Pakistan Economy - News & Updates - Archive

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Measures under way to contain budget deficit at 6.5 per cent ​

Finance minister says budget will be announced on June 7, which will be pro-poor​

Tuesday, May 27, 2008


KARACHI: Federal Finance Minister Naveed Qamar has assured that measures are afoot to arrest the budget deficit at or below 6.5 per cent by the end of June 2008.

He was speaking at a press briefing held at Overseas Investors Chamber of Commerce & Industry (OICCI) after holding a comprehensive meeting with OICCI members here on Monday.

He told mediamen that when his government came into power in March, the budget deficit was hovering somewhere between 9 and 9.5 per cent. However, he did not reveal the current percentage of budget deficit at the conference.

“In the next financial year (ie 2008-09) budget deficit would be further lowered from 6.5 per cent to very thin level,” he said. For that purpose, the government has chalked out a two-pronged strategy for cutting government expenditures and increasing tax revenues, he explained.

The finance minister would present next year’s budget in the National Assembly on June 7, 2008, which he said would be pro-poor. “The government is considering levying new taxes on potential economic sectors so that the poor could survive,” he underlined.

Government is expecting inflow of some $3 billion by the end of June that would help stabilise the rupee and foreign exchange reserves, he believed. The food and oil inflation is a global phenomenon and not an indigenous problem, he said, adding, “we have to face these challenges without losing courage.”

The government would aggressively cut its next year borrowing from the central bank to a rational level. And to get the budgetary support, it would go to the private sector, which would launch bonds in the international market next year, he said.

“I think the rates on National Saving Schemes (NSS) should also be increased so that we could be able to get more money directly from the private sector rather than SBP.” The government would also use stock exchanges to float bonds in the national and international markets. This would be one of the new strategies of the government, he said.

“Borrowing from the central bank directly affect people, especially poor,” he agreed and announced, “poor would be compensated with cash and in kind in the budget.” As far as the Capital Gas Tax (CGT) exemption or its extension is concerned on securities transactions it would only be announced in budget.

“We would make no surprises and no bomb-shell would be thrown on investment community and industry in the budget,” he assured adding, “Economic Advisory Committee (EAC) was taking inputs from stakeholders. Their suggestions are under government considerations.”

Therefore, Finance Ministry would recommend State Bank and other relevant official departments to remove the liquidity crunch in the local stocks markets, if any, he added. NFC Award: In the forthcoming budget, Naveed Qamar would also announce the formation of a committee, which would take input from all four provinces for the next National Financial Commission Award (NFC Award). The distribution of resources for the next fiscal year would be made after budget. This would be done under the new NFC formula, Qamar said.

Energy: The government is aggressively working to enhance energy availability in the county. First, the government has acquired generators on rent to make energy available immediately as its short-term measures. Secondly, the government is encouraging Independent Power Projects (IPPs) in the country.

Government has demanded for 1000MW projects and it has received applications for upto 5000MW setting up projects. More applications are expected, as the last date for that is July 15, minister said.

OICCI meeting: Earlier, minister was given presentation by President-OICCI, Waqar Malik. In his presentation, he suggested the minister to aggressively cut its non-development expenditure.

Malik said that tax rates in Pakistan were amongst the highest in the region and were a disincentive to business and investment. He emphasized that the forthcoming budget should focus on agriculture, manufacturing and export sectors, which must be given the right incentives to grow. The emphasis should be on controlling imports and increasing exports, he added.

Measures under way to contain budget deficit at 6.5 per cent

 

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Faisalabad and Dadu will each have 500 megawatts power plant ​

ISLAMABAD (May 27 2008): The Water and Power Minister, Pervez Ashraf, has said that the government will be in a better position to end load-shedding next year. He urged the general public and business community to help the government in its efforts for energy conservation of around 1000 MW.

He was talking to media persons here on Monday after the opening bid ceremony of around $1 billion thermal power projects to be established in Faisalabad and Dadu for generating 1000 MW power. He said that Pakistan is fully committed to eliminate the power crisis prevailing in the country and all-out efforts were underway to cope with the menace of load shedding in the country by adopting rational mechanism to generate more electricity with the active participation of private sector.

The present government is also pursuing liberal policy to rebuild the investors' confidence and all possible support will be provided to facilitate them in this respect, he said.

The ceremony was held at the Private Power and Infrastructure Board (PPIB) and was attended by PPIB Managing Director Fayyaz Elahi, all Directors of PPIB, and other senior government officials of Finance, Nepra and Ministry of Water and Power. The independent power producers will generate 1000 MW electricity from the two projects. The bids were opened by the 'Bid Evaluation Committee' in the presence of representatives of the bidding parties and the media.

