Pakistan's Economy - News and Updates

[muse]

Just another attempt to allow it to sink in:

What’s the plan?


Sir, are you serious about tax reforms? Let us begin with Punjab. Sir, the tax-to-GDP ratio for the federal government is 9.1 percent. Imagine: the tax-to-GDP ratio for the Punjab government is 0.2 percent. Imagine: the Punjab Revenue Authority, with a population of 97 million, has received a total of 300 tax returns. Sir, do you commit to abide by the Fiscal Responsibility and Debt Limitation Law of 2005 (the law caps public debt at 60 percent of GDP)?


Dear Prime Minister, unless “commitment is made, there are only promises and hopes...but no plans.”

 

[Argus Panoptes]

Just another attempt to allow it to sink in:

300 tax returns in to the Punjab Revenue Authority? Just who are these fools who submitted these returns and why? It is not as if they would face any consequences for not doing so.

 

[Edevelop]

PML-N govt unveils first budget today; outlay estimated at Rs 3.4tr

Govt expected to announce 15% increase in salaries and 20% increase in pension
* Tax to GDP ratio to be increased from 9.5% of the GDP to 14%

By Sajid Chaudhry

ISLAMABAD: The Pakistan Muslim League-Nawaz government will today (Wednesday) unveil its first federal budget with an outlay of around Rs 3.4 trillion for fiscal year 2013-14.
Federal Minister for Finance Ishaq Dar would present the budget in the National Assembly and also present the budget documents in the Senate. It would be the first budget of the newly elected government in the Centre. The government has decided to set realistic budget targets, official sources said. The federal budget will honour the commitments made during the election campaign. Official sources said that being its first budget, the PML-N government is expected to announce a 15% increase in salaries as ad hoc relief allowance and some 20% increase in the pension.
According to economic revival road map developed by the government, tax-to-GDP ratio would be increased from 9.5% of the GDP to 14%. Federal tax collection target is being set at Rs 2.475 trillion for 2013-14 against the expected tax collection of Rs 1.950 trillion during the ongoing fiscal year 2012-13. Some Rs 525 billion additional tax revenue would be generated by blocking Rs 500 billion to Rs 600 billion revenue leakages and tax evasion.
Tax measures will be announced in the federal budget, including administrative measures like recovery of arrears, evaded tax or fake refund claims obtained from the tax authorities. The tax system will be reformed to enlarge tax net through use of information technology for meeting revenue requirements of the country in years to come. According to earlier decision of the caretaker government, the federal government will allocate Rs 627 billion for defence of the country in the fiscal 2013-14.
Macroeconomic Framework targets as approved by NEC for the next fiscal year 2013-14 sets gross domestic product (GDP) growth target at 4.4% of the GDP with growth targets in agriculture at 3.8%, manufacturing 4.5%, services sector 4.6%, and exports at $26.6 billion.
The PML-N government has set seven major priorities in the federal budget as well as medium-term economic road map to be followed during the next five years. Revival of economy would be the priority, as the government believes that this would help meet the challenge of militancy in the country. The GDP growth target for the fiscal year 2013-14 is being set at 4.4 of the GDP and this growth would gradually be enhanced to 7% by the end of fifth fiscal year.

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

Federal budget of about Rs 3.5 trillion to be presented today

ISLAMABAD: The newly elected democratic government is all set to present its very first Federal Budget of about Rs 3.5 trillion for the fiscal year 2013-14 before the National Assembly here today (Wednesday).

Federal Minister for Finance, Senator Muhammad Ishaq Dar will announce the Budget 2013-14, after its formal approval from the Federal Cabinet, sources in the Ministry of Finance said.

"Overcoming the energy crisis, stabilization of economy, cutting down the non-development expenditures, enhancing productivity through new growth strategies and welfare of the people will feature as priorities in the upcoming budget," they added.

The budget will also focus on social sector development and revenue enhancement, besides reforms will also be introduced for improving governance and boosting private sector investment.

Meanwhile, the National Economic Council (NEC) Monday approved Rs.1155 billion development projects including Federal Public Sector Development Programme of 540 billion rupees and 615 billion rupees of development projects for provinces.

The GDP growth has been projected at around 4.4 percent for the next budget while the inflation target fixed single digit at about 8 percent.

The agriculture sector is expected to grow at 3.8 percent, industry 4.8 percent and services sector at 4.6 percent during the year 2013-14.

Exports for 2013-14 are estimated to grow by over 5 percent to $26.6 billion from $25.3 billion estimated for the ongoing fiscal year.

