KARACHI: A strike by freight forwarders and air cargo agents is piling up cargo containers at the country’s main port as delays in offloading and taking on new cargo is causing fears that a prolonged stand-off will cost the economy billions of rupees.
The strike, observed in protest against eight percent turnover tax, entered the second day on Wednesday, bringing the external trade to nearly halt, said a protesting leader.
...
[*] Euphemism for lyingISLAMABAD:
Pakistan and a trio of international lenders are slowly looking to bridge a trust deficit[*] after both sides softened their positions, which may pave way for the approval of a $1-billion loan meant as budgetary support for the energy sector.
[*] They cannot be trusted to deliver, pure and simpleThe World Bank, Asian Development Bank and Japan have withheld approval of $1 billion after they doubted the Pakistan government’s commitment to reform the ailing energy sector. [*]The lenders had complained that officials at the Ministry of Finance and Water and Power were backtracking from their assurances on the energy sector[/b], said sources.
[*] This is not the first time, and wont be the last time eitherThe officials, accused of not delivering on their commitments, created an impression in front of economic managers that the World Bank was changing targets and putting forward new conditions after implementation of earlier ones, they added.[*]
[*] Passing the buck ?Zargham E. Khan, a key official of the Ministry of Water and Power, was also accused of making over-commitments, an allegation Khan has denied, adding that he never committed anything without approval of the competent authorities.[*]
[*] Matter will be 'investigated' as usual, but doubt any action will be takenAfter growing differences with global lenders, Dar has taken it to himself to resolve outstanding issues. During numerous meetings held last month, the finance minister came to know that ministries’ claims of global lenders changing goalposts were not true,[*] said the sources.
[*] Is this possible in a country, where the PM is known to use the National Airline as his personal taxiThe World Bank and ADB are of the view that the financial viability of the power sector cannot be ensured[*] without paying the full cost of power to its producers.
PAKISTAN’S exports have floundered in the past year and a half. After an increase of nearly 3pc in 2013-14, the US dollar value of exports declined by 5pc in 2014-15. For the first month of 2015-16, export receipts have plummeted nearly 17pc. The fall in exports has been led by large declines in textiles and rice, with significant decreases in exports of jewellery, engineering goods, chemicals, and leather goods as well.
As a result, the real effective exchange rate (REER), which is an indicator of the international competitiveness of a country’s exchange rate, has appreciated over 20pc between December 2013 and June 2015, according to State Bank data. The steep, and virtually unprecedented in its magnitude, appreciation of the rupee in real terms during this period comes as many other economies across the world have either outright devalued their currencies to provide an advantage to their exporters, or have allowed their exchange rate to depreciate/adjust to market forces.The ‘strong rupee’ policy has added to the woes of exporters.Hence, between Jan 1, 2014 and Aug 26, 2015, the Indian rupee as well as the Chinese yuan weakened by approximately 7pc, the Turkish lira by nearly 37pc, the Vietnamese dong by 7.8pc and the South African rand by almost 26pc.
While questions have been raised about the effect, if any, a weaker rupee will have on our exports, the economic argument for allowing the rupee to finds its ‘truer’ value is clear. The litmus test of whether a country’s exchange rate is misaligned from economic fundamentals is not just its impact on exports — which tend to decline because of having become more expensive for foreign buyers. The corollary of an overvalued exchange rate is that imports into the country become cheaper, thus leading to a spurt. While Pakistan’s exports declined 5pc in 2014-15, non-oil non-food imports rose 13pc, even with the crash in global commodity prices (with a further 17pc year-on-year increase in July), clearly demonstrating the effect of the exchange rate overvaluation.In the presence of massive under-invoicing of imports, especially under the Free Trade Agreement with China, competitive devaluations by trade competitors, steep increases in domestic energy tariffs even with lower availability, the imposition of the Gas Infrastructure Development Cess, and the blocking of billions of rupees of genuine tax refunds, the deliberate overvaluation of the rupee is near-fatal for a large part of Pakistan’s export sector.Nevertheless, even in a longer time frame, Pakistan has not done as well as many of its developing country peers in terms of export performance. In fact, it has been an outright laggard. Its market share of global exports has stagnated for the past four decades, at a measly 0.14pc. Between 2000 and 2015, its exports have increased around two and a half times, while India’s have grown over seven-fold, and China’s nine-fold. ( he ain't counting service export)Even Bangladesh’s exports are now approaching $30 billion, recording a phenomenal increase during this period..
Lahore—Pakistan Cotton Ginners Association (PCGA) has issued the figures of cotton arrival up to September 1. Seed cotton (Phutti) equivalent to over 1,339,990 bales of cotton have reached ginneries across Pakistan as of September 1 showing a decrease of 23.96 percent compared to corresponding period last year when ginneries received 1,762,282 bales.
