Pakistan Economy - News & Updates

[wtf]

The above is only the results of a sample survey and are over a shorter period. The data is from Pak govt., but the commentary is entirely from the newspaper.

Full reports should come in later and that would give a clearer picture.

My 2 cents -
The imports data should not be really worrying since Pak currency has depreciated and hence imports are naturally expected to fall. The numbers are proportionate, so the basic economy has not suffered.
The 4% shrinkage in manufacturing on the other hand is cause for concern. In a depreciating currency scenario and when the country is labour intensive rather than capital intensive, the manufacturing should have grown. But the fall is really worrying. Coupled with inflation, the symptoms point to a stagflationary economy (or a sideways recession).

 

[dherky]

it been really a long time since i heard a good news from pakistan
what is going on guys...

 

[ejaz007]

Remittances increase 20% to $7.076 bn in July-May FY09

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $7.076 billion was received in the first eleven months (July-May) of the current fiscal year 2008-09, showing an increase of $1.172 billion or 19.86 percent over the same period of the last fiscal year. The amount of $7.076 billion includes $0.46 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

In May 2009, an amount of $720.68 million was sent home by overseas Pakistanis, up 23.25 percent or $135.93 million, when compared with $584.75 million received in the same month last year. This is the second highest amount of remittances received in a single month. Earlier, the overseas workers had sent the highest-ever amount of $739.43 million as remittances in March 2009.

The inflow of remittances in the Jul-May, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,581.48 million, $1523.89 million, $1,407.23 million, $1,094.54 million, $537.11 million and $224.71 million respectively as compared to $1,618.46 million, $1,002.01 million, $1,127.65 million, $892.41 million, $420.79 million and $162.66 million respectively in the July-May, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eleven months of the current fiscal year 2008-09 amounted to $706.84 million as against $677.49 million in the same period last year.

The monthly average remittances for the period July-May 2008-09 comes out to $643.30 million as compared to $536.71 million during the same corresponding period of the last fiscal year, registering an increase of 19.86 percent. During last month i.e. May 2009 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $157.10 million, $145.83 million, $143.16 million, $98.52 million, $69.13 million and $28.18 million respectively as compared to $94.49 million, $154.73 million, $125.94 million, $97.23 million, $41.76 million and $15.01 million in May 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May, 2009 amounted to $78.75 million, up from $55.43 million received in same month last year. staff report

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

it been really a long time since i heard a good news from pakistan
what is going on guys...

We are putting our house in order. Wait a bit and you shall hear a lot of good news.

 

[wtf]

Remittances increase 20% to $7.076 bn in July-May FY09

KARACHI: Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $7.076 billion was received in the first eleven months (July-May) of the current fiscal year 2008-09, showing an increase of $1.172 billion or 19.86 percent over the same period of the last fiscal year. The amount of $7.076 billion includes $0.46 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

In May 2009, an amount of $720.68 million was sent home by overseas Pakistanis, up 23.25 percent or $135.93 million, when compared with $584.75 million received in the same month last year. This is the second highest amount of remittances received in a single month. Earlier, the overseas workers had sent the highest-ever amount of $739.43 million as remittances in March 2009.

The inflow of remittances in the Jul-May, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,581.48 million, $1523.89 million, $1,407.23 million, $1,094.54 million, $537.11 million and $224.71 million respectively as compared to $1,618.46 million, $1,002.01 million, $1,127.65 million, $892.41 million, $420.79 million and $162.66 million respectively in the July-May, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eleven months of the current fiscal year 2008-09 amounted to $706.84 million as against $677.49 million in the same period last year.

The monthly average remittances for the period July-May 2008-09 comes out to $643.30 million as compared to $536.71 million during the same corresponding period of the last fiscal year, registering an increase of 19.86 percent. During last month i.e. May 2009 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $157.10 million, $145.83 million, $143.16 million, $98.52 million, $69.13 million and $28.18 million respectively as compared to $94.49 million, $154.73 million, $125.94 million, $97.23 million, $41.76 million and $15.01 million in May 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May, 2009 amounted to $78.75 million, up from $55.43 million received in same month last year. staff report

Daily Times - Leading News Resource of Pakistan

The increased remittances would explain the 14% inflation numbers even when the manufacturing sector is flat/slowing. Increased money in the economy causes prices to go up (more money, same amount of products to be bought ).

