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Pakistan's Economy - News and Updates

Floods; Corporates’ initial impression
Pakistan is encountering the worst of natural disasters in its history in the shape of
seemingly unending floods since July 22nd, 2010. Various agencies, including
USAID, IFIs, UN, and Pakistan’s National Disaster Management Authority
(NDMA) have yet to estimate the extent of the national loss incurred as a result of
this. However, initial estimates suggest that over 13.8mn people have been
affected from this calamity. We opine, this will have notable negative
consequences on the government’s budgetary estimates and may risk running a
higher fiscal deficit than earlier estimated which in turn will lead to increased
government borrowing. Despite this gloomy picture, we believe, the country’s
major economic activity areas (industrial & agricultural) are safe from significant
destruction and work is continuing as usual. This was verified by several major
corporates whom we contacted, and barring a few exceptions, a relatively better
situation was portrayed by them than initially feared by all (details to follow). As
fore-mentioned, the flood flow is not over yet, and thus an increased risk to our
initial assessment cannot be ruled out, as there is forecast of further rainfall to
occur in the country.

---------- Post added at 12:19 PM ---------- Previous post was at 12:19 PM ----------

2010 floods impact; taking the 1992 floods as a reference pointBrief history - 1992: As highlighted above, it is too early to ascertain the macro
impact of the ongoing flood situation, but we are taking the September 1992
floods as a case point for estimation purposes. In 1992, Pakistan witnessed
record floods (also classified as one of the worst floods in the world at that point in
time) and the country witnessed massive infrastructure and agricultural losses.
Approximately half a million people were displaced, over 5 million acres of land, 3
million acres of crops, 200,000 Kacha-area mud houses and about 100,000
houses in other areas were destroyed.
As per the economic survey of 1993, record agricultural losses were witnessed,
e.g. cotton production came in at 9.33mn bales vs. the target of 12mn bales, rice
output was recorded at 3.08mn tons vs a target of 3.48mn tons, and sugarcane
harvested came to 36.5mn tons vs the target of 39.7mn tons. On the macro front,
GDP was reported at a meager 2.1% (from 7.7% in FY92), with the dip primarily
caused by a 5.3% contraction witnessed in the agricultural sector, the current
account deficit surging to 7.2% of GDP (from 2.8% in FY92) and the fiscal deficit
coming in at 8.1% (from 7.5% in FY92). Interestingly, inflation tapered off at 9.8%
(from 10.6% in FY92) and the policy rate was reduced to 15% from 17% in the
previous fiscal year. The stock market since the floods hit in 1992, provided a
record return of 67% within a span of 15 following months.
Flood impact – 2010: As highlighted in the USAID map on Page 3, the
agricultural loss is likely to be less severe than caused by the 1992 floods. It is
estimated that a total 1.48mn acres of agricultural land has been affected with the
majority cotton producing area safe from the calamity. The national highways are
still operational and hence, the supply of essential foods item is not likely to be
significantly handicapped, as opposed to what was witnessed in 1992.
 
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To assess the losses to the industries, we have spoken to the management of key
corporations in various sectors and all presented a relatively better situation and
that they have been saved from major losses. There were only a few exceptions,
the teleco’s and PEPCO which foresee infrastructure losses. We expect GDP
growth to remain in the range of 3.5-4.0% in FY11 as against the government’s
initial projection of 4.5%, with agricultural losses to be mitigated with the
reconstruction activity. Additionally, we anticipate, the government will follow an
expansionary fiscal policy and spend around Rs150bn on rehabilitation and
reconstruction, which will raise the deficit projection by ~1% to 6%. Additional
borrowing needed for this purpose will be achieved through loans from the SBP
and a likely waiver will be sought from the IMF.
 
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Pakistan textile industry seeks more market access
Published on Fri, Aug 20, 2010 at 10:45 | Updated at Fri, Aug 20, 2010 at 17:16 | Source : Reuters

Pakistan's textile industry is asking for greater access to the US and European Union markets as it struggles for survival after floods devastated the country.

Industry representatives say flood damage to the cotton crop and consequent supply shortages could be a final blow to an industry that is already under pressure from shrinking global demand, crippling power shortages and instability brought on by a Taliban insurgency.

Textile makers are asking for support to help make up for the losses.

"We have requested that the government ask the EU and U.S. for greater market access," said an official at the All Pakistan Textile Mills Association.

Foreign Ministry spokesman Abdul Basit told reporters in Islamabad on Thursday that the EU was mulling a meeting of its foreign ministers to discuss providing flood assistance to Pakistan, and possibly greater market access for Pakistani products.

