Pakistan Economy - News & Updates - Archive

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IMF says Pakistan must focus on tax reform, reduce inflation ​

Friday, April 17, 2009

TOKYO: Pakistan must focus on reforming its tax system and lowering inflation to restore its economy, but political instability is a key risk to growth, the International Monetary Fund said on Thursday ahead of a donors’ conference.

Allies of cash-strapped Pakistan meet in Tokyo on Friday to pledge aid and seek assurances from the nuclear-armed country that it will implement economic reforms and take more urgent action against an increasingly formidable Islamist insurgency.

While Pakistan’s economic policies are on the right track, the global economy has worsened and the domestic political environment is a risk, said Adnan Mazarei, IMF assistant director for the Middle East and Central Asia department.

“I would be remiss if I do not mention that a key risk to Pakistan is political,” Mazarei, mission chief for Pakistan, told Reuters in an interview.

“The private investors and the financial market players that we often ask, they point to political uncertainty as a key factor.”

The international community is worried an economic meltdown in Pakistan, which narrowly averted a balance of payments crisis last year with a $7.6 billion IMF loan, could fan popular support for al Qaeda and other militant groups.

Pakistan hopes Friday’s meeting of donors ñ including Japan, the United States and the European Union — will pledge $4 billion to fund efforts on poverty alleviation, education and health.

Mazarei said Pakistan needed to focus on controlling its budget in the near term, by starting tax reforms and making sure revenues are secured so authorities could then focus on longer-term issues such as reducing poverty.

“It is critical that this revenue problem is addressed, with two lines under the word ‘critical’,” he said.

“Otherwise, the social services that are needed will not be provided, the public investment that is needed will not be provided.”

He added that Pakistan’s inflation, which has eased from a record high of 25.3 per cent in August to 19.07 per cent in March, was still stubbornly high, but added that its external reserves position had improved and its exchange rate had stabilised.



Not alone

Pakistan is central to US President Barack Obama’s plan for South Asia, which includes trying to stabilise Afghanistan, where Taliban militants — many operating from lawless northwest Pakistani enclaves — have thrown US success into doubt.

In a gathering ahead of the donors’ meeting on Friday, Pakistan is expected to assure its allies of its commitment to tackling economic and security problems.

Pakistan, at the Friends of Pakistan ministerial meeting, is also expected to present a prioritised wish-list of projects it has drawn up worth $30 billion, which it wants to see implemented over the next 10 years.

The projects include hydro-electric dams, roads, and projects aimed at improving security in its violence-plagued northwest on the Afghan border.

A UN official hoped the talks on Friday would lead to a longer-term dialogue to support socio-economic development.

“The Friends of Pakistan will show, through their pledges, that they are ready to stand by Pakistan in its development process, that Pakistan is not alone in its struggle,” Fikret Akcura, the Resident Representative for the United Nations

Development Programme in Pakistan, told Reuters in an interview. “And hopefully this commitment will continue, that it’s not short-term effort.”

 

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Pakistan, Azerbaijan focus on energy, privatisation ​

Friday, April 17, 2009

ISLAMABAD: Azerbaijan’s Ambassador to Pakistan Dr Eynulla Madatli on Thursday said that Pak-Azerbaijan Joint Ministerial Commission (JMC) was exploring new avenues for focusing on various sectors including information technology, oil and gas, energy, privatisation and investment.

Azerbaijan intended to benefit from the experience of Pakistan in services, transport, privatisation and investment, the diplomat stated this in a meeting with Syed Naveed Qamar, Federal Minister for Privatisation here.

Naveed Qamar said that Pakistan has the largest privatisation programme and the fairly big experience in South Asia, which can be mutually beneficial for entrepreneurs of the entire region including Azerbaijan. He lauded the efforts of the envoy for promoting economic relations and further cementing them.

