Pakistan Economy - News & Updates - Archive

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July-March period: LSM sector growth depicts eight percent decline​

KARACHI (May 12 2009): Large-ccale manufacturing (LSM) sector growth posted a broad-based decline of 8 percent during nine months of the current fiscal year 2008-09 as compared to 6 percent rise during the same period of last fiscal year. Economists said that greater energy crisis during last two years, rise in input cost and lower and slow domestic and external demand were responsible for the decline in production of LSM sector.

They said that global economic recession had also taken its toll on export-driven industries including textile with over 60 percent share in the country's exports, which also declined by 8 percent in current fiscal year. The export-oriented units are also difficulties in marketing due to the country's poor law and order situation, security problems, and the country's image, which affected Pakistan's exporters' and producers' ability to meet the delivery deadlines, they said.

"Although we are assuring our importers of on-time delivery, yet despite all guarantees they are hesitant in placing orders and prefer our neighbour countries," a leading exporter said. He said that on marketing side the need is that the government should launch a campaign in collaboration of export bodies to boost the country's exports. "Otherwise we are expecting further decline in the growth of LSM sector and the country's exports".

Federal Bureau of Statistics (FBS) data on Monday showed a negative trend of some 7.67 percent in the Quantum Index Number of LSM industries during July-March period of 2008-09. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depict that the production of major industries, including oil, sugar auto, textile etc, was on decline during the period.

QIM shows the industrial productivity of 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied data of 11 items; Ministry of Industries & Production supplied data of 35 items; and Provincial Bureaus of Statistics (BOS) provided data for 54 items.

Major share in present negative growth was contributed by OCAC, as its index declined by 9.19 percent to 158.76 points, Ministry of Industries index dipped by 7.69 percent to 195.46 points; and the provincial BOS index declined by 7.38 percent to 200.13 points.

During March 2009, the LSM growth posted a big decline of 20 percent agains 8 percent of February 2009. Muzammil Aslam, an economist at JS global said: "We believe lower exports and slow domestic demand led to the steep decline". He said that frequent power breakdowns, higher tariff and interest rate, and bad law and order situation also affected the production.

"Given the dismal trade numbers and decent inflation statistics, we believe substantial policy action would be required from policy makers to boost the confidence of the industrial sector," Aslam said. He said that interruptions in energy supplies and upward adjustment in the prices of electricity, gas and diesel and rupee depreciation with greater volatility also increased the cost of imported inputs.

 

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CPI inflation up by 22.35 percent ​

ISLAMABAD (May 12 2009): The Consumer Price Index (CPI) inflation surged by 22.35 percent during July-April 2008-09 against 10.27 percent in the same period of 2007-08. According to Federal Bureau of Statistics (FBS) figures released here, during April 2009, food inflation stood at 17.04 percent, whereas prices of non-perishable items surged by 16.22 percent and perishable items by 22.71 percent over April 2008.

Ten-month (July-April 2008-09) average Wholesale Price Index (WPI) inflation stood at 21.44 percent. Last year, during the same period, WPI stood at 13.7 percent. Increase in WPI-based inflation indicates further increase in retail prices of essential commodities.

CPI that covers the retail prices of 374 items in 35 major cities reflects changes in the cost of living in urban areas. According to it, in April 2009, fuel and lighting charges went up by 26.68 percent, education 23.04 percent, house rent 18.86 percent, cleaning laundry and personnel appearances 16.03 percent, recreation and entertainment 13.86 percent, medicare 13.36 percent, household furniture and equipment's 12.63 percent, apparel textile and footwear 12.34 percent and transport and communication charges increased by 8.65 percent over April 2008.

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal year (July 2007), food inflation stood at 8.47 percent, August 8.62 percent, September 12.97 percent, October 14.67 percent, November 12.47 percent, December 12.21 percent, January, 2008 it stood at 18.25 percent, February 16.05 percent, March 20.61 percent, April 25.5 percent, May 28.48 percent, June 32.05 percent, July 33.81 percent, August 34.09 percent, September 29.91 percent, October 31.67 percent, November 30.44 percent, December 27.92 percent, January 2009 21.61 percent, February 22.90 percent, March 19.73 percent, and now during April it stood at 17.04 percent.