Some products from Pakistan enter the EU market duty-free or at a reduced rate, but textile products such as bed linen and towels, which account for more than 65 percent of its exports to the EU, still face a 12 percent tariff.

Pakistan's total textile exports stood at over $10 billion in the 2009/10 financial year (July-June), of which about $6 billon worth of textile products went to the United States and the European Union.

The floods, the worst in the country's history, have killed up to 1,600 people, forced more than 4 million from their homes and disrupted the lives of about 20 million people - nearly 12 percent of the population.

The floods also damaged up to 2 million bales of cotton, and traders say Pakistan will have to import up to 3 million bales to make up for a shortfall. A Pakistani cotton bale weighs 170 kg.

Pakistan produced 12.7 million bales in the 2009/10 (July-June) financial year, when the country had to import about 2 million bales, and was hoping to harvest 14 million from the 2010/11 crop.

"This is really the worst time possible for textiles -- that the floods could have occurred -- because textile mills have no cotton," said Ziad Bashir, director of Gul Ahmed Textile Mills, Ltd, one of the country's biggest mills.

"The devastation they (floods) are causing definitely warrants an action like this (duty-free status for Pakistan's textile products)."

The textile sector is the source of over half the country's exports and about 40 percent of manufacturing jobs. Low output could further add to Pakistan's trade deficit.


"The government, in consultation with the industry, will take appropriate measures to help the textile sector, depending upon the extent of damage to the crop," said Textile Ministry Secretary Waqar Masood.

Textile mill owners say any further damage to the cotton crop would be devastating.

"If the floods continue, and this (the amount of cotton crop loss) goes up to 4 million or something, it's going to be colossal," Bashir said.


Pakistan textile industry seeks more market access - Reuters -
 
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21 August 2010 Last updated at 20:44 GMT

IMF to review 'massive challenge' of flood-hit Pakistan

The International Monetary Fund says the floods that have struck Pakistan pose a "massive economic challenge" and it will review the country's budget and financial prospects.

The IMF will start talks with Pakistani officials in Washington on Monday to assess how best to give help.

Tens of thousands more Pakistanis have been fleeing the floods, with the south now bearing the brunt.

Overall, about 1,600 people have been killed and 20 million affected.
Masood Ahmed, director of the Middle East and Central Asia department of the IMF, said in a statement: "The floods which have hit Pakistan in recent weeks and brought suffering to millions of people will also pose a massive economic challenge to the people and government of Pakistan.

"The scale of the tragedy means that the country's budget and macroeconomic prospects, which are being supported by an IMF-financed programme, will also need to be reviewed."

Mr Ahmed said that the IMF stood by Pakistan "at this difficult time".

The IMF agreed a rescue package with Pakistan two years ago as the country was then weighed down by soaring inflation, shrinking reserves and fighting militancy.

The Pakistan government has said that the cost of rebuilding after the floods could be as high as $15bn (£10bn).

Trying to survive

The BBC's Mike Wooldridge in Islamabad says there are concerns about higher inflation and lower growth, along with higher food prices caused by disruption to supply routes.

He says the extensive damage to the agricultural industry as a whole is another heavy blow because this is such an important part of the economy.

Meanwhile, tens of thousands more Pakistanis are being displaced in the southern province of Sindh, which is now being described as the country's worst hit province.

The BBC's Jill McGivering, who has in Sukkur in Sindh, says families are visible everywhere - on riverbanks, open ground and along the roadside.

About one-tenth of the homeless have places in relief camps, the rest are trying to survive alone, without shelter or any assurance of food, she says. Aid is being provided but it is limited and in enormous demand.

Dozens more villages have been inundated and although authorities expect flood waters to drain into the Arabian Sea over the next few days, evacuees who return may find their homes and livelihoods have been washed away.

The UN says it has now raised about 70% of the $460m it called for in its emergency appeal, as donors pledged more money.

Pakistan has also accepted $5m (£3.2m) in aid from its rival and neighbour India.

The floods began last month in Pakistan's north-west after heavy monsoon rains and have since swept south, swamping thousands of towns and villages in Punjab and Sindh provinces.

The UN said on Friday that more helicopters were urgently needed to reach communities cut off by the water.

Experts warn of a second wave of deaths from water-borne diseases such as cholera unless flood victims have access to supplies of fresh drinking water.

