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Apr 16 - 22, 2001

Growth rate may be slashed to 3.2%

The target for economic growth rate for current fiscal year may be revised for the third time following update on estimates of major cash crops.

Original target set at 5 per cent was first down-graded to 4.5 per cent followed by latest official estimate at 3.8 per cent. Unofficial estimates are that the fiscal year will end up with a real GDP growth of 3.2 per cent.

Economists keeping a watch on economic trends say that the rate at which estimates of major cash crops are being revised downwards "a zero per cent growth rate may perhaps be an optimistic assumption."

Sources in industry complain that industrial production, barring a booming textile industry, is more or less sluggish. The sugar, cement and construction industry are operating at about 50 per cent of their capacity. There is critical shortage of sugarcane and the demand for cement and property has declined sharply. No major dam is being built or construction activity that could push cement sales and revive the construction business in general, is being undertaken by the government.

The Public Sector Development Programme (PSDP) has suffered a cut of 10 per cent to keep the fiscal deficit on track and due to financial constraints, caused by shortfall in tax revenue.

Mr Razzak Dawood, Minister for Commerce, has been quoted by the press as saying that "industrial recession will continue for two years."

Official statistics show that large-scale manufacturing has grown by 3.1 per cent in first half of current fiscal year compared to 7.8 per cent during the corresponding period of last year.

A slower economic growth may impact adversely on revenue collection. Unofficial revenue estimate for the year is Rs380 billion against target of Rs417billion. In the first half of the fiscal, Rs182 billion has been collected and Rs235 billion needs to be collected in the second half. Economic indicators do not lend support to the view that the target will be met.

Sindh to get more water

Sindh and Punjab reached an agreement on Monday over supply of more water to the former from the Indus than its quota alloted under the Kharif plan.

The agreement was reached between the irrigation secretaries of the two provinces at the chief executive's secretariat after day-long deliberations, official sources said.

The secretaries had been called to the secretariat after the failure of their talks held at the Punjab House on Sunday. Under the new arrangement, Punjab would not draw more than 5,000 cusecs and leave the rest for Sindh till April 25, the sources said.

The 5,000 cusecs, which would be drawn by Punjab from the Indus till April 25, would be enough only to meet drinking water requirement of Dera Ghazi Khan and Bhawalpur districts, the source added.

Laying of white oil pipeline

Pakistan has asked China to withdraw the condition of $45 million sovereign guarantee that its company has sought for laying of a $500 million Karachi-Multan white oil pipeline, official sources told.

The federal secretary for petroleum, M. Abdullah Yousaf, raised this issue with the Chinese vice-minister for trade and economic cooperation, An Min, during a meeting at the ministry.

The secretary told the Chinese delegation that China Petroleum Corporation's demand for $45 million guarantee was not justified and the Chinese government should ask the company to withdraw the condition.

The 800km white oil pipeline from Karachi to Mehmoodkot near Multan is being financed by China Exim Bank with $120 million for the $317 million contract to the Chinese Petroleum Corporation.

Inflation increases

Inflation, measured by Consumer Price Index (CPI), registered a further increase of 4.77% during the first nine months of current financial year over the corresponding period of 1999-2000.

According to the monthly review of price indices released by the Federal Bureau of Statistics (FBS) on Thursday, this rate of inflation is substantially higher than the 3.35 per cent reported for the period July-March, 1999-00, compared to the preceding year.

White sugar production higher

The indigenous production of white sugar is expected to be little more than that of last year as the output upto March 31, stood at 2.436 million tons compared to 2.411 million of the corresponding period last year.

However, after adding to this 0.316 million tons of processed, imported raw sugar, the net production of refined crystal white sugar in the country during this period stood higher at 2.752 million tons. It showed that around 14 per cent more sugar is presently available for consumers over the previous year, when total output stood at 2.412 million tons.

The figures released by the Pakistan Sugar Mills Association (PSMA) further disclosed that during the period under review, there had been lesser off-take of the produce by 7.2 per cent at 1.207 million tons as against last year when mills sold around 1.301 million tons.

Lakhra Power House

Two units of Lakhra Power House, the only coal-fired plant in the country, ceased production after the conveyer belts used for conveying coal to the plant were gutted completely on Monday.

The conveyer belts, known as 4-P, 3-P and B-3, were said to have caught fire all of a sudden, bringing the plant to a grinding halt.

The Hydro Electric Union termed the burning of the belts a conspiracy aimed at closing the plant before privatization.

Government slashes key economic targets

The government has informed the major international donors that it has slashed its key economic targets due to a number of factors including the severe drought-like situation being faced by the country for the last many months.

Official sources said on Monday that the World Bank and the IMF were told that it was not possible to accomplish growth targets and that now the government's focus would be mainly on achievement of an average five per cent GDP growth rate during three years period (2001-2004).