FISCAL RULE OR FISCAL CRISIS

Wednesday, 26 December, 2012

ISLAMABAD

APP

DIFFICUlT economic deci-sions and reforms under-taken by the present PPPled government and de-spite challenges during

past four and half years had producedpositive results and ailing economy in thecountry had been stabilized and put onthe path of economic resilience andgrowth.

Highlighting the major achievementsof the government, a senior official of theMinistry of Finance told APP that thebudget deficit had been brought downfrom 7.6 % of GDP in 2007-08 to 6.6% ofGDP during 2011-12, while it has been es-timated at 4.7% of GDP in FY 2012-13.

Advisor to Finance Ministry RanaAsad Amin said that due to tight mone-tary policy regime, inflation had beenbrought down from 25% in 2008 to 11%in FY 2011-12 and estimated at 9.5% dur-ing FY 2012-13.

He added that subsidies have beenreduced from 3.5% of GDP in 2007-08 toaround 1% of GDP in the budget 2012-13.He further said that due to stringent aus-terity measures adopted by the presentgovernment the expenditure on civil gov-ernment has been reduced from 1.3% ofGDP to 0.9 % of GDP.

Rana Asad Amin said that FBR col-lections increased from around Rs. 1157billion in FY 2008-09 to Rs. 1908 billionin FY 2011-12 and estimated at Rs. 2381billion in FY 2012-13.

He informed that workers' remit-

tances grew from US$ 7.8 billion in FY2008-09 to US $ 13.2 billion in FY 2011-12.

"Exports increased from US $ 19.1billion in FY 2008-09 to US $ 25.3 billionin FY 2010-11, stabilizing at US $ 24.6billion FY 2011-12", he remarked.

He said that the current accountdeficit of $13,874 millionin 2008 was turnedaround into to asurplus of $423million inSept 2012.

F o r -eign ex-c h a n g ereserves ,he saidrose from a low of $ 7.5 billion inSeptember 2008 to $18.2 billion inJune 2011; currently they stand ataround $14.4 billion.

He added that debt to GDP ratio hasbeen kept within the statutory limit (Fis-cal Responsibility and Debt limitationAct, 2005).

The Advisor Finance Ministry saidthat Economic growth of 3.7% wasachieved during FY 2011-12 and esti-mated at 4% during FY 2012- 13.

Regarding the Development spend-ings, he said that the Public Sector Devel-opment Programme (PSDP) over a periodof 5 years was Rs. 3 trillion.

"Current financial year's PSDP outlayis Rs.873 billion as compared to Rs668billion last year", he remarked.

He said that Rs 153 billion were ear-marked under People's Works Pro-

gramme (Rs.118 billion under PWP-IIand Rs.25 billion under PWP-I) in 5 yearsfor implementation of hundreds ofschemes for electrification, gas supply,road, water supply and sanitation.

Highlightingthe employ-

ment situa-t i o n

d u r -

i n gt h ep a s tfour andhalf years,Rana AsadAmin said thatone hundredthousand intern-ships provided since2008 through the Na-tional Internship Programme while alarge number of sacked employees were

reinstated.He added that the government facili-

tated employment of at least 660 thou-sand Pakistanis abroad and the ban onemployment partially lifted.

He added that twelve thousand publicsector contract jobs converted into per-manent jobs while facilitation of self-em-ployment through Waseela-i-Rozgarscheme under BISP was initiated to ben-efit the poor segment of the society.

Highlighting ther e -

s o u r c etransfer to the

provinces, he said that under the 7thNFC Award gave due weightage topoverty/backwardness, revenue collec-tion, revenue generation and inverse pop-ulation density, in addition to population.

He added that transfer to the

Provinces increased from Rs.633 billionin FY2009-10 under 6th NFC Award toRs. 999 billion in FY2010-11, Rs.1,090billion in FY 2011-12; and Rs. 1459 billionin FY 2012-13.

Rana Asad Amin added that it in-creased the share of Balochistan to 9.09percent from 5.11% and seventy percentof the divisible pool is now being trans-ferred to the Provinces and Special Areas,which reflects greater financial empower-ment of the Provinces.

Regarding the steps taken for thePoverty Alleviation, he said that Rs. 138billion allocated till end of FY 2011-12 toBISP; Rs.

70 billion have been budgeted in thecurrent financial year 2012-13. He furthersaid that under Benazir Employees StockOption Programme, 12 percent shares of80 State Owned Enterprises were trans-ferred to 500,000 employees, makingthem shareholders in the respectivePSEs.

