Pakistan Economy - News & Updates - Archive

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Government targets $20 billion foreign investment next year ​

ISLAMABAD (December 14 2008): Federal Investment Minister Senator Waqar Ahmad Khan has said that the government has fixed 20 billion-dollar target for foreign investment in 2009 to bring the country out of the current economic crisis. Pakistan needed over 40 billion-dollar investment and the government was optimistic to achieve the 20 billion-dollar target fixed for 2009, he stated this while talking to reporters here on Saturday.

Pakistan, he said, was open for investment in any sector. But the priority sectors of the government were oil and gas, energy, food, agriculture, information technology and infrastructure, he added. Senator Waqar said that 100 percent repatriation of money had been ensured to the investors, while special commercial zones had also been set up for them.

"We have also announced a five-year tax holiday, besides 10-year tax exemption for investors who help us set up a commercial zone", he said. He also disclosed that the government had finalised its plans to offer ownership of agricultural lands to investors for farming. "We are extremely enthusiastic in providing areas for farming with great incentives. Investors could own the land, cultivate it and export 100 percent of its crop", he added.

President Asif Ali Zardari had a vision to give a corporate image to Pakistan and he himself would go abroad to gain the lost confidence of foreign investors. "We have a plan to constitute a special task force for protection of foreign investors," he said, adding the task force would comprise officials from the ministries of Interior, Defence, Investment and Finance, which would protect investors' interests.

The Minister said that the government was well aware of the security concerns of foreign investors and this was the reason for constitutions of special task force to protect investors and their investments. The task force would be an invisible mode of security, which would provide ultimate comfort and sense of security to investors, he said, adding that the task force would be in place later this month.

He said that the present government was not seeking any financial relief directly and this was not the thrust of President Zardari's visits to different countries. "We are immediately looking at deferred oil payments from Saudi Arabia and the UAE to get some economic relief," he added.

 

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'Pakistan fully committed to achieve SDGs' ​

ISLAMABAD (December 14 2008): Pakistan is fully committed to achieve the Saarc Development Goals (SDGs), said chief economist, Planning and Development Division, Dr Rashid Amjad here on Saturday. Addressing the concluding session of two-day workshop on Saarc Development Goals, he said that even in these difficult financial circumstances.

The Prime Minister had given clear instruction that public sector expenditures in the social sectors especially health and education will be fully protected. The participants of the Workshop after intensive consultations identified benchmarks along with targets for SDGs indicators ie livelihood, health, education and environment for the next five year as per requirement of the decisions of 14th and 15th Saarc Summits to develop country specific targets and benchmarks in this regard, says a statement issued by the Planning and Development Division here.

The team leaders of the respective groups made presentations discussing challenges and modalities as to how to achieve benchmarks and recommended targets. The SDGs targets for 2012 have been aligned with the MDGs and have been incorporated in the manifesto of the present government, as the present government is determined to reduce suffering of millions of people living in absolute poverty in Pakistan.

The government has taken bold initiatives to restore macroeconomic stability and reduce poverty and vulnerability through direct and indirect support. Allocations for social sector including education, health, population welfare, water supply and sanitation have increased manifold to create and develop social assets of the poor.-PR

 

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Tarin seeks public, private sectors' help to bring down inflation ​

ISLAMABAD (December 15 2008): Advisor to Prime Minister on Finance and Economic Affairs Shaukat Tarin has sought the help of federal Secretaries, provincial governments, and private sector to bring down inflation, after the failure of IMF-dictated tight monetary policy, sources told Business Recorder.

"Inflationary pressure is not likely to ease, at least, in the next few months owing to gradual removal of fuel and power subsidies agreed with the IMF, weaker rupee, higher import prices and monetary overhang from the unprecedented government borrowing from the State Bank of Pakistan (SBP) for budgetary financing," sources quoted Finance Ministry as having briefed the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on December 2.

According to recently released statistics, Consumer Price Index (CPI) inflation has surged by 24.65 percent during five months (July-November) of current fiscal year over the same period of last year. Top of contributors are eight essential food items, ie wheat, flour, rice, pulses, meat, milk, ghee/cooking oil, vegetables and fruits, which contributed significantly to food inflation--almost 75 percent of the total inflation.

"Inflationary pressure is not likely to ease at least in the next few months because of gradual removal of fuel and power subsidies and worsened financial position," Finance Ministry brief added.