Wholesale Price Index (WPI) stood at 8.30 percent during the month under review as compared to 23.50 percent in corresponding month of the last fiscal year. In the basket of WPI, raw materials prices went up by 18.44 percent, food 17.18 percent and manufactures by 5.15 percent while fuel, lighting and lubricants expenses were down by 4.70 percent in April over corresponding month of the last fiscal year.

The wholesale prices of tomatoes went up by 55.64 percent, vegetables 14.47 percent, potatoes 9.54 percent, gur 8.89 percent, wheat flour 7.31 percent and fresh fruits by 7.10 percent over March 2009. In raw materials, wholesale cotton price went up by 7.34 percent and cottonseed 3.23 percent, furnace oil prices up by 14.70 percent, cotton yarn 4.05 percent, other electrical goods 3.35 percent and blended yarn by 1.75 percent over March 2009.

 

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Malaysia top importer from Pakistan for July-December ​

ISLAMABAD (May 12 2009): Malaysia has emerged as the top importer from Pakistan for the first six months of the current financial year among South East Asian countries, with imports of $68.65 million. The Philippines comes second, with imports of $39.09 million, followed by Thailand with $39.01 million and Vietnam with imports of $35.01 million.

According to the data released by Trade Development Authority of Pakistan (TDAP), Malaysia is among the top 40 destinations of Pakistani exports and is on 24th position, world-wide. Data shows that Malaysia increased its world share of Pakistan's imports from 0.33 percent in July-December 2007-08 to 0.77 percent in July-December 2008-09, registering 2.5 times value ie an increase of 138 percent, compared to imports of $28.80 million in the corresponding period of last year (July-December 2007-08).

According to the data, Malaysia's imports from Pakistan included cotton fabrics, readymade garments, textiles like bedware, towels, tents and canvas bedding and mattresses, cotton yarn, knitted fabrics and synthetic textiles.

According to the Acting High Commissioner for Pakistan in Malaysia, Jamshaid Iftikhar, the substantial increase in import by Malaysia from Pakistan in the first six months of the current financial year as compared to corresponding period of last year was a reflection of confidence reposed by Malaysian businesspersons and investors on the business and investment-friendly policies of the government.

The government is taking all-out measures to root out global terrorism from its soil. Pakistan has called in its army to flush out militants from Swat Valley and adjacent areas and, in doing so, all organs of the state and people of Pakistan are working in Unison which clearly reflect the government's determination to quell militancy and confront extremism and terrorism.

According to the Commercial Counsellor in Pakistan High Commission, Majid Qureshi, Malaysia-Pakistan Closer Economic Participation Agreement (MPCEPA), which became effective from January 1, 2008, provided enormous opportunities to the Malaysian importers to forge business alliances with exporters from Pakistan, and benefit from reduced duties, taxes and procedural concessions made available to the Malaysian importers.

He said that to reap maximum benefits from high quality but competitive products of Pakistan, importers should diversify their imports by importing animals and animal products, chemicals and allied industries, tobacco & tobacco substitutes, inorganic chemicals, metals like iron, steel and copper, organic chemicals, edible preparations of meat and fish, machinery and mechanical appliances, mineral products like salt, sulphur, lime and cement, raw hides, skins, leather, and articles of stone, like plaster, ceramic products, and glass and glassware.

 

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CDWP clears 11 projects worth Rs 41.6 billion ​

ISLAMABAD (May 12 2009): The Central Development Working Party (CDWP) of the Planning Commission on Monday cleared 11 development projects, costing Rs 41.6 billion. The meeting was presided over by Planning Commission deputy chairman Aseff Ahmed Ali. The CDWP conceptually cleared the big project of "Construction and planning of Rural Access Roads" in the country costing Rs 30 billion.

The Party advised the Ministry of Local Government to negotiate aid with the development partners and prepare PC-1 for the consideration of CDWP/Ecnec. Representatives of the federal and provincial governments, and special areas ie AJK, NA, FATA attended the meeting.