The Minister said that the energy crisis was a great challenge for the government which would be tackled prudently with the cooperation of all stakeholders. He said that the government believes in processing all projects with transparency, and observed that there would be no compromise on transparency. He said that the government would welcome the investors with open arms and would facilitate them for development of the projects and they wouild not face any undue hindrances, "as right now time is of the essence and we need power projects to be commissioned as soon as possible to meet the future requirement of power in the country".

He said that bids for another 1200 MW power projects have been invited and would also be opened in the presence of media on June 30. He expressed hope that due to the measures being taken by the government, load shedding would be eliminated from the country by August 14, 2009.

He stressed the need to adopt measures to conserve energy, as announced by the government, to avert the burden of load management. The Bid Evaluation Committee said that the bids would be evaluated in accordance with the requirements of the Request for Proposals (RFPs) within the prescribed time.

Business Recorder [Pakistan's First Financial Daily]

 

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Bids for two 500MW power projects opened ​

Tuesday, May 27, 2008

ISLAMABAD: Minister for Water and Power Raja Pervez Ashraf on Monday said that the government is committed to eliminating power shortages and all-out efforts are underway in this regard.

The minister said this while speaking at the bid opening ceremony for two 500 MW capacity Independent Power Projects for Faisalabad and Dadu. He said the government is adopting concrete steps to generate additional electricity through the cooperation of the private sector, and is also pursuing a policy to rebuild investor confidence for which all possible support is to be provided.

He said that the present government believes in processing all projects transparently adding that there would be no compromise on this. He said that it is for the first time in the country’s history that bids for nearly $1 billion worth of projects were opened publicly in the presence of representatives of bidders and the media.

He further said that bids for another 1200 MW power projects have been invited and are to be opened publicly on June 30.He expressed the hope that due to steps being taken by the government, load shedding will be eliminated from the country by August 14, 2009. He also stressed on the need of energy conservation to avert further load management. The ceremony was held at the Private Power and Infrastructure Board office (PPIB).

Bids for two 500MW power projects opened

 

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Diesel, petrol consumption in power generation up ​

LAHORE (May 27 2008): The use of diesel and petrol in the electric generation has been increased up to five and two percent respectively of the total consumption. The additional use of diesel and petrol for the electricity generation is also pushing the import bill, while the power so produced will cost three times more to the users as compared to that of Water and Power Development Authority (Wapda).

The increasing import bill was not only aggravating the trade deficit, but was also adding the cost of production, said Pakistan Industrial and Traders Front Association Chairman Mian Abuzar Shad while talking to Business Recorder here on Monday.

He said the country was presently facing worst ever electricity load shedding in the urban and rural areas because of widening gap between the demand and supply that forced the domestic consumers, shopkeepers, medical shop owners, and industrialists, having installed electric generators of different capacity. "The use of generators in the industrial units is also making them economically enviable due to increase in cost of production," he added.

The industrial units, which could produce in batches, could afford load shedding, but the textile, paper, plastic, chemical and other units, which needed uninterrupted supply of electricity, were constrained to install electric generators, he said.

Similarly, the farmers were also converting their tube-wells from electricity to diesel pumps to ensure continuous flow of water for the irrigation, he said, adding that when a farmer switched on the electricity to run his tube-well, the electricity went off soon after an hour because of the load shedding and the required water could not reach his farm.

He said such an irritating situation was forcing the farmers' community to go for diesel pumps for irrigation, which would eventually add the input cost of the agriculture produce. He said the use of generators was not only pushing the oil consumption up, but was also augmenting the generators import to further increase burden on the national economy as well as the country's foreign exchange reserves.

He urged the government to allow duty-free import of the machinery for the erection of small hydropower stations to induce private entrepreneurs and the Wapda should be legally bound to purchase electricity from them.

He said that because of increasing trade deficit, the local currency was facing depreciation. The government, to deal with the situation, should direct the electricity distribution companies to manage electricity load in consultation with the industry people, he said.

He also demanded of the government to declare alternate weekly holiday for different cities and areas. Apart from this, there must be continuous supply of electricity for six-seven hours in the rural areas, enabling the farmers to properly irrigate their fields, he proposed.

Business Recorder [Pakistan's First Financial Daily]

 

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Economists back Pakistan’s rate rise, shares tumble​

KARACHI: Investors fled Pakistan’s stock market Monday after last week’s sharp increase in interest rates, but economists praised the central bank’s decisive action to counter inflation.