He added that under Bait-ul Maal,more than Rs. 7 billion distributed to thepoor over the past three years.

He added that Rs 52 billion providedto flood affectees under Citizens' Dam-ages Compensation Programme.

He added that present government'sRestructuring Public Sector Enterprisespolicy included induction of ProfessionalBoards of Directors, Induction of profes-sional management from the market, re-constitution of Boards of Directors ofPower Sector Distribution Companiesand restructuring of Steel Mills, PIA,PASSCO, Utility Stores Corporation andTrading Corporation of Pakistan.

‘Despite challenges, ailing economy stabilised’

ISLAMABAD

ONLINE

The Asian Development Bank (ADB) will hold aone day conference on January 17,2013 in Japanto analyze the determinants of successful fiscalpolicy consolidation and the basis for fiscal rulesto assure fiscal sustainability over the economiccycle.

It will examine the experience of advancedand emerging economies, with particular refer-ence to the situation of Asian emergingeconomies.

The conference will gather well-known schol-ars and experts on fiscal policy and actively pro-mote a discussion on relevant issues which isexpected to contribute to the theoretical and em-pirical literature and regional policy dialogue.The key issue to be analyzed in the conference isthe determinants of successful fiscal policy con-solidation and the basis for fiscal rules to assurefiscal sustainability over the economic cycle, withparticular reference to the situation of Asianemerging economies.

The global financial crisis of 2007-2008 andits aftermath, most notably the development ofthe euro zone sovereign debt and banking crisis,have led to a renewed emphasis on the need forpolicy measures to ensure macroeconomic and fi-nancial stability in order to support sustainablegrowth. In particular, the large amounts of gov-ernment debt issuance in response to the globalfinancial crisis—to cover shortfalls in tax rev-enues, to fund stimulus measures and to recapi-talize the financial sector—led to massiveincreases in government debt in many advancedeconomies.

This rise in government debt was one of thedirect causes of the Euro zone financial crisis.Moreover, other countries including the US,Japan and the UK with high debt ratios face po-tential financing risks, even though they are notexperiencing crises at this time. These risks arebeing exacerbated by deteriorating long-termfundamentals, mainly related to higher fiscal ex-penditures and lower revenues associated withaging populations. Countries need to find theright balance between taking necessary fiscal

consolidation steps and not dragging theireconomies into recession as a result of excessivefiscal drag in a generally weak economic environ-ment.

In contrast, emerging Asian economies gen-erally emerged from the global financial crisiswith relatively healthy fiscal conditions. Thispartly reflects higher economic growth rates to-gether with relatively small shares of governmentspending in GDP and, in some cases, financial re-pression that keeps the interest cost of govern-ment debt well below the growth rate of nominalGDP. However, these fundamentals are likely toworsen over time as populations in the regionage, growth rates slow and financial liberaliza-tion continues. This conference will focus on theidentification of and distillation from successfuland unsuccessful experiences of fiscal consolida-tion and their lessons for emerging Asianeconomies.

ISLAMABAD

ONLINE

The country’s gross official reserves may depleteto $8.24 billion by June 2013 which is 28 per centor $3.2 billion, lower than what has been pro-jected for last financial year 2011-12,said an offi-cial. The official said the current account deficit –gap between total foreign receipts and payments– is expected to widen to $5.3 billion or 2.1 percent of total size of economy during on going fis-cal.

The incumbent government has also decidedthat the necessary international and domestic pay-ments would be mulled over on case to case baseduring current financial year 2012-13.

An official working in the Finance ministrytold “Online” that unavoidable, international anddomestic contractual and obligatory payments willbe considered on case to case basis and relaxationif required may be allowed by the Finance Secre-tary.

The aid-dependent Pakistan has to pay signif-icant portion of the foreign debt during current

fiscal which will plunge unpleasant implicationsfor exchange rate that in return will fuel inflationdue to increasing cost of imported goods.

According to the repayment schedule agreedbetween Pakistan and IMF, Pakistan will repay it’sobtain $7.6 billion to the IMF till the end of fiscalyear 2014-15. The $11.3 billion SBA program hadexpired on September 30, 2011 and the last twotrenches of $3.7 billion could not pay to Pakistanby IMF following Islamabad’s failure to pursuekey reforms as well as the emergence of the rev-enue figures fiasco.