Other 10 projects costing Rs 11.6 billion mainly relate to Education, Health, Information Technology, Industries & Commerce, minerals and Environment. The projects include NCHD program worth Rs 6 billion in the education sector, construction of a hangar at heliport Islamabad at a cost of Rs 349 million, two projects for Nadra in the IT sector worth Rs 482 million.

Two projects in the health sector include a 120-bed hospital for Pakistan Rangers in Karachi and establishing a 150-bed hospital in Pulandri, AJK, at a cost of Rs 591.4 million. A project worth Rs 462 million is planned for Islamabad to develop a Shahdara complex of monuments and an inland navigation project worth Rs 450 million has also been approved by the CDWP.

In the industries and commerce sector, CDWP approved Rs 411 million project Restructuring of Pakistan Institute of Trade and Development capacity building. The CDWP also directed the ministries and all stakeholders that while preparing projects efforts should be made to avoid undue expenditures on project delivery.

 

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Country's foreign assistance requirements ​

EDITORIAL (May 11 2009): Discrepancies, estimated at about 5 billion dollars, between the country's financial requirements from external sources and actual disbursements are patently evident less than two months prior to the end of the current fiscal year.

In the first quarter of 2008-09, prior to Pakistan's acceptance of the International Monetary Fund (IMF) programme that led to the 7.6 billion dollar stand-by arrangement, federal ministers as well as senior government officials were in agreement that the country's financial requirements for foreign assistance for the year were about 14 billion dollars. This assessment was supported by the IMF staff, in a press conference late November last year. The exact amount quoted by the IMF was 13.4 billion dollars.

Subsequently around 4 billion dollars has been received from the IMF under the programme. Another 1.7 billion has been released from other international financial institutions (IFIs) like the World Bank and around 500 million dollars has been received from China as budgetary support. More inflows are expected from the World Bank and Asian Development Bank before end-June.

There seems little likelihood that the shortfall will be met by the end of the financial year through either pledges already made during the Friends of Democratic Pakistan (FoDP) meeting on March 17 in Tokyo or through another assistance package from the IMF, as was indicated by the Special Advisor to the Prime Minister on Finance Shaukat Tarin prior to his departure to Washington DC. There is just not enough time for the bilaterals and the multilaterals to process a loan in less than two months. Exports are expected to be lower by four percent.

Home remittances, so far, have been good but are unpredictable in the future. And, even if we cross the hump in end-June, next year's external assistance need would be higher. The original estimates of total foreign assistance required for the year took account of the rising external current account deficit. What could be attributed to the ongoing global recession are softer commodity prices including oil and metals such as steel. This may well have worked to Pakistan's benefit. The unexpected rise in Pakistani's remittances in the current calendar year - a rise of 2 billion dollars may be due to stoppage of outflow of money for investing in the real estate in UAE.

This amount has lowered the requirements for external financing in the current year and one would assume the shortfall is about two to three billion dollars. There is evidence to suggest that hectic efforts are underfoot to convince many a bilateral and IFI to expedite loan processing and release as much money as is possible prior to the end of June - the deadline for the current fiscal year. In case this is successful our books will be balanced; but, if not, the country will experience a further reduction in Public Sector Development Programme (PSDP) and a rise in Petroleum Development Levy (PDL) in June to make up the shortfall.

If in FY2010-2011, the present falling trend in exports persists, or oil and commodity prices go up, the external financing gap could be higher. Friends of Democratic Pakistan pledge of $5.28 billion would be crucial. The division between grant and loans as well as cash and project financing needs to be in the right mix. Pakistan would need at least two billion dollars in cash grant to tide-over its external financing need in the next year. Debt servicing as a percentage of the budget needs to be kept in check.

External debt repayments as a percentage of export earnings need to show a decline. Otherwise, the uncontrolled twin deficits - budget and current account - will continue to lead to slower growth, escalating trade friction. Such a situation will cause a setback to efforts aimed at creating fiscal space for social and economic development.

