Pakistan Economy - News & Updates - Archive

[Neo]

PM announces Rs 50bn PSDP for Balochistan​

ISLAMABAD: Prime Minister Yousuf Raza Gilani on Saturday announced Rs 50 billion for Balochistan in the Public Sector Development Programme (PSDP) 2009-10.

The allocation for Balochistan is Rs 8 billion more than last year’s PSDP allocation for the province.

Gilani made the announcement in a meeting with a delegation of the Balochistan cabinet.

The prime minister said the Rs 21 billion unspent amount of Balochistan in the present PSDP would be made available to the province in the next financial year. He announced packages worth Rs 9 billion for Balochistan, including Rs 3 billion for Quetta, Rs 3 billion for budgetary support and Rs 3 billion for development schemes that would be identified by members of the provincial assembly.

 

[Neo]

World Bank to give $30 million for Thar coal project: agreement signed with Sindh government​

KARACHI (May 31 2009): The Sindh government and the World Bank (WB) on Friday night signed the long-awaited $30 million agreement for the proposed 'Thar Coal and Power Technical Assistance Project' (TCAP). Sources said that under the agreement, which could be possible because of timely interference of President Asif Ali Zardari during his recent visit here, the WB, would loan $30 million to Sindh government in four yearly tranches with a ten-year payback time.

They said that out of total amount, $25.8 million would be provided to the provincial Mining Board, and the remaining $4.2 million will be given to the Private Power and Infrastructure Board (PPIB) to provide technical assistance for the development of Thar coal.

They said the WB had set a condition to get the proposal approved from the Executive Committee of National Economic Council (Ecnec) by June 8, 2009, but it was being delayed since March. Sindh Chief Minister Qaim Ali Shah had apprised the President about the delay during his recent visit to the city, which led to its approval, they added.

Sources said that the chief minister, who is also Chairman of the Coal Development Board, had also informed Advisor to Prime Minister on Finance Shaukat Tarin in writing about the delay in approval by Ecnec, but no progress was made.

They said that the Bank has included the scheme, a joint provincial and federal level effort, into its Board's presentation scheduled for June 30, 2009, adding that the activities would be implemented in parallel by the province (to facilitate the coal mining), Thar Coal Block No 1, having a surface area of 122 sq. km, and the federal government (to facilitate coal-to-power development).

They said that the bank has also asked the Ministry of Water and Power to set up a Project Support Unit within the PPIB, which would supervise consultants' work, ensure that implementation of federal component is on track and provide liaison with the project steering committee established by the Sindh government, Project Monitoring Unit in Karachi, Thar Coal and Energy Board and the World Bank.

They said that the bank's assistance would be provided for geographical survey and date interpretation related to Thar coalfield and in greater detail for Thar Block No 1, supervision/technical assistance with the interpretation of the regional hydro-geological study, developing overarching coal and coal bed methane t power sector/legal/regulatory/safeguards including those related to mineral licensing and tendering procedures.

The bank would also help attracting private investors to develop Thar Block 1 besides finalising bid methodology for a coal mine power plant, information memorandum and transaction and transaction of principles and intentions policy document.

 

[Neo]

‘KESC increasing generation capacity’ ​

Sunday, 31 May, 2009

KARACHI: The KESC will increase generation capacity by 220MW in June, and a further 80MW in September this year, the utility’s CEO has told top government officials.

Briefing Sindh Governor Ishratul Ibad and various MQM leaders at the Governor’s House on Saturday, KESC CEO Naveed Ismail also claimed that the utility’s ‘dependable capacity’ had increased by 131MW, and that a 50MW rental power project had been commissioned in March 2009.

He said that adding all of the increases together, a total of 481MW of additional power would be available soon.

In addition, he claimed that the 560MW planned power plant at Bin Qasim would also considerably increase generation capacity. He said that in this respect a $56 million down payment had been made to a Chinese company, and the project was being ‘fast-tracked.’

The project was originally announced by the Al-Jomaih group when they owned the utility, but work could not begin because of ‘differences with contractors.’

 

[Neo]

Rice exporters may achieve $2bn target ​

Sunday, 31 May, 2009

KARACHI: After exporting rice worth $1.8 billion during the first 11 months (July-May) exporters are expecting to achieve a target of $2 billion by the close of the current fiscal year.