The minister informed the envoy that privatisation process has been given new dimension with the promulgation of the new privatisation policy for associating the private sector through Public-Private Partnership mode, which was the real engine of economic growth and could ensure efficiency, increase in production, bring in fresh investment and expand operations with latest technologies and ensuring job opportunities.

He assured the envoy of full assistance for benefiting from Pakistan’s experience in establishing regulatory regimes and privatisation and investment activities. The government always gave priority to bring the private sector forward through the best privatisation programme in a most transparent, open and fair manner, he added.

 

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Pakistan seeks preferential market access to EU ​

Friday, April 17, 2009

ISLAMABAD: Pakistan is seeking preferential market access to the European Union (EU) and a political will can go a long way in helping the country achieve this goal, said Federal Minister for Commerce, Makhdoom Amin Fahim.

Ambassador of France, Daniel Jouanneau, High Commissioner of Bangladesh and Ambassador of Turkmenistan, Sapar Berdiniyazo separately called on the federal minister here on Thursday.

Secretary Commerce Salman Ghani and other officials of the Ministry were also present in these meetings. “Pakistan is facing law and order problem and we have spent US$35 billion on this subject and to revive our economy, we want trade and business access to advanced markets,” he added.

Fahim said that the country's priorities are maximum export and access to the EU market, which is one of the largest trading partners.

The Ambassador of France said that they encourage French companies to view Pakistan positively, because it has tremendous economic potential in different sectors.

Economic sectors like power and energy need help in Pakistan, the Ambassador added.

The High Commissioner of Bangladesh also called on the federal minister for commerce.

The minister expressed that both countries were enjoying excellent and cordial trade relations. He also expressed his warm feelings for the people of Bangladesh and showed interest in exchange of trade delegations between the two countries.

The minister asked that work on the “Early Harvest Programme” be accelerated.

The minister, while talking to the Ambassador of Turkmenistan, suggested that they come up with some proposals on how to increase bilateral trade.

Trade between the two countries is restricted to a few items like textile, surgical instruments and rice, which need some diversification, the Ambassador pointed out.

 

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IFC invests $50m in Packages ​

Friday, April 17, 2009

ISLAMABAD: The International Finance Corp (IFC), a member of the World Bank Group, is making a $50 million equity investment in the Packages Limited, Pakistan’s largest paper and board producer, to support a socially-responsible company that directly provides jobs for nearly 3,500 people and indirectly for about 27,000.

According to a statement issued by the IFC, the investment will help Packages enhance the company’s capital base, improve cost competitiveness and strengthen its ability to cope with the effects of the global economic crisis. With IFC’s support, the company will also undertake several programmes designed to have a positive impact on climate change. These include increased waste-paper collection and installation of waste-heat recovery systems and closed-loop systems for water at company factories.

IFC’s Director for Middle East and North Africa Michael Essex, said: “This investment underscores IFC’s commitment to providing its clients with capital and other support to help them withstand the global economic crisis.”

 

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Pakistan may become leading dairy producer by 2020 ​

Friday, April 17, 2009

KARACHI: Pakistan, having a vast potential in dairy production, is gaining momentum to emerge as an important player in the sector and lead the world by 2020.

Engro Foods Pakistan Chairman Asad Umer stated this while speaking on “The Dairy Business” at a forum organised by the Food Association of Pakistan the other day.

Asad said Engro Foods was projected to be the biggest business of Engro Company in the next five years.

Commenting on the challenges faced by the local dairy sector, he said existing knowledge gap, scattered animal holdings, poor milk collection infrastructure and legal framework on land availability were some of the main hurdles in the way of developing dairy farming in the country.

He said Pakistan’s dairy sector would emerge on the world scene as a significant producer by next year, as his company’s board of directors has approved to go global shortly.

During the forum, PFA President Rafiq Rangoonwala, Vice President Syed Farukh Mazhar, General Secretary Umer Qasim, Razi Ahsan and Azfar Ahsan highlighted the aims and objectives of the association.