 

[Neo]

Reduced imports shrink July-April trade deficit ​

ISLAMABAD (May 13 2009): Pakistan's trade deficit crossed $14 billion during the ten months (July-April) of current fiscal year due to negative growth in exports and a low decline in imports. This situation should be a wake-up call to senior government officials who had been proclaiming earlier this year that exports would increase by 10 percent in spite of the present economic meltdown.

To meet this situation challenging forecast was the rationale used by several officials of the Commerce Ministry to undertake foreign tours, costing the exchequer valuable foreign exchange.

The Commerce Ministry, which is preparing a blueprint of a three-year trade policy, had claimed in Parliament a couple of weeks ago that the exports target for the current year would be achieved, but the latest provisional trade figures, released by the Federal Bureau of Statistics (FBS), indicate that it would be very hard to achieve the target.

According to the figures, trade deficit has been recorded at $14,160,136 million in July-April 2008-09 as compared to $16,836,407 million in the corresponding period of last year, showing a contraction of the deficit by 15.9 percent.

Exports during the period amounted to $14,762,231 million against $15,222,946 million of the corresponding period of last year, indicating a decline in exports by 3.03 percent. However, imports also declined by 9.78 per cent--to $28,922,367 million (nearly $29 billion) during the ten months of current fiscal year as compared to $32,059,353 million ($32 billion) of last year.

According to the statistics, in April 2009, exports registered a negative growth of 23.92 percent, to $1,362,497 million, as compared to $1,790,809 million in the same month of last year; whereas imports declined by 31.74 percent, to $2,798,369 million against $4,099,870 million in the same month of last year. However, trade figures showed 3.76 percent growth in exports in April 2009, if compared with March 2009. In April, exports amounted to $1,363,497 million against $1,313,146 million of March.

Imports showed a growth of 18.83 percent, to 2,798,369 million, in April from $2,355,017 million of March. Trade deficit of March and April has been calculated at 37.82 percent, to $1,435,972 million, against $1,041,871 million.

Executive Directors of International Monetary Fund (IMF) commended the authorities for the progress achieved under the stabilisation program. They observed that fiscal consolidation and improved coherence between fiscal and monetary policies had helped to tackle the roots of large imbalances, while structural reforms had progressed broadly as envisaged. As a result, the exchange rate broadly stabilised; inflation had come down; and foreign reserves had strengthened.

They noted the increased risks stemming from the subdued global outlook and slower domestic activity. Weaker demand for exports and uncertainty about workers' remittances entail important risks for the external position, while tight domestic credit and dim external private financing prospects could constrain growth. The Directors also observed that political risk had risen recently.

Advisor to PM on Finance, Shaukat Tarin, in the Letter of Intent (LoI) of March 16, 2009 had given assurance to the IMF that Pakistan had recently modified cash margin requirements on letters of credit for certain imports, which resulted in non-observance of the continuous performance criterion against imposing or intensifying exchange restrictions.

"We will issue a regulation to eliminate this restriction by end-June, 2009 and, on this basis, we request a waiver of non-observance for the missed performance criterion," Tarin said. The IMF Executive Directors had accepted Pakistan's request, and granted waiver.

 

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May 12 holiday cripples Karachi's trade, industry: economic losses estimated at over Rs 10 billion ​

KARACHI (May 13 2009): Tuesday, May 12, was another day. Although heavens did not fall, the whole of Karachi city remained in a state of somnolence. It was the result mainly of the past few days' hullabaloo raised by rival political parties to observe May 12 as a day of mourning to remember the dead, and condemn the gory events of two years ago.

Indeed, the whole country is faced with more serious problems and issues than the one which was kicked up by the politicians in Karachi. What is happening in Swat, Dir and Malakand should have taken precedence over these basically regional issues. But hype was created by the politicians to draw mileage out of an event which is surely a non-issue in the present situation when the army is engaged in a big operation against Taliban.

The result of this rigmarole had been that though the strike calls had been withdrawn, because of fear, all markets and industrial areas remained closed, and industrial activity came to a grinding halt.

How badly the economy suffers could be calculated from the fact that Karachi is estimated to generate about Rs 10 billion of gross domestic products of the country per working day in an economy of Rs 12 trillion, according to Engr M A Jabbar, Chairman of Site Association of Industry (SAI), the biggest industrial estate of Pakistan.