_48777537_pakistan_floods_06_464.gif


BBC News - IMF to review 'massive challenge' of flood-hit Pakistan
 
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AUGUST 24, 2010, 11:57 A.M. ET

IMF, Pakistan To Discuss Possible Emergency Loan -Official
WASHINGTON (Dow Jones)--The International Monetary Fund and Pakistan will discuss on Wednesday revision of the existing lending program and the possibility of emergency funding to help the country recover from the worst flooding in its history, an IMF official said Tuesday.

Beyond easing the terms of the nearly $11 billion financing arrangement in place since 2008, the IMF is considering more immediate measures to help Pakistan cope with the ongoing disaster, said Masood Ahmed, director of the IMF's Middle East and Central Asia Department.

"We already have a program in place and we also have the possibility of providing financing through an emergency instrument for natural disasters, and we'll be discussing both of those with the visiting delegation," Ahmed said in an interview with the fund's online magazine, IMF Survey.

Pakistan's finance minister, Abdul Hafeez Shaikh, is traveling to Washington this week to seek assistance from the IMF and the U.S. Floods have inundated about a fifth of the country, killing 1,500 people and destroying $2.8 billion in crops.

Budget deficit targets and growth projections under the IMF program will have to be revised, Ahmed said. Pakistan stands to receive the last $3.5 billion of the loan through year-end.

"The floods are having a major impact on the economy of Pakistan," said Ahmed. "They are, of course, a human catastrophe and it's still evolving, but the economic impact is also going to be very significant."

He said it's too early to estimate the economic toll from the flooding and reconstruction costs, but the effects will be major and long-lasting.

Pakistan had aimed to cut its fiscal deficit to 4% of gross domestic product this financial year from 5.1% last year. But the Finance Ministry has warned that gap could widen by about a percentage point.


IMF, Pakistan To Discuss Possible Emergency Loan -Official - WSJ.com
 
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Hi, I just wanted to add some clarifications to some of the comments made. Pakistan was projected to have a 4.5% GDP growth in the upcoming year. Due to the floods, it has been projected that the growth rate will fall by at least 1%-1.5%, translating into a 3%-3.5% growth rate now.

Pakistan's GDP is not expected to contract, rather not grow that much. However a 3%-3.5% GDP growth is not optimal, given the inflation rate (>10%), a high population growth rate, and most importantly current debt obligations. Also a loss of 1.5% GDP growth in FYI 2011, compounded over future growth rates adds up to a huge opportunity cost/loss.

Moreover, Pakistan is going to have to take loans to cover the reconstruction costs, which will only add more future debt servicing costs in the future. This additional debt servicing will constrain future development spending.

However, if the reconstruction is managed properly, it can stimulate other industries, construction, cement, steel, etc. Moreover, there is the opportunity to move some of the affected people away from subsistance farming to more permanent type of employment.

However, given the corruption in Pakistan and the sorry state of its affairs, I only see more corruption and the poor getting screwed once again. There are people in Kashmir, who are still living in relief camps and waiting for help after the 2005 earthquake.

Pakistan has the money to finance this reconstruction itself, if it only gets people to pay taxes, cracks down/recovers bad loans given, and curbs corruption. Pakistan has one of the lowest tax to GDP ratios.

However, the current government finds it easier to simply go begging for a free handout. I just find it disgraceful that a country of 180M cannot even cough up $450M itself to feeds its own people. Moreover the damages have been estimated to be around $10B, it is a shame Pakistan cannot even cover that itself and Zadari and the Pakistan Foreign Minister go around begging for money. Take care.

http://www.nytimes.com/2010/08/17/world/asia/17pstan.html?_r=2&ref=world

http://iaoj.wordpress.com/2010/01/2...tan-hurts-common-people-and-breeds-extremism/

http://www.dawn.com/wps/wcm/connect...paid+rs455m+against+rs570m+liabilities--bi-07
 
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Hi, I do not feel sorry for the financial situation Pakistan is in. It has brought this on itself. If that country was to clamp down on corruption and also make people pay their taxes, they can easily finance this reconstruction themselves.

The international community is under no obligation to pay for this damage. Pakistan has mismanaged its own house, and should not get a bailout. If you or I were to fall behind on our financial obligations, or not live within our means, we would have our homes, cars, and material possessions repossessed by the bank. Why should a sovereign state be treated any differently for not being able to pay its bills?

The article and acompanying video gives a good explanantion of the reasons behind Pakistan's fiscal woes. Take care.

http://www.nytimes.com/2010/07/19/world/asia/19taxes.html
 
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WB, ADB to lead damage, needs assessment

By Amin Ahmed
Thursday, 26 Aug, 2010

ISLAMABAD: The Asian Development Bank and World Bank agreed on Wednesday to carry out a ‘Damage and Needs Assessment (DNA)’ of floods in the country in accordance with a request of the government.