Any news on what is causing remittances to increase? The increase in remittances is measured in dollars and the Gulf currencies (most) are pegged to the dollar. This means that Pakistanis abroad either earned 20% more this year or they are sending 20% more to Pakistan this year. I can't believe that Gulf is experiencing a 20% salary hike - from what I know they are actually laying off people.

Not trying to diss on anybody, but trying to find out the root cause of the wealth inflows.

 

[TopCat]

The increased remittances would explain the 14% inflation numbers even when the manufacturing sector is flat/slowing. Increased money in the economy causes prices to go up (more money, same amount of products to be bought ).

Any news on what is causing remittances to increase? The increase in remittances is measured in dollars and the Gulf currencies (most) are pegged to the dollar. This means that Pakistanis abroad either earned 20% more this year or they are sending 20% more to Pakistan this year. I can't believe that Gulf is experiencing a 20% salary hike - from what I know they are actually laying off people.

Not trying to diss on anybody, but trying to find out the root cause of the wealth inflows.

Actual salary for expatriate workers increased as the new recruits are slow and the companies are resorting to existing worker with higher pay. Second contributing factor is strict money laudering law and people are more lean towards sending money through legal channel.

 

[Neo]

WAPDA, KESC & subsidies largest burden on budget ​

Economic Survey says contingent liabilities in FY09 rose by 27pc to Rs275.89bn​

Friday, June 12, 2009

ISLAMABAD: WAPDA and the KESC are leading to increased hidden risks to the economy and pressure on the national budget, the Economic Survey 2008-09 revealed.

“The Water and Power Development Authority (WAPDA), the Karachi Electric Supply Corporation (KESC) and implicit liabilities in the shape of subsidies to various sectors have been the largest drain on the budget,” says the Economic Survey presented by the Adviser to Prime Minister on Finance Shaukat Tarin here on Thursday.

The survey repeated the last year’s paragraph, saying, “Financial improvement plans of the two power utilities are currently under implementation to curtail these outflows,” but leakages on these two major heads are increasing every next year and there is no improvement in sight.

It says that contingent liabilities (both explicit and implicit) during fiscal year 2008-09 rose by 27 per cent to Rs275.89 billion from Rs217.21 billion last year.

Contingent liabilities are costs the government will have to pay if a particular event occurs. A common example of a contingent liability is a government-guaranteed loan. At the time a guarantee is entered into, there is no liability for the government, since this is contingent upon the borrower failing to repay the loan as contracted.

It revealed that these liabilities as percentage of the GDP rose to 2.12 per cent in 2008-09 from 2.11 per cent in 2007-08.

Out of total Rs275.89 billion, explicit liabilities stood at Rs72.48 billion in 2008-09, up by 15 per cent as compared to Rs63.05 billion last year, indicating that it would have a direct impact on the federal budget in the shape of cash outflows.

Implicit contingent liabilities have also increased by 32 per cent to Rs203.44 billion in FY08-09 as compared to Rs154.17 billion in the fiscal year 2007-08. Substantial increase in contingent liabilities reveals more pressure on the economy and points towards less soundness of the country’s financial sector, macro economic policies, regulatory and supervisory system and information disclosure.

The explicit liabilities of Rs72.48 billion, comprise payments made on account of contractual guarantees issued on Ghee Corporation of Pakistan (GCP), Rice Export Corporation of Pakistan (RECP), Trading Corporation of Pakistan (TCP), Cotton Export Corporation (CEC) and Saindak Bonds; Pakistan Steel Mills Corporation’s liability payments contractually assumed by the Government and payments to Fauji Fertiliser Company Bin Qasim on account of the 1989 Investment Policy pertaining to the fertiliser industry.

Of the explicit liabilities, an amount of Rs2.356 billion has been paid on account of Pakistan Railways debt servicing liability (Government guaranteed loans) last year, whereas, in the corresponding period it was Rs2.53 billion.

