Pakistan Economy - News & Updates - Archive

[sohailbutt]

Govt to hold talks on TAPI pipeline project​

ISLAMABAD: The Advisor to Prime Minister on Petroleum Dr Asim Hussain would be leaving for Turkmenistan later this month to hold talks over the Turkmenistan –Afghanistan – Pakistan- India (TAPI) gas pipeline.

The government has decided that the talks over TAPI gas pipeline would continue parallel to the negotiations over Iran gas pipeline project.

Talking to Dawn, Dr Asim said that the TAPI project would not influence the Iran gas pipe line, adding that such talks would be beneficial for final negotiations with the Iranians over the price of gas.

Officials of the petroleum ministry said that Pakistan would also be floating a new business plan to Turkmenistan for a wheeling gas arrangement between Turkmenistan, Iran, Pakistan and if either Afghanistan and India would like to join it.

Officials said that Iran was already buying gas from Turkmenistan for its north eastern regions but at higher rates, and if Turkmenistan agrees to sell gas at attractive prices to Pakistan for the TAPI project, Pakistan would propose Iran to swap that gas for its pipeline project with Pakistan.

‘Such an arrangement would be beneficial for the whole region and there would not be any requirement to lay the TAPI pipeline,’ Dr Asim said adding ‘If this formula did not work the talks on TAPI was always on table.’

During the two day visit to Turkmenistan, which is to stat from April 26th , the Pakistani delegation would be participating in an energy conference and hold extensive dialogue over the TAPI project, which is pending for almost one year.

‘TAPI is a long term project and the demand for energy is growing in the region,’ said Dr Asim adding that after 10 to 15 years the imported gas from Iran would not be sufficient to meet the demands.

The Turkmenistan-Afghanistan-Pakistan project was conceived in 2002, and India joined the project at later stages but no significant progress has been made over the project.

The last meeting of TAPI steering committee was held in Islamabad in April 2008 and it was agreed that Turkmenistan would soon provide proof that it has adequate reserves to supply gas for 30 years.

The cost of the project was estimated at around eight billion dollars, ‘But the major concern for the investors was law and order situation in Afghanistan and the north western parts of Pakistan,’ sources in the Inter State Gas System told Dawn.

The ISGS was responsible to look into the Pakistani interest in the project.

Sources in the ISGS said that apart from the TAPI gas pipeline, Pakistani delegation was expected to visit Iran in May for the final phase of negotiations over the pricing of gas and ask the Iranian authorities to reduce the price of gas.

Sources said that with the indications that the US opposition to economic ties with Iran is softening, it is likely that India too would join the project again.

However, the advisor to the PM on petroleum confirmed that a team of petroleum ministry and the ISGS would be travelling to Turkey in May before visit to Iran.
‘The negotiations between Turkey and Iran over sale of gas from South Pars fields have not ended in positive note,’ he said and added. ‘The situation has now placed us in a more strong position to negotiate.’

Pakistan would be pressing the Iranians to accept the price of gas at 70 per cent of crude oil price instead of 80per cent of crude oil price as offered by them.

DAWN.COM | Business | Govt to hold talks on TAPI pipeline project

 

[sohailbutt]

Pakistan’s year-on-year inflation falls to 19 pc in March​

ISLAMABAD: Pakistan’s year-on-year inflation slowed in March from a month earlier, and analysts said stable commodity prices are likely to bring it down further and should encourage interest rate cuts.

The consumer price index (CPI), a key indicator of inflation, rose 19.07 per cent in March from a year ago, the Federal Bureau of Statistics said on Friday.

In February, the CPI rose 21.07 per cent year-on-year. CPI in March was up 1.37 per cent over the previous month.

The CPI in February was up 0.95 from January.

‘In coming months, inflation will come down to single digits because of wheat crop arrivals and stable commodity prices,’ Muzammil Aslam, an economist at KASB Securities told Reuters. ‘That should encourage policy makers to review monetary policy stance,’ he said.

Muzammil said he expected a 400 bps cut in the key discount rate in 2009, and did not rule out a 200 bps cut in a policy review this month.

Pakistan kept the key interest rate unchanged at 15 per cent in January after raising it by 200 basis points in November.

The State Bank of Pakistan, in a report issued last week, lowered its inflation forecast for the 2008/09 fiscal year (July-June) to between 19.5 per cent and 20.5 per cent from between 20 per cent and 22 per cent earlier.