“This is the fourth DNA that the ADB and WB are jointly conducting in Pakistan in close collaboration with the Economic Affairs Division, but this one is unique given the scale of devastation and geographical spread of the calamity,” said Rune Stroem, ADB’s country director for Pakistan.

If there is no fresh wave of flooding the data collection and its compilation may continue uninterrupted and the assessment is expected to be completed by mid-October.

“The World Bank has completed numerous DNAs worldwide in collaboration with other key financing and donor institutions such as the ADB and we will be bringing that experience to bear on this DNA, which is going to be a challenge considering the enormity of the disaster,” said Rachid Benmessaoud, World Bank’s country director for Pakistan.

“The ADB and WB will collaborate with UN and other key donors through participation and sharing of information.”

According to a WB press release, the DNA focuses on estimating three types of costs: direct damage, indirect losses and reconstruction costs.

DNAs are generally conducted in the shortest possible time immediately after a natural disaster to provide the government and the international community with a credible assessment of the extent of the damage and an estimate of the cost to reconstruct and rehabilitate the damaged infrastructure and services.

DAWN.COM | National | WB, ADB to lead damage, needs assessment
 
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Reading interaction between Pakistani economic and political planners and international financial institutions is always fascinating, particularly as the Pakistanis have to be "pushed" to do right by themselves, it's just a really curious thing, it's like a junkie (addicted to international money) and it's pusher telling it that "it can't go on like this" -- STOP giving these people money:



IMF insists on tax, energy reforms
By Anwar Iqbal


Tuesday, 31 Aug, 2010

WASHINGTON: The International Monetary Fund continues to insist on more tax and energy sector reforms within the current fiscal year, despite its concerns about the impact of the 2010 flood on Pakistan’s economy, officials say.

Pakistan’s talks with the International Monetary Fund on loan restructuring and emergency assistance for flood victims entered a decisive phase on Monday as the two sides began their policy discussions.

Officials familiar with the talks told Dawn that Pakistan would have to implement tax and energy sector reforms within the current fiscal year if it wanted to continue an $11.3 billion loan arrangement negotiated in 2008.

The IMF also wants Pakistan to grant full autonomy to the State Bank, as it pledged while negotiating the loan arrangement with the fund
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A document released by the IMF on the occasion of the talks indicates that the fund is not satisfied with Pakistan’s pre-flood performance.

While noting that the IMF-Pakistan loan programme “got off to a good start and Pakistan’s economy has made progress towards stabilisation,” the document notes that the Pakistani economy was once again on a slippery slope.

It urges Pakistan to treat external support only “as a bridge to a greater domestic revenue effort”,
which will be indispensable to sustain development spending, achieve poverty reduction, and increase much-needed social outlays over the medium term.

In this regard, the IMF reminds Pakistan that “the introduction of a broad-based value-added tax is essential.”

The document notes that while there has been some progress towards the reform in the electricity sector, “more needs to be done to eliminate the financial losses of electricity companies and other public enterprises.

According to the document, inflation has been on the rise again and reached 13 per cent in March this year.Pakistan’s fiscal policy continues to be affected by low economic activity and a difficult security environment.

The document notes that Pakistani authorities have been striving to maintain fiscal discipline by eliminating non-priority spending.

“Such efforts proved initially successful, but since June 2009, the authorities have repeatedly exceeded the quarterly budget deficit targets under the IMF programme
 
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EU agrees trade concessions to flood-hit Pakistan

The European Union has agreed to make trade concessions to Pakistan to help it overcome the impact of flooding, diplomats say.

Details of the concessions are not yet available, but British diplomats told the BBC that potentially they could be worth millions of dollars.

They say the deal could allow Pakistan significant reductions in duties paid on textile exports to EU countries.

The International Monetary Fund has agreed to provide a $451m loan.

The IMF said that money would immediately be made available to Pakistan.

It said it hoped its decision would encourage more lending by international donors.

Opposed

British diplomats in Brussels told the BBC that Thursday's agreement would in principle allow Pakistan to avoid paying in duties on key imports to the European Union.

But correspondents say that countries within the EU that have significant textile industries - such as France, Italy and Portugal - may be opposed to the move.

Any move to grant Pakistan a waiver on textile duties would also require the consent of the World Trade Organisation (WTO) to ensure trade rules are not violated.