Besides, an amount of Rs930 million was paid out as an interest (equity) to the restructured loans and Term Finance Certificates to PIA. GOP has guaranteed interest payments (restructured loans and TFCs) for five years starting in the FY01-02.

Water and Power Development Authority (WAPDA) borrowed Rs15.59 billion during FY 2008-09 from the National Bank of Pakistan as against Rs8 billion in the corresponding period last year.

From federal budget cash outflow to HBL, ABL, Bank Alfalah, Askari Bank and Brunal Investment Company stood at Rs48.9 billion during the fiscal under review against Rs44 billion last year.

The govt’s guarantee against Pakistan Steel Mills stood Rs736 million, PIA (interest on govt guaranteed TFCs and loans) Rs930 billion, FFC Jordan Rs231 million, People Steel Mills Rs155 million, Karachi Shipyard & Engineering Works Rs432 million, KESC system improvement (loan) Rs3 billion in the shape of explicit contingent liabilities.

Of the implicit contingent liabilities, the largest drain on the budget was on the Water and Power Development Authority (WAPDA) subsidy, non-recovered loans and other loans 113.16 billion against Rs58.72 billion last year.

The KESC’s subsidy against the adjustment of additional surcharge against GST stood at Rs1.28 billion against Rs3.35 billion in the last fiscal. Pakistan Railways’ other operational shortfalls stood at Rs8.158 billion against Rs4.77 billion last year.

Subsidy was given to Trading Corporation of Pakistan (TCP) on import of wheat (Rs35 billion), sugar (Rs6.30 billion), and urea (Rs3.0 billion). Cumulative subsidies under these heads given to TCP were, Rs44.30 billion during FY 2008-09.

Besides, subsidies to the exporters of the textile sector stood at Rs4.81 billion, importers of phosphatic and potashic fertilisers Rs7.65 billion, manufacturers of phosphatic and potashic fertilisers Rs21.03 billion during the year under review.

 

[Neo]

Exports, imports fall on weak demand ​

Friday, June 12, 2009

ISLAMABAD: Exports and imports showed a negative growth in 10 months (July-April) of fiscal year 2008-09 as both domestic and external demand weakened due to global recession, reveals the Economic Survey of 2008-09 on Thursday.

Exports fell by three per cent during July-April 2008-09 against a rise of 10.2 per cent in the same period last year, the survey showed. In absolute terms, exports decreased from $15.22 billion to $14.76 billion in the period under review. The government had set the export target at $22.1bn which was later revised to $19.6bn.

Imports during the period declined by 9.8 per cent compared with the same period last year, reaching $28.92 billion. This came after the government took measures to restrict imports leading to a drop in demand and international oil prices fell substantially. Besides that, depreciation of the rupee also played a significant role in the decline in imports.

According to the break-up, the survey said imports of petroleum group, which accounted for 27.7pc of total imports, fell by 7.6pc to $8.01bn. The decline in imports of the petroleum group was mainly attributed to the massive fall in oil prices in the international market.

Imports of telecommunications sector declined by 54.8pc during July-April 2008-09. It was followed by imports of consumer durable group, which fell by 16.4pc. Raw materials and food groups posted negative growth of 5.2pc and 3.1pc respectively. Machinery was the only group which showed a nominal growth of 0.5pc in imports during July-April 2008-09.

 

[Neo]

Manufacturing sector posts weakest growth ​

Friday, June 12, 2009

ISLAMABAD: Manufacturing sector is the second largest sector of the economy, contributing 18.4 per cent to the GDP. This sector has recorded its weakest growth in a decade during the current fiscal year.

According to the Economic Survey released by Advisor to Prime Minister on Finance Shaukat Tareen, overall manufacturing posted negative growth rate of 3.3 per cent during the current fiscal year against the target of 6.1 per cent and 4.8 per cent of last year.

However, SMEDA plays a vital role in creating market oriented economic growth, employment opportunities and reducing poverty. As many as 16 projects, amounting to Rs1680 million, have been approved for implementation by SMEDA.

Regarding privatization of projects, the survey said that during the current fiscal year, Privatisation Commission completed the transaction of Hazara Phosphate Fertilizer Limited (HPFL), fetching Rs1340.02 million.

