Pakistan's Economy - News and Updates

[ejaz007]

Mobilink registers double-digit growth in Q1

KARACHI: Mobilink has posted strong revenues, higher EBITDA and increasing subscriber base in the first quarter of 2010 as compared to the same period last year.

According to the results published by OTH, Mobilink subscriber base increased by 11.8 percent, closing at 31.6 million at the end of Q1 2010. Mobilink EBITDA reached Rs 9 billion, representing an increase of 20 percent over the same period last year and reflecting an EBITDA margin of 38.9 percent versus 35.8 percent in Q1 2009. Mobilink closed the first quarter of 2010 with revenues of PKR 23.1 billion showing a YoY increase of 10.5 percent.

Commenting on the results, Khaled Bichara, Group CEO, OTH shared that Mobilink has shown healthy revenue growth in comparison to Q1 of 2009 thanks to an increased number in subscribers. Orascom Telecom continues to remain focused on delivering innovative and high quality services to over 96 million customers across the globe, Bichara added. Expressing satisfaction on the results, Rashid Khan, Mobilink President and CEO, shared, “At a time when the market is approaching saturation point, I am pleased to share that our base is continually growing. staff report

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

Release of $1.2bn 5th tranche: IMF board to take decision today
By Sajid Chaudhry

ISLAMABAD: The International Monetary Fund (IMF) executive board is scheduled to meet today (Friday) to decide the release of the 5th tranche of $1.2 billion for Pakistan under Stand-By Arrangement (SBA) loan programme.

The release of IMF tranche would also help restore the confidence of the World Bank and Asian Development Bank (ADB) as both the lending agencies require Pakistan to get Letter of Comfort from IMF for obtaining any new loan.

Non-implementation of some of the performance criteria agreed with IMF especially power sector reforms has already delayed the approval of WB’s $6.5 billion Country Assistance Strategy for Pakistan.

Apart from meeting the budget deficit target of 5.1 percent of the gross domestic product (GDP) agreed with IMF authorities, the most contentious issues that are likely to come under discussion are enforcement of value-added tax (VAT) from July 1, 2010 as well as increase in power tariff by 6 percent to meet the financial requirements of the power generation companies, an official informed.

The government has already announced to raise power tariff by 6 percent to bridge the Rs 8 billion financial gap of power companies but no date has been fixed for its applicability, however, dispute over VAT on services between federal government and Sindh still needs resolution.

Federal government has already met a key conditionality of the IMF authorities of laying of VAT legislation before the National Assembly and four provincial assemblies, however, conflicting views of the Sindh and federal government on the subject would have impact on the programme, the official sources added.

Economic managers of the country, without taking into confidence the province of Sindh, had committed with the fund authorities for enforcement of integrated VAT regime on goods and services with collection right to the Federal Board of Revenue. However, Sindh has strongly agitated this move of the economic managers and informed the economic team sitting at Islamabad that Sindh would not allow, in any case, FBR to collect VAT on services.

Some 23 days are left in the announcement of the federal budget and federal as well as Sindh government have not been able to settle the VAT on services dispute.

To settle this dispute, Sindh has proposed a mechanism for implementation of VAT regime to the federal government under which, the province of Sindh thinks, would be acceptable to the IMF authorities, said the official.

The proposal submitted by Sindh proposes mechanism under which supply chain would remain intact, there would be no difficulty in input tax adjustment on both goods and services, and difficulties of dual registration could be avoided. This mechanism would meet the requirements of the integrated VAT enforcement on both goods and services, in return, Sindh has asked the federal government to allow it to collect VAT on services.

Federal government has not responded on this proposal till date and it is likely that the federal government may seek IMF’s response over the proposal and then decide to accept or reject it, added the official.

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

Pak to receive 5th IMF tranche on May 18
Updated at: 1400 PST, Monday, May 17, 2010


KARACHI: The Finance Ministry said it would receive $1.13 billion released by International Monetary Fund (IMF) as fifth tranche of loan sanctioned to Pakistan on May 18, Geo News reported Monday.