According to details released by the Rice Exporters Association of Pakistan (Reap) during July-May period, the country exported 801,72 tons of Basmati and fetched $908 million and non-Basmati 1.782 million tons, thereby earning $920 million.

Abdul Rahim Janoo, Reap chairman, while appreciating exporters achievement of the target of $1.8 billion, said it was only possible because of business friendly policies of the government.

He said it is a remarkable achievement when looked at global recession and financial crisis.

Mr Janoo said last year (2007-08) the country exported 3.5 million tons of rice, valuing more than $2.2 billion but this was only possible when global prices of rice and other commodities were going higher every day.

He said Reap has sent trade delegations with the help of TDAP to Saudi Arabia and Republic of South Africa for further enhancing rice exports.

Mr Janoo said next month two other rice exporters’ delegations would be leaving for Qatar and EU countries to explore new rice markets and promote Pakistan rice which is the best in the world.

Similarly, the Reap is planning to send delegations in July and August to Kuwait, Iran, Senegal and Zambia which are also big markets for rice.

 

[Neo]

Pakistan puts $12.6bn, 4.5 GW hydro project out to tender​

31 May 2009 - Pakistan has invited international bids for the construction of Diamer Bhasha hydroelectric dam project.

The hydro-electric dam will be built at a cost of $12.6bn. Upon completion the dam will add 4500 MW of hydro-power to the national grid and will take seven to eight years to go into operation.

The NEC (National Economic Council) has approved $1.5bn toward the construction of the dam.

The power generated from the project will add 30 per cent to Pakistan's current available generation capacity and has the potential to significantly reduce thermal power reliance and average generation cost.

The project is said to be located in a mountainous, earthquake-prone area.

 

[white_pawn]

Shahbaz chairs meeting Development projects under ADP reviewed ​

JALIL HASSAN AKHTAR
LAHORE (June 01 2009): A high level meeting was held here on Sunday under the chairmanship of Punjab Chief Minister, Muhammad Shahbaz Sharif to review development projects under Annual Development Programme and set priorities for the next year. Chief Secretary Punjab, Chairman Planning and Development, Secretary Finance, Communication and Works and senior officers attended the meeting.

The meeting considered Annual Development Programme formulation for next provincial budget.

Addressing the meeting, the Chief Minister said that provision of basic amenities was the top priority of the government and all available resources were being utilised for this purpose. He directed that proper and realistic utilisation of funds for rapid development of the province and prosperity of the people should be ensured and priorities should be set in such a manner that better facilities could become available to the people within available resources.

He said that increase in non-developmental expenditure would not be allowed. He directed to set up a special committee headed by Chief Secretary to review non-developmental expenditure and measures for its curtailment. He said that besides paying attention to provision of education, health, infrastructure and prompt justice to the people, a comprehensive strategy should also be adopted for the uplift of backward and far-flung areas of the province.

He said that proper planning should also be made for the welfare of such segments of the society that had been neglected during the last 62 years. He said that government had taken solid measures for the elimination of illiteracy and ignorance from the province and TEVTA had been reorganised for the promotion of vocational education while modern courses had also been introduced in keeping with the demands of the local industry.

He said that computer labs had been set up in more than 4000 schools of the province while Danish schools equipped with modern facilities were also being established where boarding and lodging facilities would also be available to male and female students. He said that backward areas are being given priority in this regard.

He said that the development programmes should be aimed at laying the foundation of a balanced development process and welfare planning and the deprived segments should draw maximum benefit from this programme. Chairman Planning and Development delineated the outlines of next Annual Development Programme and threw light on various development projects. Secretary Communication and Works presented various proposals for infrastructure development in the province.

Business Recorder [Pakistan's First Financial Daily]

 

[ajpirzada]

how many of you think that decision to keep interest rates in double digits was a rit decision???
i think we should have never done that. its main purpose is to control inflation but only when ur inflation is caused due to increase in demand. here situation was different. it wasnt excess demand but a sudden shortage in supply. also our gov fixed wheat price at 950 per 40Kg which was quite high compared to last year. now no matter wat u try, this price wont come down coz its been controlled. food is 45% of our inflation basket. and wheat forms the major portion of our food group.

