RUPEE
Once again the promise of no mini-budget has turned to be a lie.
In less than one-and-half month after the Budget a 15 per cent sales tax has been imposed
on the edible oil and tariff charges have gone up on telephone. The petroleum prices are
expected to increase any time. Meanwhile, the shrinking rupee and the rising production
costs are feared to take a heavy toll on domestic consumption on one hand and exports on
the other.
OIL
The reports about 15 per cent increase in POL prices have
stirred the feelings of the middle and low income groups. Due to earlier two increases
i.e. 25 per cent and over 10 per cent in the second half of 1998 and first half of the
current year respectively, prices of essential items have gone beyond the reach of middle
and low income groups.
FORBES
On July 4, 1998 Forbes and Company of the US signed an agreement
with the Government of Pakistan to invest $ 460 million in over three years to develop a
modern fishing fleet, port and fish processing plant in the province of Balochistan. The
huge investment will no longer be coming to Pakistan due to various political and
technical reasons.
Domestic commercial banks
emerged stronger in 1998 despite downturn of economy after imposition of sanctions on
Pakistan. These banks were able to perform better because they had strong rupee deposit
base. The profitability of these banks may come down due to dearth of quality borrowers,
declining lending rates and shrinking spread. To improve the strength of financial
institutions there is a need to amend the laws to facilitate speedy disposal of assets of
defaulters. Sickness of industrial sector should not be allowed to pass on to the
financial sector. A strong financial sector is needed to accelerate the economic recovery
of the country. Mergers and acquisitions can possibly improve the synergy of the sector.