In this loss, the manufacturing and industrial goods' share is almost half of Rs 10 billion. The revenue collections from Karachi's industrial and commercial service sectors-supported economy contributes about Rs two billion a day.

Site alone is the biggest shareholder of the gross domestic product of Karachi's Rs 10 billion economy a day, and so is the case of this industrial estate being the biggest contributor towards estimated revenue generation of Rs two billion a day.

Jabbar said he wondered why the government should seek reduction in gross domestic product of the country by excluding the economic and industrial hub from engaging into economic activities.

One could also question the wisdom of the Government of Pakistan for not taking cognisance of the situation of the reduction in revenue tax collection due to officially announced holiday by the government of Sindh. The government of Pakistan may face difficulties in managing the reviews of IMF for releases of tranches.

Reduction in tax collection against the revised targets by IMF are coming under big pressure, he said, adding that it is the government which is buying pressure by not controlling the 'forced holidays' and by not preferring to stay away from declaring public holidays without any tangible reason.

Jabbar said it was very amazing that the Sindh government is now itself declaring holidays which, to the extent of relaxing its own functioning, may not be as objectionable as it would when under the provisions of Factories Act 1934 labour department issues notification imposing holidays which are fully paid just for the reason that the government feels incapacitated to provide order in the industrial areas for safe working.

He said that industrialists had a meeting with Sindh Acting Governor Nisar Ahmed Khuhro on Monday in which it was emphasised that industry was more disturbed when holidays are extended to manufacturing in terms of Factories Act by invoking powers available with the provincial government.

He said he was apprised of the need to have some suitable amendments in the Factories Act through the powers available in the Factories Act whereby government could exempt the applicable provisions so that all holidays other than public holidays may remain immune from charge of the holiday for industrial activity.

The Governor was further apprised that he being from the party which is ruling in alliance with MQM and ANP and with no opposition political alliance, why the law and order was not improving to sell confidence to the investors. Investors have lost trust in any assurances given and they appear to be restraining themselves from making investments in the Greenfield and would stay away even from making long-term investments in the given situation.

 

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Mines and minerals in Sindh: big chunks of funds not utilised ​

KARACHI (May 13 2009): Millions of rupees, which were allocated by the Sindh government for different mines and minerals exploitation during the current fiscal year 2008-09, are likely to remain unutilised due to the unwillingness of higher authorities. According to sources the provincial government had earmarked at least Rs 2081.237 million for the development of vast coal reserves, mines and minerals during the current year for some 31 schemes.

But after nearly one year, they said, the Finance Department had released only Rs 350 million so far and only around Rs 201 million were utilised, adding that Rs 1731.237 million were not used, affecting the plans of the government. They opined that the performance of the provincial mines and minerals department is a reflection of the present democratic government that how sincere they are about carrying out development at the natural resources sites in Tharparkar district.

The sources said that Rs 498.850 million were earmarked for three major schemes that include the establishment of training institute in the field of mechanised mining/coal-based power generation in collaboration with renowned foreign institutions, introduction of improved mining practices on small scale mining sector and Shaheed Benazir Bhutto Youth Development Programme (SBBYDP).

They said that SBBYDP scheme, costing Rs 98.850 million, was still not approved due to the delaying tactics of the administrative department. The PC-I of the scheme has been submitted to the Provincial Co-ordinator of SBBYDP, but no further progress was made, they said.

However, the remaining two schemes with a cost of Rs 400 million were approved last September, but no funds have been released so far. Further, they said, Rs 1 million was allocated for the environmental impact assessment of coal-mining and coal fired power generation, but not a single penny was released due to non-settlement of tariff by Nepra.

They said that the finance department has yet to release a total of Rs 530 million for three schemes, which include preparation/up-gradation of bankable feasibility (Rs 130 million), development of open cast mining at Thar (Rs 350 million) and re-settlement and compensation for inhabitants of coal mine area (Rs 50 million).