 

[Neo]

Diamer-Basha dam to be completed in time: minister ​

ISLAMABAD (June 01, 2009): Minister for Water and Power, Raja Pervez Ashraf on Monday said that all resources will be utilized for timely completion of Diamer-Basha dam project to generate clean and cheaper electricity in the country.

He said this while presiding over a meeting to review the progress of Diamer-Basha dam project. Minister for Kashmir Affairs and Northern Areas and Information and Broadcasting, Qamar Zaman Kaira and Minister for Parliamentary Affairs Babar Awan also participated in the meeting.

Ashraf said that the generation of 4,500 MW cheap hydel power from Diamer-Basha dam will reduce the dependence on thermal power resulting saving of huge foreign exchange and make available 6.4 MAF of water for irrigation.

He said that the project will create massive infrastructure and job opportunities leading to the overall socio-economic uplift of the area.

The Minister directed the Wapda authorities to follow the schedule to ensure timely completion of such a project of national importance.

Qamar Zaman Kaira said that the government is giving priority to all such mega projects and every efforts is being made to make funds available for this important and national project.

He asked the Wapda to early undertake the resettlement plan for the affectees of the dam in Northern Areas and NWFP.

Earlier, the Chairman Wapda briefed the meeting on the progress of the project and said that the ECNEC had approved the project for land acquisition and resettlement of the dam at a cost of about Rs. 60 billion.

He said that the Diamer-Basha dam will be the highest roller compacted concrete dam in the world having height of 272 meters. He added 323 KM of Karakoram Highway from Havelian to dam is to be upgraded by National Highway Authority (NHA) for transportation of heavy machinery and equipment.

He said that design and feasibility study has been completed while the tenders have been invited for construction of the project. He informed the participants that the project is on schedule and will be completed within the prescribed time frame in 2016.

He said that a very positive response from international financing institutions have been received for the project financing.

 

[Neo]

President for releasing Rs 500 million from PBM for IDPs​

ISLAMABAD (June 01 2009): President Asif Ali Zardari has asked the government to immediately release Rs 500 million from Pakistan Baitul Mal (PBM) for emergency relief to the internally displaced persons (IDPs) in the camps in the Frontier province.

In a statement issued here President's spokesman Farhatullah Babar said that the President was deeply concerned about the people living in the camps and asked the government to step up the relief work with emphasis on transparency, monitoring and accountability.

"Relief and rehabilitation of the displaced persons is central to this fight", the President said adding, "It is a fight that will be carried to its logical conclusion". The internally displaced persons were the heroes of the war against militancy, he said.

The President directed that the district committees set up during his visit to camps in Shah Mansoor near Swabi on Friday should begin working immediately and that its members should be available to the people round the clock to redress their problems. "Each and every internally displaced family and person will be rehabilitated in their homes with honour and dignity", the president said. The displaced people will not stay in the camps indefinitely and will return to their homes sooner than later and their properties damaged or destroyed by the militants will be repaired and rebuilt by the government, the President said.

The President said that the campaign for seeking international assistance will be boosted during his forthcoming visit to Brussels to ask the EU summit for massive assistance for the relief and rehabilitation operations. He said that the government will continued to be guided by its police of three Ds namely Dialogue, Deterrence and Development as guiding principles in waging war against militancy. This was a policy that had also been endorsed by the national Parliament, he said.

The President reiterated the government's commitment not to allow the militants impose their obscurantism agenda on the people through use of force, bullets and guns. Apart from setting up five district committees the President has already appointed Mohammad Shehzad Arbab, Additional Secretary to the President as focal/contact person in the President's Secretariat to deal with all IDPs matters in the Presidency. Babar said that on Saturday the President also held meetings with the parliamentarians from Malakand and also with the Pakistan American Congress on the issue of relief and rehabilitation of the people living in camps.

 

[Neo]

Unprecedented rise in inflation: monetary policies, authorities held responsible​

ISLAMABAD (June 01 2009): A panel of economists who had submitted a report to the government in October 2008 highlighting issues and recommending policy actions termed monetary policy from 2002-2008 as ineffective and held monetary authorities responsible for the unprecedented rise in inflation, which has crushed the poor people, sources told Business Recorder.