Despite depressive economic situation of thecountry, the government had paid back totalamount of $2.52 billion to International MonetaryFund so far from foreign currency reserves held bythe State Bank of Pakistan (SBP).

Pakistan had enter into a $11.3 billion pro-gramme in 2008 with IMF and got disbursementsof about $7.6 billion, but failed to get the remain-ing $3.7 billion due to slippages in performancecriteria, leading to suspension of the programmein May 2010 and was ended unsuccessfully onSeptember 30,2011.

Gross official reservesmay deplete to $8.24billion by June 2013

ADB to hold one-dayconference on Jan 17

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MOSCOW

AGENCIES

Russian President Vladimir Putin un-veiled the final extension of a new $25billion oil pipeline to the Pacific that un-derscores the energy power's gradualshift away from stagnant European mar-kets.

The East Siberia - Pacific Ocean(ESPO) link is also expected to expandsales to the United States and fulfilPutin's dream of cementing Russia'splace as a dominant force on interna-tional crude markets.

Moscow hopes to make ESPO into abenchmark in the Asia Pacific region thatcompetes with WTI -- the US oil standardwhose price some traders believe is tooheavily based on domestic political fac-

tors.But analysts worry that Russia may

currently lack enough accessible oil in itsunderdeveloped East Siberia fields tokeep the line fully flowing despite strongdemand in China and Japan.

Putin brushed those concerns asideas he joined in the ribbon-cutting cere-mony by video link from the Far East cityof Khabarovsk.

"By completing the second leg, ourpotential is expanding," Putin said in tel-evised remarks.

"This is a serious event."The second leg of the 4,200-kilome-

tre (2,600-mile) pipeline runs from fieldswest of lake Baikal to the Pacific port ofKozmino near the northeastern edge ofChina.

The port -- previously connected to

East Siberian crude by rail -- also pro-vides Russia with quick access to Japanand South Korea.

But the head of the Transneft state oilpipeline operator said most of the crudefrom the final leg would in fact be des-tined for the United States.

"The American market will receive 35percent of Kozmino oil," Nikolai Tokarevsaid at the opening ceremony in com-ments reported by the company's web-site.

"Around 30 percent will go to Japanand 28 percent to China. The rest will goto Singapore, Malaysia and South Korea."

Russia has repeatedly tried and failedto make meaningful inroads on the UScrude and natural gas markets.

Its gas sales never materialised afterthe North American shale revolution

made both Canada and the United Stateseffectively self-sufficient.

Analysts also point out that US oilproduction is expanding at rates thatshould soon see the country outpace Rus-sia and Saudi Arabia in the next fewyears.

But Transneft's Tokarev appeared tobe placing his bets on this region as helaid to waste the idea of offering Europeany assurances that the continent couldcontinue to rely on Russian oil.

"We do not owe a single EU country athing, and we certainly not obligated toaccount for ourselves," RIA Novostiquoted Tokarev as saying.

"If they (EU nations) want to hold anormal, proper conversation, they shouldchange their approach to such a dia-logue."

RussiA unveils $25B oil link to PAcific

Wednesday, 26 December, 2012

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERUniLever Pak 10100.00 10200.00 10100.00 10150.00 50.00 440Sanofi-Aventis Pak 375.00 392.00 389.00 390.00 15.00 500Atlas Battery Ltd. 226.00 232.00 230.00 231.80 5.80 2,200Pak Oilfields 430.94 436.00 430.01 435.36 4.42 345,600Engro Foods Ltd. 91.89 96.48 89.01 96.21 4.32 5,509,000

Major LosersUnilever Food 4300.00 4400.00 4200.00 4200.00 -100.00 100Bata (Pak) 1399.00 1468.95 1342.00 1360.00 -39.00 1,900Shezan Inter. 445.00 445.00 422.75 422.75 -22.25 200Pak.Int.Cont. SD 255.24 250.00 242.48 242.48 -12.76 22,900Service Industries 172.15 172.15 166.00 166.01 -6.14 2,400

Volume Leaders

TRG Pakistan Ltd. 5.77 6.50 5.40 6.18 0.41 33,413,500Byco Petroleum 12.09 12.60 12.25 12.35 0.26 9,138,500Lotte PakPTA 7.49 7.95 7.50 7.61 0.12 8,784,500Dewan Salman 2.41 2.71 2.46 2.51 0.10 6,520,500Engro Foods Ltd. 91.89 96.48 89.01 96.21 4.32 5,509,000