Tarin, however, expressed concern that prices of food commodities, particularly wheat, flour and ghee/cooking oil had not come down in spite of substantial reduction in their prices in international market. Sources said that ECC in its meeting was informed that this upward trend in the prices of these commodities was witnessed in the northern parts of the country primarily because the imported wheat could not be transported to those areas due to non-availability of transport.

To resolve this issue, a committee had been constituted under the chairmanship of Finance Secretary with Secretaries of Commerce, Industry and Minfal as members to look into the problems and devise measures for reduction in prices of food items in consultation with the provincial governments and stakeholders including the private sector, sources added.

The committee would ensure that benefits in reduction in prices are passed on to the common man. According to the official documents, wheat stock as on November 27, 2008 stood at 2.613 million tons, against 2.956 million tons in the same period last year, showing a drop of about 0.342 million tons (13.2 percent).

The provincial governments and Passco together procured 3.918 million tons wheat against the target of 5 million tons. The procurement of last year was 4.4 million tons. Trading Corporation of Pakistan (TCP) has imported 1.75 million tons wheat so far on instructions of ECC.

According to IMF, the key economic and financial downside risks to the program include lower than expected private capital inflows, a reversal of the current trend of declining oil prices and a more severe than anticipated economic slow down in trading partner countries. "If these risks materialise, the government will stand ready to adjust its policies in close consultation with IMF staff to ensure achievement of a sustainable external position by the end of the program period," sources added.

They said the committee has been asked to submit its recommendations to the ECC in its meeting on December 16, but it was still not sure if the committee would be able to implement the directives of the Advisor for Finance.

 

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Government may allow urgent import of 0.4 million tons of raw sugar ​

ISLAMABAD (December 15 2008): The government within a couple of days is likely to allow import of 0.4 million tons raw sugar as current sugar stocks can meet requirements of only one month, sources in Industries Ministry told Business Recorder. On the other hand, sugar millers are of the view that there is a glut in the market, and mills are facing difficulties in payment to the farmers.

The Industries Ministry had advised the policy makers, especially the Finance Ministry, that the government should immediately decide about import of sugar to meet next year's requirements as the Pakistan Sugar Mills Association (PSMA) has already indicated shortage of sugar.

Sources said that Finance Ministry did not approve the proposal but asked the Industries Ministry to bring the proposal back in December. "Total stock of sugar is sufficient for only up to January 15, 2009, while the stock with the Trading Corporation of Pakistan (TCP) would also deplete during this period as it would be supplying sugar to the Utility Stores Corporation and the armed forces," sources added.

Some officials in the government believe that the country would face shortage of 1.5 million tons sugar, which has to be imported and, if the government goes for raw sugar, it can save a reasonable amount of foreign exchange besides value-addition in sugar mills.

Last year, PSMA had claimed that 1.2 million tons sugar would be surplus, but at the end of the season this claim proved wrong. About 0.6 million tons sugar had been exported, or smuggled, which is said to be one of the reasons of shortage in 2009, sources said.

The country's monthly consumption of sugar is around 0.35 million tons and the Finance Ministry, in its report to the Economic Co-ordination Committee (ECC) some three weeks ago, had stated that the country might face sugar crisis from November onward. However, new forecasts suggest that crisis may have started from mid-October. However, Finance Ministry's apprehensions proved to be wrong and the stocks are only enough till the middle of January. The government has already imposed duty on sugar export, and removed duty on refined sugar import.

 

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Offshore investors withdraw $9.828 million from equity market ​

KARACHI (December 15 2008): A massive outflow of foreign portfolio investment was witnessed as $9.828 million were withdrawn by offshore investors in single-day trading on Friday. According to National Clearing Company of Pakistan Limited (NCCPL) data the cumulative outflow of this mode of investment reduced to $8.625 million during the current month from December 1 to December 12.

The cumulative figure of foreign portfolio investment was recorded at negative $366.854 million during the current year from January 01, 2008 to date. "The decision to drop Pakistan from MSCI Emerging Markets Index, attacks on Nato supplies and across the eastern border tension aftermath of Mumbai terrorists strikes are expected to further dampen foreign investors sentiment and expedite their exit", analysts said.

However, some analysts were expecting fresh inflow of foreign investment in the country's equity market after starting normal trading activity at the share market following the removal of floor. They were of the view that very attractive levels at the share market could invite fresh foreign investment at the equity market in days to come.

