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Pakistan In Focus

ECONOMIC TIMES OF PAKISTAN
FDI drops 23pc after completion of many CPEC projects

Foreign investment in different sectors of Pakistan’s economy slowed down by 23percent to $1.62 billion in first eight months (Jul-Feb) of the current fiscal year 2018-19 following completion of several early harvest projects of the China-Pakistan Economic Corridor (CPEC).

According to him, the economic slowdown and lack of clarity whether Pakistan will agree on a bailout from the International Monetary Fund (IMF) also contributed to the decline in foreign investment.

Despite a notable drop in cumulative investment from China, the all-season friend still remained the largest foreign investor in Pakistan in Jul-Feb FY19. On the other hand, construction and power sectors emerged as the top two sectors in terms of drawing foreign investment.

Foreign direct investment (FDI) stood at $2.09 billion in the corresponding eight months of the previous fiscal year, the State Bank of Pakistan (SBP) reported on Friday.

Senate panel recommends PKR 200bn gidc recovery in six installments

A parliamentary panel on Friday recommended that the government should recover the outstanding gas infrastructure development cess (GIDC) in six installments from defaulter business tycoons who have got a tax relief of Rs200 billion. The Senate Standing Committee on Petroleum, in a meeting chaired by Senator Mohsin Aziz, was informed that different sectors had to pay Rs416 billion in GIDC earlier, but the government waived 50percent of the dues.

The government wanted to recover the remaining 50percent cess in two installments, but the Senate committee recommended its collection in six installments.

In the meeting, Petroleum Minister Ghulam Sarwar Khan acknowledged that public gas utilities had applied a wrong pressure factor while preparing bills for 3.3 million consumers, which inflated their bills. He stressed that the government had decided to reimburse the amount to the consumers who had received inflated bills.

Another energy tariff hike on the cards

The electricity users are likely to face further hike in power prices as the government is planning to increase electricity rates by Rs3.26 per unit in coming months in order to meet revenue requirements of power distribution companies (DISCOS). The Pakistan Tehreek-e-Insaf (PTI) government has already increased electricity tariff by 33 per cent or Rs1.20 per unit after coming into power.

Sources told that consumers are expected to face another increase of Rs2.33 per unit during the current financial year. The power tariff is expected to jump from the existing Rs12.98 per unit to Rs13.85 per unit registering an increase of Rs0.87 per unit in ongoing month of March.

The tariff is expected to further increase to Rs15.31 per unit in June 2019 as the government plans to generate Rs223 billion in revenues for power distribution companies.

In the next financial year, the consumers are also likely to face an increase in electricity price by Rs0.94 per unit on account of quarterly adjustment. Rs97 billion are expected to be generated this way.

Total base tariff is expected to jump from Rs12.98 per unit to Rs16.24 per unit registering a net increase of Rs3.26 per unit. In addition to the increase following quarterly adjustments, the consumers may also face another increase of Rs1.9 per unit on account of monthly adjustments from April to June 2019.

Govt fails to frame policy for manpower export

Despite a sharp decline in export of manpower over the past three years, the government has so far not been able to frame a new strategy to deal with the matter, which may undermine its plans to increase the inflow of remittances to $30 billion.

Its only response to a crisis-like situation is the setting up of a task force, but it will comprise the departments that are largely responsible for the decline in manpower export.

Also, there is a dispute between the Ministry of Federal Education and Training and the Ministry of Human Resource Development and Overseas Pakistanis over the ownership of the National Vocational and Technical Training Commission (NAVTTC). Under the rules of business, NAVTTC falls under the domain of the education ministry, but the human resource ministry wants to take its control, according to documents of the federal cabinet.

The government has not been able to appoint the head of Overseas Employment Corporation (OEC) – the entity responsible for government-to-government contracts for the export of manpower. It also did not take on board Overseas Employment Promoters (OEPs) during prime minister’s recent visits to Gulf countries.