Talking to Geo News, the Foreign Ministry said the foreign exchange reserves will bulge beyond $16 billion after the fifth IMF tranches is received here, which will add up the total amount received from the IMF to $7.27 billion.

Government of Pakistan resorted to the world body for loan to whittle down the fiscal and current account deficits; under which, the Fund approved $11.3 billion for the country.

It should be mentioned that the government and the Fund officials reached consensus that the remaining $4.03 billion in loan amount would be released in two tranches not three.

Pak to receive 5th IMF tranche on May 18

 

[bc040400065]

Economy expands 4.09pc in FY10

By Kalbe Ali
Wednesday, 19 May, 2010


ISLAMABAD: The National Accounts Committee (NAC) on Tuesday noted that the country’s real gross domestic product (GDP) grew by 4.09 per cent in 2009-10 against the target of 3.3 per cent.
According to the figures presented to the NAC, the overall manufacturing sector performed well and recorded a growth of 5.1 per cent this fiscal year compared with negative growth of 3.7 per cent in 2008-09.
The Large Scale Manufacturing (LSM) expanded by 4.3 per cent in 2009-10 against the negative growth of 8.2 per cent the previous fiscal year.

The NAC meeting was held in the Planning Commission Auditorium and chaired by the deputy chairman Planning Commission to review the performance of the key sectors.

The committee was informed that the latest figures showed electricity and gas consumption recorded a growth of 7.8 per cent in 2009-10.

The per capita income had been determined at Rs35,216 on constant prices while the per capita income based on current prices would be determined in few days, an official of the Planning Commission said.

The meeting was informed that the overall agriculture growth had been estimated at two per cent in 2009-10 compared with four per cent growth in 2008-09.

However, the major crops recorded a marginal negative growth of 0.2 per cent in the current fiscal year compared to 7.3 per cent growth last fiscal year.

Similarly minor crops also witnessed as negative growth 1.2 per cent in the ongoing fiscal compared with negative growth of 1.7 per cent in the last fiscal year.

However, production in the livestock sector rescued the agriculture sector and livestock production had been recorded at 4.1 per cent compared with a positive growth of 3.5 per cent 2008-09.

The construction sector witnessed growth of 15 per cent against the negative growth of 11.2 per cent in the last year.

The services sector which had been a key contributor to GDP growth for several years posted a growth of 4.6 per cent in 2009-10 compared with 1.6 per cent growth in 2008-09.

DAWN.COM | Business | Economy expands 4.09pc in FY10

 

[Hasnain2009]

Per capita income climbs to $1,102 in 2009/10 ​

Size of Pakistan’s economy peaked to $176 billion

Friday, May 21, 2010
By Mehtab Haider

ISLAMABAD : Pakistan’s per capita income climbed to $1,102 per person for around 160 million population during the financial year 2009/10, a level which was achieved by the country in 2007/08, but slowdown in economy resulted into falling down of this crucial indicator during the last two years, The News learnt on Thursday.

The per capita income is going to be released officially along with the upcoming Economic Survey, which will likely to be unveiled on June 3, officials said.

The size of the economy peaked to $176 billion for the financial year 2009/10. In rupee terms, the size of Pakistan’s economy stood at Rs14.688 trillion, they said.

The slowdown in economy slashed down the GDP growth, which remained in the range of 1.2 per cent for the last financial year in accordance with the final estimates approved by the National Accounts Committee.

The slowdown of GDP growth, as well as population growth on higher side resulted into getting almost stagnant per capita performance during the last two years, the officials said.

By the end of 2007/08, the per capita income was $1,102 per person and now again it was going to touch the same level by the end of the outgoing financial year 2009/10, they said.

On other side, the real purchasing power of the people eroded rapidly as inflation on an average crossed 55-60 per cent during the last three years, making lives of the people miserable, the officials said.

According to the working done by the Federal Bureau of Statistics (FBS), the country’s per capita income stood at Rs 91,500 in rupee terms and by taking exchange rate at an average of Rs83 against a dollar the per capita income climbed to $1,102 per person.

