POLICY

 

Sept  15 - 21 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


GAINS AFTER 9/11 MOVE WITH MARKET FORCES

The gains Pakistan economy made after 9/11 both directly and in the shape of improved policies and better economic management have showed a certain level of consistency in the last two years. But as the third year of the 9/11 calender sets in, hopes and fears clash. What can be said safely is that the gains of 9/11 like other economic developments are bound to move with market forces. And in fact market forces have already been in play in materializing these gains and marginalizing them at times. Pakistan's liquid foreign exchange reserves that stood at $3.3 billion immediately before fateful September 11, 2001 have more than tripled to $11.1 billion after two years.

 

 

 

The forex reserves rose shot up primarily due to increased home remittances or money sent back home by overseas Pakistanis. Monthly home remittances that averaged at less than $100 million before September 11, 2001 now stand around $350 million. Overseas Pakistanis have been sending more money back home through banks as the US and the UAE and other countries tightened anti-money laundering rules after 9/11 to starve the terrorist financially.

Larger inflow of home remittances in the past two years has not only helped Pakistan build up its foreign exchange reserves but has also improved its balance of payments. In fiscal July/June 2001-02 Pakistan posted a current account surplus of $2.8 billion that increased further to $5.2 billion in 2002-03. This has helped Pakistan economy in several ways creating more room for the economic managers to implement a mix of home-grown and IMF-World Bank recommended set of reforms in key sectors of the country's economy.

The rupee has also gained substantially in the wake of 9/11 enabling expatriate Pakistanis to send more money back home through official channels. On September 11, 2001 the dollar was selling at Rs64 in the inter-bank market and at Rs67.10 in the open market. Two years after the greenback is now trading at Rs57.77 in the inter-bank market and at Rs58.15 in the open market.

PAKISTAN BACKS CALL FOR CUT IN TARIFF

Pakistan has joined hands with what is called the club of 21 developing countries at Cancun and added its voice to the call for special and differential treatment (S&DT), reduction in subsidies and blend formula approach for tariff reduction on agriculture products by the developed countries.Commerce ministry sources said that the decision was taken following the club's decision to provide an option separate from that of the United States and the European Union (EU) framework for the World Trade Organisation (WTO) members to consider at the Cancun ministerial conference which began last week.

The 21 developing countries came up with their own versions of a framework for negotiations on agriculture at Cancun as counterproposal to one championed by the US and the EU so that there was a potential in Cancun on a convergence between the two other papers.

 

 

SBP SEEKS REMITTANCES REPORT FROM BANKS

The State Bank has relaxed reporting rules for the banks with regard to home remittances or the money sent back home by overseas Pakistanis. Banks are now required to report to SBP on a single document details of remittances up to $10,000. Previously they limit for this amount was only Rs10,000.

EPB OFFICE IN GWADAR

The Export Promotion Bureau (EPB) has set up its office in Gwadar which will initially operate from the regional office of National Bank of Pakistan.

TRITEX MILLS

Tritex Cotton Mills Limited presented the revised rate per share for approval of its voluntary de-listing. In a letter to the Stock Exchange, this textile unit of the Lakson group, calculated minimum price per share on the basis of average market price (annualized) at Rs9.82 per share. The Tritex Cotton's buy-back looks to be lingering since 1997 when the company had made the initial offer at Rs10 per share.

CAR PRICES COMPARISON

The government has asked the Pakistan Automobile Manufacturers Association (PAMA) to provide a comparison of automobile prices prevailing in the neighbouring countries so that a decision could be made whether or not to allow import of reconditioned cars.

REFUND DOWN

The Central Board of Revenue (CBR) has paid Rs12.2 billion refund/rebate to exporters in first two months (July-August) of current financial year against Rs14.2 billion, it had paid to exporters during the same months last year, showing a fall of 14 per cent.

SBP SEEKS CREDIT DATA IN 10 DAYS

The State Bank has asked all banks and other financial institutions to submit to it online the monthly credit data of their borrowers of half a million rupees or more by 10th of the next month.In a circular (BSD 8) issued to all banks/development finance institutions and non-bank finance companies the central bank said the revised timeline would be applicable for submission of data for the month ending September 30, 2003. That is by October 10 all banks and other financial institutions would submit to SBP online the credit data of their borrowers of Rs500,000 or more.

PAKISTAN'S GLOBAL INVESTMENT RATING

Pakistan's potential performance rating on foreign direct investment (FDI) has dropped from 72 in 1989-90 to 129 in 1999-2001, according to an UNCTAD report. The rating tumbled following nuclear blast, multilayer economic sanctions by US and European states, tensions with India and adverse impact of re-negotiations on tariff with Hubco.

EXCEPTIONAL FLEXIBILITY QUOTA

The European Commission authorities have finally agreed to release 4,000 tons of Exceptional Flexibility quota for 2003 in categories 6, 9 and 20. According to an official announcement issued recently, this facility had been made possible due to constant and persistent follow up at the highest level.