A_Gupta wrote:Is this economic stress or some other reason?
http://pakobserver.net/detailnews.asp?id=272348
Cotton arrivals show 24pc fallLahore—Pakistan Cotton Ginners Association (PCGA) has issued the figures of cotton arrival up to September 1. Seed cotton (Phutti) equivalent to over 1,339,990 bales of cotton have reached ginneries across Pakistan as of September 1 showing a decrease of 23.96 percent compared to corresponding period last year when ginneries received 1,762,282 bales.
'A_Gupta wrote:I think it is all Pakistan arrivals, see http://pcga.org/?p=1368
Meanwhile, Southwest Monsoon has withdrawn from some parts of Rajasthan, Punjab and Haryana, The withdrawal line of Monsoon is passing through Amritsar, Hisar, Ajmer and Barmer. According to Skymet, weather conditions are favourable for the further withdrawal of Monsoon from Northwest India. - See more at: http://www.skymetweather.com/content/na ... pK17c.dpuf
Key Markets and Export Destinations
The value of cotton yarn exported from India in the period April—December 2014 was estimated at US$ 2,906.43 million, while that of cotton fabrics and madeups in the same period stood around US$ 4,128.78 million.
India has overtaken Italy and Germany, and is now the second largest textile exporter in the world.
India was the third-largest supplier of textiles and clothing to the US in 2013, contributing about 6.01 per cent of its total imports.
China is the biggest importer of raw cotton from India. The other major cotton importing countries from India are Bangladesh, Egypt, Taiwan, Hong Kong among others.
The article also hints at a rate cut on September 12. If carried out, this would be the lowest rate in history of bakistan. Basically bakis strategy is reducing rate to borrow more.
The banks are short of cash and have been breathing with the help of State Bank’s weekly injection of more than Rs1 trillion. However, they accumulated maximum liquidity to park it in the government papers, preferably in PIBs.
PIBs were the most attractive investment for banks and corporate sector and they were willing to invest Rs270 billion in this auction. However, the government restricted the sale of PIBs to Rs94bn.
Though the government has slowed down borrowing through PIBs but in the recent past it crossed the limits set for PIBs and treasury bills.
The State Bank reported on Wednesday that the government has borrowed heavily through scheduled banks that may set new record of borrowing for this fiscal year. It has already made record borrowing of Rs1.4tr in FY15.
The government is benefiting from the low cost of borrowing but increased borrowing has already burdened the economy and the domestic debt serving is eating up major chunk of tax money.
Till the end of August 2015, the investment in government papers including PIBs, treasury bills and sukuk crossed the figure of Rs7tr.
....The government’s past record suggests that the austerity policy will largely remain on paper....
The government’s decision to reintroduce the austerity policy underlines the growing challenges that it faces in balancing its books. Its tax revenues remained short of the first two months target of Rs365 billion by Rs33 billion, indicating the problems that the government is facing in enhancing revenues despite levying unprecedented level of taxes in past two years.
The Coalition Support Fund, being disbursed by the United States, may also dry up soon, which will also create problems for the government. The Ministry of Finance has budgeted $1.5 billion CSF disbursements for the current fiscal year. The US has threatened to block $300 million due to its concerns that Pakistan military was not taking action against the Haqqani network.
While revenues are falling short of expectations, expenses on debt servicing and defense are increasing rapidly. The government has been borrowing heavily since June 2013, resulting into increase in cost of servicing despite significant reduction in discount rates.
We know that the pakonomoney figures have been inflated, this means that the debt to GDP ratio is far worse than being what has been declared.Public debt of 17 trillion rupees ($163 billion) for the $232 billion economy.
‘Blacklisted’ firm to run Nandipur plant
The takeover of Pigland by China is continuing apace.The Dongfang Electric Corporation, the blacklisted Chinese company which carried out the 425MW Nandipur Power Project, has been called out to help power authorities run the plants.
The mard e momeens are 400% ganwaar and cant run a power plant.The local authorities failed to keep the plant running and it has been non-operational for more than a month, amid allegation of gross corruption and irregularities on part of the water and power ministry and other relevant departments.
The company (chinese) was blacklisted by the Railways ministry for corruption and not providing engines and equipment as per contract.
The plant generated electricity at a record Rs42 per unit
and had to be shut down just after five days of its operation, since then it has been non-operational.
Until this news-item just today, one might have been under the impression that construction was not only initiated, but was proceeding.Chinese company M/s Huaneng Shandong Ruyi Group, sponsors of two imported coal-fired project of 1320 MW (2x660 MW) in Sahiwal, has reportedly refused to proceed towards financial close until massive changes are made in the proposed agreements....