The revised GDP growth figures of 1.2 per cent for the last financial year against the initially set target of 2 per cent slashed down the final figures of the per capita income to $1,018 per person from $1,071 per person for 2008/09.

Population growth was 1.9 per cent per annum and the real GDP growth stood at 4.09 per cent, pushing up the per capita to cross $1,100 per person, the officials said.

The per capita income is treated as one of the major indicators suggesting the depth of growth and general well-being of any country.

The per capita income, defined as gross national product at the current market price in dollar terms divided by the country’s population, has witnessed an upward movement at an average rate of around 13 per cent per annum during the last five years, rising from $586 in 2002/03 to $926 in 2006/07 and further to $1,085 in 2007/08, initial estimates show.

According to the final figures of 2007/08, per capita income increased to $1,102 per person.

Real per capita income in rupee terms on an average surged by 4.7 per cent during the last five years. It grew by 4.2 per cent during the current year against 4.8 per cent last year.

 

[bc040400065]

KSE sees more losses as panic sell-off continues
Published: May 22, 2010

KARACHI - The stock market saw more losses on the last day of week and panic sell-off continued as local investors preferred to off-load their holdings ahead of budget; sending the KSE 100-index to a two-and-a-half month low following a sell-off in regional markets.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 1.22 percent, or 122.24 points, to 9,871.16 points on turnover of 74.73 million shares.
The KSE-index ended at 9,784.98 points on March 10.
On the other hand, the KSE 30-index closed at 9922.16 with a loss of 159.46 points. The KMI 30-index closed at 15013.98 with a loss of 240.77 points. All shares index closed at 6938.65 with a loss of 80.22 points. Trading activity was better as compared to the last trading session as the ready market volume stands at 74.734m as compared to last trading session 66.313m. Future market volume, however, stands at 3.527m shares as compared to 2.280m shares last trading session.
Market capitalisation stands over Rs2.783tr. Total trades increases to 53,483 as compared to last trading session 47,761. Some 138 companies advanced, 226 declined and 24 remained unchanged.
Intense selling continued as Asian markets drop over European debt crisis.
Fall in international oil prices near to $67, global capital markets fall, uncertainty over next monetary policy stance and foreign selling played a catalyst role in negative activity at KSE despite intra day support by state-run mutual funds, said Ahsan Mehanti, Chief Executive Officer at Shahzad Chamdia Securities.
Highest volumes were witnessed in LOTTE at 13.547 million closed at Rs9.70 with a loss of Re0.03 followed by AHSL at 4.736 million closed at Rs40.46 with a gain of Re0.94, JSCL at 3.448 million closed at Rs15.00 with a loss of Re0.04.
Loud sell-off continued right from the word go thus shattering away even the prospective buyers who have been eyeing index level for making an entry, thus forcing low volume price erosion, although the events like such have stayed a prominent feature in previous session, intensity was indeed high on the last session of the week.

KSE sees more losses as panic sell-off continues | Pakistan | News | Newspaper | Daily | English | Online

 

[bc040400065]

Rs601bn proposed for development budget
By A Reporter
Saturday, 22 May, 2010

ISLAMABAD: The Annual Plan Coordination Committee has recommended Rs601 billion for development budget for the next fiscal year — Rs280 billion for the federal Public Sector Development Programme and Rs321 billion for the provincial Annual Development Plan.
Deputy Chairman of the Planning Commission Dr Nadeemul Haq, who presided over a meeting of the APCC, said the recommendations for the 2010-11 development outlay were in line with the finance ministry’s Medium-Term Development Framework 2010-13.

The total demand of federal ministries and departments was Rs321 billion, but because of financial constraints the committee proposed Rs280 billion for the federal PSDP.

The proposals will be sent to the National Economic Council which meets on May 28.

The APCC proposed 49 per cent allocations for ongoing projects in the social sector and 47 per cent for projects in physical infrastructure.

Dr Nadeem said there was a need to prioritise the projects because of less fiscal space available in the current PSDP. “In order to avoid throw-forward projects, innovative financing for development projects like public-private partnership and build, operate and transfer modes may also be explored to reduce burden on the PSDP,” he said.