 

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To bring down trade deficit: ICCI chief for reduction in imports, boost in exports ​

ISLAMABAD (December 15 2008): President Islamabad Chamber of Commerce and Industry (ICCI) Mian Shaukat Masud on Sunday urged the government to reduce import of luxury items, bring down interest rates for industrial sector and reduce cost of doing business.

In a statement, he said, "the best option for the government to deal with this situation is to drastically reduce or put a ban on the import of all luxury items and also bring down mark up on loans for industrial sector to give a boost to exports."

He said high cost of doing business and frequent power disruptions are hampering the growth of exports. He said the business community is concerned over Pakistan's rising trade deficit which has swelled to 8.736 billion dollars in the first five months (July to November, 2008) of current fiscal year as compared to 7.264 billion dollars of the same period of last year, showing an increase of 20.27 percent.

He called upon the government to boost the production of agricultural and industrial sectors for enhancing exports to cope with the trend of rising trade deficit. He said the soaring trade deficit, with no parity in imports and exports will create further troubles for the already difficult economic situation.

Running a high trade deficit throughout the year with imports twice the exports remains a big challenge for the economic managers as the country faces immense pressure on foreign exchange reserves already touching alarmingly low position, he added.

He said that another way out is that government should adopt a strategy to boost industrial and agriculture production and reduce non-development expenditure. He said for this purpose, the government should take steps to encourage massive investment in agriculture and industrial sectors by involving domestic and multinational entrepreneurs to add value addition in both the sectors and to meet aggregate demand for domestic consumption of food and other products.

Mian Shaukat Masud said the government needs to initiate necessary measures to boost the production of all major and minor agricultural crops and vegetables etc.

A significant increase in agricultural production would raise the country's GDP growth and the revenue collection would also increase. Besides, he said, sufficient production of the major and minor agricultural crops would help in bringing down food inflation provided that the government is able to check hoarding, profiteering and smuggling of edible items. He said self-sufficiency in agricultural production would help in reducing the imports and raising the exports of agricultural products. He said that agricultural products such as cotton and sugarcane are used by our industrial sector and thus good performance of the agriculture sector should lead to good performance of the industrial sector as well.

These measures will lessen our dependence on imports ultimately bringing down the rising trade deficit and will bridge import-export gap that might hover around 14 billion dollars despite decrease in prices of oil, commodities and metal products in international market, Mian Shaukat added.

 

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Poverty rate soars in Pakistan: Shaukat Tareen​

ISLAMABAD: Advisor to Prime Minster on Finance, Shaukat Tareen said on Tuesday that poverty rate in Pakistan has climbed to 28 percent.

Addressing a seminar here, Tareen said government’s top priority, at the moment, is to bring rate of inflation down to 9 percent. The seminar was held in collaboration with International Monetary Fund (IMF) and Pakistan Institute of Development Economics (PIDE).

Shaukat Tareen said previous governments ignored important sectors of agriculture, production, human resource development, education and health which are key to progress.

Speaking on the occasion, State Bank Governor, Dr. Shamshad Akhtar said that growing rate of unemployment and poverty posed greater challenge to the country which need to be addressed.

 

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Provisions for bad debts surge to alarming Rs228bn: SBP ​

Tuesday, December 16, 2008

ISLAMABAD: The provisioning for bad loans in the country’s banking sector, which ultimately qualifies for write-off, has alarmingly gone up to Rs228 billion till the first quarter of the current fiscal year ended on September 30, official data of State Bank of Pakistan (SBP) exclusively available with The News revealed.

Banks put a certain amount into the clause of ‘provisioning’ for bad loans in order to achieve clean balance sheets and most of the time loans are written off allegedly to please political cronies and their close kith and kin by ignoring outlined merits and guidance of the central bank.

The overall gross Non Performing Loans (NPLs) also shot up to Rs288.372 billion on September 30, 2008 from Rs251.113 billion on June 30, 2008, registering an increase in NPLs by Rs37 billion in a period of just three months of the PPP-led government from July to September 2008.

One major factor for the increase in NPLs is the hike in interest rates by the central bank to tame inflation on agreed conditions of the IMF under the Standby Arrangement (SBA). But officials in Ministry of Finance say that the central bank made prudent regulations last year, which bound the banks not to adjust the amount in accordance with guarantees attached, which basically resulted in increased amount of provisioning. “It is not a bad thing for the banking sector,” they added.