On the other hand, the imports into the country are projected to increase by 7 percent from $40.3 billion last year to $43.3 billion this year.

Federal budget of about Rs 3.5 trillion to be presented today - thenews.com.pk

 

[Hawaii's Finest]

I read the Pakistan economy in Karachi is really based on crime - what's up with that?

 

[qamar1990]

I read the Pakistan economy in Karachi is really based on crime - what's up with that?

where did you read that?

 

[qamar1990]

I heard it on Fox. They said Karachi is one of the worst crime cities in the world.

The Jacqui Low Story - Jacqui Low, American Test Tube Baby

true it is a dangerous city but you said its economy is based on crime.
i gotta a feeling you got fake account and that your a dude pretending to be a girl most likely a indian.

 

[ejaz007]

Pakistan discovers new gas reserves in Sindh


KARACHI: Huge reserves of natural gas have been discovered in Sindh as Pakistan struggles to overcome crippling energy crisis.

According to Geo News report, 39 million cubic feet gas reserves have been discovered during the drilling of wells in Sanghar. The report said 65 percent shares of the project are owned by the PPL.According to initial estimates, 106.8 million cubic feet natural gas would be produced.

70 percent of natural gas reserves in Pakistan are located in Sindh.

Pakistan discovers new gas reserves in Sindh - thenews.com.pk

 

[muse]

View from McLeod Road: Why market’s bet on Engro Fertilizers is likely to fail
By Farooq Tirmizi
Published: June 23, 2013

KARACHI:

One of the biggest bets the market as a whole appears to be making in 2013 is that Engro is set for a comeback. The market is about to be proven wrong, and is likely to lose a lot of money doing so.

But first, a look at what has been happening to the company’s stock. Engro has always been one of the most respected companies in the country, and for good reason: it has a highly professional management, its major shareholders have a progressive attitude and its core business – Engro Fertilizers – was making a product that has a very high demand in Pakistan. What could possibly go wrong? A lot, apparently.

Engro’s business is based on some very shaky foundations: the promise of natural gas supply at absurdly low prices in a country that was rapidly ramping up domestic consumption and doing nothing to increase supply. It was a situation that could not last and it did not. For much of 2011 and 2012, Engro’s $1.1 billion manufacturing unit – the largest single-train urea factory in the world – was shut down owing to a lack of gas.

In 2013, there have been some rays of hope, with a little more gas supply, particularly to Engro’s older fertiliser plants, which have allowed the fertiliser business to more than triple its revenues in the first quarter to Rs9.7 billion, and swing to a quarterly profit of Rs646 million, from a loss of Rs1.4 billion in the corresponding period in the previous year.

This fact, combined with the election of Prime Minister Nawaz Sharif, has sent the market into a state of euphoria about Engro. From a trough of Rs81.05 per share on January 16, the stock rallied to a peak of Rs151.95 on May 24, soon after the election, a jump of over 87% in little over four months.

The problem, however, is that the market has been mistaking Sharif’s pledge to resolve the electricity crisis in Pakistan with an intention of somehow fixing all issues in Pakistan’s energy supply chain. The prime minister is indeed resolute in his desire to end power cuts in Pakistan. But doing so will require him to pick fights with a lot of very powerful vested interests. He has no intention of adding to that burden.

In order to resolve the electricity shortage in Pakistan, Sharif needs to get the state-owned power plants in Punjab up and running, and the only way the government will be able to afford to do that will be on coal or natural gas. Coal conversion will take time, so in the short run, they have to run on natural gas. The election has resolved at least one segment of the energy debate in Pakistan: the power sector is number one in terms of priorities for supply of natural gas.

The fertiliser manufacturers insist that there is still enough natural gas to supply them. In theory, they have a point, but in practise, the government would have to crack down on natural gas theft in upper Sindh and southern Punjab. Cutting theft will yield about 400 million cubic feet per day (mmcfd) of gas.

But, to put things in perspective, it took a highly motivated private sector management at the Karachi Electric Supply Company, operating in a much smaller geographic region, five years to cut electricity theft by one-third. How much gas theft reduction do we think a state-owned gas distribution company will be able to achieve in the next two years?

Some Engro investors argue that the government should supply gas only to Fatima Fertilizer and Engro Fertilizers’ new plant in Dharki, the only two in the country with still-valid sovereign guarantee of natural gas supply and cut it off for the rest. That, however, would involve cutting off the supply for the military-owned Fauji Fertilizer Company. The prime minister has plenty of fights already that he plans on picking with the military. Do investors seriously think he is going to waste his political capital fighting one of those fights over a fertiliser plant?

