Pakistan Economy - News & Updates - Archive

[Neo]

Pakistan, WB sign agreement for poverty reduction​

ISLAMABAD: The government of Pakistan and the World Bank signed an agreement at Washington for IDA credit of SDR 321.3 million (US$ 500 million approximately) for Poverty Reduction and Economic Support Operation (PRESO). According to an official statement issued here the credit would support government of Pakistan’s programme to regain and maintain economic stability, bring the economy back on track to a higher growth path while protecting the poor and the vulnerable from adverse shocks. PRESO is a single-tranche Development Policy Credit. The funds will be utilised by the Government of Pakistan for the following key policy areas: Regaining and maintaining macroeconomic stability through increased tax revenue mobilisation, adjustment of fuel prices and power tariffs, improved efficiency of public spending, and strengthened government debt management. Enhancing competitiveness through reduced barriers to business entry and exit, and strengthened financial sector; and protecting the poor and the vulnerable through improved targeting of safety nets and cash transfer programmes, and strengthened statistical system. ‘PRESO is one of the three budgetary support credits that the World Bank will provide to the Government of Pakistan during the current financial year,” said Farrakh Qayyum, Secretary EAD.

 

[Neo]

Rs 46.6 billion package for Balochistan announced ​

QUETTA (March 28 2009): President Asif Ali Zardari on Friday announced a Rs 46.6 billion development package for Balochistan, and said the people and the parliament of Pakistan would ensure that the rights of the people of the under-developed province were not denied. Addressing the elders and parliamentarians of Balochistan here, the President urged the people of Balochistan to strengthen democracy.

Otherwise, he cautioned, Those, who did not do so would be strengthening those who were trying to break Pakistan or cause subversion in the province. President Zardari, who is on a two-day visit to the province, announced four water storage reservoirs at a cost of Rs 36 billion, small delay-action dams at a cost of Rs 2.5 billion, package for Quetta city for rupees three billion and transmission lines for rupees five billion. He said the people of Balochistan had a long history of struggle and with the democracy in place, all they would be able to avail of all their rights.

He said he remained fully in contact with the Governor and Chief Minister of the province to find their problems and address the issues that cropped up. The President said that political maturity was coming, as he believed that the only way forward was through democracy. He said the Pakistan Peoples Party would ensure that the people of Balochistan got their rights.

President Zardari said Balochistan was an important province and the future of the country was linked to it. He said Balochistans soil would not be allowed to be exploited for any subversive activity.

He said some people were involved in exploiting people for their own political interests. Balochistan Governor Nawab Zulfiqar Ali Magsi, Chief Minister Nawab Muhammad Aslam Raisani, Federal Ministers Qamar Zaman Kaira, Hamayun Aziz Kurd, Hayatullah Durrani, Manzoor Ahmed Watto, Raja Pervez Ashraf, Nabil Gabole, Nazar Muhammad Gondal and Prime Ministers Adviser on Interior Rehman Malik, MNA Umar George, provincial President of PPP Senator Haji Lashkari Raisani and other members of the provincial Cabinet was also present on the occasion.

 

[Neo]

Gwadar Port deal with SPA unlikely to be scrapped ​

ISLAMABAD (March 28 2009): The government is unlikely to scrap the Gwadar Port agreement with the Singapore Port Authority (SPA), fearing that the operators would drag it into international arbitration, and would claim reputation damages, sources in the Ministry of Ports and Shipping told Business Recorder here on Friday.

The Minister for Ports and Shipping, Nabeel Gabool, had announced a couple of days ago that the government would cancel Gwadars pact with SPA and hand over the port to the provincial government. "Ports are Federal territories are covered under Federal Legislative List, Fourth Schedule of the Constitution.

For giving Ports in provincial control, Constitutional Amendment is required, with 3/4 majority," said sources. If the government cancelled the contract agreement of PSA, it would effectively imply a default on the part of the GoP, which would incur compensation, to be paid to PSA, under the terms of contract agreement, as well as compensation claim for damages for reputation, which would be handled under international arbitration, they said.

According to the agreement, failing amicable settlement and/or settlement the dispute or differences or claims, as the case may be, shall be finally settled by binding Arbitration under the Rules of the Court of Arbitration of the International Chambers of Commerce by a sole arbitrator appointed in accordance with the said Rules. The place of arbitration will be London.