According to official data compiled by the SBP on NPLs, a copy of which is available with this scribe, the NPLs of all banks have increased up to Rs278.151 billion on September 30, 2008 from Rs241.853 billion on June 30, 2008. The NPLs of public sector banks went up to Rs70.745 billion on Sept 30, 2008 against Rs57.657 billion, up by Rs13 billion in first three months from July to September in fiscal year 2008-09.

The net NPLs of public sector banks stood at Rs13.366 billion on Sep 30, 2008 against Rs8.515 billion on June 30, 2008. The NPLs of local private banks shot up to Rs172.643 billion on Sept 30, 2008 against Rs153.631 billion on June 30, 2008, witnessing an increase by Rs19 billion in the three month period. The net NPLs of local private banks increased up to Rs33.145 billion on Sept 30, 2008 against Rs23.416 billion on June 30, 2008.

The NPLs in foreign banks slightly increased and touched Rs1.698 billion on Sept 30, 2008 against Rs1.597 billion on June 30, 2008. The net NPLs of foreign banks were only Rs442 million on Sept 30, 2008 against Rs540 million on June 30, 2008, showing improvements on this account.

The NPLs of specialised banks, official data showed, increased up to Rs33.065 billion on Sept 30, 2008 against Rs28.969 billion on June 30, 2008. The net NPLs of specialised banks increased to Rs12.161 billion on Sept 30, 2008 against Rs7.554 billion on June 30, 2008.

The NPLs of DFIs increased to Rs10.221 billion on Sept 30, 2008 against Rs9.259 billion on June 30, 2008. The net NPLs were Rs2.703 billion on Sept 30, 2008 against Rs1.969 billion on June 30, 2008.

This correspondent sent three questions to the official spokesman of SBP, the response to which is being reproduced here without any change. What are the reasons for increasing provisioning of bad loans despite clear instructions given by the central bank last year?

In 2007, SBP made provisioning criterion more stringent and prudent by removing the benefit of Forced Sale Value (FSV) of collateral. Consequently, banks will now have to create more provisions against their non-performing loans as compared to what they were doing in the start of 2007. Provisioning has also increased due to rise in gross NPLs, which rose to Rs288,372 million by end Sept 2008. In terms of ratio, Gross NPLs to Gross Loans ratio was 8.6pc, while Net NPLs to Net Loan ratio was 1.89pc by end Sept 2008.

The provisioning of bad loans has gone up to Rs228 billion till Sept 30, 2008. Is SBP considering taking more steps to control this situation?

SBP already has in place a number of regulations on credit exposure limits, margin requirement, and loan provisioning, which aim to improve the quality of loan portfolios of the banks. SBP has also set up e-CIB which is a comprehensive credit bureau to facilitate banks to obtain credit information on borrowers.

“Moreover, SBP also carries out inspection of banks and in case irregularities are found in loan disbursement, etc, substantial penalties are imposed,” the statement added. All provisioning and bad loan write-off must be off set against the income of the bank. In rare cases if the capital of a bank starts to erode, SBP instructs the owners’ of the bank to immediately replenish the capital.

The key measure of a bank’s solvency is the capital adequacy and the international benchmark of Capital Adequacy Ratio (CAR) is 8pc. The Pakistani banking system CAR is at 11.8pc as of end September 2008 well over the benchmark. A number of banks have CAR of more than 15pc. As such the provisioning is not threatening the solvency of the banking system.

More recently SBP has introduced an ADR (Advance to Deposit Ratio) limit on banks to ensure that advances are not excessive as compared to their deposit base.

The provisioning of bad loans is increasing especially in the public sector and private sector local banks. What steps are you taking to save depositors who ultimately become victims in terms of increasing spread, as banks recovered their losses owing to provisioning mainly from depositors?

As regulator, the key concern for SBP is to protect depositors’ funds. In this regard nearly all policies are aimed, directly or indirectly, to ensure that deposits are not lost due to any bank’s poor functioning. It is a fact that Pakistani banks have never defaulted on payment to their depositors, and even under liquidity pressures, SBP has taken prompt measures to make liquidity available for deposit withdrawals.

With regard to profit paid to depositors, SBP imposed a minimum floor of 5pc in May 2008 (effective from June 1, 2008).

With a rise in interest rates, the banks are now offering considerably high rates of returns to their depositors on time deposits, and even on PLS deposits.

It needs to be understood that PLS deposits are funds that can be withdrawn at any time by the depositor, this feature necessitates that the bank carry considerable liquidity at all times so that no depositor is refused payment. As such PLS deposits carry relatively lower rates of return.