The Planning Commission’s chief economist presented the economic outlook and said that the main objectives of the Annual Plan 2010-11 were to revive the crop sector and put the manufacturing sector on a high growth path.
The meeting was informed that the country had achieved 4.1 per cent GDP growth rate during the current fiscal year, exceeding the target of 3.3 per cent.

The growth in agriculture sector stood at two per cent, large-scale manufacturing at 4.4 per cent, industrial sector at 4.9 per cent and services sector at 4.6 per cent.

The GDP growth for the next fiscal year has been projected at 4.5 per cent, with the growth in agriculture sector at 3.8 per cent, manufacturing at 5.6 per cent and services sector at 4.7 per cent. Inflation has been projected at eight per cent.

The meeting was attended by federal secretaries and provincial planning and development ministers and finance secretaries.

DAWN.COM | Front Page | Rs601bn proposed for development budget

 

[xenia]

Manufacturing gains momentum​

By Mohiuddin Aazim

THE growth in large-scale manufacturing is gaining momentum because of the rising export, increasing domestic demand and low base effect.
Large-scale manufacturing (LSM) grew 4.36 per cent in nine months of this fiscal year against 7.6 per cent decline seen in the same period of the last year. Full fiscal year growth looks set to hit five per cent—despite gas and electricity shortages and high interest rates—against last year’s contraction of 8.2 per cent.

The huge decline in LSM growth in FY09 provided a low base to facilitate handsome growth this fiscal year .But the first half of the year saw no major signs of it while a fragile recovery was reported in October-December 2009. Large-scale manufacturing actually accelerated from January 2010 on the back of a gradual pick-up in international demand and export recovery. A higher growth in the economy and the resultant rise in domestic spending also fuelled demand for industrial goods.

“Primarily, LSM growth has been driven by an early and strong recovery in auto sector,” says Mr Zubair Tufail, former vice president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI). “Higher agricultural income in the last two years on the back of improved support prices of crops created auto demand in rural and semiurban areas,” he says. Auto sales have also been helped by bank financing since the second quarter.

Banks almost stopped offering fresh auto loans last fiscal year amidst a slowdown in domestic economy that had fattened their bad debt portfolios. They removed the cap on auto and other consumer loans after the State Bank of Pakistan relaxed rules for loan provisioning.

In addition to autos, cement, chemicals, cotton ginning and fertiliser companies also showed marked growth in the first three quarters of this year. Output of other major industries like those of electrical and electronic appliances, agricultural machinery, power looms, leather, cooking oil and medicines also went up.

Still LSM growth is not very broadbased as producers of sugar, cotton yarn, petroleum products and iron and steel materials continue to report a declining trend in output. Production of cement, chemicals, ginned cotton and fertilisers etc have risen primarily because of low base effect. Future outlook for industries largely depends on whether exports growth seen so far would sustain and whether domestic economy would accelerate fast enough to continue to push up corporate and household incomes.

“Industrial performance continues to remain tied up with exports to a large extent as we have not fully developed vibrant domestic markets,” says a central bank economist involved in industrial analysis. “But for the last few years a change for the better is taking place. Agricultural machinery and implements, electrical and electronic items, and of course, autos, all these industries cater to domestic markets. I think other industries also need to penetrate more into domestic markets without which a sustainable growth in output is not possible.” While businessmen generally buy the idea of promoting industrial output through development of efficient domestic markets, they point out that the government has so far not taken up this issue seriously. “There is enough potential for developing domestic markets for low to medium value-added products while our exporters need to switch over to higher value-added products,” says a former chairman of Export Promotion Bureau (now TDAP) who is himself a businessman. But he laments that developing domestic markets require a lot of spadework in areas like legal framework, taxation, competition environment, infrastructure and interprovincial harmony, etc.

How much the government has been serious in undertaking such spadework is evident from the way it dilly-dallied re-promulgation of the Competition Commission of Pakistan Act and the manner in which powerful lobbies were allowed to defy the rulings of CCP on charges of cartelisation and business malpractices.