There are reports that Gwadar Port Authority (GPA) has also defaulted on its commitment to provide 926 hectares land for free zone area at Gwadar Rato Dero road, which is essential to start commercial operation of the port. "GPA has not protected 18,000 hectares land allotted to Gwadar Port free of cost in 1996, as was committed by the Prime Minister," sources added.

Another issue is that the previous Sindh government had demanded KPT and PQA to be handed over to Sindh government. KPT has 4,000 acres; Port Qasim has 10,000 acres and Gwadar needs 30,000 hectares. And, just like any other port, Gwadar needs road and rail connectivity.

Analysts are of the view that in the present case, it is also an attempt to seek political mileage and an attempt to pacify the angry Baloch nationalists who did not have a say in awarding contracts in the province. The Planning Commission, provincial government, and Gwadar District Nazim were fully involved from the stage of conception to construction of berths by Chinese contractors and subsequent award of contract to a world class port operator.

The Master Plan of Gwadar city, the terms of the contract with regard to it and tax holiday period were approved by the federal cabinet which was duly represented by provincial Chief Minister Jam Yousuf. It is pertinent to mention here that Prime Minister Benazir Bhutto had approved the construction of a deep-water port project at Gwadar on BOT terms for 50 years.

Other approved terms included (a) 18,000 hectares of land to be provided by the Government of Balochistan "free of cost"; (b) Wapda to provide electricity; (c) NHA to construct 895 kilometres Gwadar-Rato Dero Road and Gwadar-Karachi Coastal Highway; (d) free of cost (except development charges) land to be provided for establishing industrial ventures and warehouses and; (e) Offer of concessions comparable with those available to existing free zones in Far East to world class companies.

After military take-over in 1999, the project was, however, cancelled. While celebrating 50 years of Pak-China Friendship in 2002, China agreed to construct the port with $250 million loan on generous terms: phase-I of the project being construction of 600 meters of berths.

In 2006, tender was floated for operation of Gwadar Port, marine services and Free Zone on BOT for 40 years. After due competitive process, GPA signed an agreement with Port Singapore Authority. As per terms, PSA delegated the task to three joint venture companies: two local investors ie AKD and NLC are also the partners of PSA in Gwadar Port.

Analysts are of the view that the slow progress to get Gwadar fully functional has nothing to do with the agreements between GPA and PSA. They say that no port can function without a commercial hinterland attached to it with requisite infrastructure for domestic and transit cargo.

There are questions as to why the 2001 directive of the Prime Minister to freeze allotment of all land in Gwadar city area and transfer of all government land to the port was not implemented? Shaukat Aziz Cabinet, after due approval from President Musharraf had ordered Pakistan Navy to shift to a new location and have the earmarked contiguous area of the port transferred to GPA.

According to sources, operators are demanding, of the government, to make Gwadar port functional; that Pakistan Navy, Coast Guard lands should be handed to them; and Port Master Plan should be strictly adhered to. There are also unconfirmed reports that GPA Chairman (Adm) Saeed has caused GoP to default on Agreement terms. He refused to give Navy land to GPA, and guided Navy to build shipyard on that piece of land.

 

[Neo]

Pakistan to get $300 million IDA loan during current fiscal ​

ISLAMABAD (March 28 2009): Pakistan will get 300 million dollars from the International Development Association (IDA), the World Banks concessionary lending arm, during the last quarter of 2008-09. Of this amount, 100 million dollars will be used for higher education development policy and 200 million dollars for social protection/safety nets programme during the current fiscal year.

Pakistan has recently signed an agreement with the World Bank for IDA credit of SDR 321.3 million (500 million dollars) for poverty reduction and economic support operation (Presco). The agreement was targeted to retain economic stability, bring the economy back to as higher growth path while protecting the poor and vulnerable from adverse shocks.

The Presco is one of the three budgetary support credits that the World Bank will provide to Pakistan during the current fiscal. The IDA credit for the Presco will be repayable in 35 years with 10 years grace period. The credit will be interest-free, but only the service charges at a rate of 0.75 percent per annum on the withdrawn credit balance, and the commitment charges at a maximum rate of 0.50 percent per annum on the un-withdrawn balance, will be paid.

