Comment by Riaz Haq on March 17, 2014 at 8:13pm

Pakistan's exports up, FDI up in first 8 months of fiscal 2013-14:

Pakistan's trade deficit fell 4.89 percent in the July-February of the fiscal year 2013/14 to $12.542 billion compared with a deficit of $13.187 billion for the same period last year, according to the Pakistan Bureau of Statistics.

Exports rose to $16.866 billion in (July-February) from $15.882 billion, and imports to $29.408 billion from $29.069 billion.

On a monthly basis, the trade deficit fell to $1.433 billion in February from $2.076 billion the previous month. Exports totaled $2.167 billion in February and imports were $3.600 billion. (Compiled by Reuters Karachi newsroom)

http://in.reuters.com/article/2014/03/17/pakistan-trade-idINL3N0KW1...

Foreign direct investment (FDI) in Pakistan increased by 17.9 percent to $606.3 million during the first eight months of the current fiscal year, according to figures released by the State Bank of Pakistan (SBP) on Friday.

FDI inflows stood at $514.2 million during the same period of last fiscal. FDI has been on the decline since 2008 in the wake of security concerns, weak law and order situation and energy and power outages in the country. And while the increase in the pace of FDI inflows is reasonable, the volumes the country received during July-February FY14 are far from satisfactory, economists say.

Between July 2013 and February 2014, overseas investment by businesses declined by 11 percent to $1.262 billion against $1.418 billion in the corresponding period last year. Similarly, outflow was recorded at $656.2 million in the period under review against $904.4 million for the same period in the previous fiscal, revealed SBP data.

The oil and gas exploration sector emerged as the biggest recipient of FDI with $296.2 million, followed by the financial sector with $102.8 million in the July-February period in FY14. Foreign investment in food, chemical and tobacco and cigarette sectors was recorded at $75.1 million, $71.6 million and $55.5 million, respectively.

FDI stood at $79.2 million in February 2014 against outflow of $14 million in the corresponding month of the last year. The numbers on foreign investment showed that portfolio investment fell drastically from $169.9 million for the July-January period in FY13 to $54 million over the same period in the current fiscal – a drop of over 68.2 percent.

Total foreign investment for the first seven months of the current fiscal was up 6.5 percent to $724.6 million against $680.4 million for the same period in the previous fiscal.

“The level of FDI is still too low to have much of an impact on the country’s financial account,” said economist Muzzamil Aslam.

However, foreign portfolio investment at the Karachi Stock Exchange is encouraging despite no listing of new companies at the local equity market, he added.

“In the financial sector, the reason behind the rise in FDI is investments by foreign shareholders and sponsors in banks which were short of the minimum capital requirement fixed by the State Bank of Pakistan for the year 2013,” he said.

The sponsors of the noncompliant banks issued right shares to raise capital. “Once the process of the privatisation gets momentum, foreign investors will come to the country, subsequently improving financial account prospects,” he added.

http://www.thenews.com.pk/Todays-News-3-238245-FDI-rises-by-17-perc...

Comment by Riaz Haq on March 29, 2014 at 10:41am

Consumer Confidence Index, or CCI, is continuing its upward trend since Nawaz Sharif's election in Pakistan last year.

The latest CCI is 141.82, up from 105.6 in March last year.

Consumer Confidence Survey (CCS) is a stratified random telephone survey of more than 1600 households across Pakistan. The survey is being conducted by Institute of Business Administration (IBA), Karachi and State Bank of Pakistan (SBP) since January 2012 with the frequency of every two months.

http://dsqx.sbp.org.pk/ccs/index.php

Comment by Riaz Haq on March 30, 2014 at 5:04pm

“So, if you look around the world you’ll see cases of countries that have had, you know, serious insurgency problems, or civil wars even, but have managed to maintain a relatively robust economic growth. Now, of course if they didn’t have those security problems, the robust economic growth would certainly have been even higher,” (IMF's Jefferey)Franks said, adding, “But, you know, from the point of view of an economist who is advising the Pakistani authorities on economic issues, what I would say is that regardless of the security conditions, pursuing good economic policies will bring dividends in terms of better economic reforms.”

The mission’s chief said the overall economic situation in Pakistan is gradually improving. “We revised in this round our forecast for economic growth for this fiscal year of 2013-14, from 2.8 percent to 3.1 percent. That 3.1 percent may still be a bit on the conservative side, so we see indicators of growth that are relatively strong considering the fiscal adjustment that has taken place.”