They said that the panel had given a detailed presentation to the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on May 19, 2009, on the invitation of Advisor to Prime Minister on Finance, Shaukat Tarin, who is also Chairman of the ECC.

"Expert economists in their presentation to the ECC held loose monetary policy from 2002-08 and lack of independence of monetary authorities responsible for unprecedented high inflation in the country," sources said. According to the economists, high inflation was contributing to increasing vulnerability and fall in real income of lower, middle and fixed income segments of the society.

"There is uncertainty about future business environment, instability of the financial system, erosion of business and investor confidence and slowing down of real economic activities like investment, economic growth and employment," sources quoted the economists as saying. The present government inherited a perfect storm, but government credibility should be firmly established to fight inflation. Although the government is on the right track but prices cannot be brought down administratively as inflation this time is a monetary phenomenon, sources quoted the economists as observing.

Sources said that ECC stressed on expansion of the tax base and raising the tax-to-GDP ratio. Some members observed that new areas should be brought under the tax net and, to improve tax collection, administrative set-up should be overhauled. "Present government intends to follow inclusive policies to enhance tax collection and would certainly avoid destructive policies," sources quoted Shaukat Tarin as saying.

According to sources, the economists advised the Finance Ministry to reduce budget deficit, cut expenditure, do away with circular debt, retire federal government debt to State Bank of Pakistan (SBP), refrain from further borrowing, and constitute a fiscal and monetary policy co-ordination board. The panel of experts was informed by Shaukat Tarin that all prescribed steps had already been taken by the government, including reconstruction of the board.

A couple of days ago, International Monetary Fund (IMF) stated that a prolonged economic recession could increase the number of poor in Pakistan. "Growth is slowing down, while financial sectors are now showing some signs of vulnerability," Paul Ross, IMF resident representative in Pakistan said.

On May 20, the Federal Cabinet was briefed by Tarin that the current account deficit and fiscal deficit have been brought down to 5.3 and 4.2 percent, respectively, from 8.4 percent and 7.4 percent. Inflation and trade deficit have also come down and efforts are afoot to bring inflation down to single digit by the end of current fiscal year.

Analysts are of the view that inflation will rise after the budget is announced, as sales tax is expected to be revised upward by one percentage point.

 

[white_pawn]

German companies keen to invest in Pakistan ​

ISLAMABAD (June 02 2009): A German delegation led by Axel Pliefke, CEO, Handel Services Consulting, Germany alongwith Mehr Muhammad Yousaf Chand, Honorary Investment Counsellor (HIC) and Tariq Mahmood visited Ministry of Investment (Board of Investment) and called on Saleem H. Mandviwalla, Minister of State & Chairman BOI on Monday. Mandviwalla welcomed the delegation, and appreciated German companies interest to invest in Pakistan. He highlighted the policy parameters of investment in Pakistan.

While stressing so he underlined the policy, which allows 100 percent foreign equity in major sectors and full repatriation of profits and dividends in all the sectors. It was further explained that the average rate of return is almost 30 percent and in some cases up to 50 percent.

Axel Pliefke expressed his keen interest for a joint venture in Pakistan's Solar, Wind and Hydel energy sectors. He said that German entrepreneurs are keen to invest in Pakistan but, due to security concerns potential investors are keeping themselves at a distance. The government should take steps to remove the negative perception about Pakistan.

Furthermore, the delegation informed that within 4-5 weeks they will be bringing the first prototype wind mill (small unit) in Punjab, which will cater to the needs of tube wells in small towns and villages. The delegation also showed interest in the establishment of 50 MW wind mills in Pakistan. The Minister of State assured to extend all possible assistance required by the German delegation. Mandviwalla thanked members of the delegation for visiting Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]

 

[white_pawn]

Rs 2.9 trillion outlay for 2009-10 budget: Rs 1,406 billion tax target set, National Assembly body told ​

ZAHEER ABBASI
ISLAMABAD (June 02 2009): The next budget outlay, for financial year 2009-10, will be worth Rs 2.9 trillion, with Rs 1406 billion target to be set for revenue collection, Ministry of Finance told the National Assembly standing committee on finance, sources said.

They said that Finance Secretary Salman Siddique in his detailed presentation informed the committee that current expenditure would be Rs 2.1 trillion, including Rs 655 billion for debt servicing, Rs 343 billion for defence, and Rs 245 billion will be earmarked for grants and subsidies.