The Presco is a single-tranche development policy credit. The funds received under the Presco will be utilised for retaining and maintaining macroeconomic stability through increased tax revenue mobilisation, adjustment of fuel prices and power tariffs, improved efficiency of public spending, strengthening of government debt management, enhancing competitiveness through reduced barriers to business entry and exit, protecting the poor and vulnerable through improved targeting of safety nets and cash transfer programmes and strengthening of statistical system.

The reform programme, supported by this operation, is based on the governments recently adopted second poverty reduction strategy paper. Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation. The rise in international oil and food prices sharply inflated the countrys import bill and the subsequent slowdown in the global economy dampened external demand for Pakistans exports.

On the internal side, political turmoil and uncertainties affected investors confidence which, together with macroeconomic imbalances, led to capital outflows. The World Bank has already said: "With dampened external demand for its exports, an inflated import bill and low investor confidence, Pakistan needs additional assistance from the international community to restore economic stability and bring its economy back to a higher growth path."-PR

 

[Neo]

Pakistan to get aid as down payment on Americans future: US to give $1.5 billion in annual assistance for five years to build infrastructure ​

WASHINGTON (March 28 2009): US President Barack Obama vowed to intensify the fight against the Taliban and al Qaeda in Afghanistan and Pakistan as he outlined a new strategy for a conflict that began more than seven years ago but has no end in sight. Obama announced Washington will increase development aid to both countries but will hold their governments accountable for its use and implement benchmarks to ensure the money is being spent effectively.

That will include 1.5 billion dollars in annual aid to Pakistan over the next five years to build schools, roads and hospital and strengthen democratic institutions. "The American people must understand that this is a down payment on our own future, because the security of America and Pakistan is shared," Obama said. "Pakistans government must be a stronger partner in destroying these safe havens, and we must isolate al Qaeda from the Pakistani people."

Obama said he was ordering an additional 4,000 soldiers to Afghanistan to increase the effort to build up Afghan security forces on top of the 17,000 already enroute to the country this year. "We have a clear and focused goal: to disrupt, dismantle and defeat al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future," Obama said.

Obamas speech came days before he heads to Germany and France for a Nato summit, where he will present his new approach and is expected to ask allies to contribute more to the conflict in Afghanistan. Secretary of State Hillary Clinton will attend an international conference on Afghanistan in The Hague on Tuesday.

Obama made it clear that al Qaedas leadership, including Osama bin Laden and his deputy, Ayman al-Zawahiri, is hiding in Pakistan and plotting terrorist attacks on the United States and other countries, and called on the government in Islamabad to do more to deny al Qaeda refuge.

"They have used this mountainous terrain as a safe haven to hide, to train terrorists, to communicate with followers, to plot attacks, and to send fighters to support the insurgency in Afghanistan," Obama said. "For the American people, this border region has become the most dangerous place in the world," he said. "But this is not simply an American problem; far from it. It is instead an international security challenge of the highest order."

Obama launched a strategic review of the situation in Afghanistan shortly after taking office in January, and has pledged to shift US resources out of Iraq and into the conflict with the Taliban. The United States will also send more diplomatic and civilian personnel to Afghanistan to help with reconstruction and strengthen President Hamid Karzais government, which Obama said has been plagued by corruption.

The United States has been conducting periodic attacks into the mountainous tribal region of Pakistan along the border, strikes that Islamabad publicly condemns as a violation of its sovereignty. Obama provided no indication he would rein in the attacks.

"After years of mixed results, we will not and cannot provide a blank check. Pakistan must demonstrate its commitment to rooting out al Qaeda and the violent extremists within its borders," he said. "And we will insist that action be taken, one way or another, when we have intelligence about high-level terrorist targets."

Obamas troop increase will take the US presence in Afghanistan to more than 50,000 soldiers. More than 700 American soldiers have died in the war in Afghanistan since October 2001, and the heaviest toll came last year as a resurgent Taliban stepped up attacks and the security environment sharply deteriorated.

Citing the success the US military had in Iraq by reaching out to former enemies to turn them against al Qaeda, Obama said a similar strategy could be adopted with moderate elements of the Taliban. "There is an uncompromising core of the Taliban. They must be met with force. And they must be defeated. But there are also those who have taken up arms because of coercion or simply for a price," he said. "These Afghans must have the option to choose a different course."