The State Bank of Pakistan (SBP) raised its discount rate to 12 percent from 10.5 percent on Thursday to help control ballooning fiscal and current account deficits and rein in inflation, which hit 17.2 percent in April, a level last seen in the mid-1970s.

It has lost nearly 8 percent in the two trading sessions since the rate hike was announced.

“Sentiment was weak already on economic and political uncertainty,” said Shuja Rizvi, director broking operations at Capital One Equities Ltd. “The moves by the central bank, though necessary, made weak holders offload their holdings and the rest remained sidelined,” he added.

A research analyst, Matthew Wilson at Morgan Stanley said, “It is one of the few central banks in the region prepared to actively confront head-on the current macroeconomic issues of inflation and excessive aggregate demand,”

The rupee has depreciated 10 percent against the dollar since the start of the year, much of it this month, due to booming import demand.

It eased slightly on Monday to close at $67.90/68.20, compared with Saturday’s close of $67.80/68.00. The currency has clawed back 2.4 percent from last Tuesday’s closing low of 69.60/90. On Monday the Karachi Stock Exchange’s (KSE) benchmark 100-share index ended at 12,584.75 points, down from a close of 13,011.74 on Friday.

Analysts said monetary tightening will certainly have a negative effect on corporate sector earnings, and banks will be hit by the imposition of a minimum 5 percent deposit rate to be paid to customers with interest-bearing checking accounts. The KSE index is now 20 percent below an all-time high of 15,700.48 hit in mid April, having already been weakened by fear of political instability after a coalition partner withdrew its ministers from Prime Minister Yousaf Raza Gilani’s cabinet two weeks ago.

Seeking fiscal responsibility: “The central bank used whatever it could in its domain,” said Asif Qureshi, head of research at Invisor Securities Ltd. “What is needed now is fiscal responsibility.” The government took office in late March amid high hopes that the alliance between Pakistan’s two major political parties would bring stability following the defeat of President Pervez Musharraf’s political allies in general election in February. The Pakistan People’s Party, leading the coalition, wants to go through the lengthy process of a constitutional amendment to strip Musharraf of powers and reduce him to a figurehead.

PPP leader Asif Ali Zardari said Saturday that he hoped to create a situation whereby the president quit on his own accord.

Nawaz Sharif, the leader of the second largest party in the alliance and the prime minister Musharraf overthrew, wants to immediately reinstate judges dismissed by Musharraf, in the hope that they would help drive him from office. The minister overseeing the finance portfolio since Sharif withdrew his ministers, including finance minister Ishaq Dar, from the cabinet earlier this month. The annual budget would be presented on June 7. Privatisation Minister Naveed Qamar told a news conference that the government was considering providing direct relief for the poor to help them cope with high food and fuel prices.

Pakistan has been hit by soaring global oil and commodity prices, and a shortage of basic foodstuffs added to the problems.

Pakistan’s responses to these challenges have been hampered by political uncertainties going back to early 2007. Failure to trim food and fuel subsidies has exacerbated spending overshoots, while revenue collection has lagged. reuters

Daily Times - Leading News Resource of Pakistan

 

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THE RUPEE: rates move both ways ​

KARACHI (May 27 2008): The rupee moved both ways against dollar on the currency market on Monday, dealers said. In the interbank market, the rupee lost 10 paisa in relation to the US currency for buying and selling at 68.00 and 68.10, they said. The dollar was in demand by the importers as supply was not enough to meet the demand due to international market closure, they said.

In the first session of the week, dollar steadied near one-month lows against a basket of major currencies after falling late last week on concerns that surging oil prices could further slow the US economy and add to inflation pressures. The New Zealand dollar held firm against its US counterpart, underpinned by its high yield despite worse-than-expected trade data that dented the kiwi briefly earlier in the session.

OPEN MARKET RATES: By the official closing, the rupee, however, rose by 30 paisa against the dollar, for buying and selling at 69.00 and 69.10, they said. The rupee also gained 80 paisa against euro for buying and selling at Rs 108.25 and Rs 108.35, they said.