It had originally forecast inflation at an average of 11 per cent for this fiscal year but it had to revise that following a surge in international oil and commodity prices last year.

Inflation was 12 per cent in the previous fiscal year.

The wholesale price index (WPI) rose 11.08 per cent in March from a year earlier, according to the data. The WPI was up 0.42 per cent over February.

Using 2000/01 as the base year, the CPI stood at 194.53 in March against 191.90 in February. The WPI index stood at 195.00 in March against 194.19 in February.

DAWN.COM | Business | Pakistan?s year-on-year inflation falls to 19 pc in March

 

[sohailbutt]

Atlas, Saudi-Pak announce merger​

KARACHI: The Atlas Bank and the Saudi-Pak Commercial Bank have decided to go for a merger after a formal approval by the State Bank.

Both the banks informed the shareholders that the boards of directors of the banks have agreed to the merger.

The merger carries some interesting facts as both the banks failed to meet the minimum capital requirement (MCR) set by the State Bank, and both have been facing losses while the year 2008 was a serious dent for their balance sheets.

At the end of 2008, the Saudi-Pak Bank showed a total equity of Rs4.319 billion while Atlas had a total equity of Rs3.657 billion.

The State Bank, which revised the requirement of MCR, had set Rs5 billion minimum capital requirement till December 2008. Now after merger, this requirement could be met through combined equities.

During 2008, banking sector’s profitability dropped by 21 per cent compared to the preceding year which suggests that banks are also going to have a hard time.

Experts believe it would not be easy to earn profits, especially for small of medium size banks in the country.

This would be the first merger of the year and also an indication that existence of even medium-sized banks is difficult under the current banking scenario which has been receiving negative impacts from the collapse of giant banks in the developed countries.

The swap ratio for the merger would be determined based on valuation by a mutually agreed firm of chartered accountants and on the results of the due diligence.

Atlas Bank, KASB Bank and KASB Capital in 2008 announced the merger of their respective operations to form a KASB-Atlas Bank.

However, despite the announcement, a deal could not materialise.

The Saudi-Pak Bank also went through many changes. On March 31, 2008, a consortium, comprising of the International Finance Corporation (a member of the World Bank Group), Bank Muscat, Nomura International and Sinthos Capital, acquired an 86.55 per cent stake in Saudi Pak Commercial Bank (SPCB) for around $213 million or $0.47 per share (PKR 29.3 equivalent per share).

The consortium, led by senior bankers Shaukat Tarin and Sadeq Sayeed, had plans to make SPCB a significant player in the local market.

This is also interesting that Shaukat Tarin who led the Consortium to acquire Saudi-Pak Bank, is now adviser to the Prime Minister on finance and the Governor of the State Bank Syed Salim Raza was one of the directors on the board of Atlas Bank in 2008

DAWN.COM | Business | Atlas, Saudi-Pak announce merger

 

[sohailbutt]

A bumper wheat crop but...​

THE wheat harvest season is under way. Thanks to a high procurement price set by the government, a bumper crop of close to 25 million tonnes is expected.

This is considered sufficient to meet the consumption needs of Pakistan and partly of Afghanistan. Taking Afghanistan’s needs into account is prudent policy, given the difficulties of controlling the movement of goods across the porous border. The past policy of keeping wheat procurement price low led to low acreage and output, creating a supply deficit, which had to be met through costly imports. The new policy pays higher prices to Pakistani farmers than to farmers abroad.

The bumper wheat crop is, however, not likely to resolve the problems of wheat or wheat flour availability and price by itself. In fact, it is likely to generate new problems that will have to be attended to before they arise. Essentially, the wheat issue will need to be treated as part of a policy package and all elements of the package will need to be planned and executed accordingly.

The immediate problem the bumper wheat crop is likely to present is one of storage capacity. Without proper storage, there is a danger of a part of the wheat being spoilt, thus reducing supply despite the bumper harvest. Secondly, a decade of economic management under the neo-liberal paradigm has eroded the government’s administrative capacity to operate the distribution system. Even today, flour price in remoter parts of the country is about twice that in the Karachi-Lahore-Peshawar belt.