SBP has given incentives to banks to encourage them to mobilize time deposits and offer good rates to customers. Presently no CRR or SLR is required against time deposits of one year or more. Profit rates on these deposits will further improve, the SBP concluded.

 

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Pakistan, IMF to review targets in Feb ​

Tuesday, December 16, 2008

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) will review envisaged macroeconomic targets including Rs1,360 billion tax collection, flexible exchange rate, monetary and budgetary matters by mid-February next year, it is learnt.

A review mission of the Fund will visit Pakistan for holding talks with authorities which may lead to some changes in various macroeconomic targets keeping in view ground realities after the end of first two quarters of the current financial year.

Pakistan’s authorities will strive hard to convince the IMF’s review mission to revise downward the tax collection target of Rs1,360 billion because the basis of increasing the target from Rs1,250 billion to Rs1,360 billion had drastically changed mainly on account of a massive fall in prices of crude oil in the international market.

Pakistan and the IMF had also agreed on a flexible exchange rate under which the State Bank of Pakistan would phase out the facility of providing dollars for import of petroleum products, meaning the rupee may further depreciate in coming months.

Currently, the IMF’s newly-appointed Director of the Middle East and Central Asia, Masood Ahmed, is visiting Islamabad for holding meetings with economic managers. He has already met Adviser to PM on Finance Shaukat Tarin and other high-ups of the finance ministry. Masood Ahmed will also attend FBR and Planning Commission’s seminars in the next few days.

Policy level discussions are not among main agenda items during the current visit of IMF high-ups, but they are urging the authorities to stick to the agreed programme implementation in letter and spirit.

“When the first half (July-Dec) of the current fiscal year ends, the IMF’s review mission will hold talks with Pakistani authorities to adjust envisaged targets,” an official source in Ministry of Finance told The News on Monday.

When Secretary Finance Dr Waqar Masood was contacted for comments, he confirmed the Fund’s review mission would visit Pakistan by mid-Feb in order to discuss readjustment in the agreed programme. “Today’s meeting was just exchange of views while programme-specific discussions will be held by mid-Feb,” Masood said.

 

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IMF asks Pakistan to achieve targets ​

Tuesday, December 16, 2008

ISLAMABAD: Newly-appointed IMF Director of the Middle East and Central Asia, Masood Ahmed, has asked Pakistan to ensure the achievement of the targets set under the $7.6 billion bailout package, saying that implementation is key to the success of the programme.

Ahmed came up with this piece of advice in a meeting here on Monday with Adviser to Prime Minister on Finance and Economic Affairs Division Shaukat Tarin. During the meeting, top officials of the finance ministry were also present.

In the meeting, Ahmed was given comprehensive briefing on the country’s economic situation and the measures being taken to achieve the targets set under the bailout package.

When contacted, Shaukat Tarin said after assuming the office as IMF’s director, he made a courtesy call to Ahmed. However, he said Ahmed was not given a formal briefing on the measures for meeting the targets set by the government for implementing the homegrown package, as after getting the IMF loan, the first quarter would end in December. After that, IMF officials would be given a briefing sometime in January or February about the progress on meeting the targets.

Ahmed is scheduled to meet President Asif Ali Zardari and Prime Minister Syed Yousuf Raza Gilani today (Tuesday). He will also be attending a three-day seminar being arranged by the Federal Board of Revenue (FBR) in Lahore to devise a future plan of action about widening the tax base.

Ahmed replaced Mohsin S Khan, who recently retired from the IMF. Mohsin is reportedly among the potential contestants eyeing the coveted slot of governor of State Bank of Pakistan.

 

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Industries can be set up without NOC: minister ​

Tuesday, December 16, 2008

KARACHI: Sindh Government has chalked out a most simplified industrial policy whereby industries could be setup without any permission or NOC.

“This policy has been framed to boost investment and to help prospective industrialists setup an industry at their own will and capacity”, disclosed Sindh Minister for Industries and Commerce, Rauf Siddiqi, while addressing a press conference here on Monday.

He informed that a long-term heavy industrial infrastructure scheme is being launched at a cost of Rs205.161 million. The scheme has been worked out by SITE Ltd for medium and large size industries, while a similar programme has been launched by the Sindh Small Industries

Corporation for small industries, involving an expenditure of Rs25.7 million. The Minister pointed out that he had suggested to President Asif Ali Zardari to provide 10-year tax exemption to agro-based industries in the interior of Sindh and is thankful to him for accepting the same in principle.

