RUPEE STABLE AGAINST DOLLAR
The rupee remained stable against the dollar at 105.3/105.5 in the inter-bank market on Friday compared to Thursday’s close of 105.3/105.5, Kamal Hayder, Research Analyst-PAGE said. The currency market has fluctuated regularly in recent months with hefty rises and falls on some occasions. In the long run, however, the rupee has stood firm after experiencing extensive volatility, when it weakened from around Rs98 to a dollar to above Rs103 in the wake of political impasse over alleged election rigging. The central bank has imposed 100% cash margin on the import of certain consumer goods to restrict the demand for US dollars. The rupee has been one of the best performing currencies in Asia for over three years despite the dollar’s sharp appreciation against other currencies. However, the International Monetary Fund has repeatedly said that Pakistan’s rupee is overvalued by 5-20%. The artificial support for the rupee has adversely affected Pakistan’s exports, he added.
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FEDERAL GOVT MUST NOT INTERFERE IN SBP’S AFFAIRS: IPR
The government of Pakistan must not restrict State Bank of Pakistan’s (SBP) autonomy as a lack of respect for institutions harms the economy, a fact sheet issued by the Institute of Policy Reforms said on Thursday. These actions also defy economic logic. The state of the economy is testimony to our contempt for institutions and for economic rationale, it added. The report also stated that SBP’s autonomy is protected by the constitution through the SBP Act, which forbids any outside interference or influence on the bank’s operations or decision-making. It mandates the SBP to ensure economic growth and stability and also keep a check on the value of the rupee, ensure foreign exchange stability and facilitate export competitiveness, the fact sheet said, deploring that interference in the SBP’s decision-making and poor economic indicators are going hand-in-hand.
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FTA WITH CHINA: A LOSS-MAKING CONTRACT FOR PAKISTAN
The Free Trade Agreement (FTA) between Pakistan and China has had a significant impact on the amount of trade between the two countries. This has prompted a shift from higher productivity to lower productivity in firms, which is far from optimal in the context of Pakistan’s growth strategy. The relationship between the two countries has a long history and over the last few decades this relationship has been accompanied by significant economic interactions, which include the 2006 Free Trade Agreement (FTA) between Pakistan and China as well as the China-Pakistan Economic Corridor (CPEC). The researchers also found that lower Chinese tariffs on Pakistani goods have negatively affected productivity in those sectors that could have potentially benefited from higher access to the Chinese markets.
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GOVERNMENT TAKES CONCRETE MEASURES TO INCREASE IN EXPORTS
A business forum has urged the government to take concrete measures in order to facilitate a significant increase in exports and reduce the volume of imports that will help avert a big trade deficit. The government must provide more attractive incentives and special packages, with reduced taxes and preferential treatment to exporters, the All Pakistan Business Forum (APBF) said to Research Analyst-PAGE on Friday. It called energy crisis the most critical challenge and its resolution would ensure sufficient and affordable supply of electricity, which was essential to maximise industrial productivity. Apart from this, there is a need to further strengthen the law and order situation and eliminate terrorism to optimise the economic progress. The government must invest heavily, engage in active trade diplomacy and hold trade exhibitions in an attempt to develop the export sector over the next three years. Pakistan has a great opportunity to increase its share in global trade through fresh economic activities generated by the China-Pakistan Economic Corridor, regional trade arrangements and the Strategic Trade Policy Framework, said APBF.
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KPK DEMANDS EXPLORATION RIGHTS WITHOUT BIDDING
The government of Khyber-Pakhtunkhwa (KPK) has come up with a proposal, seeking the grant of petroleum exploration rights in a new block to each of the provincial energy companies as well as a federal energy company without going into the bidding process. The KPK government had circulated a summary to the ministries concerned of the federal government to seek their input before submitting the proposal to the Council of Common Interests (CCI) – an inter-provincial body – for seeking the consent of all provinces, PAGE source told. Provincial governments have formed energy ministries and departments, but they lack required expertise in oil and gas exploration. Under the KPK proposal, the energy departments of provinces may be required to enter into joint ventures with companies of international repute in order to kick off work on the new exploration block.
According to source, the KPK government sent the summary to the CCI for review in its meeting on Friday, but the council did not take up the matter. The KPK government sought one-off relaxation in rules for the award of a new petroleum exploration block to each of the provincial holding companies in their respective provinces as well as one block to Government Holdings Private Limited (GHPL) in any part of the country.