Businessmen say that sustainable LSM growth is not possible without exports becoming more competitive in the world markets. On this front too, the situation is far from encouraging. So far this year, exporters have not been facilitated through Competitiveness Support Fund.

But most of them are upbeat about the future outlook of large-scale manufacturing. They say that the strategy to involve sugar mills in electricity production through captive power plants, recent commissioning of some power generating units, the coming into operation of rental power plants and the campaign launched to conserve gas and electricity would help industries overcome power shortages from the next year.

Besides, the high interest rates may begin sliding from the next fiscal year as the efforts being made to contain deficit financing through inflationary borrowings start bearing fruits. “If energy crisis is taken care of and the interest rates start coming down from next fiscal year, I foresee even better LSM growth in the years to come,” commented Zakaria Usman, VicePresident of the Federation of Pakistan Chambers of Commerce and Industry. But, he said, the implementation of value-added tax in a hurry might create inflationary pressures.

Large-scale industrial production would accelerate further if the government comes up with a comprehensive plan to establish linkages between LSM and downstream smallscale manufacturing units and implements it with effective support of the private sector. “This would result in higher efficiency of both large and small scale industries and cut import bills as well,” said a senior executive of a chemicals’ manufacturing unit in Karachi. “Innovative thinking on the part of private sector is also important.” Citing an example, he said, a small denim manufacturer who was on the verge of losing business last year used a portion of the junkyard of his factory in North Karachi industrial zone to construct residential quarters for his skeleton staff. “The result is that production does not suffer due to bad law and order in the city and the resultant drop in workers’ turn-out.”


Dawn ePaper

 

[farhan_9909]

very very very good

after passing through such a tough time we are again rising

INSHALLAH one day we will again achieve the 8.4% economic ggrowth rate of 2004-05

 

[xenia]

Economic stability taking hold in Pakistan: IMF ​

Wednesday, 26 May, 2010

ISLAMABAD, May 25: Pakistan’s economy is getting back on an even keel after a balance of payments crisis 18 months ago but it remains vulnerable to shocks and a risky market for investors, according to the IMF’s representative in Islamabad.

Political uncertainty, chronic insecurity and a budget deficit inflated by spending to tackle Taliban militancy were all threats to recovery, but the outlook was far brighter than when Pakistan was on the brink of default in 2008, said Paul Ross.

“In terms of the economy, stabilisation seems to be taking hold ... progress has been made,” he said in an interview on Tuesday.

Pakistan turned to the International Monetary Fund for an emergency package of loans in November 2008, when inflation was 25 per cent, central bank reserves were the equivalent of just one month of imports and the current account deficit had widened to 8.5 per cent of gross domestic product for fiscal year 2007-08.

Now, inflation has dropped to 13 per cent, reserves are four months of imports and the current account deficit is set to be around 2-3 per cent of GDP this fiscal year ending June 30.
Even among risky “frontier markets” Pakistan is seen as too long a shot for many investors due to its insecurity, poor governance, corruption and crippling power shortages.

Indeed, foreign direct investment (FDI) has almost halved over the past year, standing at just $1.77 billion in the first 10 months of the fiscal year 2009-10. In Vietnam, by comparison, the government expects FDI of $10-11 billion in 2010.

However, there has been an upturn in foreign portfolio investment as the economy has improved, with net inflows into the stock market of $508.7 million in the first 10 months compared with an outflow of $392 million in the year-earlier period.
Ross pointed to a narrowing of the spread on Pakistan’s sovereign CDS, used to insure against sovereign debt default, as a signal of returning confidence in Pakistan’s economy.

The 5-year credit default swap spread started to drop steadily at the end of February from levels above 900 basis points. It dropped as low as 675 this month before rising again in line with global trends as Eurozone tremors spooked markets.

It was at 750 on Tuesday.

“The security situation adds to uncertainty, which investors don’t like, but if the economic stability deepens further I would expect CDS spreads to come down some more,” Ross said.