 

[Neo]

SPI inflation 18.05 percent up over last year ​

ISLAMABAD (March 28 2009): The weekly inflation, measured through Sensitive Price Indicator (SPI) swelled to 18.05 percent on week ending March 26, 2009 over the same period of last year, according to Federal Bureau of Statistics (FBS). Figures released by FBS here on Friday showed a marginal reduction in inflation during the week.

The inflation significantly came down in the regional countries after decline in the commodity prices in the global market, but people in Pakistan could barely benefit from it owing to the prevailing market system. According to economists, people in Pakistan have least benefited from the falling prices in the global market mainly because of the market forces that never allow the market to move both ways.

The moves of the market in Pakistan, they believe, are unidirectional, which means that when the prices are on the rise in the global market their impact is immediately passed on to the consumers, but their relief in case of decline is never passed on.

They said that commodities prices declined to one-fourth in the global market, but the impact was not passed on in the domestic market. With this increase in the Sensitive Price Indicator (SPI), the dearness was recorded 19.15 percent for families having up to Rs 3000 monthly income, 19.60 percent to families bracketed in Rs 3001-5000 monthly income, and 20.12 percent for families in Rs 5001 to Rs 12000 group. The inflation was recorded 17.41 percent for families having monthly income over Rs 12,000.

The SPI bulletin, based on 53 essential commodities collected from 17 urban cities, showed that prices of 18 commodities increased during the week, 13 declined, while 22 remained stable.

The items which registered increase in their prices included chicken (farm), electricity bulb (60 watts), sugar, bananas, bread plain (middle size), lawn, voile (printed), wheat (average quality), mash pulse (washed), curd, gur, vegetable ghee (loose), mutton, cooked dal, wheat flour (average quality), cooked beef, milk (fresh) and beef.

The items which recorded decrease in their average prices during the week under review included onions, tomatoes, gram pulse (washed), garlic, potatoes, masoor pulse (washed), egg hen (farm), rice basmati (broken), rice (Irri-6), red chillies, moong pulse (washed), mustard oil and LPG (11 kg cylinder).

The items with no change in their average prices during the week under review included milk (powdered), vegetable ghee (tin), cooking oil (tin), salt (powdered), tea (packet), tea (prepared), cigarettes, coarse latha, shirting, sandal (gents), sandal (ladies), chappal, kerosene, firewood, match box, washing soap, bath soap, gas charges (up to 3.3719 mmbtu), electricity charges (1 100 units), petrol, diesel and telephone local call.

 

[Neo]

Pakistans foreign exchange reserves rise to $10.26 billion ​

KARACHI (March 28 2009): Pakistans foreign exchange reserves rose by $100 million to $10.26 billion in the week that ended on March 21, the central bank said on Thursday. The State Bank of Pakistans reserves rose to $6.79 billion from $6.69 billion a week earlier while reserves held by commercial banks were flat at $3.47 billion, SBP said.

Pakistans foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill. Pakistan expects to get another $700 million in foreign inflows this month, Shaukat Tarin, the countrys top finance official, said last week.

 

[Neo]

Economically stronger Pakistan would be in best interest of USA ​

KARACHI (March 28 2009): Founder Chairman Pak-USA Business Council and Former President FPCCI, Iftikhar Ali Malik has appreciated the role of business counterparts in USA for lobbying with the government and convincing to cut tariff on Pakistan Textiles. Malik was of the firm opinion that stronger economic ties with Pakistan would help advance Americas geopolitical goals in South Asia.

"Economically stronger Pakistan would be in best interest of USA and the whole World" also due to strategic position. Malik had the opportunity to sign agreement of co-operation between US Pakistan Business Council Washington USA and Federation of Pakistan Chambers of Commerce and Industry.

The agreement was signed by Ahmet C. Bozar and Iftikhar Ali Malik in 2001 at US Chamber of Commerce at Washington. The purpose was to encourage and facilitate the co-operation in trade investment. As a result the trade between Pakistan and USA has increased manifold. During the past years a number of business delegations from said USA Chamber have visited Pakistan led by Dr Herbert J. Davis, Esperanza Gornez Jelalian.