================================
Open Buying Rs 69.00
Open Selling Rs 69.10
================================

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

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Buying Rs 68.00
Selling Rs 68.10
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=================================================================
Repo Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 11.25 11.95 11.50 11.95 11.66
1-Week 11.50 11.90 11.75 11.95 11.78
2-Weeks 11.40 11.75 11.60 11.80 11.64
1-Month 11.10 11.50 11.40 11.60 11.40
2-Months 11.00 11.50 11.40 11.60 11.38
3-Months 11.00 11.50 11.40 11.65 11.39
4-Months 11.00 11.50 11.40 11.65 11.39
5-Months 11.10 11.50 11.40 11.70 11.43
6-Months 11.25 11.50 11.50 11.75 11.50
9-Months 11.25 11.50 11.50 11.75 11.50
1-Year 11.25 11.50 11.60 11.80 11.54
=================================================================
Call Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 15.00 22.00 16.00 23.00 19.00
1-Week 15.50 17.00 16.50 17.50 16.63
2-Weeks 15.00 16.00 16.50 17.00 16.13
1-Month 14.00 15.00 15.00 16.00 15.00
2-Months 13.50 14.50 14.00 15.00 14.25
3-Months 13.75 14.50 14.00 15.00 14.31
4-Months 13.75 14.50 14.25 15.00 14.38
5-Months 13.75 14.50 14.25 15.00 14.38
6-Months 14.00 14.50 14.50 15.00 14.50
9-Months 14.00 14.50 14.50 15.00 14.50
1-Year 14.25 14.75 14.75 15.25 14.75
=================================================================
RUPEE IN LAHORE: The dollar began trading on Monday at Lahore currency market Rs 68.80 and Rs 69.10 and kept moving up throughout the day. At the end of trading, the dollar closed at Rs 69.00 and Rs 69.30 against Saturday's Rs 68.00 and Rs 69.00 on buying and selling sides.

The rupee has continued going up against pound and was traded at Rs 136.00 and Rs 136.50 against the previous closing of Rs 136.60 and Rs 137.50 on the buying and selling counters.

RUPEE IN ISLAMABAD AND RAWALPINDI: The rupee was up by 10 paisa against dollar at the currency markets of Islamabad and Rawalpindi on Monday. The dollar opened at Rs 68.80 (buying) and Rs 68.90 (selling) against last rate of Rs 68.90 (buying) and Rs 69.10 (selling).

It did not witness further fluctuation by the end of second session and closed at Rs 68.80 (buying) and Rs 68.90 (selling). Pound sterling opened at Rs 136 (buying) and Rs 136.25 (selling) against last rate of Rs 136.50 (buying) and Rs 137 (selling). It did not observe further change in the evening session and closed at Rs 136 (buying) and Rs 136.25 (selling).

Business Recorder [Pakistan's First Financial Daily]

 

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PTA busts another illegal gateway exchange ​

ISLAMABAD (May 27 2008): Grappling with the issue of grey traffic resulting in financial losses of over Rs 3 billion annually, the Pakistan Telecommunication Authority (PTA) has busted another illegal gateway exchange operating in Karachi. According to details, the illegally set-up exchange was detected through the Technical Facility recently installed by the PTA to monitor the illegal business of telecom throughout the country.

It is the first illegal operation detected through this state-of-the-art facility made operational on May 1 this year. Upon investigation and confirmation, a successful raid was conducted at a residential bungalow in Defence Housing Authority, Karachi, and an operational international gateway exchange was seized.

The set-up was using 130 Mbps bandwidth for international connectivity while hundreds of GSM SIMs were being used for local call termination. The confiscated equipment includes 06 Quantim Voice Over Internet Protocol (VoIP) gateways (with 24 ports each) and a rack of cellular devices along with other accessories. It is estimated that the set-up has caused a revenue loss of Rs 25 million in last 10 months of operations. Further investigations are underway by FIA, and it is expected that allied set-ups would also be unearthed shortly.

Grey telephony is a term referred to the illegal telecom traffic in which calls from foreign countries are brought in the country as local calls while using illegal means, which is an offence under Telecom Reorganisation Act, 1996. The PTA had evolved some regulatory and technical measures to curb this menace, such as establishment of vigilance cell in PTA in July 2005, reduction in accounting settlement rates (ASR).

Business Recorder [Pakistan's First Financial Daily]

 

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Rs 20m released for development projects in Swat ​

PESHAWAR: Cheques worth Rs 20 million were distributed on Monday in various areas of Swat district of NWFP where development projects are in progress. These projects are part of the nation building initiatives of the government and are taking place under the supervision of security forces in Swat. According to an official statement, ceremonies were arranged in Uchraisar, Sherplum, Chaprial, Shoure, Matta, Barthana and other areas of the district to hand over cheques to the development agencies. These projects include construction and maintenance of roads, provision of potable water and other necessary facilities. On the occasion Pakistan Army troops along with Frontier Corps and police were lauded for their efforts for development in the area. staff report

Daily Times - Leading News Resource of Pakistan

 

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KSE bounces back as 100-Index recovers 237 points ​

KARACHI: Karachi Stock Exchange Tuesday bounced back as KSE benchmark 100-Index crossed 12800 level.