Large-scale manufacturing (LSM), accounting for almost 70 per cent of overall manufacturing, witnessed a broad-based decline of 7.7 per cent against the revised growth target of negative 5.0 per cent during July-March 2008-09.

Main contributors towards this broad based decline were the impact of severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-a-vis US dollar, and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand.

The increasing trend of inflation also affected consumers to curtail expenditure on durable goods.

Textile sector, being an export-oriented industry of Pakistan and more prone to international demand shocks, has been under severe stress amid a global recession.

However, textile production declined slightly by 0.7 per cent over the same period last year. The textile sector was badly hit by power shortages and weak external demand.

Both cotton yarn and cotton cloth industries, with the largest share of the textile sector, posted negative growth of 0.3 per cent during the first nine months of the current financial year.

Sustained growth in recent years in the cement industry has been an outcome of increase in its production capacity and exploitation of export markets.

The cement sector posted a growth rate of 4.71 per cent during the current fiscal year. Cement exports increased by 48.8 per cent. The fertilizer industry also posted positive growth due to increase in production.

The Steel Mill is producing coke, pig iron, billets, hot rolled coils/sheets, cold rolled coils/sheets, galvanized sheets, etc. The performance of steel mill was unsatisfactory during the current fiscal year. Production value slid down from Rs11133 million in 2007-08 to Rs9971 million in the current financial year, witnessing a decrease of 10.44 per cent.

Mineral potential of Pakistan, though recognized to be excellent, is inadequately developed as its contribution to GDP at present stands at 2.4 per cent. During the current fiscal year (July-March 2008-09), the mining and quarrying sector registered almost flat growth rate ie 0.24 per cent, against 3.0 per cent of last year and a target of 4.5 per cent for the current year.

The growth rate of this sector declined sharply due to the substantial diminishing trend in the production of Sluphere (10.3 per cent) and Dolomite (4.6 per cent).

 

[Neo]

Govt steps to help enhance per capita income ​

Friday, June 12, 2009

ISLAMABAD: The government has taken various initiatives to combat poverty during the year 2008-09, which will help enhance absolute per capita income, net per capita income and widen the scope to earn livelihood, said the Economic Survey of Pakistan released on Thursday.

These initiatives included PPAF, micro finance SME operations, Benazir Income Support Programme (BISP), Peoples Works programme, Pakistan Bait-ul-Maal and Punjab government initiatives including tractor subsidy, sasti roti and Punjab food support scheme.

Agriculture, services and manufacturing sector each is among the largest source of employment for income generation. Although agriculture, barring livestock, has grown faster in 2008-09 than in 2007-08, industry and services sector will register a declining growth rate with shifting pressure for employment to other sectors outside the organised sectors, acceptance of lower grade jobs, lower income and thus lower consumption.

Although persistent growth in per capita income which determines absolute purchasing power, and minimal of inflation, which determines the net purchasing power coupled with least skewed income distribution is required for perpetual decline in poverty incidence, it varies both in terms of space and time governed by domestic and international influent factors.

In this perspective year, 2008-09 has been an exceptional year. International financial crisis after translation into reduced and even negative growth rates the world over, in conjunction with soaring fuel and food prices, are at best estimated to increase poverty estimates the world over.

 

[Neo]

Finance and insurance sector records negative 1.2 percent growth​

ISLAMABAD (June 12 2009): Advisor to Prime Minister on Finance Shaukat Tarin said on Thursday that finance and insurance sector registered a negative growth of 1.2 percent in ongoing fiscal year ie 2008-09 whereas real GDP growth stood at 2 percent against 4.1 percent last year.

While launching Economic Survey 2008-09, Tarin stated that the performance of finance and insurance sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets.

He said that total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment fell to 18.1 percent of GDP from 20.4 percent last year. Private sector investment was decelerating persistently since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.

Public sector investment to GDP ratio, which has been depicting a consistent increase from 4 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09. The overall foreign investment during the first 10 months (July-April) of the current fiscal year declined by 42.7 percent and stood at $2.2 billion against $3.9 billion in the comparable period of last year, the advisor said.

