01 BUSINESS B Sunday, 14 April, 2013 KARACHI ISMAIL DILAWAR S oFt international commodity prices and the ever-burgeoning remittances are expected to rid the dollar-hungry economy of its current account woes in FY 13, but political “intangibles,” weeks ahead of the May 11 general elections, appear to be dominating the country’s economic fortune, according to State Bank of Pak- istan (SBP) quarterly reports. Concerned over “persistent struc- tural problems” that keep haunting the ailing economy, the central bank said local investors were reluctant to go for long-term investment because of the pre-polls uncertainty looming large on the country’s political spectrum. “Intangibles appear to be dominating Pakistan’s economic outlook,” the State Bank of Pak- istan (SBP) observed in its quar- terly reports, jointly issued on Saturday for the July-Dec FY 13 ‘State of Economy’. “With a caretaker government paving the way for general elec- tions in May 2013, domestic in- vestors are understandably reluctant to take a long-term view,” it said adding that “this uncertainty cannot be denied”. the regulator said it was a must for the caretaker government to priori- tise addressing stubborn structural problems in public sector enterprises and the energy sector. Similarly, it said, concrete steps were needed to enhance the resource- constrained country’s revenue collec- tion in an equitable manner. the bank lamented that the July- Dec period although saw the FBR col- lecting only 5.7 percent more taxes, the outgoing political government’s current expenditures had grown by 31 percent in the first quarter only. Recording the country’s domestic debt, swelling by Rs 691 billion in 1HFY13, the central bank said the cash- strapped government depended on the state bank for budgetary support during the second quarter. “the fiscal picture explains the federal government’s com- pulsion to borrow,” it said. the consolidated fiscal deficit in the first half of fiscal year 2013, the bank said, was to widen by 2.6 percent of the GDP, owing to the inflow of $ 1.8 billion in Coalition Support Fund from the United States. the review period saw the coun- try’s external debt contracting by $ 1.9 billion, of which $ 1.3 billion was owed to the IMF. Repayments sans fresh in- flows pressured the country’s Balance of Payment and exchange rate that, ide- ally, should be countered by running a much larger current account surplus. terming trade flows as “benign” for in the said time period, the SBP said the dollar-hungry country’s im- port bill had shrunk by 3.3 percent due to decreased imports and softer commodity prices. the textile exports upped by 8.6 percent owing partly to the duty-free access granted to Pakistan by the Euro- pean Union (EU) in November 2012. However, the country’s falling dollar reserves, the bank said, were giving way to “perceived vulnerabili- ties” in the external sector. “It is not the size of the current account imbal- ance, but the fall in foreign exchange reserves that is dampening senti- ments,” the central bank said. the scheduled repayments to IMF pulled down the SBP’s dollar reserves by $ 1.8 billion despite a current ac- count surplus of $ 218 million in 1HFY13. “the fall in reserves has occasion- ally exerted pressure on the rupee- dollar parity coinciding with monetary policy decisions and pay- ments to IMF,” it said. the SBP, however, feels that even with scheduled repayments to the IFIs, the SBP’s foreign exchange reserves would be adequate to meet all foreign exchange obligations. the central bank also takes com- fort from easing global commodity prices and strong home remittances that, it says, would offset pressure on the country’s current account in FY13’s remaining months. “Soft commodity prices and strong remittances, should keep the current account contained within one percent of the GDP deficit,” the SBP projected. Having sent back home $ 7.1 billion during 1HFY13, the overseas Pak- istanis are expected to remit over $ 14 billion by the end of this year. Domestically, the bank was happy to note that demand for private loans had increased with the formerly risk-averse banks lending Rs 146.5 billion more to pri- vate businesses compared to last year’s Rs 86.1 billion. this trend, the central bank said, was helping large-scale manufacturing that could counter the weather-driven losses in the agricultural sector. Except sugarcane, almost all cash crops including cotton, rice and wheat remained below target. Wheat under performed despite increase in support price in November 2012. the manufacturing sector was likely to continue improvement with al- lied sub-sectors showing consistent growth since FY12. on inflation, the SBP still feels that the average inflation rate for FY13 would remain within the fiscal target. the central bank said the resilience of the informal sector was pushing