The equity prices finally recovered today as investors took relief from the central bank measures aimed at boosting liquidity in the market.

And although trade was quite volatile until midday, the bulls finally snapped a rally -- led by heavy buying in undervalued stocks.

KSE 100-Index gained 237 points to close at 12822 level.

Volumes improved to 260 million shares, 100 million shares more than the previous day.

KSE bounces back as 100-Index recovers 237 points - GEO.tv

 

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100,000 tons of clinker exported to UAE​

KARACHI, May 26: Pakistan has for the first time entered export market of clinker by exporting around 100,000 tons to the United Arab Emirates (UAE) where construction boom has created a strong demand for cement.

The UAE had been importing cement from Pakistan and other sources, but surge in demand has compelled developers and builders to import clinker which could be converted into cement by further processing.

There is a strong demand for Pakistani cement in the Middle East, Africa, Far East and Indian market.

During the current month, around 340,000 tons of cement has, so far, been exported which is the highest in a single month. Around 30,000 tons was exported to India through sea and another around 58,000 tons by rail, official figures disclosed.

However, the biggest impediment in export of cement and clinker is a sudden surge in freight rates which have increased by more than three-fold.

A leading cement exporter Amjad Rafi told Dawn that up to April 15, freight for a 20 feet box to Jabal Ali port was $250, but on April 25 it jumped to $800 per container, leaving exporters in a quandary.

This means, he said, when freight charges were $250 per container of 25 tons capacity, freight charges used to be around $10 per ton but after the increase the per ton freight charges have gone up to $32 whereas the average quoted price of cement to the UAE is $70 per ton f.o.b. Karachi.

He further stated that in the past cement exporters used to book shipments even a month earlier but ever since freight charges are being frequently increased exporters enter into export contracts only week prior to shipping schedule to avoid extra freight cost in case there was any change.

Amjad Rafi said frequent changes in freight charges had forced us to turn down many export inquiries.

On an average, he said, roughly 150,000 to 200,000 tons of export inquiries were being received per month but mostly they were refused owing to highly volatile freight charges.

An official of a leading cement manufacturing group, requesting anonymity, said that since last year we had an exportable surplus of cement and by chance for the first time India also ran into shortage which gave our country a golden opportunity to meet their demand and also improve our balance of trade which had always been in their favour in the ratio of 70:30.

Unfortunately, he said ever since cement exports began about a year back there had been unlimited problems starting with non-tariff barriers from Indian side and acute logistic problems through land and rail, he added. However, during this entire period no government ministry or department came forward to sort out these irritants, he maintained.

He further stated that cement and clinker exports fall under the category of non-traditional items for which the Trade Development Authority of Pakistan (TDAP) is committed to give freight subsidy.

As per TDAP rules, export of goods to non-traditional markets also qualify for getting freight subsidy.

Therefore, he said in both cases cement qualifies for freight subsidy but so far the TDAP has remained indifferent to all issues and problems faced by cement exporters for the last one year.

At a time when the country needs to explore all avenues to increase exports, he said the TDAP high-ups were least concerned about such opportunities which fall in their way.

Responding to a question, another cement exporter Rauf Merchant said clinker which is one step short of cement had been exported to the UAE at an average price of $58 per ton and still there was a great demand as many inquiries are being received. He, however, said that high freight charges have forced many African and Middle East importers to revert back to their traditional suppliers.

100,000 tons of clinker exported to UAE -DAWN - Business; May 27, 2008

 

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12,000 tons of petrol exported​

KARACHI, May 26: While the local petrol price has jumped four times, since March from Rs53 to Rs68.81 per litre, the country exported 12,008 tons of petrol to Afghanistan, Albania and the United Arab Emirates (UAE), fetching Rs662 million during July-Feb 2007-08.

Out of total exports, the UAE was the main buyer of petrol with 6,000 tons, resulting in foreign exchange income of Rs376 million, followed by Afghanistan with an intake of 5,968 tons worth Rs283 million and Albania paying Rs2.4 million for a paltry shipment of 40 tons. In 2006-07, the country exported 38,654 tons of petrol worth Rs1.6 billion with the UAE share of 30,644 tons (Rs1.2 billion), Kabul 8,007 tons (Rs372 million) and the United Kingdom three tons

(Rs129,000).