A transcript of the conference call available on the IMF’s official website shows Franks adding that inflation has been somewhat better than anticipated at around eight percent currently, although “we do expect some rebound in the inflation rate in the coming months”. He said the balance of payments situation for Pakistan has been quite difficult, and reserves were declining quite sharply during calendar year 2013. However, so far in 2014, there is a positive turn with reserves beginning to move upward.

The IMF also foresees the further strengthening of the country’s reserves. The IMF country chief said, “Right now we have IMF inflows helping to boost preserves, balance of payment flows are beginning to turn more positive for the country, and of course there has been an influx of money from gold states, which is also helping. In the coming months we expect that this trend of recovering central bank reserves to continue with important inflows coming from other international partners, particularly the World Bank, the Asian Development Bank, and some bilateral donors to Pakistan.”

Franks said that during the review the fiscal deficit target was observed with a substantial margin. “Revenues are coming in roughly as we did forecast, although they are somewhat worse than was in the original Pakistan budget.” However, the IMF official said, expenditures have been very tightly controlled, leaving a substantial margin of over-performance on that target.

“This leaves us with significant confidence that by end of [fiscal year] 2013-14 in June, they will likely meet the deficit target for the year as a whole, bringing the deficit down in the range of 5.5 percent of GDP from around 8 percent of GDP last year.”

The IMF official said that there were two other smaller targets which however were not met. “One was a ceiling on government borrowing from the State Bank of Pakistan. They over-borrowed at the end of December, but that over-borrowing has since been rectified and we expect that they will meet that target for end March. The other target that was met is a target that we have to gradually reduce the State Bank of Pakistan’s open swap forward position. They missed that target by a small margin but here, again, we think that they are now on track to make the target for end March.”

The IMF Mission chief added: “Overall, we saw satisfactory performance by the government in pushing forward the structural reforms under the IMF programme. They are making good progress in reforms in the energy sector, and they are working hard to push forward their privatisation agenda, although there do seem to be some delays in some of the key milestones along the stage to bring certain firms to the market for secondary public offerings, or initial public offerings.”

http://www.thenews.com.pk/Todays-News-13-29391-Pak-economy-can-grow...

Comment by Riaz Haq on April 9, 2014 at 6:03pm

Washington, April 9. 2014—The World Bank said today it was cautiously optimistic about economic prospects in South Asia in 2014 because of growing exports and investment as it emphasized that the risks to growth were becoming more domestic, including an increasingly vulnerable banking sector.

In its twice-a-year “South Asia Economic Focus”, the World Bank forecast that economic growth would rise to 5.8% in 2015 from 5.2% this year and 4.8% last year. South Asian countries – which include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka – appeared to have largely recovered from last year’s financial turmoil caused by changes in US Federal Reserve monetary policy. Many were rebuilding currency reserves while curbing current account deficits.

But these successes on the external side were accompanied by looming problems in the domestic economy. Economic growth could be held back by unstable banking sectors, inflation, fiscal deficits and debt, and persistent shortfalls in energy and transport infrastructure across the region.

“Now that external pressures are waning, it’s time to refocus on addressing problems within the economies in South Asia so that countries can boost growth and reduce poverty,” said South Asia Chief Economist Martin Rama. “The good news is that across South Asia there is a growing momentum in support of reforms to increase growth because governments recognize this is the best way to overcome poverty.”

Over this year, the report saw a strengthening of economic growth for most South Asian countries.

The region’s largest economy, India, would see growth rise to 5.7% in fiscal year (FY) 2014 from 4.8% last fiscal year with activity receiving a boost from a more competitive exchange rate and many large investment projects going ahead. Pakistan’s economic growth could increase to 4% this fiscal year from 3.6% in FY2013 as its economy benefitted from a reduction in electricity blackouts, resilient remittance flows from Pakistani workers abroad, rebounding manufacturing exports and a more buoyant services sector. Nepal was recovering from a difficult year affected by setbacks in the agricultural sector and with its government budget. Helped by strong remittance flows boosting consumption and the services sector, the economy should grow by 4.5% in FY2014 after 3.6% in FY2013. Sri Lanka would continue to grow at 7.3% this year as the economy was sustained by new capacity from infrastructure investments and rebuilding after the country’s recent conflict.

Economic activities recovered in the second half of FY14 in Bangladesh, driven by resilient exports and domestic demand, following setbacks suffered in the first half due to political uncertainty and turmoil. A recovery in export growth and increases in public expenditure are likely to help achieve 5.4% GDP growth in FY14, slightly lower than last year’s 6%.

