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 5. TRADE  6. GULF



Mar 25 - 31, 2002

Domestic growth shows no sign of improvement: SBP

The State Bank of Pakistan says the outlook on domestic growth has not shown perceptible signs of improvement in the first half of this fiscal year and warns that exports may also fall further in the second half.

"Despite increased foreign assistance and favourable external developments the outlook on domestic growth, investment, budgetary revenues and employment still does not show perceptible signs of improvement," says the second quarter report of the SBP released on Wednesday. "This reinforces our belief that the favourable external sector should not lull us in a false sense of complacency."

In the external sector the balance of payments registered a dramatic improvement during the first half of this fiscal despite a marginal decline in exports.

The current account showed a surplus of $1.27 billion in July- December 2001 against a deficit of $262 million recorded in July- December 2000. The overall balance of payments showed a surplus of $751 million "a feat that has rarely been achieved before."

Foreign exchange reserves also shot up to a historic high of $4.8bn at end-December from $3.2bn at end-June 2001.

"The developments in the external sector have also improved the outlook for foreign direct and portfolio investment which has been reflected in the upgrading of Pakistan's credit rating by Moody's," says the report. Net foreign investment has already increased by $148m during the first half of this fiscal year up from $74.7m a year ago. And home remittances or the money sent back home by overseas Pakistanis shot up to $983 million in July-December 2001 from $609m in July-December 2000.

The report says the improvement in creditworthiness following Paris Club agreement, ongoing implementation of PRGF, and reserve accumulation should provide sufficient signals for expected turnaround in the real sector of the economy.

Spinning mill revived

The Revival Committee for Sick Units on Wednesday decided to revive a spinning mill Golden Textiles at a meeting held. The committee met at the regional headquarters of National Bank of Pakistan with its chairman Tariq Hamid in the chair.

With the revival of textile unit the number of total sick units whose loans have been restructured by the banks on the recommendation of the committee rose to 125. The committee says the revival of these units has saved over 38,000 jobs. The committee has so far considered the revival pleas of some 273 units since its inception about two years ago.

Out of revival pleas of six units taken up at the meeting, the cases of another three have been referred to a sub-committee for further deliberation and consideration. Sources were hopeful that these units would also be revived through restructuring of their loans.

Sindh to get more water

The Chief Executive Secretariat on Monday decided to review the controversial Greater Thal Canal Project, increase water supply to Sindh till March 31 to facilitate sowing of Kharif crops , and approach the Supreme Court over the interpretation of Clause 14-B of the Water Accord, 1991.

The decisions were taken at a meeting held by the Principal Secretary to the Chief Executive, Tariq Aziz, with irrigation secretaries of Punjab and Sindh, Tariq Majeed and Mir Mohammad Parhiyar, respectively, a highly placed source told.

As a consequence of the decisions, the source said, the construction of Thal Flood Canal, which had been started by Wapda even before Ecnec could have accorded approval to it, would be stopped.

EC to give Rs1.2bn for livestock plan

The European Commission (EC) will provide Rs1.2 billion for livestock project in Pakistan, under a pact signed between Islamabad and the commission on Saturday.

The EC has agreed to fund the plan by approving a grant equivalent to 22.900 million euros. The duration of the project is six years, from the date of arrival of the technical assistance in Pakistan.

The project aims at developing potential of the livestock sector, improving existing provision of livestock services, eradicating diseases like rinderpest, and foot-and-mouth disease and initiating efficient and quality production of vaccines.

Local car assemblers gear up production

Local assemblers have finally geared up their production to meet the rising demand of cars from the buyers, but the market may witness shortage for few more months because of lengthy period of delivery.

The Ministry of Industries and Production also asked the assemblers few days back to roll out maximum number of cars in order to overcome the rising demand. Manufacturers were asked to check with their dealers for charging hectic premium on new models.

Bosicor oil refinery to start output

New $50 million Bosicor oil refinery, with refining capacity of 30,000 barrels per day (bpd), will start production by October, a company spokesman said on Saturday.

The spokesman said the new refinery, being set up near the southern port city of Karachi under Pakistani management, had drawn on project financing of $50 million from local and foreign banks, with 60 per cent equity and 40 per cent debt financing.

"We expect to start up the plant by October this year...it will have a production capacity of slightly over 30,000 barrels per day," he told Reuters. The project is owned by private Pakistani company Bosicor Pakistan Ltd.

Auto production

To cope with the growing demand of automobiles in the country, the Ministry of Industries and Production has asked the manufacturers to gear up production to ensure sufficient supplies availability with minimum waiting period.

These views were expressed by Commerce Minister Abdul Razak Dawood in a meeting with the automobile manufacturers on Wednesday.