Bryan D. Hunt, Principal Officer, US Consulate General in Lahore made consistent efforts through contacts with Business Community to promote trade. Visits of Richard Boucher, Assistant Secretary of State for South and Central Asian Affairs to Lahore further helped to develop trade between USA and Pakistan. He hoped that Textile Sector would avail maximum benefit.-PR

 

[sohailbutt]

Oil refineries production sees over 4 per cent growth​

ISLAMABAD: The total production of oil refineries has witnessed a growth of 4.14 percent during the corresponding fiscal year 2007-08.

The total production (energy and non-energy) by the refineries during the year amounted to 11.10 million tons as compared to previous year’s 10.66 million tons, posting a growth of 4.14 percent, according to official sources.

All the refineries, except National Refinery Limited (NRL) registered increase in production during the period, while the production by Bosicor refinery was significantly higher due to its increased production capacity resulting from revamping and de-bottle-necking of crude distillation unit.

PARCO’s annual growth for the year under review stood at 3735.8 tons against the previous year’s 3586.2 tons, showing increase of 4.17 percent.

NRL could not perform well in 2007-08 as its production fell to 2585.1 tons from last year’s 2664.5 tons, registering decrease by 2.98 percent.

While, Attock Refinery Limited and Bosicor Pakistan Limited exhibited good performance by attaining 5.39 percent and 16.29 percent respectively.

Oil refineries production sees over 4 per cent growth - GEO.tv

 

[sohailbutt]

Pakistani stocks up despite militant attack in Lahore​

KARACHI: Despite a brazen militant attack on a police training centre in Lahore on Monday, Pakistani stocks rose 2.3 percent in early trade as investors took heart from moves by the government over the weekend to reconcile with the opposition.

Investors were also encouraged by the economic support promised by U.S. President Barack Obama on Friday in a strategy for countering militancy in Afghanistan and Pakistan, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index <.KSE> was up 2.06 percent, or 140.88 points, higher at 6,967.87 at 12.25 a.m. (0725 GMT).

Pakistan President Asif Ali Zardari said on Saturday he would recommend the ending of central rule in Punjab and support the return of a government led by rival Nawaz Sharif's party in the province.
&#8216;Investors are hoping for political stability as President Zardari announced end of Governor's rule,&#8217; said Shuja Rizvi, director of broking operations at Capital One Equities Ltd.

The Pakistani rupee <PKR=> was firmer at 80.42/47 to the dollar, compared with Saturday's close of 80.46/53 due to some inflows.

DAWN.COM | Business | Pakistani stocks up despite militant attack in Lahore

 

[sohailbutt]

SBP to raise Rs350bn​

KARACHI: The State Bank of Pakistan on Friday announced that it would raise Rs350 billion through treasury bills auction from April eight to June 17, 2009.

The cut-off yields on treasury bills have been slashed to below 12 per cent while the market expects further cut in the rate.

Market experts said the decline in the yields on bills would be visible after an expected cut in the policy interest rate in the monetary policy review next month.

Analysts said the local banking system had massive liquidity, which is quite surprising as banks the world over are facing liquidity crunch and the governments are pumping billions of dollars to improve liquidity.

‘Pakistan is facing a different situation. The private sector’s borrowing has hit the bottom creating liquidity glut in the system,’ said an analyst.

DAWN.COM | Business | SBP to raise Rs350bn

 

[sohailbutt]

Sindh reluctant to allow new sugar mills​

KARACHI: Eight investors have applied for NOCs to set up sugar mills in Sindh. While the government seems reluctant to grant permissions as existing mills in the province are experiencing severe cane shortage.

The province has over 30 sugar mills and NOCs to another five had already been issued in 2006-07.

Secretary of Industries Ali Ahmed Lund told Dawn that the government wanted to promote the production of white sweetener from sugar beet, which has good recovery rate and its crop takes 3-4 months to mature and requires less water.

The cane crushing season in the province ended abruptly one month ahead of its schedule due to 30 to 35 per cent sugarcane shortage and many mills suffered temporary shutdowns and while several could not operate to their full capacity.