The economy in Afghanistan will be weighed down by the persistent uncertainty caused by the withdrawal this year of international forces and the subsequent reduction in foreign aid for the economy. In addition, the country’s agricultural sector’s output has declined. Economic growth was therefore projected to fall to 3.2% this year after 3.6% in 2013. Depending on security and whether agriculture rebounds and mining output increases, Afghanistan could see growth recover in 2015 and 2016 to around five percent.

The report made a point of focusing on the banking sector because of its centrality for South Asia’s economic stability and growth.

http://www.worldbank.org/en/news/press-release/2014/04/09/time-for-...

Comment by Riaz Haq on April 23, 2014 at 10:25pm

Here's an Investing.com report on Pakistan's "power grid looking brighter":

Pakistan’s national energy grid will add more than a dozen power projects, including two dams and a coal mine, increasing electricity capacity in one of the worst shortages in the country’s history.

Pakistan’s power sector can generate about 16,000 MW, short of requirements by about 5,000 MW and worsening as demand grows, projected to swell to 26,000 MW by 2020, according to Pakistan’s 2013 National Power Policy report.
Capacity in some Pakistani industries, like the fertilizer industry, fell to nearly 50 percent in the last six months, forcing interruptions to gas supplies and closures. Importing expensive energy over the past few years, when the country had the capacity to produce it, has eroded Pakistan’s foreign exchange reserves.
Work is underway in advanced stages at Gaddani Power Project and two power projects at Bin Qasim, Pakistan Minister for Planning and Development Ahsan Iqbal told Parliament in Islamabad on Wednesday, Pakistan Today reported. He also said work has begun on Thar Coal Project, which includes a mining and three power projects that will begin producing electricity within three years.

China has agreed to ten power projects at Thar, Iqbal added. Chinese banks offered to finance up to $900 million of the $1.2 billion for the Thar coal in December, asking the Pakistani government for a loan guarantee. London-based Oracle Coalfields, the owner and developer of the coal plant project, expects to finalize detailed agreements with two Chinese partners, CAMCE and SEPCO, by the end of the year.
Two hydroelectric projects, the Diamer-Bhasha and Dasu dams, will also help lift Pakistan from its energy shortage and usher in economic progress, analyst Nasir Jamal told Radio Pakistan Thursday.

http://www.investing.com/news/economy-news/pakistan's-power-grid-looking-brighter-278179

Comment by Riaz Haq on April 26, 2014 at 10:17am

India (score 25.6) ranks at 19, higher than Pakistan (score 21.9)at 28 on world misery index rankings compiled by Washington's Cato Inst.

According to a analysis published by the Cato Institute, Venezuela holds the disreputable top spot as the most miserable nation in the world.
The 90 countries listed in the misery index were selected based on data from the Economist Intelligence Unit and calculations from Steve Hanke, a professor of Applied Economics at Johns Hopkins University.

The formula used to compile the list involves inflation, lending rates, and unemployment rates minus year-on-year per capita GDP growth.

Venezuela's much higher misery score of 79.4 is much higher than every other country except Iran (61.6), and the top 22 countries are above 25 on the index.

Inflation is the major contributing factor plaguing three of the top four nations listed. The other countries are either hampered by high unemployment or interest rates.

http://www.cato.org/publications/commentary/measuring-misery-around...

http://www.businessinsider.com/most-miserable-places-in-the-world-2...

Comment by Riaz Haq on April 28, 2014 at 11:11am

Here's a Dawn report on additional $400m from ADB for energy projects in Pakistan on top of $900m for coal power at Jamshoro:
The Asian Development Bank (ADB) has approved $400 million loan to help Pakistan carry out reforms for overcoming power shortages.

An agreement in this regard was signed by Secretary Economic Affairs Division Nargis Sethi and ADB's Country Director for Pakistan Werner E. Liepach here on Monday. Finance Minister Ishaq Dar and ADB's Governor witnessed the signing ceremony.

“The ADB has approved a soft and concessionary loan for Pakistan, which has the best terms and conditions with interest rate of even less than 2 per cent annually,” said Ishaq Dar.

He said the ADB had also recently approved a loan of $900 million for Jamshoro coal power project to produce cheaper electricity.

Speaking on the occasion, Werner E. Liepach said the loan would support key reforms in the energy sector to ensure uninterrupted supply of cheaper and dependable power to millions of industrial and private consumers, who were presently adversely affected by long power outages.

“This important energy sector assistance will propel growth, boost businesses, and create jobs that are critical to reduce poverty in the country,” said Liepach.

In line with Pakistan's National Power Policy approved in 2013, the sustainable energy sector reform programme targets robust policy, capacity development and institutional strengthening action to reduce crippling power shortages that according to estimates, are costing the country about 2 per cent of its GDP growth every year.