The IMF agreed this month to release a fifth tranche of the $11 billion loan agreed in 2008 after Pakistan sought a waiver on some of its targets, including for the budget deficit, which the government has targeted at 5.1 percent of GDP for 2009-10.

The government’s initial forecast for the budget deficit was 4.9 per cent of GDP for fiscal year 2009-10.

The government, which will unveil its budget for 2010-11 on June 5, is now expecting GDP growth of 4.5 per cent for the next fiscal year starting July 1.

The government is expecting 4.1 per cent GDP growth for fiscal year 2009-10.

However, Ross said a rise to the Asia emerging markets growth rate of 8 per cent will require a leap in the tax-to-revenue rate, which is just 9 per cent of GDP. Plans for a value-added tax face significant opposition and there are currently fewer than 2 million taxpayers from a population of 170 million.

This leaves no domestic cushion for the government in the case of an economic shock, constantly forcing it to look externally for assistance, and it limits the resources available for investment in health, education and infrastructure.—Reuters

DAWN.COM | Front Page | Economic stability taking hold in Pakistan: IMF

 

[xenia]

Govt may miss fiscal deficit target ​

By Shahid Iqbal
Tuesday, 25 May, 2010


The SBP expressed doubt that the Federal Board of Revenue could achieve the target of Rs1,380 billion as it needed to collect Rs354 billion over the next two months while the monthly average collection was Rs102 billion. — File Photo

KARACHI: The State Bank has expressed fears that the government may miss even the revised target of fiscal deficit for the current year.

In the Monetary Policy statement for the next two months issued on Monday, the SBP has taken a critical view of the government’s heavy borrowing from the State Bank and scheduled banks.

“There is a risk that the government may miss the revised fiscal deficit target of 5.1 per cent of GDP, which will be inconsistent with the objectives of macroeconomic stability,” the statement said, adding that further deterioration of the fiscal account would have consequences for debt sustainability and the external balances.

The central bank decided to keep the policy discount rate unchanged at 12.5 per cent in the wake of rising inflation.

It said persistent borrowing from the banking system for budgetary support coupled with expected borrowings for commodity operations during the fourth quarter of the financial year was jeopardising the space for private sector credit, causing inertia in market interest rates, running the risk of excess domestic credit creation and increasing the debt burden of future generations.
For the third quarter of the current fiscal the government breached its quarterly borrowing limit from the SBP by about Rs30 billion.

The government borrowing increased to Rs1,310 billion (on cash basis) on May 14 against the end-June target of Rs1,130 billion. It borrowed Rs206 billion from scheduled banks.

The SBP expressed doubt that the Federal Board of Revenue could achieve the target of Rs1,380 billion as it needed to collect Rs354 billion over the next two months while the monthly average collection was Rs102 billion.

“Even if the target is met, the tax-GDP ratio is likely to be less than 10 per cent, which is one of the lowest in the world,” it said


DAWN.COM | Front Page | Govt may miss fiscal deficit target

 

[bc040400065]

Higher price to farmers must to get good crops
By Amin Ahmed
Wednesday, 26 May, 2010


ISLAMABAD: Federal Minister for Food and Agriculture Nazar Muhammad Gondal has attributed this year’s good cotton crop to the successful policy of the government saying that it was mainly due to the good price given to the growers.

The domestic requirement of 15 million bales would be met as the government has entered into an agreement with the leading American seed company Monsanto.

A proper mechanism would be formulated to pass on benefits to the farmers and protect them against any exploitation, Gondal told a delegation of Pakistan Hosiery Manufacturers Association (PHMA) from Faisalabad, which briefed him on the situation obtaining from duty imposed by the government on the export of yarn.

Mr Gondal stated that the entire economy and industry was based on agriculture and without safeguarding the interests of the farmers’ community, prosperity could not be achieved.

The country is presently facing sugar shortage because of low price paid to the growers that has resultantly affected the production of sugar, he said.

The PHMA urged the government to formulate a mechanism that results into a win-win situation for the growers, spinners and the value-added sector. This could only be achieved if the benefits are also passed on to the farmers, it added.

