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Pakistan In Focus

Punjab to organize 6-8 new industrial zones

The Punjab government is striving to extend maximum facilities to promote local industry and provide all services under one roof to steer the ease of doing business in the province.

“I will be visiting all chambers of commerce of Punjab to get feedback and recommendations on tariffs, taxation and reforms,” said Punjab Board of Investment (BOI) Chairman Sardar Tanveer Ilyas during his visit to the Rawalpindi Chamber of Commerce and Industry (RCCI).

“The Punjab government will establish six to eight new industrial zones, which will help the local industry flourish.” Upholding the provincial government’s commitment to offering maximum facilities to overseas investors, he emphasised that local manufacturers, industrialists and investors would be provided equal opportunities and a level playing field.

Pak, Turkey in talks for FTA

The concerned authorities are in the process of building consensus with Turkish counterparts and other stakeholders for a meaningful free trade agreement (FTA) and increase in economic integration.

Listing steps taken by the present government to improve trade relations with Turkey, official at the Commerce Division said that the first ever single country exhibition was planned to be held soon by Turkish Pakistan Tourism Council, along with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Lahore chamber and other relevant trade associations.

Officials said Pakistan’s exports to Turkey grew at good pace and crossed $850 million in 2011. However, it started to decline after imposition of additional duties by Turkey in August 2011 and amounted to $323 million in 2017.

Pakistan has engaged Turkey for a preferential market access arrangement to increase bilateral trade and both countries announced to initiate talks on Pak-Turkey free trade agreement in High-Level Strategic Cooperation Council (HLSCC) meeting in Islamabad.

Foreign exchange: SBP reserves rise 0.47pc to stand at $8.2bn

The foreign exchange reserves, held by the central bank, increased 0.47% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Earlier, the reserves plunged to $6,636.1 million, which raised concern over Pakistan’s ability to meet its financing requirements. However, the first tranche of $1 billion from the United Arab Emirates (UAE) and the last tranche of $1 billion from Saudi Arabia for balance of payments support pushed the reserves above $8 billion.

Moreover, China and the UAE have agreed to provide more cushion for the fast depleting reserves.

On February 1, the foreign currency reserves held by the SBP were recorded at $8,192.5 million, up $38 million compared with $8,154.3 million in the previous week. The SBP report stated no reason for the increase of $38.2 million.

Overall, the liquid foreign currency reserves, held by the country, including net reserves held by banks other than the SBP, stood at $14,885.1 million. Net reserves held by banks amounted to $6,692.6 million.

In November last year, Chinese Embassy Deputy Head of Mission Zhao Lijian assured Pakistan of a financial package to boost its flagging foreign currency reserves, hinting that it would be bigger than that pledged by Saudi Arabia.

With the anticipated $2.5 billion in deposits agreed recently, China’s contribution in this fiscal year alone will surge to $4.5 billion.


Russia plans to invest $14bn in Pak’s energy sector

Russia has come up with an integrated investment package of $14 billion for the energy sector in Pakistan.

During a recent visit of the Russian delegation, headed by Gazprom Management Committee Deputy Chairman Vitaly A Markelov, the Russian side pledged an investment of $14 billion in offshore gas pipeline project, North South Pipeline Project and underground gas storages in Pakistan.

The officials said that they would invest around $10 billion in offshore gas pipeline project, $2.5 billion in the North South Pipeline Project and the remaining on building underground storages in Pakistan. The Russian companies would build gas pipeline from Karachi to Lahore to transport imported gas for meeting the needs of the gas-starved province. Recently, the government faced a severe gas crisis, which can be prevented by underground storages, said an official. The storages would help store imported gas allowing meeting rising gas demand at any time, particularly in winters, he added.

NFC forms 6 panels to sort out thorny issues

The National Finance Commission on Wednesday set up six working groups to thrash out the thorny issues amid Sindh’s objections to the constitutional and legal status of the Commission and the 6th population census.

Sindh Chief Minister Syed Murad Ali Shah also sought a cut in the vertical share of the Centre to the extent of fiscal resources that the federal government was earlier spending on erstwhile Federally Administered Tribal Areas (Fata) which have now been merged with Khyber Pakhtunkhwa.

The first meeting of the reconstituted 9th NFC was chaired by Finance Minister Asad Umar in Islamabad. At the meeting, the federal government presented a weak macroeconomic picture that showed higher budget deficits due to spending on debt-servicing and defence.

The meeting decided to form the working groups to prepare reports that will be presented in the next meeting of the Commission. The NFC also agreed that the issue of vertical distribution of resources would be decided first.

It set up a working group to determine the fiscal share of FATA that would be headed by the Khyber Pakhtunkhwa government. A sub-group on ease of doing business would be led by Sindh, which would take up the issue of integration of tax collection.