The other problem is the rise in the consumer price of wheat flour. The raise in the procurement price of wheat to Rs950 per maund will provide improved prices to producers but cost consumers more as the retail price of wheat flour is likely to rise from an average of about Rs25 per kilogram currently to Rs40 per kilogram. In remote areas, the price could rise to shocking levels. The impact on the poor will be devastating.

Continuing to benefit the producer and at the same time protecting the poor will require de-linking producer and consumer prices. Managing the conflicting interests of producers and consumer is thus of critical importance.

Governments have traditionally attempted to keep wheat flour price low through the provision of subsidised wheat to flour mills with the expectation that wheat flour ground from government-supplied wheat will be sold at lower prices. However, the policy is conceptually flawed and has led to the subsidy element being absorbed as flour mills’ profit, rather than being passed on to consumers. The arrangement also has the effect of distorting the market.

Economic theory postulates that the success of an indirect input-level subsidy requires two conditions to be present for it to be passed on to consumers. One, the product must have high price elasticity of demand; two, it must be possible to segment the market. Neither of these conditions exists with respect to wheat. Wheat price elasticity is low on account of it being an essential commodity with the result that the price is largely determined by supply rather than demand factors. Moreover, since flour mills grind government-supplied as well as market-procured wheat, the necessary market segmentation does not exist. In any case, market segmentation for such a homogenous product as wheat or wheat flour is difficult.

Given that elasticity and market segmentation factors do not allow for the subsidy to be passed on to consumers, the policy of subsidising flour mills need to be discontinued forthwith and replaced with a subsidy mechanism that enables the transfer of the benefit to the consumer more directly. As with every commodity, there is a demand and a supply aspect. The supply aspect relates to the distribution network, which is available at utility stores.

Currently, however, utility stores present a host of problems. Coverage is limited, particularly in poorer areas. Procurement and financial management systems are flawed and there are pervasive complaints relating to the substandard quality of products and corruption at various levels, including the store level. All these will need to be and can be attended to. The Utility Stores Corporation is on the privatisation anvil. A traditional privatisation will see the end of the corporation, at least as far as the poor are concerned. Consideration needs to be given to retaining the corporation as a state-owned entity and privatising its management. The management technology for multi-store retail chains is fairly standard in the West and can easily be replicated. If necessary, foreign management consultants can be hired – at government expense – for the initial period.

The problem of coverage is currently being addressed by moves to increase the number of utility stores to 6,000 – at one store per union council. That number too will need to be doubled to improve outreach to consumers in all areas including those of low-population density. The cost of operating stores at uneconomic locations can be met by the government.

The utility stores can purchase all items from the market at market prices, but sell wheat flour and other specified food items, like rice, pulses, cooking oil and sugar, at separate counters at subsidised prices in specific quantities per week per ration card. The purchase-sale price differential can be paid by the government to the corporation as subsidy. Unlike in the case of subsidising the flour mills, subsidising at the retail level will not be market-distorting. The subsidy payable to the Utility Stores Corporation on both counts will be based on measurable costs and can be adequately accounted for. The necessary operational efficiency and transparency with respect to government subsidy can be achieved.

The demand aspect in this case relates to identification of the poor and their targeting. Given that over two-thirds of the population are stated to be living under $2 a day and are under economic stress, the costs of excluding the non-poor are likely to exceed the benefits of identifying the poor. It may thus be advisable to extend the provision of subsidised flour to all households, with limitations on the quantity available to each household. In other words, all households can be provided with ration cards, albeit with limited quantities of food items supplied per card. Given that the share of food expenditure for richer households is significantly low, the benefit incidence of the subsidy is likely to remain progressive.

The economic pressure facing the vast majority of the population is severe. There is the concomitant threat of a social upheaval, especially in urban centres, which can be exploited by anti-democratic forces. Managing the wheat flour regime is thus important and urgent.

DAWN.COM | Business | A bumper wheat crop but...

 

[sohailbutt]

Tax revenues​

NO one likes to pay taxes. That holds as true for Pakistan as for the rest of the world. But taxes are a necessary evil for running the state and generating resources for the common public good. A major cause of our current financial and economic squeeze is the extremely low domestic revenue collection contributing to less than 10 per cent of GDP.

Even economies comparable to ours, like those of Bangladesh, Egypt and others, have a much higher tax-to-GDP ratio. Apart from the people’s dislike of taxes, inequitable and investment-unfriendly tax policies are blocking the generation of adequate revenues for the country’s development needs. That results in a gaping fiscal deficit, an unsustainable current account gap and distortions in the credit market as the government is forced to borrow from banks to finance its budget. Apparently, the government has realised this and is all set to remove distortions and exemptions in the tax system, albeit under IMF pressure, to make it transparent and equitable.