...the project company has raised serious concerns that it cannot proceed towards the achievement of the financial closing and initiation of construction without: (i) effective cover against non-performance of Pakistan Railways and (ii) excuse from performance obligations under the Power Purchase Agreement, where coal is not available at the complex due to the reasons of non-completion of port handling terminal and coal transportation arrangement from port to Railway yard as the project company will be exposed to huge financial risk without any of itsdefault.
The farmers demanded that the district co-ordination officer should reopen the only sugar mill of Farooqa Town in Tehsil Sahiwal. They said due to closing of that sugar mill, their sugarcane crop was in danger. The cultivators sought early implementation of the orders to open Chistia Sugar Mills.
Investment in power generation through coal: Shahbaz fails to successfully persuade businessmen.
They went on to claim that one advisor on the Solar Park project had left him in the middle of his contract when he found that the solar panels were full of dust following heavy storms in Bahawalpur. "The advisor had told the chief minister that he should consider his doctorate fake when the latter asked him to continue his job while reminding him that he was doctorate in electric engineering."
ISLAMABAD: Natural gas will only be available to domestic consumers this winter and will not be supplied to other sectors due to a rising shortage in Punjab, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said on Monday.
Speaking at a press conference, the minister said that only 1150mmcfd (million cubic feet per day) of gas was available in the Sui Northern Gas Pipelines Limited (SNGPL) system, of which 350mmcfd was Khyber Pakhtunkhwa’s share. That would leave only 800mmcfd for Punjab, against its peak domestic demand of over 900 mmcfd.
Responding to a question on shale gas production, the minister said this was not economically viable at a time when oil prices were this low. Shale gas would require a price of $12 per mmbtu (million British thermal units), while liquefied natural gas (LNG) was currently available at $7-8 per mmbtu.
Responding to a question, the minister said his ministry ordered the removal of SNGPL Managing Director Arif Hameed because he had not been able to deliver on targets. As the head of the company, Mr Hameed was required to look for sources of gas for the company’s consumers, which he failed to do, while gas losses — known as unaccounted for gas — also increased on his watch.
[*] Dal mae kuch kaala haehe maintained that he had not embarrassed the prime minister by issuing Mr Hameed’s termination orders. He said that the board of directors had not taken up his removal for approval because of a restraining order issued by the Lahore High Court[*].
He said Pakistan would also like to expand its cooperation with Germany in the spheres of trade, science and technology, automobile industry, manufacturing and renewable energy projects. He also called upon the German side for revisiting the bilateral agreement between the government of Pakistan and Federal Republic of Germany which was signed in 1972.
An agreement signing ceremony followed the meeting in which three financing agreements for German development cooperation to Pakistan were signed. These include (i) 10 million Euro grant agreement for the reintegration and rehabilitation for temporarily displaced persons in Federally Administered Tribal Areas (FATA) (ii) 10 million Euro grant agreement for the regional infrastructure fund for Pakhtunkhwa and 40 million Euro loan [*]agreement for the rehabilitation of Warsak Hydropower plant.
[*] Hope that the lenders have factored in the risk of repayment in calculating the interest rate
As for the two grants totaling 20 million Euro, German auditors should ensure proper evidence that the funds are not embezzled by the administrators etc
The project – Reintegration and Rehabilitation for Temporarily Displaced Persons in FATA – aims to support the return of the TDPs to the tribal areas and to contribute to the rehabilitation of the affected areas. The project – Regional Infrastructure Fund in Khyber Pakhtunkhwa – aims to strengthen the implementation capacities of the district administration and to enhance participation of the population in the decision-making process at district level.
The Warsak Dam rehabilitation project aims at the rehabilitation of 55 years old hydropower project for restoring its power generation capacity to 243 megawatts from 180 megawatts. Finance Secretary Dr Waqar Masood Khan, EAD Secretary Saleem Sethi and senior officials of the Ministry of Finance and Economic Affairs Division attended the meeting.
Moody's press release:Moody’s Investors Service has assigned a provisional rating of (P)B3 to Pakistan’s announced global bond offering while keeping the outlook stable.
Pakistan came to the market on the back of a good track record of economic management since its last issue. The investors were appreciative of the progress made in stabilising the economy and reforms carried out in critical sectors of energy, privatisation, tax administration and investment climate.
CheersThe launching of the Euro bond, the third global issue in less than two years, highlights the government’s lack of commitment to structural reforms hampering economic growth, according to independent economists.
The bond will fund the upcoming maturity of a 10-year, $500-million bond issued in 2006.
Analysts described the issue as a “slight setback” for the government, saying the timing of the issue was less than ideal considering global market conditions.
“They’ve got less money [than expected], and I think it’s slightly expensive. We were expecting 8% or below,” said Mohammed Sohail, chief executive of Topline Securities
The country, however, appears to be in a debt trap; it is borrowing to retire borrowing. The government paid 6.12% over and above the US treasury rate for ten-year bond – a cost that highlights investors’ sentiments about the health of the country’s economy.