 

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FoDP conference: Pakistan lobbying hard for multilateral support in Tokyo​

ISLAMABAD: Pakistan is keen to get firm commitment from bilateral donors on market access from USA, EU and Japan, $7 billion oil supply on deferred payment basis, $3 billion securitization of remittances from Saudia and UAE during the Friends of Democratic Pakistan (FoDP) meeting and Donor’s Conference scheduled today (Friday) at Tokyo, official sources told Daily Times on Thursday.

USA: Pakistan would try to get firm commitment from United States to initiate Free Trade Agreement (FTA) negotiations to offset losses sustained by Pakistan as front line state in war against terrorism. Similarly, it would also seek early finalisation of Bilateral Investment Treaty (BIT) on mutually agreed terms, the sources added.

Second demand that Pakistan would place before the US authorities is to ensure investment with buy back arrangements to promote private investment from US companies. Pakistan would also request the US authorities to allow industrial units to be set up Balochistan eligible for incentives of Reconstruction Opportunity Zones (ROZs) package.

EU: In the area of market access and economic cooperation, Pakistan would pursue European Union to agree on initiation of FTA negotiations to compensate Pakistan’s losses in war against terror. As an interim arrangement until the finalisation of FTA, Pakistan has already placed a demand before the European Commission (EC) to include Pakistan in Generalized System of Preferences, GSP+ scheme for next few years.

Japan: Japan being major investment partner, is maintaining higher import tariffs on agriculture commodities. In the area of market access and economic cooperation, Pakistan would seek market access for its agriculture commodities in the Japanese market by entering in to a preferential trading arrangement for Pakistan.

Saudi Arabia: Pakistan has been enjoying for years the Saudi Oil Facility (SOF) in the recent past and is trying to convince Saudi authorities to restore it for the next 2 years at a level of $5 billion oil facility on deferred payment basis.

UAE: Pakistan has plans to hold talks with UAE authorities for provision of oil worth $2 billion on deferred payment for next two years to ease out its balance of payment difficulties.

Pakistan is expecting $7 billion remittances in the current fiscal year from overseas Pakistanis mainly from Saudia Arabia and UAE and has plans to securitise it. This facility would help Pakistan enhance its foreign exchange reserves at a comfortable level as well as improve its credit rating.

Paris Club: Pakistan would also get initial feed back on its request relating to debt swap of $10.8 billion from Paris Club member countries. Debt Swap would be sought for conversion of debt in to development aid for social sector—education, health and other basic facilities for the population in rural areas.

Donor’s Conference: Pakistan would share the aims and targets of Pakistan development Trust Fund worth $4 billion with FODP member countries as well as donors. According to the sources multi-donor trust fund would administer the development in Federally Administered Tribal Areas (FATA), Balochistan, NWFP and Azad Jammu and Kashmir.

 

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IMF’s Analysis: ‘Pak must reform tax system to restore economy’​

TOKYO: Pakistan must focus on reforming its tax system and lowering inflation to restore its economy, but political instability is a key risk to growth, the International Monetary Fund said on Thursday ahead of a donors conference.

Allies of cash-strapped Pakistan meet in Tokyo on Friday to pledge aid and seek assurances from the nuclear-armed country that it will implement economic reforms and take more urgent action against an increasingly formidable Islamist insurgency. While Pakistan’s economic policies are on the right track, the global economy has worsened and the domestic political environment is a risk, said Adnan Mazarei, IMF assistant director for the Middle East and Central Asia department. “I would be remiss if I did not mention that a key risk to Pakistan is political,” Mazarei, mission chief for Pakistan, told Reuters in an interview. “The private investors and the financial market players that we often ask, they point to political uncertainty as a key factor.”

The international community is worried an economic meltdown in Pakistan, which narrowly averted a balance of payments crisis last year with a $7.6 billion IMF loan, could fan popular support for al Qaeda and other militant groups.