He said this will bring an industrial revolution in Sindh and particularly help remove poverty from rural areas. He noted that the President has asked Salman Farooqui to examine the proposal and give it a final shape.

 

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P&G coming up with investment of $100 million​

KARACHI: Proctor and Gamble (P&G) is coming up with an investment of about $100 million. An announcement to this effect was made in a statement issued here on Monday. It said that the P&G is establishing a large-scale state of the art manufacturing facility at Port Qasim bringing in FDI of approximately $100 million being the P&G’s largest fixed investment in Pakistan. The statement pointed out that the P&G is a leading consumer goods company based in Cincinnati Ohio with operations in over 90 countries. It said that in Pakistan P&G has grown to one of the leading consumer product companies marketing 12 quality brands.

 

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Over Rs 2.19bn to be spent on FATA road projects​

PESHAWAR: Out of Rs 7616 million total outlay for 2008-09, Rs 2193.622 million will be spent on implementation of 177 road schemes in the Federally Administered Tribal Areas (FATA) to make it more accessible, said an official release issued here on Monday.

The government has allocated Rs 1650.605 million for 151 ongoing and Rs 543.017 million for 26 new schemes in the annual development programme (ADP).

The lion’s share of Rs 352.343 million goes to South Waziristan Agency while North Waziristan gets the second highest allocation of Rs 288.637 million.

A sum of Rs 250.884 million has been set apart for 12 road schemes in Khyber Agency. These include construction of a 10 kilometre long blacktopped road from Bagh (Tirah Valley) to Oblan up to Orakzai border and construction of five RCC bridges in Bara, Jamrud and Landikotal sub divisions.

Most of the schemes in communication sector in North and South Waziristan agencies and other parts of the tribal belt pertain to construction of new roads, improvement, widening and rehabilitation of the existing roads and construction of bridges to facilitate traffic and connect far-flung areas.

Attention has also been focused on improvement of road infrastructure in Kurram, Orakzai, Mohmand and Bajaur agencies and Rs 259.105, Rs 134.638, Rs 218.053 and Rs 218.493 million are being spent respectively in these agencies during the current fiscal year.

The ongoing road schemes, when completed, would help bring FATA closer to rest of the country, provide it access to markets and accelerate pace of development there.

According to available figures, the road network in FATA extends to over 4,900 kilometre, including more than three thousand kilometre blacktopped and 1,900 kilometre shingled roads.

 

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Increase in agricultural production: a lot can be learnt from the Chinese model: Zardari ​

ISLAMABAD (December 16 2008): President Asif Ali Zardari has said that if people are harnessed properly by introducing modern technologies, Pakistan will not only meet its own food requirements but would also become an exporter of grain.

"We have a capability to enhance agriculture growth manifold and, by utilising modern techniques and equipments, we will not only feed our people but also earn foreign exchange, and produce indigenous fuel", he said while presiding over a meeting here on Monday on food and agriculture situation in the country. Nazar Muhammad Gondal, Minister for Food, Agriculture and Livestock briefed the President.

The President stressed the importance of the food and agriculture sector and called for greater focus on the agri sector to make the country self-sufficient and to enable it to export food. "Technology for boosting agriculture growth and production of food is easily available and can be obtained to get better yield," he added.

He said that the government should enable access of the farmers to mechanised farming and consider import of re-conditioned tractors. This would inject an element of competition in the local tractor manufacturing industry, besides helping the farmers to increase their capability, he added. He said a lot could be learnt from the Chinese model to increase food and agriculture production both qualitatively and quantitatively.

He advised the government to consider the possibility of enhancing foods grains storage capacity through private-public partnership. He said that one such model could be for the private sector to build additional storage capacity with guarantees from public sector to rent out the storage space built by the private sector.

The President also advised the government to consider special projects for upgradation of ginning factories with focus on meeting their power requirements. He said that all requirements for seeds and fertilisers should be worked out in advance, and arrangements put in place well ahead of the season to avoid any disruption in availability of these critical inputs.

Minister for Food briefed the participants of the meeting about current situation of agriculture sector in the country. He said that out of 3 million tons wheat, 1.7 million tons had already been imported, while import of rest was in the pipeline.