The details will be determined in the coming weeks, with the European Commission working with the WTO to finalise how the concessions can be be implemented.

Meanwhile, some of the estimated 10 million Pakistanis displaced from their homes by the massive July monsoon floods have begun tentative salvage operations.

The BBC's Mark Doyle in the north-west of the country says that piles of bricks are some of the first things people salvage from houses destroyed by the water - and the first task is to scrape away several feet of dried mud and river silt.

UN refugee agency head Antonio Guterres - who is also in the north-west - said that with 20 million Pakistanis affected by the floods and so many displaced, the aid effort was inevitably going to be short of what was required.

He said the international community had a duty to give more money and it was in their "enlightened self-interest" to do so, because if people in Pakistan felt angry and abandoned, this had potential to lead to turmoil and instability.

Elsewhere, new flooding has been reported from around the town of Dadu near the Indus river in Sindh province.

The army is continuing relief efforts, rescuing hundreds of people trapped or isolated by floodwaters in the area.

The floods which hit the country at the end of July have killed at least 1,500 people and devastated large areas.

The UN has said that billions of dollars will be needed in the long term.

But charities say the response to the UN's appeal has been sluggish.

The US has made the biggest contribution so far, followed by the UK.

UK Deputy Prime Minister Nick Clegg has called the international response "lamentable".

BBC News - EU agrees trade concessions to flood-hit Pakistan
 
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No money left to run government

No money left to run government

By Mehtab Haider

ISLAMABAD: While cutting down macroeconomic targets for 2010-11, the Asian Development Bank (ADB) on Tuesday declared there was no money left for running the federal government after paying for defence, subsidies, interest on loans and pensions.

The ADB said the combined outlays for these sectors of the economy were eating away the total revenues collected by the FBR and operating expenses of the federal government (2.9% of GDP) were to be financed only through loans.

It its Outlook 2010 update, released on Tuesday, the ADB also made the startling revelation that the severe energy shortfall had reduced the GDP growth by 2.0%-2.5%. The growth for the three years from FY2008 averaged 3.0%, substantially below 6.2% recorded in the previous six years.

The ADB 2010 update states that revenue measures are more urgent in view of the massive reconstruction requirements in the aftermath of severe floods, as are improvements in revenue administration and collection.

Assessing the medium-term outlook is problematic due to the devastating floods that began in early August 2010 and that clearly hit the short-term growth. Coping with the human toll and the massive damage will be daunting. The urgency of fiscal reforms to create space for reconstruction and development funding is now more pressing than ever before, said the bank.

The flood-related expenditure, the ADB states, will also alter the fiscal outcome, relative to the budget posted for FY2011, widening the fiscal deficit from the targeted 4.0%. In this context, it will be even more important to address the trends that were troublesome for the FY2010 out turn.

The ratio of the federal tax revenue to the GDP fell to its lowest level in more than 30 years, as tax collection declined from 9.1% of GDP in FY2009 to 9.0%, well below the 9.4% target. “The fiscal position is even more precarious than implied by the budget deficit alone. Net tax revenue available to the federal government (9.0% of GDP) was well short of current outlays (12.0% of GDP) in FY2010,” the ADB states.

Notably, the combined total of subsidy outlays (1.6% of GDP), defence spending (2.6% of GDP), interest costs (4.4% of GDP), and pensions (0.5% of GDP) amounted to 9.1% of GDP. General operating expenses of the federal government (2.9% of GDP) are thus to be financed by borrowings. Additional pressure on domestic credit markets came from escalating losses of state-owned enterprises in recent years, which amounted to an estimated Rs 245 billion or 1.7% of GDP in FY2010. Despite 37% rise in customer tariffs, power-related subsidies ballooned from the budgeted 0.5% of GDP to 1.0%, as tariff increases were insufficient for cost recovery. Total subsidies (including fertiliser and food) climbed to 1.6% of GDP.

Both the magnitude and the composition of federal spending in recent years have undermined macroeconomic stability and sustainability, and these trends must change, the ADB maintained.

Regarding outlook for 2011, the ADB states that the economic impact of severe floods will be heavily negative in the short run, due to extensive damage and reallocation of resources to cater for urgent needs.

“As losses in crops and livestock, damage to infrastructure and limited economic activity in a large part of the country will dampen growth prospects in virtually every sector, such that tepid GDP growth of 2.5% is expected in FY2011,” the report states. It is relevant to mention here that the government had envisaged GDP growth target at 4.5 per cent on eve of budget 2010-11.