The minister told the delegation that the industry could not survive until and unless the interests of the farmers are duly protected. He blamed the cotton- related industry for the crisis as it calls for a free market mechanism and at the same time favours taxation on yarn export.

If the farmers get good price for their crop locally, there would be no need of exporting cotton or yarn, said the minister.

The hosiery delegation agreed to jointly work for devising a mechanism that takes into account the rights of the growers and stated that the benefits of regulatory duty imposed on yarn export must be passed on to the farmers. A farmers’ support fund must be created for this purpose, it added.

DAWN.COM | Business | Higher price to farmers must to get good crops

 

[Hyde]

10-month cotton export up 140 percent ​

RIZWAN BHATTI
KARACHI (May 27 2010): Despite a massive shortage in the domestic market, the country's raw cotton export registered a robust increase of 140 percent during the first 10 months of current fiscal year mainly due to rising demand in the world market. Industry sources told Business Recorder on Wednesday that Pakistani exporters are getting massive orders on the back of high production and low prices in the domestic market as compared to other countries.

As per world cotton estimates, all major cotton producers including China are facing short cotton crop this year, therefore, cotton demand in the world market is increasing gradually and recently India imposed some 2.75 percent duty on the export of raw cotton to curb rising export of the commodity.

Pakistan achieved a bumper crop during the current cotton season and overall cotton production stood at 12.7 million bales during current fiscal year (2009-10) as compared to 11.2 million bales in last fiscal year 2008-09, depicting an increase of 1.5 million bales. Although, the country has got a bumper cotton crop, however it is much less than the consumption and not sufficient to meet the country's demand, which presently stood at some 15.5-16 million bales per annum.

Recently, the value added textile sector also demanded of the government to slap ban on the export of raw cotton, as local prices of cotton yarn are moving up due to short supply of raw cotton. However, local exporters are taking full advantage of free trade regime, as there is no restriction on the import and export of raw cotton due to the free economy under the WTO agreement.

According to the Federal Bureau of Statistics (FBS), the country's cotton export posted an increase of 140 percent during the first 10 months (July-April) of current fiscal year. The country exported worth $194.154 million raw cotton in July-April as compared to $80.835 million during the corresponding period of FY09, depicting an increase of $113.319 million.

Meanwhile, month on month basis cotton export also surged by 20 percent to $1.12 million during April 2010 as compared to $0.645 million during the same period of last fiscal year. "At present Pakistani exporters and traders are being offered lowest cotton price in the region as compared to other competitors, with the result they are getting massive export orders," said an exporter.

He said Pakistani raw cotton exporters are offering better quality cotton at reasonable price of some 80 cents per maund as compared to some 84-86 cents per maund by the Indian traders, while expected bumper crop in the upcoming season has also put a positive impact on the export of cotton. "We are expecting record export of raw cotton next fiscal year," he added.

 

[ejaz007]

China to invest around $1 billion in IT sector

ISLAMABAD: China would invest over $1 billion in Information Technology sector in Pakistan as sequel to the Memorandum of Understandings (MoU) signed by President Asif Ali Zardari in his visit to China last year.

To discuss the modalities and procedures for investment, Ambassador of China in Islamabad, Lou Zhaohui met with the Advisor to Prime Minister on Information Technology Latif Khosa on Wednesday.

The friendly country would invest in three sub-sectors of Information Technology for re-strengthening the sector.

The Advisor to Prime Minister assured the envoy that all bureaucratic bottlenecks on the way to implement the projects would be overcome.

He said the government is making all-out efforts to give impetus to the technology sector with ultimate aim to create more job opportunities for the talented youth of the country.

Khosa was thankful to the Chinese Ambassador who has been taking keen interest to further strengthen the existing bonds between both the brotherly nations of Pakistan and China.

The Ambassador of China also discussed the arrangements for upcoming visit of the Vice Prime Minister and Minister for Information Technology to Pakistan.

