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June 11 - 17, 2001

Drug price hike recommended

The Ministry of Health has recommended to the Economic Coordination Committee of the cabinet to okay an increase of 6% to 8% in the prices of controlled drugs and an 8% to 10% raise in the prices of decontrolled drugs to the federal cabinet, highly placed official sources told on Thursday.

The sources said the Federal Secretary of Health Ejaz Rahim had written to the ECC with the consent of the Federal Health Minister Abdul Malick Kasi that due to change in various economic indicators, including rupee devaluation, increase in consumer price index by around 6% and repeated hike in the prices of energy since the last revision in the drug prices in June 2000, the pharmaceutical industry has started "clamouring" for an upward revision according to a 1994 government formula.

The secretary in his correspondence with ECC has said that due to the pressure of pharmaceutical industry his ministry is of the view that a 6% to 8% and 8% to 10% raise in the prices of controlled and decontrolled drugs, respectively, should be allowed.

The secretary, while endorsing the increase, said: "The 8% to 10% raise in the prices of decontrolled drugs is in accordance with the past price adjustments when certain premium over and above the controlled category was given to the de-controlled category with the approval of the ECC and the cabinet."

The revision in the prices, it has been learnt, would be calculated on the basis of brand leader prices. The increase so arrived at would form the ceiling within which all the manufacturers/importers would be entitled to fix their retail prices.

The sources, however, termed this system faulty and to the benefit of those companies who were producing cheaper drugs as they get a raise much more than the sanctioned increase. These companies, it has been further learnt, are already giving undue profits to the wholesalers due to large margins and are involved in the promotion of unethical and corrupt practices among the doctors.

Budget perspective

Budget-makers face the most challenging job of dove-tailing the IMF mandated short-term fiscal stabilization programme with the imperatives of bigger investment, high economic growth and poverty alleviation.

The government focus narrowing on issues like fiscal deficit; tight monetary policy and market driven exchange rate has for all practical purposes, sidelined basic concerns of real economy. The outcome is subdued investment, low economic growth, soaring unemployment and dire poverty.

Fiscal problems can be more easily resolved in a buoyant real economy.

And fiscal stability is far more difficult to achieve in a difficult economic situation as is evident from the trends emerging from drastic fall in the GDP growth, primarily as a result of drought and poor performance of agricultural sector. Financial analysts at Taurus Securities say, "given the setback of a drought, the government will have to face agonising trade-off between its goals of short term stabilization, higher economic growth and poverty alleviation."

WAPDA to float Rs 34 billion bonds

Water and Power Development Authority (WAPDA) has decided to float Rs34 billion bonds after June 30 to meet its projected cash shortfall of almost equivalent amount in the coming fiscal year.

Sources in the finance ministry told that this information was also conveyed to the World Bank and International Monetary Fund (IMF) during the recent meetings. The measure is being contemplated because of a ban on electricity tariff raise during the current fiscal year imposed by the chief executive.

Funds

Arif Habib Investments a fund management company plans soft launching of two funds to raise seed capital of Rs500 million, before the end of June, company sources said.

New KESC restructuring planned

Another restructuring of the cash starved Karachi Electricity Supply Corporation (KESC) has been planned by the Privatisation Commission with the financial help of the Asian Development Bank (ADB) to reduce the colossal operational losses of the organisation.

"The Privatisation Commission has decided to have another restructuring of the KESC to prevent its Rs 50 million daily operational losses", disclosed the Secretary Privatisation Commission, Mr Zafar Ali Khan on Friday. He said that restructuring worth Rs 34 billion has already been done with the financial assistance of the ADB and added that the Financial Advisor of the KESC was currently trying to contact some more foreign lending agencies to have another restructuring of the organisation.

Musharraf felicitates Tony Blair

Chief Executive General Pervez Musharraf on Friday sent "warmest felicitations" to British Prime Minister Tony Blair on his landslide victory in the United Kingdom's general elections. "Please accept my warmest felicitations on your landslide victory in the British general elections," he said in his message to the British Prime Minister.

Govt to give PIA Rs 20 billion

The government will provide Rs20 billion to Pakistan International Airlines (PIA) to make it a stable and profit-earning organization. This was decided at a meeting held on Wednesday , in which Chief Executive Gen Pervez Musharraf was given briefing about the present condition of the airline.

The chief executive was briefed about the upcoming projects to be undertaken for further improvement of the PIA. The airline plans to earn a profit of Rs2.6 billion next year and Rs4 billion by 2004. The meeting also decided to suspend PIA union and staff associations. It was also decided that no employee will be laid off.