Nationwide Updates

► SAARC to form professional body for poverty alleviation

SAARC Chamber of Commerce and Industry, South Asian Federation of Accountants (SAFA) and SAARC Law have principally agreed to form a joint association of professionals in South Asia with an objective of improving transparency, accountability and governance leading to poverty alleviation.  According to a press release Saturday, leading businessmen and the representatives of SAFA and SAARC Law proposed for the formation of joint association of professionals. It would be presented before the executive committee meeting of SCCI for final approval, president SCCI Tariq Sayeed said.  (Daily Times)

► Pakistan and Iran sign four agreements  

Pakistan and Iran signed four documents of co-operation at the 17th session of their Joint Economic Commission (JEC) which concluded here on Sunday. Federal Minister for Finance and Economic Affairs Syed Naveed Qamar led Pakistan's delegation in the meeting while Iranian side was led by Foreign Minister Manouchehr Mottaki. The four documents included MoU of 17th session of JEC between Pakistan and Iran; MoU between Iran Chamber of Commerce, Industries and Mines and Federation of Pakistan Chambers of Commerce and Industry (FPCCI); agreement between two sides on international transport of passengers.  (Business Recorder)

► Direct shipping link can enhance Pakistan-BD trade

The major problem in trade between Pakistan and Bangladesh is lack of direct shipping link, Saquib Ali, deputy High Commissioner Bangladesh said this while  talking to members Karachi Chamber of Commerce and Industry (KCCI) Saturday. The present trade volume of Bangladesh and Pakistan is $350 million, which includes $80 million of Bangladesh export of jute and tea and $270 million of export from Pakistan to Bangladesh in textile. He said a sizeable garments orders from EU and USA are moving from China to Bangladesh in near future, so a robust growth of textile exports from Pakistan to Bangladesh opens more avenues for both the countries.  (Daily Times)

► IT exports reach $175m

Pakistan’s IT exports reached $175 million during 2007-08, about $13 million more than the $162 million target set for the year. “We are satisfied with the pace of progress of the local IT sector. It has registered a remarkable growth during the last five years,” said Pakistan Software Export Board (PSEB) Managing Director Talib Baloch here on Monday. Pakistan’s IT exports of $116 million for the FY06-07 were also in excess to the set target of $108 million, he disclosed. The sector has consecutively registered 50 per cent annual growth in exports for the last five years.  (Dawn)

► Long-term financing for power plant import  

Coming at the heels of National Electric Power Regulatory Authority's proposal to the Karachi Chamber of Commerce and Industry (KCCI) to set-up its power generating units so as to meet the power shortage in the city, understandable should become the decision of the State Bank of Pakistan to allow import of power plants and machinery under 'Long Term Financing Facility (LTFF)', pointing out that the initiative was prompted by requests from the exporters and industrialists to meet their power requirements amid a continuing power shortage across the country.   (Business Recorder)

► Surging food imports, stagnant agriculture 

THE surging food import bill is assuming serious proportions, making it imperative to focus on a stagnant agriculture sector. These huge imports, a result of policy failures, can only be reduced by raising farm productivity and production. After all, 65 per cent population-- directly or indirectly involved in agriculture-- has not been able to feed 35 per cent of fellow country men. In the West, only two to three per cent of the population is involved in agriculture, feeds 98 per cent of its country men but also exports the trading surplus to other countries.  (Dawn)

► Too wide a gap  

The Mehbub-ul-Haq Human Development Centre (MHHDC) has just released its annual report entitled "Human Development in South Asia, 2007" expressing the concern that despite unprecedented economic growth in the region, the number of people living in poverty has not gone down. The report's section on Pakistan notes that although high GDP growth over the last five years has reduced income-poverty ratio, rising income inequalities and non-income have led to a weaker link between economic growth and poverty reduction. There has been gradual erosion, it says, in the consumption share of the lowest 20 percent section of society.  (Business Recorder)

► Political economy of poverty reduction

Poverty reduction has been a major official development objective for most developing countries since the 1970s, when it dethroned growth from the high pedestal of development policy. In Pakistan, the economic discourse on poverty did not receive serious attention until much later, although it entered the political discourse with the populist politics in the wake of the backlash against Ayub Khan’s growth-centred and elitist policies, which were partly responsible for Pakistan’s dismemberment in 1971.  (Dawn)

► Challenges to macroeconomic stability

Pakistan’s economy is currently facing four major challenges, that is, deceleration in economic growth, unprecedented spike in inflation (particularly food inflation), a growing fiscal deficit, and the widening of trade and current account deficits. Among these challenges, fiscal, trade and current account deficits are largely the outcomes of external shocks of extra-ordinary proportions accompanied by policy inaction during most part of the outgoing fiscal. Fiscal and the current account deficits are intertwined and the result of many uncertainties surrounding the economy. The Federal Budget 2008-09 has failed to suggest policy measures.  (The News)