Which brings me to my final point about why the market is misinterpreting political conditions: the ruling Pakistan Muslim League Nawaz (PML-N) is an urban party. They have never focused on agriculture and their core constituency are not farmers. And lest anyone think that Engro can hold its investment in Thar coal hostage until the government gives it gas, think again: imported coal works just fine for the PML-N energy policy, and Thar coalfields are owned by the Sindh government, run by the rival Pakistan Peoples Party.

So ramping up local supplies of natural gas to Engro Fertilizers in the next two years is looking unlikely and the company’s plans to import liquefied natural gas are not making much progress so far. For the moment, the Engro Fertilizers comeback is looking very unlikely. In the long run, the company is likely to solve its natural gas shortage. But the time horizon on that is uncertain, and certainly does not justify a stock price increase this year.

 

[muse]

Well boys and girls, Can you learn to say "Mittal" ? good nuz for the CJP, he hates all things private except what's his :


Shutdown in August feared: PM urged to privatise PSM
Sunday, 23 June 2013 12:36


ISLAMABAD: The Ministry of Production (MoP) has reportedly proposed to Prime Minister Nawaz Sharif to privatise the Pakistan Steel Mills (PSM) as early as possible, otherwise it will shutdown in mid August this year because of non-availability of new financing, sources in the Finance Ministry told Business Recorder.

The ministry had submitted the proposal at a time when the federal government was advertising for applications from suitable candidates for appointments as heads of Public Sector Entities (PSEs). However, applications were not invited for the post of Chief Executive Officer (CEO) of PSM which, according to analysts, indicated that the government was serious about privatising PSM. The performance of the incumbent CEO, Major-General Muhammad Javed (retd), was graded as being 'very poor' by the new government.

"Over a period of time, PSM has emerged as a bottomless pit craving for more and more financial resources with dismal, even scandalous consequences. The basic fact remains that the government should be out of this business as quickly as possible," the sources insisted.

The Ministry of Production, sources said, submitted three options to the Prime Minister which are as follows;

Option No. 1

Shut the mill down. The immediate benefit will be mitigation of further losses. However it will render some 15,000 regular and 1,000 contingent staffers jobless with related political outcry and possible law and order situation. This option may also entail permanent damage to production units and depreciation of assets.

Option No. 2

PSM may be privatised at the earliest. The option of privatisation of PSM was exercised by the government in 2006, but the Supreme Court set it aside and ordered that the matter be referred to Council of Common Interest (CCI) afresh if the option is to be exercised. The newly-constituted CCI is scheduled to meet on June 29 this year under the chairmanship of Prime Minister Nawaz Sharif.

Option No. 3

PSM may be revitalised by injection of a very heavy dosage of funding which would revamp its existing infrastructure and upgrade its capacity from current 1.1 million tons annually to 3 million tons which is contingent on technical assistance of the Russian Federation. This option is not supported by past experiences and is likely to perpetuate the vicious cycle of losses.

The sources said that a decision in this regard has to be taken by the federal cabinet after deliberations and recommendations of the Cabinet Committee on Restructuring (CCoR).

The caretaker cabinet had approved a new bailout package of Rs 11 billion for procuring raw material for the mills, but the money was not released by the Finance Ministry. According to sources, initially the caretaker Prime Minister approved the bailout package but later he backed out from his earlier decision, saying that the proposal should be reviewed by the new government.

The pre-conditions, sources said, imposed by the Finance Ministry for Rs 11 billion bailout package were not acceptable to the PSM management.

On the other hand, the Ministry of Production maintained that the success of any bailout package depended on first improving governance structure by appointing competent and experienced professionals especially CEO and Board of Directors, rationalising manpower of the PSM and improving its operational efficiency.

 

[Jango]

Some Engro investors argue that the government should supply gas only to Fatima Fertilizer ...

This is the company of Ch Ahmed Mukhtar, former defence minister.

That, however, would involve cutting off the supply for the military-owned Fauji Fertilizer Company.

The military does not own Fauji Foundation in any way...

Courtesy @Xeric:

Infact if you look at the slide, Fauji Fertilizer isn't even completely owned by Fauji Foundation!

 

[muse]

Set up by ex military -- for ex servicemen and their families

How did you manage to miss the actual news and instead focus on this?? WHY? What's more important??

 

[Jango]

Set up by ex military --

For the welfare of retired Army men...self funded...not by the Army.

Still a long shot away from being 'military owned'.

 

[muse]

Perhaps not in practice - you know old associations and influence

 

[Jango]

Perhaps not in practice - you know old associations and influence

Can't go on making hypothetical inferences...don't you agree?