ECONOMIC TIMES OF PAKISTAN
IDB expresses interest in funding hydroelectric energy projects
The Islamic Development Bank (IDB) has expressed keen interest in financing hydroelectric power projects in Pakistan as the country needs cheap and affordable electricity for all.
The IDB expressed the interest in a meeting between its six-member delegation, headed by its President Dr Bandar MH Hajjar, and Water and Power Development Authority (Wapda) Chairman Lieutenant General (Retired) Muzammil Hussain on Friday.
They discussed potential support for the development of a programme that would facilitate construction of hydroelectric power projects in Pakistan.
The IDB president, expressing keen interest in funding hydroelectric power projects, congratulated Wapda for the recent landmark as the Neelum-Jhelum hydroelectric power project generated 1,040 megawatts of electricity, which was 108percent of its installed capacity of 969MW.
He emphasised that the IDB felt honoured to be a leading partner in the development of that engineering marvel.
The IDB provided $357.6 million in financing for the construction of Neelum-Jhelum power project. In addition to that, it provided financial assistance of $150.2 million for three high-head hydroelectric power projects. These were Khan Khwar, Duber Khwar and Allai Khwar with cumulative generation capacity of 323MW.
Speaking in the meeting, the Wapda chairman praised the IDB for providing financial assistance to complete various hydroelectric power projects of Wapda.
“The IDB and Wapda have a longstanding relationship of mutual cooperation and this cooperation will further strengthen in the upcoming Wapda projects,” he said.
Hussain stressed that Wapda hydroelectric power projects provided excellent investment opportunities and like other institutions the IDB could also take benefit of such investment avenues.
He also briefed the delegation about the new and upcoming Wapda projects including Mohmand Dam, Diamer Bhasha Dam and Keyal Khwar power project.
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Gas supply to cement producer cut off
The ongoing drive against gas theft undertaken by Sui Northern Gas Pipelines Limited (SNGPL) in Khyber-Pakhtunkhwa (K-P) has begun damaging large industrial units, one of which has contacted the Prime Minister’s Office for immediate relief.
In a letter written by Lucky Cement, a big manufacturer and exporter of clinker and cement, to Prime Minister Imran Khan, the company management highlighted the major shutdown at its northern plant, located in Pezu, Lucky Marwat district, K-P.
“For the past almost four months, we are facing major gas shutdowns at our plant and we have been raising the issue continuously with relevant departments but the situation has gone from bad to worse,” stated the letter.
“Since the commencement of April, we have experienced almost complete gas shutdown at our plant and in the past 15 days, we have not received gas for more than two days.”
The plant was situated in a backward area of the country and the company had no other utility service except for gas to run it, the letter added.
A senior official of Lucky Cement said the gas unavailability had become a major issue, which was threatening the livelihood of thousands of company employees besides negatively impacting the cement manufacturing process.
“The company has no fault and believes that immediate restoration of gas supply is the only solution to the ongoing crisis. The management has highlighted the suspension of gas supply with the quarters concerned, but no tangible progress has been made yet,” he added.
The letter said the management approached both the relevant ministry and SNGPL and it was told that gas closure was due to the disconnection of illegal connections in the main gas pipeline, leading to the company’s plant.
“However, we have been given no timeline for how long this curtailment will continue,” the letter said. It added that a prolonged reduction in gas supply was playing havoc with plant operations.
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Minimum nisab set at PKR 44,415 for zakat deduction
People maintaining a minimum of Rs44,415 balance in savings, profit and loss sharing or similar bank accounts in Pakistan on the first day of Ramazan will be liable to pay 2.5percent Zakat on the total balance, the State Bank of Pakistan (SBP) announced on Friday.
However, people who have balance lower than the minimum one or those who have submitted Zakat exemption affidavit by the given deadline of 15 Shaban (April 21) or those people and corporations maintaining ‘current accounts’ are not liable to pay Zakat at banks.
“According to Administrator General Zakat, Ministry of Religious Affairs and Interfaith Harmony, Nisab for Zakat for the Zakat year 1439-40 AH is Rs44,415 (Rupees forty four thousand four hundred fifteen only),” according to SBP notification.
First day of Ramazan has already been notified as the ‘deduction date’ of Zakat from savings bank accounts, profit and loss sharing accounts and other similar accounts having credit balance of at least Rs44,415, the central bank said.
The first day of Ramazan will fall on May 6 or 7, 2019 (subject to sighting of the moon).
The minimum amount set for zakat deduction this year is Rs5,217 higher than the Nisab of Rs39,198 last year.
According to sources, the government collected close to Rs17.7 billion in zakat deductions from banks across the nation, during the three fiscal years 2015-2017.
The Nisab for Zakat is computed to be equivalent to 52 tola worth of silver (or 606.32 grams). The collected amount of zakat is distributed among needy people, including hospitals patients.
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Public debt surges PKR 3.6tr to a hefty Rs27.8tr
The government has added Rs3.6 trillion in public debt as of end March, taking total stock to Rs27.8 trillion, which is not in line with Prime Minister Imran Khan’s promise to reduce the debt pile by one-third at the end of his term.