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FAMILY SIZE SHRINKS: CENSUS 2017
There are 32.21 million households in Pakistan, bringing the average size of household to 6.45 persons, suggesting that the family size is shrinking in the country because of the rising share of people living independently as well as the declining fertility rate. The sixth population and housing census results showed that the number of households in Pakistan increased by 13 million or 67.6% against the data compiled 19 years ago. Of the total 32.21 million, as many as 12.1 million or 37.85% of total households are in cities. The number of urban households in all provinces has increased over 100% during past 19 years when the country had the last housing census. In 1998, there were 19.21 million households and the average size of family was 6.889 persons. Urban households units in 1998 were six million or 31.39% of total households. In 1998, the annual growth rate was 2.69%. However, over the past 19 years, the annual growth rate was 2.4% — the lowest since 1981. This resulted in slight shrinkage in the size of household. The latest housing census showed that there were 3.85 million households in Khyber Pakhtunkhwa – higher by 1.64 million or 74.2% over 19 years ago. The share of urban households in total units increased from 16.74% to about one-fourth. However, the urban households doubled in the past 19 years. In FATA, households increased from 340,000 to 560,000 – an increase of 64.7%. Urban households in FATA have increased to 200,000 or 35.7% of the total households of the region. In Punjab, the number of households now stands at 17.1 million – an increase of 6.56 million units or 62.2%. Urban units stand at 6.4 million or 37.37% of the total households in the province. Urban units have doubled over the past 19 years. Punjab’s households are 53% of the national housing units. In Sindh, there are 8.59 million households – an addition of 3.57 million units or 71.2% more than the previous census. The share of urban housing units currently stands at 51.22% in total provincial households, matching the province’s urban population. In absolute terms, urban households in Sindh stand at 4.4 million. In Balochistan there are 1.78 million housing units – an addition of 810,000 or 83.5% over the past 19 years. The urban units stood at 470,000 or 26.4% of the province’s total households. In Islamabad, total households remain 340,000, higher by 280,000 units, registering a 215% growth in the past 19 years. Urban units in Islamabad stand at 170,000 – half of the total units of the federal capital territory. In 1998, the share of urban households was 69.2%, which has since declined because of high cost of living in notified urban areas.
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SBP INTRODUCES FINANCING SCHEME FOR WOMEN-RUN SMALL BUSINESSES
State Bank of Pakistan (SBP) Governor Tariq Bajwa on Friday launched a financing scheme for small businesses run by women entrepreneurs with no refinancing cost and wide risk coverage. The Refinance and Credit Guarantee Scheme for Women Entrepreneurs in Underserved Areas was launched in Quetta as one-fifth of the funds earmarked for the program would be spent in Balochistan. Speaking on the occasion, the central bank governor reiterated his commitment to sustainable and inclusive economic growth across Pakistan. Women are central to this growth paradigm, he said. Bajwa emphasised that for the first time in Pakistan’s history a scheme with 0% refinance rate and 60% risk coverage for small businesses run by women entrepreneurs had been rolled out. This scheme is an affirmative action by the State Bank to encourage the flow of funds to small enterprises run by women in underserved areas of Pakistan. The scheme earmarks at least 20% of funds for Balochistan, he said. The financing facility will help women entrepreneurs set up new businesses or expand the existing ones. The SBP will provide refinance to banks at 0% and the maximum financing amount will be Rs1.5 million.
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WEEK-ON-WEEK: SPI RISES 0.05PC
The Sensitive Price Indicator (SPI) for the week ended August 24, 2017 registered an increase of 0.05% for the combined income group, going up from 219.42 points in the previous week to 219.53 in the week under review, Kamal Hayder, Research Analyst-PAGE said. Compared to the corresponding week of previous year, the SPI for the combined income group rose 0.61%. The SPI for the lowest income group increased 0.16% compared to the previous week. The index for the group stood at 209.82 points against 209.48 in the previous week. During the week, average prices of 15 items rose in a selected basket of goods, prices of 12 items fell and rates of remaining 26 goods recorded no change, he added.
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$3.4 BN ADB-FUNDED PROJECTS MIRED IN DELAYS
Half of the Asian Development Bank (ADB) funded projects – worth $3.4 billion – have either become problematic or put on watch list due to implementation delays, reveals a latest portfolio review that has again highlighted governance issues in Pakistan. Most of the troubled projects are in the areas of energy generation, transmission and distribution, which are the so-called priority sectors of the PML-N government during the past four years. The other projects are in the water, agriculture, transport and social sectors, according to officials who attended the portfolio review meetings that continued for about one month. As of end June 2017, the ADB-funded active public sector portfolio in Pakistan is made up of 37 projects with a total cost of $6.7 billion. Of the 37 investment projects, 32 valued at $5.83 billion are ongoing. About 18 of them worth $3.6 billion are facing problems. The ADB has declared six projects worth $560 million ‘actual problems’ and eight schemes costing $1.2 billion ‘potential problems’. There are four projects, which are on the watch list, having total cost of $1.7 billion and there are a total of seven projects on the watch list but three are already declared problematic.
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FINANCING FOR NAULONG DAM BEING NEGOTIATED WITH ADB
Water and Power Development Authority (Wapda) Chairman Muzammil Hussain reviewed progress on water projects at a meeting held in Quetta on Thursday. Hussain assured meeting participants that Wapda was cognisant of Balochistan’s water requirements and making utmost efforts to utilise and store the province’s water resources in the shortest possible time. He listed Naulong, Hingol, Badinazai and Sukliji dams as the most recent projects taken up by Wapda. While briefing the chairman, Wapda Chief Engineer (West) said Naulong Dam was ready for construction with financing arrangements being negotiated with the Asian Development Bank through the Economic Affairs Division.