Badin Sugar Mills, Shahbaz Qalander Mills, Kuwait Sugar Mills, Sheikh Mohammad Rashid and Company, Ajmer Sugar Mill, Sardar Mohammad Tehsin Khan Mill, Sindh Punjab Sugar Mills and Orient International Pvt Ltd have submitted applications for NOCs.

The secretary said that the ministry had not yet taken a decision on the applications, but it felt that the new units should be encouraged to base their production on sugar beet.

Sources in the ministry said that the sugarcane production could only meet requirements of 19 to 20 mills while around three dozen mills were currently operating in the province.

Meanwhile, Sindh Abadgar Board Chairman Majid Nizamani opposed the idea of setting up new sugarcane-fed mills and observed that the total capacity of the existing mills was over six million tons while the domestic consumption was below four million tons.

He said that the mills utilising total cane crop had been running at 72 per cent of their capacity and there was no need to set up new mills for 10 to 12 years.

Mr Nizamani said on experimental basis sugar beet was cultivated on 1,300 acres near Badin and it did not only give an extra ordinary high yield but it also had sugar recovery ratio of over 14 per cent.

He said that a small unit based on beet crushing was set up in Badin Taluka, but the then government whose ministers had stakes in sugar mills refused to give NOC and resultantly the unit had to be scrapped by the owner.

He said the attempt by some big shots to set up new sugar mills was aimed at grabbing huge loans in the name of industry and using them on personal luxuries.

DAWN.COM | Business | Sindh reluctant to allow new sugar mills

 

[sohailbutt]

KSE-100 Index surges beyond 7,000 level​

KARACHI: Stocks prices at Karachi Stock Exchange (KSE) witnessed a significant gain on Monday with the benchmark KSE-100 Index advancing by 212 points to finish the day at 7,015.

The Index was seen at over 7,000 level for the first time since December 22, 2008.

The President’s announcement regarding lifting of the Governor Rule in his address to the joint session of Parliament further restored the confidence of the investors who looked particularly interested in taking positions in energy and banking stocks.

Market turnover surged to 330 million shares.

Pak PTA recorded maximum activity which gained paisas 26 to Rs3.6.

Market experts say the major Index could cross the psychological barrier of 7,500 level in the coming sessions.

KSE-100 Index surges beyond 7,000 level - GEO.tv

 

[sohailbutt]

Gawadar airport land acquisition likely to be approved today​

ISLAMABAD: National Economic Council’s executive committee is all poised to give an approval for the acquisition of the land for construction of Gawadar international airport.

Finance Advisor, Shaukat Tareen will preside over the committee meeting, where 25 key-projects will be presented for appraisal and approval. These projects were not deferred despite huge cut in the annual development program.

The committee will also review 11 energy sector’s projects, which included updating of the facilities in Faisalabad, Multan, Islamabad, Lahore, Quetta and Peshawar electric supply companies, besides private sector’s six power houses’ linking with the national transmission system, electricity supply to the villages of Dera Bugti and the setting up 43.5MW and 14.4MW power houses at Muzaffarabad. Pakistan Railway project for acquiring 500 new bogies approval and water storage projects will also come under consideration for approval.

Gawadar airport land acquisition likely to be approved today - GEO.tv

 

[sohailbutt]

Weekly inflation decreases by 0.43 percent​

ISLAMABAD: The Sensitive Price Indicator (SPI) for the week ended on March 26, for the lowest income group up to Rs3000 has registered decrease of 0.43 percent over the previous week.

The SPI for the week under review in the above mentioned group was recorded at 215.61 as against 216.55 registered in the previous week, according to provisional figures of Federal Bureau of Statistics (FBS).

The weekly SPI has been computed with base 2000-2001=100 covering 17 urban centers and 53 essential items for all income groups and combined.

SPI for the combined group registered decrease of 0.34 percent by declining from 208.43 in the previous week to 207.73 in the week under review. As compared to the corresponding week of last year, the SPI for combined group in the week under review witnessed increase of18.05 percent.

As compared to last week, the SPI for the group falling in the income brackets of 3001-5000, 5001-12000 and above 12000 decreased by 0.43 percent, 0.37 percent and 0.22 percent respectively.

During the week under review average prices of 13 items registered decrease, while that of 18 items increase with the remaining 22 items' prices unchanged.

Weekly inflation decreases by 0.43 percent - GEO.tv