He said that foreign direct investment (private) showed some resilience and stood at $3205.4 million during the first 10 months of the current fiscal year against $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed a net outflow of $451.5 million against a net inflow of $98.9 million during the comparable period of last year.

Agriculture sector depicted a stellar growth of 4.7 percent as compared to 1.1 percent witnessed last year. Major crops registered an impressive growth of 7.7 percent against a negative growth of 6.4 percent last year and the livestock sector grew by 3.7 percent against 4.2 percent last year.

The advisor said that the output in the manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent against expansion of 4 percent during last year.

The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009. He said that the services sector grew by 3.6 percent against the target of 6.1 percent and value added in the wholesale and retail trade sector grew at 3.1 percent as compared to 5.3 percent last year. Finance and insurance sector registered negative growth of 1.2 percent in 2008-09.

He noted that the performance of this sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. The transport, storage and communication sub-sector depicted a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent last year.

He said that Pakistan's per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. The per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent.

Real private consumption rose by 5.2 percent against negative growth of 1.3 percent attained last year. However, gross fixed capital formation could not maintain its strong growth momentum and real fixed investment growth contracted by 6.9 percent against the expansion of 3.8 percent in the last fiscal year. Large-scale manufacturing witnessed an across-the-board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year.

Severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-à-vis US dollar and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand are responsible factors for sluggish performance of manufacturing sector.

Interest payments surpassed their budgeted level by a significant margin. A sum of Rs 557 billion was budgeted for interest payments in 2008-09. The year is likely to end with interest payments of Rs 618 billion which are higher by Rs 61 billion over budgeted amount.

He said that government borrowing from the central bank has been dampened since December 2008 in line with the target set under the macroeconomic stabilisation programme as part of the IMF Stand-By Arrangement. The government budgetary borrowing from the banking system decreased by Rs 339.9 billion during July-May FY 09 against an increase of Rs 360.4 billion in the corresponding period of FY08.

Credit to private sector grew by Rs 21.8 billion during July-May in ongoing fiscal year as compared to Rs 369.8 billion during the corresponding period last year. Foreign portfolio investment stood at a negative $418.4 million during first nine months of 2008-09.Dismal performance owing to a confluence of factors was exhibited by different sectors of the economy and the dull indicators left a weighty impact on the stock market activity during 2008-09.

He said that the inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 22.3 percent during the first 10 months (July-April) of the current fiscal year ie 2008-09, against 10.3 percent in the comparable period of last year. The food inflation is estimated at 26.6 percent and non-food 19.0 percent, against 15.0 percent and 6.8 percent in the corresponding period of last year.

The increase in inflation rate during the current 2008-09 is attributable to the increase in food price inflation which has been due to increase in prices of wheat, wheat flour, sugar, milk, poultry, meat, fresh vegetables and fruits. Services account deficit shrank by 41.3 percent during July-April 2008-09 to reach $3. billion and financial account contracts from $6,224 million to $3,476 million during July-April against corresponding period last year.

Workers remittances amounted to $6355.6 million in July-April against $5319.1 in corresponding period last year, thereby showing an increase of 19.5 percent. Pakistan's total liquid foreign exchange reserves amounted to $11.6 billion by the end of May 2009.Of which, reserves held by State Bank of Pakistan stood at $8.28 billion and banks at 3.32 billion, the advisor said.

 

[Neo]

In case FODP funding is delayed: IMF asked to arrange $4 billion credit line as insurance, says Tarin​

ISLAMABAD (June 12 2009): Prime Minister's Advisor on Finance, Shaukat Tarin on Thursday revealed that Pakistan has requested the International Monetary Fund (IMF) to arrange $4 billion credit line as insurance to absorb economic shocks in case of delay in payment of promised funds from Friends of Democratic Pakistan (FODP).

"The fear of fiscal deficit and current account deficit still exists as oil prices are going up and workers remittances may come down," he said at a press conference after formally launching the Economic Survey 2008-09 - two days after Business Recorder revealed it.