Pakistan hopes Friday’s meeting of donors – including Japan, the United States and the European Union — will pledge $4 billion to fund efforts on poverty alleviation, education and health. Mazarei said Pakistan needed to focus on controlling its budget in the near-term, by starting tax reforms and making sure revenues are secured so authorities could then focus on longer-term issues such as reducing poverty.

“It is critical that this revenue problem is addressed, with two lines under the word ‘critical’,” he said. “Otherwise, the social services that are needed will not be provided, the public investment that is needed will not be provided.” reuters

 

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‘Pakistan has largest privatisation programme’​

ISLAMABAD: Pakistan has the largest Privatisation Programme and the fairly long time experience in the South Asia, which can be mutually beneficial for the entrepreneurs of entire region including Azerbaijan, Syed Naveed Qamar, Federal Minister for Privatisation stated during a meeting with Dr Eynulla Madatli, Ambassador of Azerbaijan to Pakistan who called on him here Thursday.

Syed Naveed Qamar informed the envoy that privatisation process has been given new dimension with the promulgation of new Privatisation policy for associating the private sector through Public Private Partnership (PPP) mode, which was the real engine of economic growth and could ensure efficiency, increase production, bring in fresh investment and expand the existing operations with the latest technologies and ensuring new job opportunities.

He assured the envoy of full assistance for benefiting from Pakistan’s experience in establishing the regulatory regimes and the process of open, fair and transparent privatisation and investment activities. The present government always gave priority to bring the private sector forward through the best privatisation programme in a most transparent, open and fair manner, he added.

Dr Eynulla Madatli that Joint Ministerial Commission (JMC) of both the countries were exploring the new avenues for focusing in various sectors of economy including Information Technology, Oil & Gas sectors, Energy, Privatisation and Investment.

 

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Zardari seeks new Japanese investment​

TOKYO: Pakistan’s President Asif Ali Zardari, visiting Tokyo for a major aid conference, Thursday sought to drum up Japanese investment for his poverty-stricken country. Zardari told Japan’s Trade Minister Toshihiro Nikai that Pakistan plans to set up ‘a special Japanese economic zone’ near the southern port city of Karachi, a Japanese trade ministry official told reporters after the meeting.

Pakistan has already set up a similar zone for Chinese companies in a suburb of the city of Lahore, said the official, Yoshihiro Sekine.

Zardari wrote in Thursday’s Japan Times daily he was visiting Tokyo not only for the Pakistan aid conference Friday but also ‘to encourage entrepreneurs from the world’s second-largest economy to invest in Pakistan’.

He said, “Japanese investment will help us in reviving the economy and fighting violent extremism and terrorism but also enable Japanese entrepreneurs to benefit from the liberal pro-investor policies adopted by our government.”

The Pakistani president also said a business mission from the South Asian country would visit Japan in late May, according to the official. Zardari arrived in Tokyo late Wednesday to attend Friday’s donors meet, which aims to raise $4 billion to $6 billion to help stabilise his country, seen as a frontline state in the battle against Islamic militancy. afp

 

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SORRY I POSTED IN WRONG PLACE.THIS WAS SUPPOSED TO BE IN AN OTHER FORUM.
HAS TO BE DELETED NOW

 

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Japanese experts arrive soon​

TOKYO (April 17 2009): Japanese Minister for Economy, Trade and Industry Tashihiro Nikai called on President Asif Ali Zardari here on Thursday and discussed matters of bilateral interest. The Japanese Minister told the Pakistani leader that the Japanese government would facilitate the import of mangoes from Pakistan by the private sector, and a delegation of mango experts would visit Pakistan soon to remove all hurdles in this respect.

President Zardari said Pakistan would establish a special economic zone for the Japanese companies and investors in Karachi on an area, covering 2,500 acres of land. Tashihiro Nikai said Japan was satisfied with Pakistan's economic strategy and programme, as despite the global economic Recession, the country's economic prospects look positive and the economy were track of growth.