The Advisor to PM expressed the hope that the upcoming high profile visit of the Chinese Vice Premier would help take the existing relations of the two nations to new heights. app

Daily Times - Leading News Resource of Pakistan

 

[xenia]

Economy grows amid lingering concerns​

By Mohiuddin Aazim

IMPROVEMENT in the external account, a strong recovery in manufacturing, high growth in services sector but more importantly, a downward revision of economic growth rates for the last two years have helped the government claim a higher-than-targeted estimate of GDP expansion in FY2010.
When it presents the national budget 2010-11 in the first week of June, the government is expected to boast of 4.1 per cent GDP growth for FY10 against the target of 3.3 per cent.The FY08 and FY09 GDP expansion of 4.1 and two per cent have been revised downward to 3.7 and 1.2 per cent, respectively.

The economy is recovering gradually from the last year’s slowdown—thanks to improvements in some vital areas though energy crisis persists, foreign debts continue to pile up, interest rates are still high and agriculture sector’s output remains low (See Table). But, “the worsening power crisis, which has severe ly hampered economic activity, and fiscal weaknesses, continue to impede sustainable recovery and comprehensive macroeconomic stability,” SBP says in its latest monetary policy statement.

Average inflation in ten months of FY10 has remained much below the last year’s level but inflationary pressures have lately been building up as international prices of fuel, food and other commodities are on the rise, domestic demand is up and the government’s inflationary borrowing from the central bank remains high. That is why SBP has left its key policy rate intact at 12.5 per cent for next two months.
In nine months of FY10, large-scale manufacturing grew 4.36 per cent and fullyear growth rate is expected to reach five per cent against the target of just one per cent. An increase in domestic spending backed by higher agricultural incomes, growth in global demand after the recession and the resultant upsurge in exports continue to facilitate industrial growth. Services sector is estimated to have grown by 4.56 per cent this year against the target of 3.9 per cent.
But a marginal decline in wheat and rice production and a massive fall in sugarcane output combined with below-ex pectation performance of the livestock and dairy sector due to security-related issues in Khyber Pakhtunkhwa province are likely to keep agriculture sector’s growth at two per cent against the target of 3.8 per cent.

A decline in inflation and stability in the exchange rates continue to support industrial performance despite high interest rates and energy crisis. But the exchange rate stability and improvements in the external sector account carry a heavy price-tag i.e. a substantial increase in external debts.
In mid-May the IMF released the fifth tranche of $1.13 billion out of a total loan package of $10.66 billion. Pakistan has so far drawn $7.27 billion and has requested the Fund to release the last two tranches in one go so it put its financial house in order.

This huge borrowing from the IMF, an increase in exports, slower import growth and home remittances have helped in reducing its current account deficit and in posting a small balance of payments surplus despite a fall in foreign investment. But at the same time, external debts and liabilities have increased by 9.5 per cent in nine months of this fiscal year and the cost of debt servicing has also gone up. In three quarters of the current fiscal year, $3.625 bil lion were spent on servicing external debts and liabilities against $3.575 billion for the entire last fiscal year.

Higher cost of external debt servicing, increase in se curity-related expenses amidst much lower-thanpromised inflows of funds committed by the Friends of Democratic Pakistan, huge non-development spending by the government and less-thandesired growth in tax revenue have all contributed to ballooning of the fiscal deficit. The fiscal deficit targeted at 4.9 per cent of GDP for FY10 is expected to shoot up to revised 5.1 per cent. And the central bank, in its latest monetary policy review, has indicated that the actual deficit may rise even beyond this revised ceiling. The government borrowing from the banking system in general and from the central bank in particular remains higher than in the last fiscal year.

However, a recovery in manufacturing sector and increase in exports have renewed the appetite for private sector credit that had bottomed out in the last fiscal year. The relaxation in rules by the central bank for provisioning of banks’ bad loans has also emboldened banks to restart lending to the private sector with confidence.

Higher-than-targeted fiscal deficit has also forced the government to cut its budgeted development spending of Rs616 billion by more than 50 per cent in the current fiscal year—with all its consequences on future capacity building for sustainable economic growth.



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