Figures obtained from the Federal Bureau of Statistics (FBS) revealed that in July-June 2005-06 Afghanistan was the only buyer of local petrol with 3,940 tons valuing at Rs160 million.

According to figures compiled by Oil Companies Advisory Committee (OCAC), the country also exported 7,500 tons of petrol in March and 10,500 tons in April this year but it did not mention the destinations and the resultant foreign exchange earnings.

According to FBS, the country imported 58,419 tons of petrol from five countries at a cost of Rs5.85 billion in July-Feb 2007-08. Out of these the highest imports were recorded from Sudan at 35,289 tons (Rs1.96 billion), followed by 19,148 tons (Rs3.6 billion) from UAE), 1,975 tons (Rs111 million) from the Netherlands, 1,426 tons (Rs64 million) from Singapore and 581 tons (Rs23 million) from Kuwait.

There is big disparity in the figures of export and import provided by the FBS and OCAC. For example, the OCAC has been quoting import figures on its website on monthly basis since July 2004.

Accordingly, the petrol was imported in October (22,041 tons), November (39,287 tons) and December (51,697 tons) in 2007, showing a total of 113,025 tons.

While the FBS figures mentioned petrol import of 58,419 tons in July-Feb 2007-08, while as per FBS figures, there have been no petrol imports in 2006-07 and 2005-06.

If petrol export figures of FBS and OCAC are compared then exports from July-June 2005-06 till July-Feb 2007-08 stood at 54,602 tons as per OCAC figures. However, according to FBS statistics it stood at 93,286 tons in the same period. An official in the OCAC, who asked not to be named, said that the committee’s figures were authentic as these were based on the feedback given by the oil marketing companies (OMCs) and the refineries. He said Pak Arab Refinery Limited (Parco) exports petrol, while the Pakistan State Oil (PSO) imports through global tenders. These imports are also shared by the Shell Pakistan Limited (SPL) and Caltex Pakistan. The FBS official said that the bureau obtained figures from the Customs.

Parco had exported 300,000 tons of petrol in 2001-02 and earned $75 million at a price then ranging between $235 and $260 per ton.

The government is pocketing Rs8.98 per litre as sales tax and 80 paisa per litre as petroleum development levy (PDL).

The average export price of petrol during July-Feb 2007-08 comes to Rs41 per litre or Rs55,129 per ton, compared to Rs42,233 per ton or Rs31.28 per litre in July-June 2006-07.

In July-June 2005-06, the average export price was Rs40,616 per ton or Rs30 per litre.

12,000 tons of petrol exported -DAWN - Business; May 27, 2008

 

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Services sector deficit up by 44pc ​

Wednesday, May 28, 2008

ISLAMABAD: The services’ trade deficit during July-April 2007-08 went up by 43.9 per cent to $5.57 billion as against $3.87 billion recorded in the corresponding period of the last fiscal.

During these 10 months, services imports (outflow) were $8.24 billion, while exports (inflow) stood at only $2.67 billion. Last year during the same period, imports were recorded at $6.93 billion and exports at $3.6 billion.

It was revealed that during the period under review, services exports went down by 12.77 per cent, while imports went up by 19 per cent over the corresponding period of the last fiscal year, the State Bank of Pakistan (SBP) reported on Monday.

The rising service trade deficit, resulting of mismatch of supply and demand in the country’s underdeveloped service sector and its opening-up to the outside world, is set to pose a daunting challenge to the government. Given a comparatively backward service industry, it is impossible for Pakistan to reverse the trend and would not break-even in service trade in the short term.

The service trade, which covers major tertiary sectors such as transport, tourism, telecommunications, construction, insurance, financial services and royalties and licences fees, were all in deficit during this period under review.

The entire service sector in the country has been experiencing sluggish development and is thus, less competitive than the developed countries. The service sector’s long-standing trade deficit may continue for many years, because the fledgling sector will lag behind overseas counterparts for that long, trade experts have predicted.

Pakistan’s soaring need for foreign transport, insurance and consultancy services, as well as increased expenditure on financial services would also contribute to the expected hike in the deficit. Besides, other factors responsible for huge services deficit included higher outflows on account of travel, insurance, construction services, computer and information services, royalties and licence fees. The country’s fast-expanding general trade deficit, resulting from a robust growth in merchandises imports over the past decade, is also alarming for the government’s trade experts.

The SBP figures show that Pakistan had to spend $2.99 billion on transportation account (i.e. charter of ships and aircrafts with crew, freight on commodity imports through sea and air, 8 per cent freight on cash import), whereas its earning under this head was only $854 million. Thus, the net deficit in the service account due to chartering of vessels for imports, exports shipment was $2.136 billion.