President Zardari stressed the need of increased people-to-people contacts, particularly enhanced enrolment of Pakistani students in Japan, which currently stood at around 200, to strengthen the bilateral relations between the two countries. During the meeting, the two sides also discussed the prospects of increased trade and economic co-operation between Pakistan and Japan, with particular focus on the promotion of trade and investment ties.

They also exchanged views about the matters relating to the Friends of Democratic Pakistan (FoDP) ministerial meeting and the donors' conference being hosted by Japan here on Friday. Minister for Information and Broadcasting Qamar Zaman Kaira, Advisor on Finance and Economic Affairs Shaukat Tareen and Advisor on Interior Rehman Malik were also present in the meeting.

 

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LSM sees decline of six percent in eight months​

KARACHI (April 17 2009): Large Scale Manufacturing (LSM) growth has decelerated and registered a decline of 6 percent during the first eight months of the current fiscal year, mainly due to the energy shortages, high cost, lower domestic and external demands. The performance of the manufacturing sector was impressive during the last five years, as it posted an average growth of over 10 percent per annum since 2003.

However, battle on the political front, rising cost, poor law and order situation and negative economic indicators have pushed the LSM growth on a downward side. LSM had already presented poor performance during the last fiscal year, 2008, and registered a six-year lowest growth of 3.76 due to the political uncertainty, power shortage and deteriorating law and order situation.

Federal Bureau of Statistics (FBS) on Thursday revealed that Quantum Index Number of LSM industries witnessed a negative trend of some 5.73 percent during the July-February of fiscal year 2008-09. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicting the production of major industries in the country are also on the decline.

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

Major share in the present negative growth has contributed most by OCAC, as during the July-February OCAC index declined by 8.40 percent to 159.17 points while, the ministry of industries index has dipped by 5.71 percent to 195.68 points. In addition the provincial BOS index stood at 199.04 points after a decline of 5.30 percent during the first eight months.

The LSM growth during February 2009 also registered a significant decline of 7.91 percent, when compared to February 2008. As in February 2009 QIM stood at 206.15 points from 223.85 points. "A number of factors, including intensified energy shortages, rise in input cost, as well as lower domestic and external demands are responsible for this decline," economists said.

They said that interruptions in energy supplies and upward adjustment in the prices of electricity, gas and diesel lowered the productivity and rise in the cost of production of domestic industry have also contributed to the negative growth. Economists pointed out that rupee depreciation, with a greater volatility, also increased the cost of imported inputs. While, at the same time, export demand has decline due to the global economic, recession.

Decline in consumer demand in the domestic market is attributed to the high interest rates on consumer financing (due to the tight monetary policy) and commercial banks' reluctance in providing consumer financing for consumers due to rising NPLs, they added. They said that almost all large industries, oil, auto, sugar, steel and others have posted a negative growth during the first eight months. "We are expecting some 7 percent decline in the LSM growth by the end of fiscal year 2009 against a growth of 3.76 percent in fiscal year 2008," they said.

 

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Surge in Pakistan's foreign exchange reserves​

KARACHI (April 17 2009): The country's foreign exchange reserves have gone up by 57.9 million dollars during the week ended April 11, 2009, the State Bank of Pakistan said on Thursday. With the current surge the overall foreign exchange reserves have reached 11.2289 billion dollars as on April 11, 2009 from 11.1710 billion dollars a week earlier.

The central bank reserves witnessed a surge of 59.8 million dollars to 7.8651 billion dollars, while banks' reserves declined by 1.9 million dollars to 3.3638 billion dollars.

 

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Centre taking measures for development of Balochistan​

ISLAMABAD (April 16 2009): Mir Humayun Aziz Kurd, Federal Minister for Livestock, Fisheries and Dairy Development, has assured that the federal government would extend maximum opportunities to the young and educated people of Balochistan in curricular and extra-curricular activities. The Minister expressed these views while talking to Mir Shah Nawaz Khan Marri, Balochistans Minister for Sports and Youth Affairs who called on him here on Wednesday.