Another sub group on straight transfers and horizontal distribution of resources would be led by Balochistan and the vertical distribution of resources working group will be chaired by the federal government.

Under the Constitution, the NFC is a nine-member body, comprising five finance ministers and four technical members, one from each province however, this time federal finance secretary has been included as the 10th member. The Sindh government has put a question mark on the legal status of the commission, objecting to the inclusion of federal finance secretary.


Pak cuts loan estimate as $6.5bn remains stuck

Pakistan has cut its projection of foreign inflows from traditional multilateral and bilateral lenders to only $3.7 billion for the current fiscal year as $6.5 billion in loans remains stuck in the pipeline due to administrative and procedural hurdles.

The $6.5 billion worth of loans stuck at various approval stages are exclusive of the amount that Pakistan is not receiving for already approved and under-implementation projects.

The slow disbursement poses a challenge for the government, which is struggling to bridge the external financing gap despite securing $14.5 billion worth of commitments from three countries.

Finance Minister Asad Umar is expected to go on a two-day visit to the United Arab Emirates (UAE) on Friday aimed at discussing the remaining issues hindering operationalisation of a $3.2-billion oil facility from the UAE.

The Economic Affairs Division has projected the receipt of $3.7 billion from four multilateral agencies and bilateral sources, lowering them by 15% or $635 million, according to officials of the finance ministry. The inflows from four multilateral agencies have now been projected at $2.4 billion only against $3.3 billion in budgetary estimates, they added.

There is a reduction of $878 million or 27% from these four sources

– the World Bank, Asian Development Bank (ADB), Islamic Development Bank (IDB) and Asian Infrastructure Investment Bank (AIIB).

The reduction in inflows from the multilateral agencies is partially offset by an increase in inflows from China, but still the overall inflows from all these sources are now estimated at $3.7 billion.

For the ongoing fiscal year, the government had projected $9.2 billion worth of foreign inflows and of these $4.3 billion was the responsibility of the EAD. The remaining $3 billion was planned to be raised through the issuance of sovereign bonds and another $2 billion through foreign commercial borrowing.

Saudi investment highlights trust in Pak’s economy

Saudi investment in different sectors depicts the trust of Saudi Arabia’s leadership and investors in Pakistan’s economy, said Senate Chairman Muhammad Sadiq Sanjrani.

During a meeting with Saudi Arabia Ambassador Nawaf bin Said Al-Malki on Thursday, he pointed out that trade, economic and investment ties would help lift bilateral cooperation to new heights in the days to come.

Sanjrani expressed hope that the upcoming visit of Saudi Crown Prince Muhammad bin Salman would further cement and deepen bilateral ties into broad-based multi-sectoral and comprehensive partnership.

Recalling his recent visit to Saudi Arabia, he revealed that fruitful discussions were held with Saudi leadership and emphasised the need for further promotion of parliamentary and institutional linkages between the two nations. During the meeting, Sanjrani extended an invitation to Saudi Shoura Council President Dr Abdullah Muhammad Ibrahim Al Sheikh.

He disclosed that the Senate of Pakistan had an active Pakistan-Saudi Arabia Friendship Group aimed at promoting enhanced inter-parliamentary linkages. The chairman was of the view that both sides shared ideological and political commonality on different issues.

“Institutional cooperation between the two countries on multilateral parliamentary forums like Asian Parliamentary Assembly and Inter Parliamentary Union will augur well for both countries,” Sanjrani commented.

Govt to pay PKR3.6 trillion on defence, debt servicing

The federal government would pay a whopping Rs3.6 trillion on account of defence and debt servicing that is equal to 68.2% of the current fiscal year’s revised budget, the centre on Wednesday sensitised the provinces about the grave fiscal situation that has thrown the country into a debt trap.

After excluding debt servicing and defence related obligations, the net federal revenues for fiscal year 2018-19 are negative Rs632 billion, Federal Secretary Finance Arif Ahmad Khan briefed the four provinces during the first meeting of the ninth National Finance Commission (NFC).

The NFC meeting included a detailed presentation by the federal finance secretary, focusing on the country’s overall current fiscal position.

The federal government’s total gross revenues are estimated at Rs5.5 trillion. Out of this sum, the provinces will get Rs2.581 trillion as their share in the federal divisible pool. This leaves the net federal revenues at Rs3 trillion but the cumulative spending on just two heads – debt and defence – is Rs3.62 trillion.

Since the debt and defence spending are equal to 121% of the net federal revenues, the finance ministry borrows to pay salaries, pensions, run hospitals, schools and build roads. Every penny that the centre spends on development is borrowed from the banks and foreign lenders.

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