Another factor responsible for the big services’ account deficit was a net outflow of $1.11 billion on account of overseas traveling. Pakistan had to spend $1.337 billion to finance personal and business-related traveling abroad of individuals and groups, whereas it earned only $226 million under this account. The same applies to spending on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan.

During July-April 2007-08, inflows under construction services were $29 million, insurance $35.6 million, financial services $36.9 million, royalties and licences fees $45.24 million, while outflows under these heads were $42.1 million, $128 million, $147.4 million and $107.8 million respectively.

However, under the communication, computer and information services, the scenario was a little encouraging. Under the communication sector, outflows were $89.5 million and inflows $102.35m. Computer and information services inflows were recorded at $118.89 million and outflows at $109m during the period under review.

Services sector deficit up by 44pc

 

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LCCI asks govt to review decision on Kalabagh dam​

Wednesday, May 28, 2008

LAHORE: Federal Water and Power Minister Raja Pervaiz Ashraf has said the shortage of energy is one of the biggest challenges the nation is facing at the moment.

He said the menace of loadshedding would be controlled by the end of August as a contingency plan to cope with the situation had been put in place.

He made the remarks during a visit to the Lahore Chamber of Commerce and Industry on Tuesday. During the talks, LCCI President Mohammad Ali Mian raised the issue of Kalabagh dam. LCCI Vice President Shafqat Saeed Piracha and former president Bashir A Baksh were also present.

The minister said the government alone could not solve the issue of energy shortage and for that purpose it was in dire need of the private sector, which should come forward to ensure the success of govt’s energy conservation programme.

He said the government had decided to put on hold the controversial Kalabagh dam project as controversy over the issue had reached an alarming level that was threatening the unity of the Federation.

The minister hoped that water level would improve in reservoirs, which would produce additional 500 megawatts of power. The next three months, he said, would be crucial to solve the power crisis and the nation should bear with the govt during the current crisis.

Blaming the previous government for the ongoing energy crisis, the minister said no roadmap was given in that regard, adding however the government would ensure implementation of its decision of closing down all major commercial centres and shopping plazas at 9pm from June 1 to help overcome the power problem.

These steps were being taken to save power for at least 90 days, he said, adding 1,000MW of electricity would be added to the national grid by way of improvement in generation capacity of existing power houses.

He said the construction of Basha dam would start next year besides the completion of Mangla raising project. “The government is taking steps by adopting a rational mechanism to generate more electricity through the private sector. The government is also pursuing a liberal policy to rebuild investors’ confidence and all possible support will be provided to facilitate them in this respect,” he said.

Lahore Chamber of Commerce and Industry President Mohammad Ali Mian, on the occasion, demanded the federal government review its decision on Kalabagh dam as it was not the issue of Punjab alone rather it was connected with the whole country. The acute shortage of water and power, he said, had put the very survival of the country at stake.

Throwing his full weight behind the government’s energy conservation programme, Mohammad Ali said the energy to be conserved through this programme should be utilised to keep the industrial wheel moving as it was the biggest victim of power shortage.

He urged the minister to focus on containing line losses as it would help the government bridge the demand and supply gap. Citing the example of China where more than 70 per cent of electricity was being generated through coal and hydel means, he stressed the need of expediting work on alternative energy resources including coal, wind and solar.

Friday off rejected: The traders’ community, during talks with the power minister at the LCCI, refused to close markets on Friday.

Anjuman-e-Tijran President Muhammad Ashraf Bhatti, who is also executive committee member of LCCI, rejected the plan of Friday off and said it was not viable for them. Before Ashraf Bhatti could give further explanation, LCCI President Mohammad Ali Mian intervened and snubbed him. After that, no one discussed the issue with the minister.

Govt seeks private sector’s help to combat power crisis

 

[sohailbutt]

1000 megawatts of power to be added to national grid​

LAHORE (May 28 2008): Federal Minister for Water and Power Raja Pervaiz Ashraf has said 1,000MW of electricity will be added to the national grid by way of improvement in generation capacity of the existing power stations. The government will ensure implementation of the decision to close down all major commercial centres and shopping plazas at 9.00 pm from June 1 to overcome power crisis.

He said that these steps were being taken to save power for at least 90 days, and added the menace of load shedding would be bridled by end of August as a contingency plan to cope with the situation had been put in place.