The first major steps towards achieving the goal of self-sufficiency in domestic financial resources crucial for poverty alleviation and social and economic infrastructure development would be to broaden the existing narrow tax base and to eliminate exemptions for powerful lobbies. That would take extra burden off the manufacturing sector, the single largest tax revenue contributor, and encourage fresh investment. The second step should be to simplify tax administration and reduce the number of existing taxes to two: income tax and consumption tax in value-added mode. A report in this newspaper suggests that the government plans to replace the general sales tax with a broad-based system of value-added tax from next year. If implemented, it should help document the economy and generate more revenues. But that alone will not solve the government’s financial woes. In order to increase the tax-to-GDP ratio to 16 per cent over the next seven years, as agreed to with the IMF, it would have to ensure that all kinds of income, irrespective of origin, is taxed and all exemptions are done away with. That is where the government’s resolve to increase its tax revenues will be tested.

DAWN.COM | Business | Tax revenues

 

[sohailbutt]

Need for exploring alternative energy stressed​

KARACHI: Participants of a multi-topic international symposium have overwhelmingly demanded reversal of the privatisation of Karachi Electric Supply Company (KESC), observing that the private management has failed to enhance the utility’s power generation capacity and control line losses, which had risen to 46 per cent.

The two-day symposium held under the auspices of the Institution of Electrical and Electronics Engineers Pakistan (IEEEP) concluded on Thursday after deliberating upon various ideas for alternative energy sources.

The proposition was tabled after the chief guest, Taj Haider, a Pakistan People’s Party (PPP) leader and former senator, said that ‘the KESC is a major source of problems and something has to be done now to reverse its privatisation.”

Haider noted that the poor services being offered by the KESC had been causing huge losses in terms of industrial production for years. ‘Its privatisation has rendered thousands of people unemployed and caused untold sufferings to the teeming millions of Pakistan’s major economic and industrial hub,’ he observed.

He warned that it was going to be a very hot and dreadful summer this year because the utility had not fulfilled its promise of making heavy investment in power generation and distribution.

He emphasised the need for more public sector investment to meet national targets of power production, and said that the private sector should also be encouraged to come forward. He also called for making fresh legislation in this regard.

Haider was of the view that the problem with Pakistan was implementation of policies, and urged the government to take necessary measures to overcome the problem.

The symposium called for urgently establishing a 50MW biogas project in Karachi to support the WPP, a power plant to be established in the Gharo corridor. It also recommended that wind turbines could be utilised for lifting water and operating small submersible pump motors. All sources of renewable energy should also be encouraged, it said.

The conference recommended introduction of alternative energy and energy management disciplines in the curricula of all universities in collaboration with the IEEEP.

It called for a tariff scheme to cater incentives for energy utilisation via energy-efficient equipment. The disaster management infrastructure should trickle down to tehsil level from the federal level and the NDMA.

The forum demanded framing of regulations for measurement and monitoring and penalisation in respect of power quality at various buildings to save energy, besides harmonic distortions in power system.

Among other things, it recommended that solar energy for water heating should be utilised on a massive scale in the textile sector and that efforts should be made to start progressive indigenous production of large wind turbines and PV solar system. It also asked the government to facilitate local power production by formulating entrepreneur-friendly policies.

Pepco’s Basharat Cheema called for a ‘holistic approach’ to energy sector problems and underlined the need for public sector’s catalyst role in this regard.

He said there was a dire need for capacity building in power generation and transmission besides evolving energy conservation methods. In this context, he referred to the experiment of ‘daylight saving policy’ and made mention of the installed and projected capacity of various sources in Pakistan, including the KESC.

Earlier, speakers dealt with the wind, solar, bio-energy and other alternative power sources which, they noted ‘have suffered due to lack of government’s whole-hearted backing attributed to political and law & order concerns.’

Alternative sources of energy, especially fuelled by urban solid waste, cow dung and other residuals of agricultural produce, were also considered necessary to meet the growing energy demand not only in urban settlements but also the neglected and far-flung rural areas, where more than 70 per cent of the country’s population was without electricity, potable water etc.