the formal economy forward. “there are indications of foreign interest in joint- projects in the country’s real estate sec- tor,” it said. Political ‘intangibles’ driving Pakistan’s economic fate Concerned over “persistent structural problems” that keep haunting the ailing economy, the central bank says local investors are reluctant to go for long-term investment because of the pre-polls uncertainty looming large on the country’s political spectrum Petroleum Ministry refuses to remove 2 MDs despite ECP orders ISLAMABAD: The Ministry of Petroleum has refused to remove the Managing Directors (MDs) of Sui Northern and Sui Southern from their offices despite orders of the Election Commission of Pakistan (ECP). Ministry of Petroleum sources said the ministry has refused to remove both the MDs and has sent reply to this effect to ECP. Earlier, the ECP had issued written orders to the Ministry of Petroleum to remove MD Sui Southern Haroon Zahir Siddiqui and MD Sui Northern Haroon Siddiqui from their offices as they both could influence the elections through gas schemes. Replying to the ECP’s letter, the Ministry of Petroleum said that the allegations levelled against both the MDs are baseless and they would not be removed from their offices. Sources said that the Ministry of Petroleum had also said that the two companies had not launched any gas scheme during the current year. ONLINE PQA case: SC to resume hearing on 17th ISLAMABAD: The Supreme Court of Pakistan will resume on April 17, hearings of irregularities in the Port Qasim Authority appointments (PQA) case pertaining to 686 illegal appointments from Grade 2 to 21 in PQA by the Ports and Shipping Ministry. The court would also resume hearing of a petition of sacked secretary of PQA, Abdul Jabbar Memon challenging his removal. A three-member bench of the apex court headed by Chief Justice Iftikhar Muhammad Chaudhry will hear the case about 686 illegal appointments. Notices have been issued to the Attorney General of Pakistan, Advocate General Sindh, Advocate Anwar Mansoor Khan and the Chief Secretary Sindh to appear before the court. Earlier in December 2012, the Supreme Court was informed that more than 250 new appointments had been made in the PQA from Grade 2 to Grade 19 despite a stay order issued by the apex court after 686 illegal appointments from Grade 2 to 21 were made in the authority last year. The SC had already declared that majority of these appointments were made from specific constituencies and these should be declared illegal and a new advertisement should be made in this regard as the appointments were against provincial, regional quota and merit policy. ONLINE ICCI, EU dialogue for enhancing EU-Pak trade ties ISLAMABAD NNI Pakistan has unique geographical and strategic geo-political location and considered to be the hub of trade in South Asia, therefore EU countries should also consider Pakistan for enhancing trade and investment, said Zafar Bakhtawari of the Islamabad Chamber of Commerce and Industry (ICCI). He was addressing a dinner hosted by ICCI in honour of EU envoys in Pakistan including Lars-Gunnar Wigemark, Head of the Delegation and Ambassador of the European Union to Pakistan, Petros Mavroidis, Ambassador of Greece, Ambassador of France, Austria, Czech Republic, Romania, Italy, Poland, Spain, UK Deputy Head of Mission and Swedish Deputy Head of Mission. Speaking on the occasion, Lars-Gunnar Wigemark said that Pakistan and EU enjoyed political and economic relations and EU has supported Pakistan in a number of sectors. He said that Pakistan would get the GSP plus status by the end of this year which will give a better market access of Pakistani Products to EU markets. Bakhtawari said that European Union (EU) was the largest trading partner of Pakistan with an annual trade volume of over 10 billion euro. He said that Pakistan attached great importance to its relationship with the EU regional bloc as its annual GDP accounts to $17 trillion which was higher than GDP of US which is around $15 trillion and China’s GDP of $7 trillion. Bakhtawari urged all the EU ambassadors designated in Pakistan to support the country for grant of GSP Plus status which would provide easy access to Pakistani products in EU market and further enhance Pakistan’s volume of trade with EU countries. Petros Mavroidis, ambassador of Greece, said that Pakistan and Greece need to improve their commercial and economic relations to promote bilateral trade and investment by taking advantage of new business opportunities. Pakistan would get the GSP plus status by the end of this year which will give Pakistani products a better market access to EU markets. — Lars-Gunnar Wigemark, EU envoy to Pakistan RAWALPINDI: A scrap worker cuts metal at his workshop on Saturday. INP CMYK 16-17 Business Pages (14-04-2013)_Layout 1 4/14/2013 12:37 AM Page 1