He said that Pakistan would receive the next tranche of the 7.6 billion dollars standby loan from the IMF after the budget 2009-10 scheduled to be presented in the National Assembly on June 13. He said that the FODP had committed $5.28 billion but assured that the development programme would continue in case of delay. "We are trying to secure another standby arrangement as insurance from the IMF to continue the development programme if the FODP delays payment", he added.

He ruled out that the IMF had delayed release of $840 million tranche due to failure of the government to meet the targets agreed with the IMF, saying that Pakistan had proposed a wait to assess the measures in the budget. The figures for July-March comply with the IMF targets, he added. Tarin said the government was going to announce massive programme for development in the next budget and with the increase in GDP, the debt-to-GDP ratio would start declining.

"The government will get enough money from the FODP that would be spent on the development programme, he said, adding that $1.2 billion from the FODP would be spent on development projects. Pakistan will also secure $500-550 million from other external resources to spend on the development projects during the upcoming financial year ie 2009-10, he said.

He said the international capital market was closed to generating money due to recession and the government had no option but to seek loans from international financiers. He said that international capital market would be open next year for generating money.

Responding to a query whether Pakistan had violated the Fiscal Responsibility and Debt Limitation (FRDL) Act 2005, Hina Rabbani Khar, Minister of State for Economic Affairs said that borrowing by the present government was slightly more than allowed by the Act.

According to FRDL, the government is bound to reduce debts by 2.5 percent of GDP each year but the present government borrowed one percent in excess of what is allowed by the Act which is a clear violation.

The government under the Act also required reducing revenue deficit by June 30, 2008, which has not been implemented. The government has obtained foreign debts of $5.5 to 6 billion in just nine months of the current fiscal year, expected to touch $7 billion by year-end. Interestingly, none of the members of the parliament raised this issue in the House.

Tarin said the government would make sufficient allocation for Internally Displaced Persons (IDPs) in upcoming budget and spending on IDPs would be in shape of grants to be received from different countries and would not put pressure on inflation in Pakistan. He said that spending on defence had exceeded Rs 300 billion during the current financial year ie 2008-09.

"The subsidy to power sector had reached Rs 98 billion against the budget allocation of Rs 65 billion for the current fiscal year even though the government had not passed on full impact of power tariff determined by Nepra to consumers," he added. He said the government would focus on productive growth of manufacturing and agriculture sectors in the next budget. He said the IMF had no reservations about the tax system in Pakistan.

 

[Neo]

Rs 2.9 trillion outlay shows Rs 1.4 trillion revenue target: budget deficit estimated at Rs 680 billion​

ISLAMABAD (June 12 2009): The government is planning to present a budget with total consolidated outlay of Rs 2.9 trillion including Rs 1405-1410 billion tax target for the Federal Board of Revenue. Defence spending would be up to Rs 343 billion and the budget deficit is likely to be Rs 680 billion, with the condition of approval of the Cabinet before the budget announcement, sources told Business Recorder on Thursday.

New Bankruptcy Law and Resolution Trust Corporation would be introduced for easing the industry which saw a big hit from host of local and international crises. The government is putting its energies to restore its growth in coming fiscal year. Two new Development Financial Institutions (DFIs) are being set up and the announcement is awaited in the budget.

One institution would focus on infrastructure sector and the other on the industry's revival with initial capital touching Rs 6 billion. Development spending is likely to be enhanced by Rs 150 billion outside Public Sector Development Programme (PSDP) and Rs 621-646 billion from PSDP.

Tax on cash withdrawal is likely to be relaxed in the budget. Introduction of carbon tax from Rs 6-12 per liter to replace petroleum development levy and to consolidate taxes on petroleum products will also be firmed up after the Cabinet approves the budgetary measures. With the help of provinces, banks, insurance, doctors, lawyers and cargo agents would be brought into sales tax net. Stationary, mineral water, juices and other items are being considered for duty revision.

 

[Neo]

Remittances rise to $7.076 billion in 11 months​

KARACHI (June 12 2009): Remittances sent by overseas Pakistanis continued to show a rising trend and an amount of $7.07626 billion was received in the first eleven months (July-May) of the current fiscal year 2008-09, showing an increase of $1.17243 billion or 19.86 percent over the same period of the last fiscal year.