Interbank RatesUS Dollar 97.5007UK Pound 157.8049Japanese Yen 1.1549Euro 128.8277

Dollar EastBUY SELL

US Dollar 97.40 98.10Euro 128.22 129.44Great Britain Pound 156.81 158.27Japanese Yen 1.1410 1.1516Canadian Dollar 97.50 98.91Hong Kong Dollar 12.40 12.58UAE Dirham 26.48 26.70Saudi Riyal 25.94 26.15Australian Dollar 100.38 102.77

Business

KARACHI: Opening of the philatelic exhibition at the Russian

Consulate in Karachi Picture Show.Mr & Mrs.Adndrey Demidov ,

Consulate General of the Russian Federation in Karachi

NBP pays tribute to Quaid-e-AzamKARACHI: On 136 th birth anniversary of Father of the Na-tion,Muhammad Ali Jinnah, National Bank of Pakistan paid trib-ute to Quaid-e-Azam’s untiring efforts for creation of Pakistan,during a Media briefing on December 25, 2012 at Marriot Hotel,Islamabad. While emotionally cementing to salute epitome toQuaid-e-Azam, Ibne-Hassan, Divisional Head, and Mr. AdnanAdil Hussain, Senior Vice President/Divisional Head,Consumer&Retail Banking Division, Commercial & Retail Banking Group,NBP, apprised the media about NBP’s recent achievements andinitiatives.“let us pay tribute and salute to our QUAID”. It was thevision of Quaid that NBP is serving to carve out the picture that hewanted. “let NBP foster the financial cause that Quaid wanted, awell-balancedPakistan, that includes financially structured Pak-istan…a responsibility shared by SBP, NBP and all other banks”,was the version of an old pensioner fellow talking to the partici-pants. He said, “Despite numerous challenges, NBP’s performanceduring the past 5 years stands out. Its products and strategies arebased primarily around national priorities and catering horizon-tally scattered population. It’s the vision of Mr. Qamar Hussain asour president that we are leaping our practical steps.” Targets areset to touch the dearest wood, and then Dr. Asif. A. Brohi (ChiefOperating Officeris the beacon and the touchwoodfor NBP”.

CORPORATE CORNER

KARACHI

STAFF REPORT

GlAxOSMITHKlINE has organ-ised an educational and fun-filled Orange Day 2012 at theMaritime Museum in whichapproximately a hundred en-

thusiastic students from SOS Children’s Vil-lage took part. The Orange Day was dividedinto one on one interactive career counseling,creative writing/drawing contest around thetheme 'My vision if I were the President of Pak-istan', an engaging museum tour, singing com-petition, and lunch.

GSK leveraged its strength of a diversi-fied group of people from various academicbackgrounds and 25 GSK employees, doingvarious roles across the organisation, volun-teered as counselors for the Orange Day2012. Each of these counselors had been des-ignated to counsel approximately 4 students,who had expressed their interest in particu-

lar fields prior to counseling, over a periodof an hour and a half.

Meanwhile, other volunteers were engagedin helping students through a creative writ-ing/drawing contest in which students usedpens, colors and their wonderful thoughts tocreate some masterpieces about their vision forthe country if they had all the power. The stu-dents’ keenness to learn more from the profes-sionals in the various fields that they wished tobe a part of was extremely encouraging for thevolunteers and counselors.

Dr. Yousuf Khan, Head of Clinical Re-search, expressed his opinion of this event inthe following words: “Before I began counsel-ing, I wasn’t certain of how helpful my wordsmight be to the students but after counselingthe very first student and seeing the level of in-terest and inquisitiveness, I realized that theOrange Day was one of the very rare chancesthat these students had gotten for the guidancethat they had been seeking and might not havereceived otherwise. It was a brilliant and eye

opening experience!”The top 3 submissions from the creative

writing/drawing contest were awarded prizeswhich managed to bring bigger smiles to theirfaces. All submissions were posted on a wall ti-tled 'The Wall of the Brighter Future' whileGSK employees also took this opportunity toput down their thoughts about this initiative ona wall titled 'What Orange Day means to me.'

An interesting tour of Karachi’s famousMaritime Museum and a scrumptious lunchmarked the end of the day. It is to be noted thatOrange Day, introduced globally in January2009, enables GSK employees to make a signif-icant difference by engaging with their localcommunity.

The initiative allows employees to take onefull paid-day to volunteer for a chosen commu-nity project, organisation or cause which theysupport. Not only do the employees benefitfrom the team building experience but the or-ganization gets an opportunity to play its duerole in community building.