► Deep concerns about provincial budgets

Provincial budgets of four provinces despite being quite generous to help marginalised segments of society through subsidies, pay rise and other cosmetic measures in hard time of food and energy crises and high inflation reflect that their fiscal states are hardly sound to meet even genuine fiscal needs essential for development and welfare of people. They have to look up to Islamabad for their share in the divisible pool to ride over their fiscal woes whose root causes are over centralised fiscal system that favours Islamabad despite the fact that a big chunk of financial resources is generated by the provinces, high provincial debt stocks taken from multilateral organisations.  (The News)

► Taxation, inflation and development

One of the most important objectives of economic development suggested by recent experience is the need of avoidance of inflation or control of the tendency to persistent climb in prices. A sharp price uptrend interferes seriously with the successful implementation of programmes of development. It directly inflates the money cost of development projects and programmes and results in escalation in financial terms of medium and long-term plans with self defeating consequences for their real targets, which get eroded in the process. It distorts besides the investment pattern as income and price relationships alter. It eats away exports and gives fillip to home consumption.  (The News)

► Balochistan on foreign investors’ radar screen

As the world prices of all minerals, metals, industrial raw materials and commodities go on rising, Balochistan has emerged as a bright spot on the international investors’ radar screen. ‘’We are not poor but the richest province in terms of resources,’’ a beaming Mehfooz Ali Khan, the provincial finance secretary, told a post- budget conference on June 22. “The provincial government should have its own petroleum and gas policy with a high level technical board to manage this area (mineral exploitation and investment) of vital interest’’, he said.  (Dawn)

► Gas tariff goes up by 31pc

The government on Monday announced a hefty 31 per cent increase in gas rates for all consumer categories. The new rates will be effective from July 1. The increase will push the retail price of CNG to over Rs52 per kg -- the highest in the region. The decision was taken a day after the government raised petrol and diesel prices by 10 per cent. Shah Mehmood Qureshi, who is looking after the petroleum portfolio, said at a press conference that independent power projects and the fertiliser sector had been exempted from the gas tariff hike to avoid an increase in the cost of production.  (Dawn)

► Oil hits record near $144

Oil prices hit record highs close to $144 per barrel on Monday as the dollar slid and tensions simmered over Iran amid protests aimed at sky-high crude costs. London’s Brent North Sea oil scored a historic peak of $143.91 a barrel and New York light sweet crude struck an all-time high of $143.67. After striking a fresh pinnacle, Brent North Sea oil for August delivery stood at $140.40 a barrel, a rise of nine cents from Friday’s close. New York’s main oil contract, light sweet crude for August delivery, was at $141.21, a rise of one dollar exactly. On Monday, high fuel prices sparked protests among hundreds of truckers across France.  (Dawn)

► Rising oil prices face global opposition

The international oil prices have shattered all past records and have been hovering around $140 a barrel, for the last few weeks. While oil prices have already doubled during the last one year, Goldman Sache group inc predicted last month that oil prices could witness a ‘super-spike’, rising to $150-200 a barrel, within the next six months to two years. The recent upsurge in oil prices has drawn world attention and the latest G-8 meeting – wrapped up in Japan a few days ago – had expressed its deep concern over the unchecked increase in the international oil prices, which (it thinks) constitutes a serious threat to the global economy.  (The News)

► Public policy failure and the energy crisis

Pakistan, at this critical time in its economic and political history, faces not one but three energy crises. Two of these are of its own making; the third is the consequence of the developments over which its policy makers have neither influence nor control. The two that are the product of public policy failure concern the short supply of two important components of energy – electricity and natural gas. The third, of course, is the way the global oil market is evolving which has taken the price of crude oil to around $140 a barrel. The price rise has been sharp; in the first six months of 2008.  (Dawn)

► Textile sector likely to get Rs 30bn R&D

Despite dismal exports performance in the outgoing Fiscal Year 2007-08, the textile sector is likely to grab a Rs 30 billion Research and Development (R&D) support for the next Fiscal Year 2008-09, a high placed government official informed Daily Times Saturday. The Economic Co-ordination Committee (ECC) of the Cabinet which is scheduled to meet on July 1, 2008 at Karachi, in the chairmanship of the Prime Minister Syed Yousuf Raza Gilani, is likely to allocate the amount for R&D support for the textile sector, the official added.  The textile sector, which has already enjoyed a huge sum of Rs 19 billion subsidies.  (Daily Times)

► Will cotton sowing target be met? 

Pakistan’s cotton economy — a major source of export revenues and jobs — is in a mess. This is obvious from the failure to meet the national cotton sowing targets for the past few years now and the expanding gap between the domestic industrial demand for the silver fibre and the stagnating crop output. The country is set to miss the cotton sowing target of 7.9 million acres by 15-20 per cent this year if unofficial estimate of sowing in Punjab and Sindh is to be believed. “In Punjab which produces more than three-fourths of the national seed cotton output.  (Dawn)