The need for urgently making use of coal deposits for power generation was also emphasised, arguing that ‘the country cannot afford to foot the bill of furnace oil and depleting gas reserves.’

DAWN.COM | Business | Need for exploring alternative energy stressed

 

[Neo]

Pakistan gets Rs50m export orders for hunting arms​

Saturday, April 11, 2009

PESHAWAR: After successfully displaying arms during an international exhibition, the Pakistan Hunting and Sporting Arms Development Company (PHSADC) has got export orders worth around Rs50 million.

Talking to The News, PHSADC Chairman Nauman Wazir informed they had received orders from 11 international companies for around 5,000 guns and pistols. The development came after the company displayed arms at international exhibition IWA held in Germany in March.

“We had made arrangements for display of guns produced by Pakistani artisans in the exhibition and got a positive response,” Wazir said, adding in the three-day fair, which was the second biggest in the world after Shot Show in Florida (US), about 25 to 30 companies showed interest in the products.

He went on to say 11 companies had placed orders for purchase of 5,000 to 6,000 guns and pistols manufactured by gunsmiths of Peshawar and Darra Adam Khel arms cluster. Negotiations, he added, with some other companies were still continuing and more orders may be received.

For delivery, he said, the PHSADC had started an exercise to assess the potential of registered arms dealers in Peshawar and Darra Adam Khel. He said the PHSADC had circulated a letter asking the arms dealers to inform about their production capability to the technical experts of the company.

After that, he said, the technical experts would visit the production units to confirm the capacity of the arms manufacturers. Orders would then be given to potential dealers for the production and export of arms as demanded by the international companies.

Wazir added the company would facilitate the arms dealers in the whole process of manufacturing and exports so that foreign exchange could be earned and the gunsmiths could prosper.

He said the PHSADC was working to tap the potential of crafts and skills of the gunsmiths by opening ways for exports to international companies.

 

[Neo]

Market ripe for 3G technology ​

Saturday, April 11, 2009

ISLAMABAD: The use of technology such as 3G will not go down owing to existing recession in world economy and Pakistan’s market is ripe for moving towards launching this service keeping in view experience of other competing economies, Strategy Marketing Manager of Nokia Siemens Network, Leslie Shannon, said here on Friday.

Briefing media persons on the use of 3G (Third Generation) technology, she shared experience of comparable economies such as Morocco and Indonesia and said that the latest technology got an overwhelming response in all developed as well as developing countries. “India is also moving towards issuing a licence for 3G technologies,” she added.

Regarding expected investment in Pakistan after 3G licensing, she said that it depends on the size of the country. Citing examples, Shanon said that Indonesia received an investment of almost $1 billion for issuing five licences while Morocco got investment of around $123 million for three licences.

 

[Neo]

Country needs $110bn for infrastructure ​

Saturday, April 11, 2009

ISLAMABAD: Pakistan requires $110 billion in private sector investment for meeting infrastructure needs over the next five years.

Adviser on Public-Private Partnership (PPP) Ghulam Murtaza Satti said this during an investors’ forum organised by the Infrastructure Project Development Facility (IPDF) on Friday.

Talking to a group of investors, he said that the elected government is fully cognizant of the importance of PPP, for which the IPDF is a focal entity. He highlighted the key issues like employment generation, economic empowerment and additional use of existing infrastructure which are associated with the economic development of the country.

He said that the PPP has also got support of the international institutions like the World Bank and Asian Development Bank (ADB). Urging the investors, he assured that their concerns will be taken care of while drafting concession agreements for infrastructure projects in order to make them air tight so that these concessions should be workable and should not be affected by the change of government.

The investors appreciated the working of IPDF and observed that there should be consistency and continuity in the policies of the government and also legislation to cover loopholes. They quoted examples of the LahoreñFaisalabad road on BOT (build, operate and transfer) basis of Punjab Government and Lakpass tunnel project on BOT basis of NHA. In both the projects government backed out to abide by obligations of the government/public institutions stipulated in the concession agreements as the government changed.

The investors also quoted statement of the minister of ports and shipping regarding the cancellation of concession agreement signed between the government and Singapore Port Authorities which can affect business environment in the country.

Giving presentation to participants, the IPDF team informed about 11 projects of IPDF worth Rs200 billion that are at various stages of development and in front of investors for feedback to market these projects accordingly.