The sources said that so far an amount of Rs 11.25 million was yet to be utilised on organising road shows to attract potential investors and international financing institutes, Rs 5.581 million on the construction of Thar Lodge, Rs 3.604 million for exploration of coal reserves in Sanghar area, one million for hydro-geological studies near Khorwah Village Mulla Hassan in Badin, Rs 6.5 million for analytical laboratory for coal and core library in Karachi, Rs 2.373 million for rehabilitation of existing accommodation at Mithi and Rs 34.925 million for construction of road from Islamkot to the airport.

 

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A strong hint of moderation in price pressures ​

EDITORIAL (May 13 2009): The latest figures on price situation released by the Federal Bureau of Statistics (FBS) suggest that though inflation is still a serious problem, the hope for easing of inflationary pressures, at least in percentage terms, stands a good chance to materialise in the near future. The CPI, SPI and WPI in April 2009 were up by 17.19 percent, 15.78 percent and 8.30 percent respectively over April, 2008.

These indices had recorded higher increases of 17.21 percent, 24.94 percent and 23.50 percent in the corresponding period of last year and of 19.07 percent, 20.10 percent and 11.08 percent respectively in the previous month over March, 2008. The notable feature of the latest monthly price indices was not only their slowdown in percentage terms but a comparatively higher deceleration in the rate of increase in WPI which is generally the precursor of trend in other indices including CPI. As such, this bodes well for future price developments in the country.

Some softening of price pressures was also discernible from the average monthly data. The CPI, SPI and WPI which had recorded average increases of 22.97 percent, 27.64 percent and 23.07 percent upto March during the current fiscal rose by a somewhat lower margin of 22.35 percent, 26.33 percent and 21.44 percent respectively during July-April, 2009 over their level a year ago. Another positive development was the slowdown in trimmed core inflation and non-food and non-energy core inflation which declined from 21.6 percent and 18.8 percent in December, 2008 to 19.3 percent and 18.6 percent in March and further to 17.6 percent and 17.7 percent respectively during April, 2009.

However, while looking at the latest price indices, it needs to be kept in mind that a higher base in April 2008 may have contributed partly to the easing of price pressures calculated in percentage terms. Such a view is confirmed by a sudden jump in all the price indices which was witnessed in April, 2008 and obviously impacted the subsequent price trends.

A higher increase of 1.41 percent in CPI and 1.68 percent each in SPI and WPI during April, 2009 over the last month as compared to the rise of 1.37 percent in CPI, 0.62 percent in SPI and 0.42 percent in WPI in March, 2009 over the previous month was also somewhat disquietening because it could be interpreted as the accentuation of price pressures rather than a reversal of the previous rising trend.

Looking at the overall picture, however, it is not very difficult to guesstimate the evolving price situation in the country. Although prices are still increasing but there are early indications of an expected deceleration in the average rate of inflation and on the point to point basis. With the continuation of the trend witnessed in April, 2009, the inflation rate during 2008-09 as measured by the average increase in CPI would be somewhere near 21 percent and could decline to a single digit during 2009-10. Such an outcome could be viewed as moderation in price pressures and would be, more or less, in accordance with the expectations of the authorities.

However, moderation or easing of price pressures should not be confused with decline in prices but should be taken to mean a deceleration in the present rate of inflation which could lead to price stability over time. Understandably, a rise of more than 20 percent in prices during FY09 would have a very negative impact on the quality of life of ordinary persons and all-out efforts need to be made to soften the blow as far as possible and ensure financial stability in future. It also needs to be remembered that stability in prices could only be brought about and sustained with the implementation of right policies both on the demand and supply side.

An appropriate mix of tight fiscal and monetary stance has to be maintained for the containment of overall demand in the economy. At the same time, GDP growth rate has to be improved to a respectable level to ensure higher level of availabilities and reduce prices. Sadly, the GDP is projected to grow by only about 2.5 percent this year which has compounded the inflationary pressures in the economy.

While paucity of credit, low saving rate, inferior quality of infrastructure and higher cost of doing business in Pakistan are the usual culprits impeding growth, there is now mounting evidence that factors like political instability, poor law and order situation and increasing militancy and insurgency on the western border have lately started playing a more dominant role in determining the level of investment and affecting the pace of development.