The ADB along with Japan and the World Bank have been working with the Pakistan government to formulate and implement a five-year plan targeting increased power supply, reduction of losses and boosting the efficiency of the power sector.

The programme would support government's plans to rationalise tariffs and eliminate subsidies by 2016, except for low income customers.

“The reforms will improve transparency and accountability, which will also go a long way in leveraging stronger private sector led investments in the power sector,” said Werner Liepach.

The full programme, set to complete by June 2018, spans a total of $1.2 billion investment by the ADB, and for the first sub-programme, co-financing is expected from Japan with $49 million and the World Bank with $600 million.

The ADB is the lead development partner in Pakistan's energy sector supporting a wide range of power sector development activities, including energy efficiency, transmission, distribution, cross-border natural gas pipelines, power generation, and renewable energy projects.

The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.

In 2013, ADB assistance totalled $21 billion, including co-financing of $6.6 billion.

http://www.dawn.com/news/1102852/adb-approves-400mn-loan-to-boost-p...

Comment by Riaz Haq on July 29, 2014 at 3:03pm

#Nawazsharif #PMLN Government will forfeit right to rule if energy crisis not resolved http://www.dawn.com/news/1121503 #Pakistan #loadshedding

WASHINGTON: The government will forfeit its right to rule if it fails to resolve the energy crisis, says Musadik Malik, Special Assistant to the Prime Minister on Energy.

“It happened to the previous government and it will happen to this government too if we do not end the load-shedding,” he said.

Addressing a seminar on Pakistan’s energy crisis at the Woodrow Wilson International Centre for Scholars, Washington, Secretary Water and Power Nargis Sethi emphasised the need for a multi-pronged approach to end this crisis.

“The power sector subsidies had been costing about 2 per cent of GDP and taking 15-17 per cent of the revenues,” she warned. “This is not sustainable.”

Power ministry hopes new strategy to cut losses will pay off

In a power-point presentation, Mr Malik said the government had developed a new approach, based on “meritocracy, transparency, automation and accountability” to overcome this crisis.

“We will encourage competition by developing energy corridors and favourable tariffs for low cost energy sources, and by creating a key client management system,” he said.

He identified load-shedding, theft, receivables and poor collection of revenues as the key distribution issues causing circular debt and compromising the viability of the power sector.

Mr Malik said there’s considerable variance in load-shedding across feeders; ranging from as little as 3 hours a day to as much as 23 hours.

“In addition to human suffering, the load-shedding is causing a loss of up to 3 pc of GDP each year; in 2013-14 this loss amounted to Rs 630 billion,” he said.

Nearly all DISCOs had losses that were considerably higher than acceptable levels indicating that “theft is occurring across the board,” he said.

Mr Malik said that more than 90 pc mixed feeders had theft / under-billing, hidden often by overbilling remote or rural feeders. “In industrial connections (3 per cent loss), 30 feeders steal 64 per cent of all stolen electricity,” he explained. “This theft is hidden by over-billing other companies.”

The government had created loss targets for each feeder length and linked it with load-shedding, he said. “Meeting these targets will save Rs 40 billion to the national exchequer just from 6 DISCOs, (27 Billion rupees from MEPCO and LESCO alone).”

Comment by Riaz Haq on September 29, 2015 at 1:11pm

#NEPRA accuses #Pakistan Power Ministry of ‘deliberately’ resorting to #LoadShedding: report http://www.pakistantoday.com.pk/?p=446177 via @ePakistanToday

The National Electric Power Regulatory Authority (NEPRA) in its annual report has blamed the Ministry for Water and Power for purposefully not supplying required amount of electricity to the consumers, hence deliberately resorting to load shedding.

The report also found that TOU (Time of Use) electricity metres of 70 per cent consumers were outdated, which either loot the consumer or deprive the government from justified charges.

“TOU meters of 70 per cent consumers were outdated due to which some consumers were billed off-peak rates and some with peak rates.”

The report said that TOU meters help the consumers to pay less while in other cases it makes them pay more than what they had actually consumed.

Some of the observations made in the report are as follows: The connected/running load of most of the consumers under domestic, commercial and industrial B-2 consumers was more than their sanctioned load. However, no action in the form of issuing notices or extending the load has been taken by DISCOs. Transformers are running on 80% to 100% overloading due to which frequent tripping was occurring; TOU meters of 70% consumers were outdated and out timed due to which some consumers were billed off-peak rates and some with peak rates; 11KV metering rooms were found in miserable conditions, having no protection (relay) system; Lines and poles were found in poor condition, which is also a reason for increased number of interruptions, resulting in non-achievement of reliability standards.”

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