 

[Neo]

Optimistic investors push KSE up by 322 points ​

Saturday, April 11, 2009

KARACHI: In a dramatic move, the Karachi stock market was set well-above 7,500 points level again with a notable surge of about 4.5 per cent. Almost all of the blue chips closed on their upper circuit breaker on Friday.

After two consecutive negative closings the KSE 100-share Index posted a healthy recovery of 4.41 per cent or 321.98 points and finished at 7,617.96 points. Its junior partner the 30-Index rose by 4.82 per cent or 378.82 points and concluded at 8,238.26 points.

Analysts said that fall in core inflation, though it was nominal of 40 basis points, made investors optimistic about a likely cut in central bank discount rate in its April 2009 quarterly monetary policy.

On this hope, investors injected Rs90 billion in the shares business, as the overall market capitalisation surged to Rs2,290 billion from Rs2,200 billion of yesterday.

Interestingly, the foreign portfolio investors invested another $135 thousand here in Pakistani equities, according to NCCPL.

Other analysts were of the view that the continuous come back of foreign capital flight made the local investors hopeful, as they might witness a great buying rally in the days to come.

There were rumours in the market that few monopolistic brokers have plans to take market up to 8,500 - 9,000 point levels and then pull it down to make windfall profits at the cost of optimistic investors, it was learnt.

About four-and-half dozen stocks closed on their upper circuit breaker of five per cent or Re1 - whichever is higher.

Circuit hitting stocks are included National Bank, Pakistan Telecommunication Company, DG Khan Cement, Lucky Cement, Adamjee Insurance, Engro Chemicals, Fauji Fertilizer Bin Qasim, Pak Oilfields, Pak Petroleum, MCB Bank, Oil & Gas Development Company, Pakistan State Oil, Attock Refinery, Habib Bank and many more.

The day turnover declined 27 per cent to 272.940 million shares from 372.240 million shares yesterday. No trading took place in future market against 50 thousand shares traded a day earlier.

As a matter or record, market continued to hover in the green territory throughout the day and concluded very much close to intra-day high of 7,622.13 points.

Analysts maintained that the intense buying was witnessed amid expectations about lifting of 58(2b) and 17th. While high hopes from Friend of Democratic Pakistan meeting on April 17, rising international oil prices, recovery in international equity markets also changed investor sentiments to positive.

They further said that the partial resolution of circular debt; improvement in other economic indicators e.g. over one billion dollar increase in foreign exchange reserves this week and ending of political disputes have altogether made stocks market outlook shining.

Out of total 351 actives on board, 290 stocks managed to maintain in positive column, 54 stocks fell in red, while the value of remaining seven stocks closed unchanged.

Highest volumes were witnessed in Karachi Electric Supply Company at 16.958 million closing at Rs3.73 with a gain of 11 paisa, followed by NIB Bank at 16.732 million closing at Rs6.53 with a gain of 60 paisa, National Bank at 13.416 million closing at Rs101.30 with a gain of Rs4.54, Bank of Punjab at 13.090 million closing at Rs15.75 with a gain of 99 paisa, and Pervez Ahmed at 12.766 million closing at Rs8.58 with a gain of 66 paisa.

 

[Neo]

Decline in wheat production to lower GDP growth​

KARACHI: The GDP growth rate of Pakistan is expected to decline further as the wheat production target would be missed by 6.8 percent, initial estimates of wheat production show.

Federal Committee on Agriculture (FCA) on Thursday informed that initial estimates showed 23.3 million tonnes wheat production against the target of 25 million tonnes.

Any change in the agricultural productivity sends a ripple effect throughout the economy

affecting the vital macroeconomic indicators.

This decline in production is in spite of the fact that the wheat sowing target was surpassed. The government had fixed the target of wheat sowing at 8.610 million hectares, while wheat is sown on 8.749 million hectares, an increase of 1.61 percent.

“The GDP growth would further decline to 2 percent, which is the lowest in the past 38 years of Pakistan’s history,” Dr Shahid Hassan Siddiqui said while talking to Daily Times.

“There is a need of structural changes in the economy. Without introducing land reforms, one should not expect any substantial rise in productivity,” he said.

The problem on the technological front is that the yield per acre is not increasing and there is a need to establish connection between the farmers and the agriculture scientists. “Only increasing the wheat support price would not solve the problem,” Dr Shahid maintained.