PKR weakens against $

The rupee weakened against the dollar at Rs138.9/Rs139.4 in the inter-bank market on Friday compared with Thursday’s close of Rs138.6/Rs139.1, according to forex.pk. Last year in November, the rupee fell to an all-time low at Rs144 against the dollar in intra-day trading before recovering to Rs139.05 in the sixth round of devaluation since December 2017. Cumulatively, the rupee has lost 31.8percent of its value in the last 13 months. In October 2018, a slump in the value of the rupee came after the government decided to knock at the International Monetary Fund’s (IMF) door to avoid default on import payments and debt repayments. The central bank said economic data showed that the positive impact of recent stabilisation measures had started to emerge gradually. “Particularly, the current account deficit is showing early signs of improvement,” said the SBP. Earlier, the central bank said it “will continue to closely monitor the situation and stands ready to intervene in case of any unwarranted volatility in the foreign exchange market.”

 

Government for facilitating border trade with Iran

Pakistan and Iran reiterated their desire for further enhancing bilateral trade on Friday, which would greatly benefit the two neighbouring countries. Consensus to this effect was developed in a meeting between Minister for Finance Asad Umar and Iranian Foreign Investment Company (IFIC) Managing Director Hassan Abghari, stated a press release issued by the finance ministry. The minister informed the IFIC MD that Pakistan wanted great economic engagement with Iran and assured him of Pakistan’s support to facilitate bilateral trade. He said the government had directed the relevant quarters to take measures for facilitation of the border trade, which would be beneficial for both sides. He said there was tremendous potential of improving economic cooperation and both countries were required to capitalise on the existing opportunities in the area of bilateral trade. The meeting agreed to address the obstacles being faced by the two countries in the area of trade.

SPI increases 0.19pc

The Sensitive Price Indicator (SPI) for the week ended March 14, 2019 registered a rise of 0.19percent for the combined income group, going up from 248.29 points in the prior week to 248.77 in the week under review. However, the SPI for the combined income group surged 12.23percent compared to the corresponding week of previous year. The SPI for the lowest income group also increased 0.38percent compared to the previous week. The index for the group stood at 228.53 points against 227.67 in the previous week, according to provisional figures released by the Pakistan Bureau of Statistics (PBS). During the week, average prices of 23 items rose in a selected basket of goods, prices of 11 items fell and rates of remaining 19 goods recorded no change.

Current account deficit falls 22.5pc to $8.84b

The current account deficit (CAD) narrowed down 22.5percent to $8.84 billion in the first eight months (July-February) of current fiscal year 2019, reported the State Bank of Pakistan (SBP) on Friday.

The much-needed drop in the deficit became possible mainly due to a notable surge in workers’ remittance inflows and a significant contraction in the outflow on account of services imports during the period under review.

The overseas Pakistani workers’ remittances increased 12percent to $14.35 billion in the eight months due to increased efforts to receive the inflows through proper banking channels.

Country lagging behind in sugarcane productivity

Although Pakistan is considered the fifth largest sugarcane producer in terms of cultivated area, the average per-acre yield of the crop is far behind developed nations.

Speaking to students at the University of Agriculture Faisalabad (UAF) on Friday, Vice Chancellor Dr Zafar Iqbal Randhawa stressed the need for mechanising the agriculture sector and adopting modern agricultural practices to raise productivity.

He directed researchers and agricultural experts to implement a scheme to ensure food security besides enhancing crop productivity.

Imran Khan satisfied with aviation policy draft

Prime Minister Imran Khan has directed the aviation department to put up for approval the draft of National Aviation Policy 2019 in the next meeting of the federal cabinet. He gave the instructions after getting a detailed briefing on it from Aviation Secretary Shahrukh Nusrat in the presence of Federal Aviation Minister Muhammad Mian Soomro and officers of the PM Secretariat, aviation division and the Civil Aviation Authority (CAA).

The aviation secretary said that the policy draft had been developed in line with the PM’s vision and direction, including examination of the existing policy, making the CAA charges reasonable, and overall providing facilities to the aviation department.

He said that it was for the first time in the history of the country that the aviation policy had been formulated with the input of all relevant stakeholders. He added the draft was developed after prolonged consultations.

Pakistan seeks $500 mn loan from ADB

Pakistan has requested the Asian Development Bank (ADB) to approve a $500 million loan in budgetary support before June this year, as it faces difficulties in retaining foreign exchange reserves because of mounting external financing needs.

The ADB official arrived in Pakistan 12 days before a scheduled visit of the International Monetary Fund’s (IMF) new mission chief. Spanish born IMF mission chief is arriving on 26th of this month on his maiden visit to Pakistan, where he will stay for two days.

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