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June 18 - 24, 2001

Tight monetary policy planned

The government has worked out a three-year 'tight monetary policy' to discourage unnecessary monetary expansion. However, it will be ensured that adequate credit is available to the private sector for productive purposes.

According to official sources, the three-year policy (2001- 2004) has been conceived after the IMF raised objections saying monetary policy was 'insufficiently tight' and needed immediate attention of the government.

The government will ensure tight monetary policy by increasing foreign exchange reserves to cover the imports for minimum of three months and by controlling the growth of money supply in a manner compatible with the growth of nominal Gross National Product (GNP). The tight monetary policy will also be ensured during the three years period by continuing the policy of liberalizing interest rates to improve efficiency of resource allocations and by ensuring consistency among macroeconomic targets of growth, inflation, monetary and external accounts with better coordination of fiscal, monetary and exchange rate policies.

According to the three-year plan, the deficit in trade balance, in nominal terms, is expected to decline from 1.3 billion dollars in 2000-2001 to 828 million dollars in 2003-04. This would be made possible by exports growing at a faster rate than imports. The increase in exports is predicted on increased production of cotton and rice as well as revival of the manufacturing sector, improvement in quality and competitiveness of value-added products and adherence to the delivery schedule.

The exports are thus projected to increase on average by 9.1 per cent. Imports are projected to increase on average by 6.8 per cent. The slow growth in imports has been envisaged in view of large imports substitution in such commodities as wheat, edible oil and crude oil and its products and a fall in their prices.

Economic revival plan discussed

The programmes for economic revival in Sindh specially the provision of loans to small businessmen came under discussion at a special meeting of Economic Development Council (EDC) held on Tuesday with Sindh Governor, Mohammadmian Soomro in the chair.

The meeting was conducted by Vice Chairman EDC, Shahid Firoz and attended by Sindh Finance Minister, Dr Hafeez Shaikh, Local Government Minister Dewan Yousuf Farooqui, Chief Secretary Sindh, Managing Director KWSB, Director General KDA, Administrator KMC and other high ranking officials of Sindh.

The EDC members, who attended the meeting included Dr Shams Kassim-Lakha and Nessar Ahmed of CresBank. The 4-hour long meeting addressed all issues relating to the Programme for Economic Revival of Karachi. The decision taken on the occasion included the provision of facilities for sports and recreation, transport civic amenities, municipal upgradation and speedy implementation of projects under Khushhal Pakistan Programme.

Concessions worked out for industry

A number of new concessions have been worked out for the local industry in the budget for 2001-2002 including rationalization of income tax rules and regulations as well as reduction in input cost of the agriculture produce.

Official sources said on Monday that since tax survey campaign has culminated in a "big success", bringing in more tax-payers, hardly new taxes were being contemplated in the new budget.

There will be certain "adjustment and re-adjustment" in existing taxes and duties to achieve roughly Rs460 billion revenue collection target in 2001-2002. "And we would manage to achieve the target hopefully without imposing new taxes," said a senior official of the ministry of finance. The new budget, he pointed out, would, by and large, be a welfare-oriented budget to provide relief to the common man and the salaried class.

Petroleum exploration licence awarded

The government on Monday awarded petroleum exploration licence for Karak block in Kohat (NWFP) to a joint venture led by Orient Petroleum Inc (OPI). An official announcement said that OPI-led joint venture , comprising Zaver Petroleum Corporation and government holdings, was awarded through competitive bidding. OPI has 90 per cent shares while Zaver Petroleum and government holdings hold five per cent shares each in the licence.

The JV would make a risk investment of about $2.6 million for an exploration programme comprising geological and geophysical surveys and drilling of an exploration well during the initial three year's term. The agreement was signed by M. Abdullah Yousaf, secretary petroleum on behalf of Pakistan government while John E. Kennedy, CEO and President of OPI, signed the agreement for his company. OPI, the operator of the licence, is currently operating five concessions including three producing properties like Dhurnal, Bhangali and Ratana in the Potwar basin of Punjab.

Cotton sowing area up

The cotton sowing area in the Punjab has increased by 6.2 per cent over the corresponding period last year. According to reports received up to June 9, the sown area so far is 4.35 million acres against the last year's 4.09 million acres. The total area under cotton crop during 1999-2000 was 5.897 million acres, so the area sown so far is 72 per cent of the last year's total acreage, says a press release issued on Monday.

Package for shipping industry soon

The government will soon announce a package of incentives for the development of shipping industry. "The package is being worked out by the Central Board of Revenue," official sources said on Monday. The government has decided to adopt a liberal policy to attract foreign investment in the shipping sector. The package will be part of the shipping policy, aimed at promoting shipping business, the sources said. The government has also approved in principle the draft Pakistan Merchant Shipping Ordinance 2001 to replace the Merchant Shipping Act 1923.