The use of conventional farming methods by the farmers seems to be the most important factor responsible for low yield of crops in Pakistan. The modern technology is capital intensive and can only be adopted if adequate capital is available for the investment in farming.

The alternative is to increase crop yield per unit area, which can be achieved through the adoption of proper technology by the farmers. Any improvement made in yield of this crop will be of great help to the people of Pakistan.

Since 2000, the per annum increase in wheat production is a paltry 0.44 percent. Besides the economic dimension, there is a more important Human dimension to this problem. Since our population growth rate is approximately 2.3 percent, the consequences for the food security can be grave given this dismal growth rate. Pakistan ranks 61 out of 85 countries in the 2008 Global Hunger Index.

The 2008 global hunger index report comes at a time of dramatic changes in World food markets, with high food prices threatening the food security of millions of vulnerable households.

Federal Minister for Food and Agriculture, Nazar Mohammad Gondal said that these are initial estimates and expressed the hope that production of wheat might be increased with final estimates arriving after harvesting.

 

[Neo]

Trade deficit drops by 12.51%​

ISLAMABAD: Pakistan’s trade deficit declined by 12.51 percent during first nine months July-March period of current fiscal year 2008-09 with total deficit at $12.709 billion against the deficit of $14.527 billion in same period of last fiscal year 2007-08.

According to provisional figures released by Federal Bureau of Statistics, Pakistan’s exports have registered a negative growth of 0.13 percent during July-March period of current fiscal year 2008-09 with total exports at $13.414 billion as compared with $13.432 billion in same period of last fiscal year.

Country’s imports also witnessed a decline of 6.56 percent during the July-March period of ongoing fiscal year with total imports at $26.124 billion as against the imports of $27.959 billion in same period last fiscal year.

March 2009 over March 2008: Country’s merchandise exports totaled $1.313 billion during March 2009 as against the exports of $1.771 billion in March 2008 projecting a decline of 25.88 percent. Similarly, imports of the country declined by 38.38 percent in March 2009 with total imports at $2.355 billion as compared with imports of $3.821 billion in March 2008. Trade deficit during March 2009 totaled at $1.041 billion as against the deficit of $2.049 billion in March 2008 indicating a decline of 49.18 percent.

March 2009 over February 2009: The exports of the country witnessed an increase of 3.71 percent in March 2009 with total exports at $1.313 billion as compared with exports of $1.266 billion in February 2009. Imports registered a growth of 10.91 percent in March 2009 with total imports at $2.355 billion as compared with imports of $2.123 billion in February 2009. Trade deficit amounted to $1.041 billion in March 2009 against the deficit of $857.247 million in February 2009 projecting an increase of 21.54 percent.

According to an official analysis, the textile industry, which has remained the major driver of the export growth once again, depicted sluggish performance and it registered negative growth. This downward trend in the textile sector is contributed by both significant fall in the unit value of almost all major textile items and supply constraints reflected through negative growth even in quantity terms. The share of textile sector has declined from 58.8 percent last year to 53.2 percent this year and it is persistently posting negative growth for some time. The product and market wise diversification is the need of the hour. Notwithstanding, good growth in non-traditional sector, country still needs to look into the structural problems of the textile industry. The January figure of exports is not representative as the pass through of global melt down is yet to be seen.

The growth in imports reflects impact of substantial fall in oil and food imports in monetary terms, and these two items were responsible for 80 percent of additional imports bill last year. Import compression measures coupled with massive fall in international oil prices have started paying dividends and imports witnessed marked slowdown during the last two months.

Notwithstanding the recent dramatic fall in the prices of crude oil in the international markets, the petroleum is still depicting positive growth of 9.2 percent and adding $581 million to the additional import bill over last year’s petroleum import. The monthly import bill on account of petroleum has lost one-third of its value. The additional import bill during the period July-February 2008-09 on account of petroleum and wheat was just above the $1.0 billion. This massive addition is neutralized by massive negative contributions from non-food and non-oil imports.

 

[Neo]

‘Thar Coal and Power Technical Assistance’: WB body to consider $26 million aid for Pakistan on 22nd​

ISLAMABAD: The executive board of the World Bank (WB) will consider Thar Coal and Power Technical Assistance worth $26 million for Pakistan in its meeting scheduled for April 22, 2009.