Provincial transfers would amount to Rs 590 billion, whereas overall development budget will be around Rs 745 billion. Media persons were not allowed in the presentation, but sources said that in an overview of the budget the committee was briefed by Finance Secretary about budget expenditure for 2008-09 and budget proposals for 2009-10.

The overall size of the development outlay will be Rs 745 billion in the next budget, that would include Rs 400 billion federal, Rs 200 billion provincial, Rs 70 billion Benazir Income Support Program (BISP), Rs 50 billion for internally displaced people (IDPs) and Rs 7 billion for Bait-ul-Maal. Rs 70 billion, Rs 50 billion and Rs 7 billion have been earmarked in the budget to strengthen social safety net under BISP, internally displaced people (IDPs) and Bait-ul-Maal heads, respectively.

Salman said that fiscal deficit and inflation targets were kept at 4.5 to 5 percent and 9.9 percent respectively for the next fiscal year. He said that tax administration reform program proposals, being worked out by the Economic Advisory Council (EAC) and to be finalised on June 5, would enable them to increase tax-to-GDP ratio in the next fiscal year by 0.6 percent.

The Secretary also shared with the committee the anticipated risk to the budget, saying that low growth, less revenue by the Federal Board of Revenue (FBR), additional security cost and additional cost on rehabilitation of IDPs are seen big threats and pose risk to the budget.

He said that defence expenditure has been increased to Rs 343 billion in the budget from Rs 311 billion allocated for the ongoing fiscal year owing to law and order situation. He said that increase in defence budget was critical and could not be avoided. About addition revenue collection, he said that Rs 60 billion new revenue sources have been identified, whereas Rs 30 billion are being looked for additional income.

Salman, however, added that there would be no burden on the poor and the industrial sector. Sources said that the meeting wanted the government to impose tax on agriculture sector in a way that small farmers are not affected. Big farmers should be taxed, at the same time ensuring protection to the small farmers. Minister of State for Finance Hina Rabbani Khar also attended the meeting.

Business Recorder [Pakistan's First Financial Daily]

 

[white_pawn]

NEC may approve 3.3 percent growth target ​

ZAFAR BHUTTA
ISLAMABAD (June 02 2009): The National Economic Council (NEC) is likely to approve 3.3 percent GDP growth target for the next financial year (2009-10). The growth target of 3.3 percent has been calculated based on 3.8 percent growth rate in agriculture, 1.8 percent in manufacturing and 3.9 percent in services sector in the Annual Plan 2009-10, to be tabled before the NEC for approval on June 4.

The proposed Annual Plan 2009-10 envisages $8.8 billion trade deficit with projected exports of $19.9 billion and imports of $28.7 billion. Projected exports are close to current year's estimated exports of $19.5 billion and imports projection has been scaled down to $28.7 billion against estimated $30.2 billion imports for 2008-09.

According to sources, agriculture sector has been projected to grow by 3.8 percent. Its components have been forecast to have the following growth rates: major crops 3.5 percent; livestock 4 percent; fisheries 2.4 percent; and forestry 1 percent.

In the financial year 2009-10, manufacturing sector has been projected to achieve a growth rate of 1.8 percent, provided energy shortage is overcome and exports competitiveness improves through appropriate incentives and policy measures. Large-scale manufacturing sector is targeted to grow by 1 percent. The services sector is likely to grow by 3.9 percent, with wholesale and retail trade growing by 3.3 percent, and finance and insurance by 3 percent.

Total investment during the next fiscal year (2009-10) is being projected at around 20 percent of GDP, and national saving 14.7 percent of GDP, implying that almost 74 percent of investment would be financed through national savings and 26 percent from foreign savings, which would be 5.3 percent of GDP. The inflation (CPI) for the next financial year (2009-10) has been targeted at 9 percent, against expected CPI inflation of 20 percent in 2008-09.

The Annual Plan 2009-10 envisages remittances of $7 billion, close to the level of remittance target for the current fiscal year. Current account deficit has been estimated at $9.5 billion, that is also close to $9.4 billion for the current fiscal year (2008-09).