Needless to say, that the authorities need to give utmost attention to all these inhibiting factors to spur growth in order to contain the rate of inflation. In the meantime, let us hope that as a result of suitable policies expected from the government, the price pressures would subside to a reasonable level to provide a sigh of relief to the majority of population. Other benefits could accrue in the form of reduction in lending rates and improvement in the external sector accounts.

 

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ADB to provide $1bn for trade financing By Dawn Reporter ​

ISLAMABAD: Eleven Pakistani banks will receive $1 billion under the Trade Finance Facilitation Programme (TFFP) from the Asian Development Bank (ADB) to boost export and import trade.

The trade-financing agreements between the ADB and a large Pakistani bank will be signed on May 15, which is expected to enhance trade among the ADB member countries and to help counter declining exports.

According to the ADB, the TFFP has been devised after witnessing the lending difficulties of commercial banks due to the current global financial crisis.

An ADB official said that its Board had recently approved an expansion of the TFFP to $1billion.

The programme provides a mechanism to reduce and mitigate commercial and political risks associated with international trade among the ADB member countries, including Pakistan.

Under the programme the ADB works with the private sector to maintain and enhance trade credit to member countries by supporting imports of goods, including critical goods such as machinery, food, medicine, fuel, and inputs for export products.

The TFFP will enable ADB to provide Pakistani banks access to more trade credit lines and help develop correspondent relationships with confirming banks.

The ADB official said, ‘TFFP would also avoid the need to place cash collaterals and provide more support to importing and exporting clients.’

44 countries are members of Asian Development Bank and the bank is a regular donor for Pakistan, which has received around $18.59 billion in loans and grants since joining the ADB in 1966.During the current fiscal year the ADB was providing $1.74 billion disbursements to Pakistan, which includes $161 million worth of project loans and $645 million programme loans during the current quarter.

The ADB has expressed concern over the rising poverty level in the country, particularly in health and education sector.

The finance ministry officials said that the ADB disbursements to Pakistan were at nominal interest rates of 0.75 per cent. He said that the loans cost less than the actual amount when repaid after many years due to inflationary impact

The ADB has also pledged $200 million grants to the country at the donors conference recently held in Tokyo.

DAWN.COM | Business | ADB to provide $1bn for trade financing

 

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April trade deficit shrinks ​

ISLAMABAD: The country’s trade deficit narrowed to $1.43 billion in April, compared with $2.30 billion in April last year, Federal Bureau of Statistic said on Tuesday.

Exports stood at $1.36 billion in April this year, as against $1.79 billion in the same period last year. Imports were worth $2.79 billion compared with $4.09 billion last year.

The deficit in the first 10 months of the 2008/09 fiscal year to April, narrowed to $14.16 billion compared with $16.83 billion in the corresponding period last year, the data showed.

The change is put down to weaker fuel prices, and a lower demand for imports following the global recession


DAWN.COM | Business | April trade deficit shrinks

 

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KSE index could increase by 25pc: Credit Suisse​

Updated at: 0906 PST, Wednesday, May 13, 2009

KARACHI: Karachi stock market could see a surge in index by 25 percent, following the successes in war against terrorism.

Credit Suisse analyst, Farid Khan in an interview to a foreign agency told this. He said that a surge in the stock market could be seen, as the government has stepped up its operation against the terrorists.

Farid Khan said that Pakistan stock market index could be included in the Morgan Stanley Frontier Index, which would help in reviving the confidence of the investors.

He said that inflation has mellowed down and a further cut in the interest rate by the Central Bank was expected.

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News

 

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Trade deficit down by 15.9pc ​

Wednesday, May 13, 2009

ISLAMABAD: Pakistani economy is likely to miss one-sixth of its exports target for the outgoing fiscal.

During the first ten-month of 2008-09 only 70 per cent of the target export target could be achieved - a worrisome signal for economic health of the country.

The export target for 2008-09 was $21.1 billion. Total volume of exports during July-April 2008-09 stood at $14.76 billion, which is 3.03 per cent less than what, was recorded in corresponding period of the last fiscal ($15.22 billion), the Federal Bureau of Statistics (FBS) said on Tuesday.