Talking to the office-bearers of the Lahore Chamber of Commerce and Industry (LCCI) during his visit on Tuesday, Raja Pervaiz Ashraf hoped that water level would be improved in the reservoirs, which would add 500 MW in addition. He said that next three months would be crucial to resolve power crisis and the nation should bear with the government over the ongoing power crisis.

The minister, blaming the previous government for the ongoing energy crisis, said no roadmap was given in this regard. The construction of Bhasha Dam would start next year, besides the completion of Mangla raising project, he added.

He termed the shortage of energy one of the biggest challenges the nation at the moment was facing, and said the government alone could not solve the issue of energy shortage and for this purpose, it was in dire need of private sector and the private sector should come forward to ensure the success of government's energy conservation programme. He said the government had decided to put on hold the Kalabagh Dam project for the time being till the development of consensus among the provinces.

He also said the government was taking steps by adopting rationale mechanism to generate more electricity through private sector. He said the government was also pursuing liberal policy to rebuild the investors' confidence and all possible support would be provided to facilitate them.

LCCI President Mohammad Ali Mian demanded of the Federal government to review its decision on Kalabagh Dam as it was not the issue of Punjab alone rather it belonged to the whole country and its people. The acute shortage of water and power had put the very survival of the country at stake. "Shelving it with one stroke of pen is against the national interests", he added.

LCCI Vice-President Shafqat Saeed Piracha, former president Bashir A Baksh and former senior vice president Sohail Lashari were also present on the occasion. Throwing his full weight behind the government's energy conservation programme, Mian said that the energy to be conserved through this programme should be utilised to keep the industrial wheel on the run as the industrial sector was the biggest victim of power shortage.

He urged the Federal Minister to divert its attention towards line losses, as it would help the government bridge demand-supply gap. Citing the example of China where more than 70 per cent of electricity was being generated through coal and hydro means, he stressed on the Federal Minister to expedite work on alternate energy resources, including coal, wind and solar.

Business Recorder [Pakistan's First Financial Daily]

 

[sohailbutt]

4.5 percent increase projected in 2008-09 major crops output ​

ISLAMABAD (May 28 2008): The government has projected 4.5 percent increase in value-addition of major crops for 2008-09 from Rs 388.9 billion in 2007-08 to Rs 406.4 billion. Business Recorder has learnt that the agriculture sector is being projected to grow by 4.0 percent, for which contribution of major crops would be 4.5 percent, minor crops 2.5 percent, livestock 4.0 percent, fisheries 4.0 percent, and forestry 1.5 percent.

Cotton production is projected to increase by 21.1percent to 14.1 million bales, while sugarcane production is estimated at 56.6 million tons for 2008-09, compared with 63.9 million tons during 2007-08, showing a decline of about 11.6 percent.

Wheat production target for 2008-09 is being projected at 24 million tons--higher by 10.4 percent against current year. Rice and maize production have been estimated at 5.7 million tons and 3.3 million tons, respectively.

The value-addition, as far as minor crops are concerned, will be 2.5 percent to Rs 134.2 billion, against Rs 131 billion of current year. The livestock sector is targeted to grow by 4 percent to Rs 632.2 billion against Rs 599.2 billion. The fishery and forestry sectors have been projected to grow by 4 percent and 1.5 perecnt respectively for 2008-09.

The overall performance of the agriculture sector in 2007-08 can not be appreciated at all, as it grew by 1.5 percent against the targeted growth of 4.8 percent. The main cause of this decline may be contributed to low production of major crops--wheat and cotton.

According to the latest estimates, output of wheat is estimated to be 21.8 million tons, considered to be 6.3 percent lower as compared to current year's production of 23.3 million tons. On account of late start of sugarcane crushing and delay in picking of cotton, the area under wheat cultivation declined by 2 percent against the target. Similarly, cotton production in 2007-08 was estimated at 11.7 million bales that is 9.3 percent less than previous year's production.

Rice output, though increased by 2.3 percent to 5.6 million tons against the last year estimates of 5.4 million tons, is still lower than the target fixed for 2007-08 that was 5.7 million tons. The minor crops registered a growth rate of 4.9 percent against the target of 2.3 percent. Within the minor crops, the production of pulses--mainly mash, masoor and mung--has increased by 8.8 percent, 13.8 percent and 28.4 percent, respectively.

Livestock sector has registered a growth of just 3.8 percent against the targeted growth of 5.7 percent. The output of milk has registered an increase of 3.2 percent as compared to the last year. The fishing sub-sector is estimated to grow by 11 percent while the value addition to forestry decreased by 8.5 percent against the targeted increase of 3.5 percent.

Business Recorder [Pakistan's First Financial Daily]