During the current financial year (2008-09), the economy registered a growth of 2 percent, against the target of 5.5 percent. Large-scale manufacturing sharply contracted with growth turning negative by 7.7 percent based on July-March figures for the first time in ten years. The construction sector also contracted by almost 11 percent. Only agriculture sector has surpassed the target, registering a growth rate of 4.7 percent, as compared to its target of 3.5 percent.

The services sector is estimated to grow by 3.6 percent during 2008-09. For the year 2008-09, current deficit has been estimated at $9.4 billion (5.7 percent of GDP), significantly lower than the annual plan target of $12.7 billion (7.2 percent of GDP), due to reduction in trade deficit and robust increase in workers' remittances.

Exports are estimated at around $19.5 billion, against the annual plan target of $22.9 billion for 2008-09. Imports are estimated at $30.2 billion, against the annual plan target of $37.2 billion. Remittances in year 2009-10 are estimated at $7.2 billion due to return of Pakistanis working abroad with their savings owing to economic slowdown in the developed countries.

Business Recorder [Pakistan's First Financial Daily]

 

[white_pawn]

Pakistan may accede to UN Convention on transit trade ​

MUSHTAQ GHUMMAN
ISLAMABAD (June 02 2009): Pakistan is likely to accede to 'Transports International Routiers (TIR) Convention 1975' of the United Nations, aimed at promoting transit trade in the region, official sources told Business Recorder here on Monday. Commerce Ministry has placed the matter before the Cabinet, which will discuss the issue in detail, besides other important issues including IDPs.

Customs Convention on the international transport of goods, under cover of TIR Carnet, known as TIR, was adopted under the aegis of United Nations Economic Commission for Europe (Unece) in 1975. The Convention provides a legal framework for traffic-in-transit of goods across borders among the contracting countries without involving payment of customs duties and taxes, and serves as an effective instrument of international transit trade, compatible with national legislation, and containing inherent safeguards for revenue protection.

At present, all ECO countries, except Pakistan, are signatory to the Convention. Other ECO countries have strongly been urging Pakistan to accede to it. It is, therefore, imperative that Pakistan, too, should sign and accede to the Convention so as to play an active role in the transit movement of goods and vehicles in the ECO region, sources said.

In order to promote transit trade in the region through operationalisation of the 'North-South Corridor', linking Pakistan with Central Asian Republics (CAR), Pakistan deposited an Instrument of Accession to the TIR Convention, 1975, on October 21, 2004, with the United Nations at New York, along with the following reservation:

"Pakistan declares that under Article 8, paragraph 4 of the customs Convention on the International Transport of Goods under the cover of TIR Carnets (TIR Convention) concluded at Genera, on November 14, 1975, acceptance of TIR Carnet by the Customs office means that national legislation allows the transit of such goods and from a particular country".

The office of the Legal Affairs of the United Nations, however, refused to accept Pakistan's application for accession to the Convention on the grounds that the reservation "allowing the transit of such goods and from a particular country" entered by it, was not permissible under article 58, paragraph 3, of the Convention.

Sources said that several meetings with concerned ministries/stakeholders were held under the chairmanship of Commerce Secretary to resolve the issue of withdrawal of reservation.

After detailed deliberations in these meetings, it was decided, with consensus of all stakeholders ie FBR, Ministry of Law, and Ministry of Foreign Affairs, that FBR will submit a revised document for accession to the TIR Convention, incorporating a permissible reservation under Article 57 paragraph 2 to 6 of the TIR Convention.

It was also decided to obtain concurrence/view of Attorney General of Pakistan on the language/substance of the Declaration of Understanding. Consequently, a reference was made to Attorney General of Pakistan, through Ministry of Law. The Attorney General advised that, except for the permissible reservation, any other statement, even if camouflaged as 'reservation' under the heading 'Understanding', would not be acceptable.

According to sources, the subject was further discussed on January 26, 2009 in a meeting chaired by FBR Chairman. It was decided, in consultation with the Ministry of Foreign Affairs, that Pakistan should deposit the Instrument of Accession to the TIR Convention. Federal Board of Revenue, Ministries of Foreign Affairs and Communications have been consulted and all support the accession proposal.

Business Recorder [Pakistan's First Financial Daily]

 

[aziz raza]

What is latest Economy News and what is our nowadays GDP ratio.