Nationwide Updates

► Fiscal Policy choices in Budget 2008-09

The Budget season is here again. But this year's budget is unique because of a number of factors. First, there are high expectations from the democratic government which has acquired the reigns of government after a gap of eight years. Second, it comes at a time when the economy is in the midst of an unprecedented level of stress following a period of apparent buoyancy. After the bonanza following 9/11, the economy revived achieving not only high growth and macroeconomic stability but also some poverty reduction. However, the growth was neither inclusive nor sustainable. Till last year there was little realisation or acceptance of how vulnerable the foundations of that so called 'buoyancy' was.  (Business Recorder)

► Gas transit fee: Iran to mediate between India and Pakistan  

Iran will mediate between India and Pakistan to end a deadlock on the issue of transit fees to be paid by New Delhi for gas transported through a 7.5-billion dollar pipeline to be built by the three countries. Iranian President Mahmoud Ahmadinejad has constituted a four-member committee of officials to hold talks with Pakistan and India on the transit fee issue, Zee TV reported. He has given the panel 45 days to settle the issue between the two countries and submit a report to him. Pakistan and Iran were set to sign a bilateral gas sale purchase agreement (GSPA) for the Iran-Pakistan-India gas pipeline project by May 31 but would now sign the pact after the Iranian committee resolves the transit fee issue between Pakistan and India.  (Business Recorder)

► APTMA demands zero% import duty on PSF

All Pakistan Textile Mills Association (APTMA) has urged the government to reduce import duty on Polyester Staple Fibre (PSF) from the current level of 6.5 percent to zero percent Wednesday. According to a press release, APTMA said government would also provide level playing field to the industry to enable it to compete in the international marketplace. The current fibre mix of Pakistan's textile industry is at 20:80 MMF to cotton as against the world average of 60:40. This has rendered Pakistan's exports at a disadvantage as against its competitors and has not benefited it in securing its share in the expanding MMF based textiles and clothing in the international marketplace.  (Daily Times)

► 10pc refined petrol imported, NA told

Only 10 per cent of the annual refined petrol requirement is met through imports while 90 per cent is produced locally from imported and locally extracted crude oil. This was stated by the Minister for Petroleum Makhdoom Shah Mehmood Qureshi in reply to a question in the National Assembly by PPP MNA Ms Yasmeen Rehman, who sought details regarding total requirement, local production and imported quantity of petrol and diesel. However, the minister did not elaborate the actual quantity of crude oil imported for conversion into petrol, diesel at the local refineries.  (Dawn)

► The disconnect between capital market and the real economy  

They could not wait for the Federal Budget to announce an extension in capital gains tax exemption on listed shares, while the rest of Pakistan was holding its breath for relief or fearing imposition of additional tax burden or tariff rises on goods and services. But then, as if in keeping with tradition, former prime ministers, as well as Shaukat Aziz, joyfully made the pronouncement of CGT extensions, not on the floor of the National Assembly, but at the annual prize distribution of the Karachi Stock Exchange. This time, though, due to the judicial crisis and the national elections, KSE function could not be held, according to past practice.  (Business Recorder)

► SBP raises yields on T-bills above expectations

The yields on all tenors of treasury bills rose sharply on Wednesday, as was widely expected by the market.  The yield on three-month paper went up to 11.2331 percent, six-month to 11.2464 percent and 12-month to 11.4893 percent. They stood at 9.9741, 9.9570 and 10.3427 previously. The SBP raised Rs 53.59 billion through three-month paper, Rs 3.125 billion through six-month bill and Rs 6.73 billion through one-year paper. In all, it raised Rs 63.46 billion. The dealers had offered Rs 67.09 billion. Banker’s participation was concentrated in three-month paper, a banker said. That’s why the biggest jump was seen in its yield and all bids were accepted, he added.   (Daily Times)

► Efforts needed to win back investors: OICCI

The Overseas Investors Chamber of Commerce and Industry (OICCI) has welcomed the government’s initiative of involving stakeholders prior to taking any policy decision, stating that the move will bring stability back to the stock market and will also help in raising investor confidence in Pakistan. The government’s decision to develop a three-year Capital Market Policy, which will focus on reforms related to taxation, promotion of new listings and integration of capital markets with the national economy, reflects the government’s sincerity in bringing stability into the country. There are no “sudden shifts in policy” and it is good that the government is involving stakeholders for their input. “  (The News)

► Grade 1-15 contract employees to be regularised

The federal cabinet on Wednesday decided in principle to regularise the services of all those contract employees in Grade 1-15 who have completed more than two years of service. “A four-member committee comprising the finance minister, the law minister, the minister for labour and manpower and the deputy chairman planning commission has been set up to give suggestions regarding the financial implications of this decision at the next meeting of the cabinet for final approval. The decision will be implemented in the coming budget,” said Information Minister Sherry Rehman while addressing a press conference here after the cabinet meeting which was chaired by Prime Minister Syed Yousuf Raza Gilani.  (The News)

► The urgent need to tackle water and energy shortages  

Prime Minister Yousuf Raza Gilani has, reportedly, directed the Planning Commission to prioritise those power development projects to be included in the Public Sector Development Programme (PSDP) which have components of both water storage and electricity generation. There is a nation-wide consensus that initiating projects designed to enhance the water storage capacity as well as supply of electricity must be a priority of the new government, given the scale of water and power shortage facing the country today. Thus the Prime Minister's directive is a response to public demand.  (Business Recorder)

► Failure not an option, UN chief tells food crisis summit

UN chief Ban Ki-moon warned on Wednesday that failure was not an option as world leaders hammered out a plan of action to address the global crisis of soaring food prices. “We simply cannot afford to fail,” the UN secretary general said at the UN Food and Agriculture (FAO) summit on food security. “Hundreds of millions of people expect no less.” The extra resources that might be as required will cost between $15 billion and $20 billion 10-13 billion euros) a year, Ban told a news conference. Food prices have doubled in three years, according to the World Bank, sparking riots in Egypt and Haiti and in many African nations. Brazil, Vietnam, India and Egypt have all imposed food export restrictions.  (The News)