Mir Humayun Aziz Kurd said that the federal government was sincerely taking concrete measures for the development of Balochistan, bringing it at par with other provinces. "The President of Pakistan has already announced a special package for the people of Balochistan, which he announced during his recent visit to Quetta," Mir Humayun Aziz Kurd maintained.

Mir Shah Nawaz Khan Marri, Provincial Minister for Sports and Youth Affairs highlighted the measures aimed at promoting healthy sports activities in Balochistan. He said that the provincial government was focusing on the exchange of inter-provincial youth delegations so that the people from different parts of the country interacted regularly thereby promoting harmony and sharing each others experiences.

Mir Shah Nawaz Marri called upon the Federal Government for allocations of substantial funds for upgrading the existing healthy recreational facilities in Balochistan. The Provincial Minister maintained that the budgetary allocations during the current financial year were too meagre to help carry out sports activities in the countrys largest province.-PR

 

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KSE gains 124 points on news of $5bn aid ​

Saturday, April 18, 2009

KARACHI: The commitment by Friends of Democratic Pakistan (FoDP) of giving over $5 billion aid to the country kept Karachi bourse up in the green territory on Friday.

This news prompted investors to push up the market by 1.63 per cent on active short covering.

KSE 100-shaer index posted a handsome recovery of 1.63 per cent or 124.87 points and closed at 7,794.95 points. The parallel running junior 30 index surged by 1.72 per cent or 144.73 points and finished at 8,540.16 points.

Leading analyst M Sohail said that the announcement of over $5.28 billion aid to the country by FoDP was well in line with expectation and the decision retrieved market in green. Earlier, the market opened on a confused note and fell in red immediately. The extended correction took market down to 7,524.71 points intra-day low, losing another 155 points from pre-opening level. Sohail added that the market faced some selling pressure in early hours owing to likely unchanged outlook of the tight monetary policy to be announced by the State Bank of Pakistan on Monday, April 20. If SBP did not announce a significant or even a little cut in the exorbitant discount rate then there shall be seen no battering in the market and the impact would be neutral, as it (market) has already posted the due discount on conflicting news about maintaining the current rate high at 15 per cent in the next quarter as well. The market would, however, react positively if central bank announces a cut and eases the policy, he further said.

Ahsan Mehanti at Shahzad Chamdia said that the investment activities at bourses would increase, as investors were expecting further pledge from FoDP donors’ conference, which would also stabilize the economic outlook of the country.

Moreover, expectation of good result announcements in oil, banks and fertilizer sectors remained a major catalyst for positive activity, he added. Out of total 302 actives on board, 171 stocks advanced, 115 stocks declined, while the value of remaining 16 stocks closed unchanged.

Among the notable stocks, Pak Oilfields, Lucky Cement, EFU General Insurance, Attock Refinery and Pak Refinery settled in red territory. Furthermore, the day turnover declined to 259.365 million shares against 337.353 million shares traded in the ready market a day earlier, showing a decline of over 23 per cent on day-to-day basis. Activities in the future market remained lull with zero shares turnover. On the contrary, the overall market capitalisation surged by Rs28 billion and stands at Rs2,323 billion.

The foreign portfolio investors also injected funds worth over one million dollar in this session at three local bourses, according to NCCPL website.

Highest volumes were witnessed in JS Company at 23.825 million closing at Rs43.73 with a gain of Rs1.46, followed by National Bank at 16.273 million closing at Rs84.26 with a gain of Rs2.88, Pak Oilfields at 14.383 million closing at Rs155.06 with a loss of Rs5.75, DG Khan Cement at 13.512 million closing at Rs28.72 with a gain of 32 paisa, and Oil & Gas Development Company at 12.418 million closing at Rs78.08 with a gain of Rs1.35.