The amount of $7.07626 billion includes $0.46 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs). In May 2009, an amount of $720.68 million was sent home by overseas Pakistanis, up 23.25 percent or $135.93 million, when compared with $584.75 million received in the same month last year.

This is the second highest amount of remittances received in a single month. Earlier, the overseas workers had sent the highest-ever amount of $739.43 million as remittances in March 2009.

The inflow of remittances in the July-May, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,581.48 million, $1523.89 million, $1,407.23 million, $1,094.54 million, $537.11 million and $224.71 million respectively as compared to $1,618.46 million, $1,002.01 million, $1,127.65 million, $892.41 million, $420.79 million and $162.66 million respectively in the July-May, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eleven months of the current fiscal year 2008-09 amounted to $706.84 million as against $677.49 million in the same period last year.

The monthly average remittances for the period July-May 2008-09 comes to $643.30 million as compared to $536.71 million during the same period of the last fiscal year, registering an increase of 19.86 percent.

During last month ie May 2009, remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $157.10 million, $145.83 million, $143.16 million, $98.52 million, $69.13 million and $28.18 million respectively as compared to $94.49 million, $154.73 million, $125.94 million, $97.23 million, $41.76 million and $15.01 million in May 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during May, 2009 amounted to $78.75 million, up from $55.43 million received in same month last year.

 

[Neo]

Thar Coal Company disbanded ​

ISLAMABAD (June 12 2009): The government on Thursday disbanded the Thar Coal Company with immediate effect. The decision was taken in a meeting of Thar Coal Energy Board (TCEB) chaired by Prime Minister, Syed Yousuf Raza Gilani, specially convened to resolve the issue of ownership of Thar Coal project at PM House.

The Prime Minister asked TCEB to take all decisions since it was formed by keeping all aspects of the Constitution in view of giving representation to both federal and provincial governments. He said Thar Coal deposits of over 170 billion tons, worth billions of dollars are the country's big strategic assets and stressed the need to explore them to meet growing energy needs.

The Prime Minister reposed confidence that TCEB would act as a one-window support to potential investors in matters relating to development and leasing or sub-leasing at Thar mining development of clean coal technologies.

Underlining the importance of exploiting all areas of energy resources, the Prime Minister emphasised that speedy development of coal as another source of energy was imperative for the progress and prosperity of the country. The meeting was informed that 46 percent of energy needs of the world were being met through coal while Pakistan's share was only 0.1 percent.

It was further informed that Government of Sindh was preparing water supply scheme for Thar Coalfields for delivery of 250 cusecs water, which would cost around Rs 4 billion. Chief Minister Sindh, Syed Qaim Ali Shah, who is also the Chairman of TCEB has been asked to hold an urgent meeting of the Board to resolve the pending issues so that development work on the project could be started at the earliest.

The meeting was informed that in the forthcoming TCEB meeting Wapda would be asked to start work on the transmission lines on urgent basis besides putting up a power plant of 1000MW in Thar as well as to rehabilitate the Model Coal Fired Power Plant in Lakhra.

The meeting will also consider proposal to start work on laying broad-gauge lines for transportation of machinery up to the coalfields by Railways. During the meeting it was decided to remove with immediate effect Managing Director TCEB, Aslam Sanjrani. In his place, Ijaz Ali Khan, currently working as Secretary Mines and Mineral Development, Government of Sindh has been given additional charge of the office.

Federal Ministers for Water and Power, Raja Pervaiz Ashraf; Labour and Manpower, Syed Khursheed Shah; Parliamentary Affairs, Dr Zaheer ud Din Babar Awan, Privatisation, Syed Naveed Qamar, Senator Raza Rabbani; Deputy Chairman Planning Commission, Sardar Asif Ahmed Ali; Sindh Minister for Revenue, Jam Saifullah Khan Dharejo; Sindh Minister for Irrigation, Syed Murad Ali Shah; Secretary Water and Power, Chief Secretary Sindh, Member TCEB and Sindh Secretary Mines and Minerals also attended the meeting.