Nearly 1.4 million tons imported wheat had already been dispatched to far-flung areas of the country, besides 5000 tons flour to Frontier and 1000 tons to Balochistan was also being sent from Punjab, the Minister said.

He briefed the President about the steps taken to empower the small farmers by improving their access to mechanised farming through availability of tractors on subsidised rates under the Benazir Tractors Scheme Programme. Under the scheme, 20,000 tractors are to be provided over a period of two years, with a subsidy of Rs 0.2 million per tractor, he added.

He also briefed the President about Benazir Zarai Card Scheme (BZCS) under which farmers can get loan of up to Rs 500,000 from banks. The schemes will be test-launched early next year for which one district will be selected in each province.

Zardari observed that rice is consuming huge quantities of water and the government should develop a special project on minimising water use, or re-using the water used for rice crop. About urea situation, the Minister said that 65,000 tons urea had already been imported in November, and another 186,000 tons would be imported this month.

The briefing was also attended by Sherry Rehman, Minister for Information, Salman Faruqui Secretary General to President, Shaukat Tarin, advisor to the Prime Minister for Finance, Asif Ahmed Ali, deputy chairman Planning Commission, Shamshad Akhtar Governor State Bank of Pakistan and senior officials of relevant ministries.

 

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Moody's revises four Pakistani banks outlook to negative ​

SINGAPORE (December 16 2008): Moody's Investors Service on Monday confirmed, with a negative outlook, the B3 long-term foreign currency deposit ratings of four Pakistani banks. The following Pakistani banks are affected by this rating action.

-- National Bank of Pakistan (B3 Neg/Not-Prime/D BFSR)

-- Habib Bank Ltd (B3 Neg/ Not-Prime /D- BFSR)

-- United Bank Ltd (B3 Neg/ Not-Prime /D- BFSR)

-- MCB Bank Ltd (B3 Neg/ Not-Prime /D BFSR)

This concludes the review for possible downgrade for these banks initiated by Moody's on October 29, 2008. "Today's rating action is in response to the recent announcement by Moody's sovereign risk group that it has changed the outlook on Pakistan's B3 foreign currency bank deposit ceiling to negative," explains Nondas Nicolaides, Vice President - Senior Analyst in Moody's Financial Institutions Group.

The outlook change for the country ceiling concluded Moody's review for possible downgrade, further to the recent finalisation of a two-year, $7.6 billion standby financing agreement with the IMF, which will avert a near-term sovereign debt default.

The foreign currency deposit ratings of the four above-named banks remain constrained by this country ceiling. The outlook on the bank financial strength rating (BFSR) of each of the four Pakistani institutions remains stable.

However, Moody's cautions that downward rating pressure could develop in the event of a deterioration in Pakistan's economy above current expectations, while security threats could challenge the country's political and economic stability. "For the time being, however, Moody's continues to believe that the rated banks display satisfactory financial fundamentals overall and solid franchises," says Nicolaides.

Despite challenging market conditions and a deterioration in the macro-economic environment, the banks' performance remains adequate for now in terms of both business growth and profitability. As all four banks' short-term foreign currency ratings are already at Not-Prime, the outlook on these ratings remains stable.

Moody's previous rating action on the four Pakistani banks was implemented on 29 October 2008, when the rating agency downgraded the long-term local currency deposit ratings to Ba2 following the downgrade of the country's local currency deposit ceiling to Ba2 from Baa2.

The short-term local currency deposit ratings for National Bank of Pakistan and MCB Bank were also downgraded to Not-Prime from Prime-3. In the same rating action, Moody's also placed the B3 long-term foreign currency deposit ratings of the four banks on review for possible downgrade, in line with a similar rating action on Pakistan's B3 foreign currency deposit ceiling, as this ceiling acts as a constraint on these deposit ratings.

The principal methodologies used in rating the above-named Pakistani banks are "Bank Financial Strength Ratings: Global Methodology" and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology".

Headquartered in Karachi, National Bank of Pakistan reported total assets of Rs 740.4 billion ($9.5 billion) at the end of September 2008. Headquartered in Karachi, Habib Bank Ltd reported total assets of Rs 742.7 billion ($9.5 billion) at the end of September 2008. Headquartered in Karachi, United Bank Ltd reported total assets of Rs 618.1 billion ($7.9 billion) at the end of September 2008. Headquartered in Lahore, MCB Bank Ltd reported total assets of Rs 456.3 billion ($5.8 billion) at the end of September 2008.