Nevertheless, the ADB says, reconstruction and rehabilitation activities will subsequently have a positive impact on GDP. As the major transportation arteries of the country have been severely damaged, shortages of goods and services — even with rapidly ramped-up imports — are expected to put substantial upward pressure on prices.

The update projects average inflation in FY2011 at 13.0% compared to the federal government target of 9.5%. The price hike emanating largely from the supply constraints will pose challenges for effective monetary management of the SBP. Also, while the central bank will find it difficult to fully implement its earlier monetary stance in the present circumstances, it will need to make substantial efforts to keep demand for credit from exacerbating inflation pressures.

Pressures on the current account will also intensify in FY2011. These will stem both from a steeper than earlier forecast rise in imports (reflecting the launch of reconstruction activity) and from domestic supply shortages pushing food, raw cotton, and other essential imports upward. Limits on existing infrastructure capacity and flood damage are expected to hold down export growth — already, flood-related damage has curtailed cotton and rice exports.

Still, workers’ remittances, which increased by 13.2% in July-August 2010 over the same period the previous year, are expected to remain strong. If substantial grant aid is provided for relief, the deterioration in the current account deficit may be limited to 4.3% of GDP.

The massive flood-related devastation underscores the need for reprioritisation on the fiscal front so as to expand fiscal space for reconstruction.

The drain of subsidy requirements for the energy sector also needs attention: while the federal government has increased consumer tariffs, a substantial gap remains, requiring a combination of efficiency gains and further tariff increases. The energy sector as a whole will need to be placed on a financially viable footing if the necessary investment in productive capacity is to be realised.
 
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Pak has made progress in stabilising economy: IMF

* Agency says reforms must continue to strengthen fundamentals of economy

* Open to negotiating another programme with country

WASHINGTON: Pakistan has made some progress in stabilising the economy despite difficult circumstances but it needs to stick to bold reforms to strengthen the fundamentals of the economy, the IMF said on Thursday.

The international lending agency signaled openness to negotiating another programme with the country and said fifth review of the ongoing $11.3 billion programme was possible later this year if sufficient progress was made. The last tranche of $1.7 billion will be made available to Pakistan after the fifth review is completed. IMF Mission Chief to Pakistan Adnan Mazarei underlined the importance of keeping the inflation under check and pursuing tax reforms, including general sales tax. He said all these decisions are for Pakistanis to make in their interest.

“In the past couple of years Pakistan has had some success in stabilising the economy but these should not be temporary,” Mazarei said. He saw the current Pakistani economic team very much conscious of the importance of reforms for solid progress. Replying to a question about the possibility of discussing a new package for Pakistan, he said it could be discussed anytime if the country wanted such a package. Mazarei praised Islamabad’s efforts at bringing down inflation down to single digit but noted that it had crept back up lately. Mazarei, who met Finance Minister Dr Abdul Hafeez Shaikh and his team during the IMF-World Bank meetings, also said he understood the combination of problems facing Pakistan (in the midst of anti-terror fight), which have been compounded by the recent floods. “The problems are real but difficulties are an opportunity for building.” The official pledged IMF support in flood recovery. He said the World Bank and the Asian Development Bank were carrying out a comprehensive damage and needs assessment, which will be very helpful during flood recovery phase. He noted that it would be helpful for the economy that Pakistan rationalise the prices of electricity without hurting the poor. app

Daily Times - Leading News Resource of Pakistan
 
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‘Over 90pc manufactured items substandard’

‘Over 90pc manufactured items substandard’

KARACHI: The government on Wednesday admitted that over 90 percent locally-manufactured items are substandard.

“The government is finalising a draft law for prevention of substandard items,” said Muhammad Azam Khan Swati, Minister of Science and Technology, at a seminar on the 41st World Standard Day.

“A three-year imprisonment has been suggested in the proposed law for the person involved in adulteration of products,” he said.

Swati alleged that the sugar manufacturers had formed a strong cartel and they are selling substandard sugar in the open market. “All the sugar available in the market is substandard,” he said.

The sugar manufacturers have moved the court against the initiatives taken by Pakistan Standard and Quality Control Authority (PSQCA), contending that checking the quality of sugar is a provincial subject and the authority has nothing to do with it.

The minister claimed that he would prove adulteration of sugar before the court.

Regarding the quality of imported sugar, he said that not a single product can be imported without quality check by the PSQCA.

The minister, however, failed to justify the mass availability of substandard drinking water in hospitals and said that the PSQCA has very little human resource to cater to the issues
 
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