The central government’s debt grew at a pace of 14.8percent from July through March of this fiscal year, reported the State Bank of Pakistan (SBP) on Friday. The double-digit growth in the debt stock would not bode well for the government of Prime Minister Imran.
From July through March 2018-19, the government on an average added Rs13.2 billion a day to its debt, which included almost seven and a half months of Pakistan Tehreek-e-Insaf (PTI) government.
The accumulation of debt is the direct result of the gap between expenditures and revenues, which is widening due to the inelasticity in debt servicing and defence needs and the Federal Board of Revenue’s (FBR) failure to enhance revenue collection.
In the first nine months of the current fiscal year, the FBR suffered a shortfall of Rs300 billion in revenue collection, which further widened to Rs345 billion at the end of April. The FBR’s tax collection grew at a pace of slightly over 2percent, which should also be a concern for PM Imran.
A source told that senior level changes in the FBR were expected soon.
During an interaction with media persons over a month ago, the prime minister had said that he planned to bring down the debt stock to Rs20 trillion from what he claimed Rs30 trillion at the end of June 2018.
The premier on Wednesday again blamed the governments of the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N) for increasing the public debt to Rs30 trillion.
Imran’s claim that the PML-N left the public debt at the level of Rs30 trillion is factually incorrect, as the SBP record showed that the gross public debt by June 2018 was Rs24.2 trillion, said former finance minister Ishaq Dar on Thursday.
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Pakistan seeks $1bn budgetary support from ADB
Pakistan’s economy is going through tough times and as per the norm the country is back on the International Monetary Fund’s (IMF) doorstep. Technical teams of the IMF and Pakistan are locked in negotiations for a bailout package and hope to strike a deal by May 10.
A lot is riding on this package and the Asian Development Bank (ADB) has also hinted at providing budgetary support following an agreement on the IMF programme.
“This time there is a request for budget support of close to $1 billion, in addition to the IMF programme,” said ADB President Takehiko Nakao while addressing a press conference at the ADB’s 52nd Annual Meeting.
He said Pakistan may witness the restoration of budgetary support, in addition to other loans provided by the ADB.
Pakistan’s budgetary support has remained suspended for the past over two years due to the deterioration of macroeconomic conditions. The Manila-based lending agency requires a Letter of Comfort from the IMF to accept the request.
“If there is a programme, we are very happy to provide budget support and loans, quite soon and another one can be a step further.”
Highlighting that the lending agency has very large operations in Pakistan, the ADB president said he had met with Pakistani authorities in April and had also had ministerial-level meeting in Fiji.
“We are ready to support Pakistan based on IMF discussions and we are closely talking with IMF authorities about the progress,” Nakao added.
After reaching an agreement with the IMF, several avenues are expected to open for cheap financing for Pakistan in terms of borrowing from international lenders including the World Bank and ADB. The programme will enhance the country’s credibility in the eyes of international lenders.
Pakistan is looking to finalise a $6.5-billion loan programme with the IMF, spanning over three years as without IMF umbrella, the country’s external-sector position remains largely fragile.
Pakistan has got 12 IMF bailout packages since the late 1980s, with the last one being in September 2013.
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IMF asks Pak to maintain development spending
The International Monetary Fund (IMF) has expressed the desire that Pakistan should “protect” its development spending at this year’s level in the next budget, which will limit the government’s options to achieve primary fiscal balance.
Head of IMF Mission to Pakistan Ernesto Rigo expressed these views during a meeting with Planning, Development and Reform Secretary Zafar Hasan, according to the planning ministry officials.
Rigo is leading a staff-level mission to Pakistan to finalise the Extended Fund Facility to help Pakistan steer out of the economic crisis.
It is the second staff-level visit of the IMF to conclude the deal for a three-year bailout package totalling around $6.5 billion. The fund is in the town for the last five days and there is still no convergence on the macroeconomic framework, according to sources. The projections made by the finance ministry and the IMF team on every main economic indicator varied, they added.
During the meeting, the planning secretary pointed to the problems the federal government was facing due to the squeezing fiscal space for development spending, said the officials. There are concerns that the development spending, which has already been on the wane over the past two years, may further decrease due to the IMF programme.
Rigo was said to have told the planning secretary that the IMF was not in favour of reducing the development spending. Rather, he said the IMF would like to see the development spending “protected” at this year’s level in terms of total size of the economy, said the officials.
For fiscal year 2018-19, the federal PSDP was equal to 1.8percent of gross domestic product (GDP) whereas the four provinces cumulatively allocated the development budget equal to 2percent of GDP. The total development allocation by the Centre and the four provinces is equal to 3.8percent of GDP.
However, the Ministry of Finance has given an indicative development budget ceiling of Rs675 billion to the planning ministry for the next fiscal year, which was equal to only 1.5percent of GDP and lower than the current fiscal year. There is another critical condition of the IMF that seeks primary fiscal balance next year which means the government’s total expenditure, minus interest payments, should be met from its revenues.
It is expected that this year again there will be primary deficit of around 2percent of GDP. To turn it into surplus, the government either has to cut its development budget, defence budget or massively scale up tax revenues.