During the period, economy also racked up $14.16 billion in trade deficit, however it is 15.90 per cent (or $2.67 billion) less than what was recorded in the corresponding period of the last fiscal ($16.836 billion).

According to statistical bureau, during the period under review, the economy pulled in imports worth $28.92 billion which were more than double its exports $14.76 billion.

During the same period of the last fiscal 2007-08, imports stood at $32.06 billion and exports at $15.22 billion. This depicts a 9.78 per cent decline in imports and 3.03 per cent in exports.

Depressing aspect of the data was that during April 2009, trade gap widened to $1.43 billion which is 37.82 per cent more than the trade shortfall of $1.04 billion recorded in March 2009.

During the month under review, imports up by 18.83 per cent to $2.798 billion and exports went up by only 3.76 per cent to $1.36 billion over the previous month (March 2009).

Besides, comparing trade figures of the month under review with the corresponding month of the last fiscal, in April 2009 trade gap declined by 37.82 per cent from $2.31 billion recorded in same month of the last fiscal. Exports declined by 23.92 per cent from $1.79 billion documented in April 2008 while imports were down by 31.74 per cent from what was recorded in the corresponding month of the last fiscal ($4.09 billion).

Trend of trade activities during April of the current fiscal year eggs on the prospect of slowing down the pace of burgeoning deficit as imports reduced sizably against previous months. If the current trend persists and Pakistani economic planners are able to take reasonable measures for bridging the gap, it would be very helpful to economy.

The trade deficit has pushed up current account deficit, which is still a potential threat to the economic health of the country.

 

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Ukraine to help Pakistan explore natural resources ​

Wednesday, May 13, 2009

ISLAMABAD: Pakistan is rich in natural resources and Ukraine could extend assistance for exploitation of these resources for economic prosperity of the country.

“Pakistan is rich in resources which can be made useful through research and the government of Ukraine will provide assistance in the form of research equipment,” Ambassador of Ukraine to Pakistan, Ahoor Pasco said while speaking at a programme at the National Press Club on Tuesday.

The ambassador said Ukraine will also provide assistance in terms of research on mineral resources.

Pasco assured full support of investing in technologies in Pakistan to resolve energy crisis, poverty issues and the problem of water reservoirs.

Pasco said relations between Pakistan and Ukraine were established before independence of Ukraine, which have now been very strong, adding, efforts were now being made to further promote cooperation in the defence field.

 

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Auto sales down by 47 percent​

KARACHI: The year-on-year based growth in local auto sales including cars and LCVs has declined by 47 percent to 81,143 units during the first ten months (July-April) of current fiscal. The auto sales units stood at 153,846 during the corresponding period of previous financial year.

According to the latest data released by Pakistan Automotive Manufacturers Association (PAMA), the auto sales were up 6 percent in April 2009. Interestingly, during the last two months auto sales have shown a rising trend. In April 2009 alone, auto sales have risen to 7,475 units, up 6 percent month-on-month (MoM).

However the company wise data reveales that Pak Suzuki and Indus Motor are amongst the major gainers as their sales increased by 38 percent and 24 percent respectively on MoM basis. Moreover, Dewan Motors also showed some improvement with sales up 41 percent MoM largely due to low base effect. However, Honda Atlas failed to post positive growth as their sales declined by 44 percent.

In 10MFY09, Indus Motor captured significant market share at the expense of Pak Suzuki largely on account of impressive performance of newly launched Corolla model. Indus Motor’s market share increased to 33 percent from 25 percent in June 2008 while Pak Suzuki’s market share fell to 53 percent from 61 percent. Similarly, with launch of new Honda City, Honda Atlas Car was able to capture market share of 12 percent from 7 percent earlier.

Economic slowdown, high car prices, political tensions and high rates of car financing are the key issues behind the decline in sales. In the first 10 months, car sales alone declined by 50 percent YoY with Pak Suzuki and Dewan Motor among the major losers as their sales plummeted by 55 percent and 75 percent respectively.