GlaxoSmithKlineorganises Orange Day

KARACHI

STAFF REPORT

3P Plas Print Pack Pakistan 2013, isdistinguished for business opportu-nity, satisfaction and success in theindustrial sectors. Serving as a pre-mium platform for companies tomake contacts and keep abreast ofthe latest industry trends and newtechnologies in plastic, printing,packaging machinery industries andautomation.

This year the exhibition is ex-pected to host over 300 exhibitorsfrom 30 countries and attended byover 30,000 quality visitors.

The show has already confirmedmajor participation from Chinese,Indian, Turkish and European com-panies.

From 8th to 10th March 2013 inlahore expo Center 3P- Plas, PrintPack Pakistan 2013 is the onlyevent in Pakistan strategically sup-ported by Pakistan Plastic Manufac-turers Association (PPMA) andTurkish Plastics Manufacturers Re-search Development and Educa-tional Foundation (PAGEV) andendorsed by the leading relevant in-ternational and local authorities inthe country.

The tradeshow is destined to en-gage the world of plastics, printingand packaging sector. The concur-rent event of Food and Technology,along with the conference, will also

be incorporated with the mainevent.

3P- Plas, Print Pack Pakistan2013 is believed to provide oneplace for all the related industryleads and associations to promotebusiness, enhance networking andintegrating decision makers to buildprofitable relationships in the longrun.

The exposition will showcase thelatest and state of the art machineryand equipment used in the plastic,printing and packaging industry.

The event is deemed to provideseveral opportunities to grow busi-ness and employ the best practicesthat are recognized worldwide tocompete on international standards.Tradeshows like 3P-Pakistan helpcountries to experience growth, in-vestment inflows and economic sus-tainability in the future.

3P- Plas Print Pack Pakistan2013 is aimed to promote trade be-tween countries in order to supportthe frame of economy. Such eventshelp in retaining economic growthand prosperity to recover from therecession.

The exhibition showcasing themodern equipments and technologywith huge foreign participation isbound to bore succession andgrowth for the industry.

The event has all the instincts tocreate a benchmark in the plasticindustry and its related segments.

9th international plasticprinting and packagingshow from March 8

‘We’ve been outstanding!’ ISLAMABAD

STAFF REPORT

Despite numerouschallenges, NationalBank’s performance re-

mained outstandingduring the past five years.

This was stated by AdnanAdil Hussain, Senior Vice Presi-

dent/Divisional Head of NBP hereon Tuesday. Addressing a press con-ference, Mr Adnan said that NBP

products and strategies were based primarily around na-tional priorities and catering horizontally scattered popula-tion. He was flanked by, Ibne-Hasan, Divisional Head andother senior members of flag carrier bank. “look you havefinancial needs in lahore, Karachi, Islamabad and other bigcities growing vertically. Tell me about 121 districts in Pak-istan, with over 50,000 villages and around 180 millionmasses, are they growing vertically in financial needs? No,obviously and NBP is the only bank handling them withtheir horizontal root to rise needs,” said Adnan while an-swering a question. While representing President QmarHussain and COO/Head C&RBG Dr. Asif A.Brohi, heproudly announced the enhancement in launch of NBP ad-vance salary, cash& Gold scheme, agriculture products andNBP products in general. He said that NBP Advance Salarypersonal loan, finance facility was targeted towards publicsector employees who were already NBP’s account holders.“ The product was an instant success and to date, NBP haddisbursed more than PKR 210 billion and more than 1.6million government employees have been benefited fromscheme. Despite these huge volumes, the infection is onlyaround 2%. All government employees receiving salariesthrough NBP can get personal finance up to Rs 1 million.”Adnan further said that NBP was enhancing services to theincome strata that could seek Rs 1,000, 000. “ Agricultureis yet another area where NBP demonstrates its nationalcommitment and resolve. NBP leds its counterparts by ahuge margin and outreaches approximately more than250,000 farmers in the nook and corner of the country,”Adnan added. Earlier, At the start of press briefing, the rep-resentatives of NBP paid rich tribute to Quaid-i-Azam onhis 136th birth anniversary. “let us pay tribute and Saluteto our Quaid. It was the vision of Quaid that NBP is servingto carve out the picture that he wanted. let NBP foster thefinancial cause that Quaid wanted, a well balanced Pak-istan, that include financially structured Pakistan.”

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