The difference is - Jan 2015 was a different time than now. If Reliance tries to raise the same amount of money now, they will pay more than what Pak as a sovereign nation will pay. The dollar carry trade is unwinding and even huge bond funds and bond houses are feeling the heat. The global bond market is controlled by 20 US based institutions. UBS managed yield bond fund has folded overnight. Its only going to get worse.A_Gupta wrote:xpost from STFUP thread (hat-tip arun!)
http://forums.bharat-rakshak.com/viewto ... 0#p1907077
Pakistan’s new Eurobond earns lukewarm response
The government paid 6.12% over and above the US treasury rate for ten-year bond
612 Basis Points over and above US treasury rate for ten-year bond is a really high interest rate to pay. Indian corporate entities without sovereign guarantees have been raising 10 year US Dollar denominated bonds at a third of the mark-up over the 10 year US treasury rate that the Islamic Republic is paying.
A new element in the review is the discussion of the China-Pakistan Economic Corridor. Significantly, the Fund has poured a bucket of cold water on the expectation that implementation of the CPEC projects will drive growth. “Any demand-driven economic expansion as a result of project implementation is expected to be limited,” the report says, since investment is likely to be offset by higher imports. The growth prospects resulting from CPEC will come later, once the infrastructure is in place and able to support a higher level of economic activity. That crucially hinges on the larger macroeconomic environment and how conducive it is to supporting investment and growth. Moreover, proper implementation of the projects, which includes managing the risks contained within them, will be crucial, and here too the government’s track record is weak.
Firstly, Pakistan is unlikely to appear on the investment map of any nation; And secondly, as reported elsewhere, the so-called spike in reserves has been generated through extreme borrowing, a burden to the uneducated Aam Abduls of future generations .KARACHI: The foreign direct investment (FDI) rose eight per cent to $216 million in the first quarter (July-September) of this fiscal year from $200m a year earlier, the State Bank of Pakistan said on Thursday.
However, 88pc ($190m) of these inflows were from China which indicates that Pakistan has yet to appear on the investment map of private investors despite a spike in foreign exchange reserves to $20 billion.
Analysts believe the domination of a single country in FDI inflows could have negative consequences asit would makeit has made Pakistan dependent on China.
So in spite of this flight capital by US investors, Massa Rating Police (Moody) had no qualms about granting a triple B rating on the new Bond Issue.Another important development was the disinvestment by the United States — the country withdrew about $103m during the first quarter. This heavy withdrawal undermined the other investments like $33m from the United Kingdom, $49m from the United Arab Emirates and $28m from Switzerland during the quarter.
No wonder that Badmaash, Raheel, and (relative) Dar are flying everywhere for borrowing (AKA begging) purposes.The poor investment climate was also visible at the time of latest Eurobond offer. The government sold $500m Eurobonds last month at a very high rate of 8.25pc, but still failed to attract investors the way it had attracted in the previous offer.
Borrowing funds, left and right to provide basic services ; in an "ordinary" nation, this would qualify as "news" !MANILA/ISLAMABAD: The Asian Development Bank (ADB) has agreed to provide a $1.2 billion assistance package to Pakistan, the major chunk of which will be spent for improving power, transport, agriculture and urban service sectors, Radio Pakistan reported on Saturday.
According to the agreement, the bank in its new five year partnership strategy with Pakistan will provide the amount annually for infrastructure development and institutional reforms.
Ganja's gang and in fact all future Paki Governments are now saddled with "promises" made by the earlier PPP regime; promises, if truth were told, they could not afford; now the Aam Abduls are "addicted" to this drug (handouts) and it will be pretty difficult to wean them away, unless they can effectively deal with the withdrawal symptomsThe assistance package will also expand the outreach of Benazir Income Support Programme, the poverty reduction initiative started by country's federal government back in 2008.
About 2.4 million women beneficiaries will be added to the programme with the help of this annual assistance package.
The Asian Development Bank will help establish a government owned disaster risk fund to mitigate risks and enhance resilience to natural disasters.
The bank claims to be one of Pakistan’s largest development partners, having provided more than $25 billion in loans, as well as more than $200 million in grants, as of Dec 31, 2014.
Hope Raheel is an avid reader of Yawn, as he likes to be on top of things !Pakistan has taken loans of billions of dollars from ADP, WB, IMF but no progress can be seen on the ground. Agriculture yield per acre are the lowest in the world, schools and hospitals are in a pathetic state, rural roads are unusable and, corruption and mismanagement is rife. What use will new loans make?
Pakistan and Russia today signed a major agreement to build a 1,100-kilometre gas pipeline from Lahore to Karachi at an estimated cost of $2 billion, a collaboration that is expected to take ties between the two Cold War-era adversaries "to a new level".