According to the Monthly Operational Summary for the month of April based on status as of March 15 on proposed lending programme of the WB for Pakistan. WB would hold consultation in first phase on the proposed programmes and projects and their approval is subject to the clearance by WB Pakistan office and executive board at final stage.

Thar Coal and Power Technical Assistance worth $26 million will help Pakistan and the Sindh province strengthen the enabling policy, legal and regulatory frameworks conducive to new investments in the coal-to-energy sector.

The project also aims at assisting the governments of Sindh and Pakistan to attract qualified private investors to develop Thar coal deposits and build new capacity for coal thermal power generation, guided by high standards of environmental and social sustainability.

Education: Higher Education Support Programme worth $100 million from International Bank for Reconstruction and Development (IBRD) is also in the pipeline to support the government of Pakistan’s higher rducation medium-term development framework to foster public-private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country.

Sindh Education Reform: The objectives are to improve participation, retention and transition rates, reduce gender and regional disparities, and improve quality in elementary and secondary education (grades 1-10).

Energy and mining: Mineral Sector Technical Assistance worth $50 million is for implementing a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources.

Information and communication: Rural Telecommunications and e-Service project worth $124 million from IBRD to: (a) accelerate access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, (b) strengthen legal, policy, regulatory and spectrum management and (c) monitor functions and expansion of e-services. Project preparation is underway.

Law and justice: Second Sindh Structural Adjustment project worth $100 million aims at implementing reforms to improve fiscal and financial management, governance, public service delivery, and the state’s regulatory framework. Project preparation is underway.

Social protection: Support to Safety Nets project worth $50 million is to support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes. Project preparation is underway.

Transportation: National Trade Corridor Improvement Programme worth $200 million from IBRD is also under consideration aiming at enhancing export competitiveness by reducing the cost of trade and transport logistics and bringing service quality to international standards. Project preparation is underway.

Urban development: Punjab Large Cities Development Policy project worth $100 from IBRD is also in the pipeline. The objective is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery. Project preparation is underway.

Water and sanitation: Second Punjab Barrages Rehabilitation and Modernization worth $120 million from IBRD is under consideration. The objective is to prevent the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. Decision meeting scheduled for June 1, 2009. staff report

 

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‘Surgical exports can increase’​

ISLAMABAD: Exports of surgical instruments can be enhanced from existing $260 million to $1 billion in three years if the government resolves the problems with regard to certification and duty drawback. A six-member delegation of Surgical Instruments Association of Pakistan called on the Federal Minister for Commerce Makhdoom Amin Fahim Friday and discussed with him issues hindering the exports of value-added goods. President of the association, Amjad Ali Cheema led the delegation and assured the federal minister that the industry is currently exporting $260 million, which can go up to $1 billion in three years.

 

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White House asks Congress to approve $1.8 billion aid for Pakistan​

WASHINGTON (April 11 2009): The White House has asked Congress to approve $1.8 billion to bolster Pakistans economic development and counter insurgency capability as well as support the US diplomatic operations in the key South Asian country. The amount is part of an $83.4 billion supplemental spending request for financial year 2009 that President Barack Obama Thursday sent to Congress to fund his administrations strategies in Iraq, Afghanistan and Pakistan through the summer.

According to White House Office of Management and Budget, $1.4 billion is for economic assistance for Pakistan, and to support additional civilian personnel, more secure infrastructure, and diplomatic operations under international assistance and stabilisation activities.

The document says $0.4 billion will be dedicated to building the counterinsurgency capabilities of the Pakistani security under support for coalition partners. Besides, some humanitarian assistance will also be allocated for Pakistan, according to the document.

"We face a security situation in Afghanistan and Pakistan that demands urgent attention. The Taliban is resurgent and al Qaeda threatens America from its safe haven along the Afghan-Pakistan border," President Obama wrote to Speaker of the House of Representative, Nancy Pelosi, in a letter while urging quick Congressional approval for the request.

"With that reality as my focus, today I send to the Congress a supplemental appropriations request totalling $83.4 billion that will fund our ongoing military, diplomatic, and intelligence operations."

Nearly 95 per cent of these funds will be used to support American ongoing operations in Iraq and Afghanistan where it seeks to disrupt, dismantle, and defeat al Qaeda along Pakistan-Afghanistan border. The rest of the money will fund a variety of defence and international efforts that will help to use all the elements of American power to confront security threats.