At the ripe age of 62 after suffering from a short and serious illness, todays Pakistan's economy finally died.

Please remember these statistic, they will serve as a record.
I will update these in six months.

Foreign Debt - $46 billion approx
KSE - 10, 700
Exchange rate - 75 rupees to the USD
Inflation - 25 %
Foreign reserves - $10, billion approx
Growth rate - 5.8 %

Now that the looters are fully in charge, all hope for Pakistan's economy is lost.

that is indeed an unfortunate reality

very unfortunate... this is where Musharraf and PML-Q company brought Pakistan after 8 years of rule..... and dont be an illiterate by pointing fingers at current govt plsssss.......

very good Musharraf has gone...

beta ur current government took pakistan to 1500 points for KSE in 53 years, yeh musharaf hi hai jis nai 1500 se 15000 tak KSE ko puhnchaya tha...yeh aap ki "literate" government nai panch hi mahino mein 5000 points urraa diye hein..

The following data is from Business Recorder.

Market at Close:

BRIndex-30 11,289.60
KSE-30 Index -- 12,279.90
KSE-100 Index -- 10,719.62
LSE-25 Index -- 3,466.11
ISE-10 Index -- 2,510.07
Gold Per 10gm -- 19,714.00
KCA Spot Rate -- 4,200.00
Libor Rate -- 2.19125

The Rupee:

Interbank closing rates for US Dollar on Monday (08/18/2008)
Buying -- Rs. 76.30
Selling -- Rs. 75.40

Economic Indicators:

Annual 2006/07
Foreign Debt -- $45.00bn
Per Cap Income -- $1085
GDP Growth -- 7.0%
Average CPI -- 12.00%

Monthly July
Trade Balance -- $-1.64bln
Exports -- $1.9bln
Imports -- $3.54bln

Weekly August 18, 2008
Reserves -- $9.920 bln

It would be great if this thread is pinned. We can update this thread on weekly basis to monitor the progress made after Mushy's exit. This will give all a good idea how the economy does now with the help of strategies formulated by Economic maestro Prof. Zardari (PhD Financial Mngt. and International Relations) and Prof. Nawaz Sharif (Dr. of Poltical Science and Foreign Affairs.)

Ha ha ha

The excuse - lets blame it all on Musharraf will no longer work.

Lets see now how these Looter do in running the economy,

I see the crack are already appearing in the coalition.
It is obvious that they will spend the next six month fighting each other while the Pakistan economy goes from bad to worse.

I hope in six month I don't get to say I TOLD YOU SO


--------------------------------------------------------------------------------------------------------------------

Challenger, thanks bro you are a star.

No problem Smegster. I am no star bhai. I am just an ordinary person who's trying to express what's wrong and what's right.

KSE drops over 3pc as uncertainty returns

KARACHI (updated on: August 20, 2008, 11:16 PST): Karachi stocks market fell over 3 percent on Wednesday as investors sold blue chips like OGDC amid uncertainty whether the coalition government's parties can work together to tackle pressing economic issues.

The benchmark Karachi Stock Exchange (KSE) index fell as much as 3.5 percent in early trade. By 0530 GMT, the index had slightly pared losses and was down 2.8 percent.

Investors said they were losing hope President Pervez Musharraf's resignation on Monday would ease country's political tension because the fractious coalition government did not see eye to eye on political issues.

"Once the Musharraf (resignation) happened, everybody thought the coalition was going to work like a charm, but obviously that is not happening," said Asad Iqbal, the managing director at Ismail Iqbal Securities Ltd.

Coalition leaders met for several hours on Tuesday but got bogged down by squabbles over the restoration of the judges. Iqbal said investors were also worried the party led by former prime minister Nawaz Sharif may join the opposition. "Markets will be volatile until you know which way the political situation is going," Iqbal said.

Expectations of Musharraf's resignation will ease political turbulence pushed Pakistan shares up nearly 13 percent as of Tuesday's close, after the coalition government said on August 7 it would begin impeachment proceedings against Musharraf.

But the post-Musharraf euphoria is evaporating and investors now want the coalition government to prove its members can co-operate, and show they have the will to revive Pakistan's sickly economy. Pakistan is fighting widening trade and fiscal deficits, falling reserves depleted by high oil prices, and soaring inflation.

Blue chips led losses on Wednesday. Oil and Gas Development Co Ltd, Pakistan's biggest firm by stock market value, fell 3.2 percent. OGDC is set to announce its full-year earnings later on Wednesday.

Seven analysts forecast OGDC to post a full-year net profit of 50.1 billion rupees ($676.1 million), Reuters' estimates showed. MCB Bank, the country's largest bank by market capitalisation, fell 4 percent, and state-run Pakistan Petroleum Ltd (PPL) dropped 3.1 percent.

Copyright Reuters, 2008


Source: Business Recorder

Pakistan rupee weakens

KARACHI, Aug 20 (Reuters) - The Pakistan rupee weakened on Wednesday as investors turned their focus to Pakistan's sickly economy amid growing uncertainty the coalition government can rule effectively after President Pervez Musharraf resigned.

The rupee ended trade at 74.80/90, compared to Tuesday's close of around 74.53/60. The currency has lost over a fifth of its value against the dollar this year.

Investors said the deadlock between the two main coalition parties over the restoration of deposed judges was dashing hopes the government will focus on reviving Pakistan's economy and not be distracted by politics after Musharraf's resignation.

"The political situation is not helping the foreign exchange market," said a trader who declined to be named. "The underlying economy is not great either."
"Unless you get a balance of payments solution, I don't see anything else but further weakening for the rupee ahead," he said.

After six years of healthy growth under Musharraf's rule, Pakistan's economy is struggling with widening trade and fiscal deficits, soaring inflation, and falling foreign exchange reserves depleted by high oil prices.

Pakistan's central bank is set to announce later this week the size of the country's current account deficit in July.

Pakistan's stocks also fell more over 3 percent on Wednesday as investors began to lose hope for an end to political tension.

The two coalition parties are squabbling over whether to restore the judges ousted by Musharraf last year. In the money market, Pakistan's short-term money rates were flat on Wednesday as liquidity in the market stayed tight, traders said.

They said the next inflow of funds into the market was due on August 27 when the central bank settles an auction of 67.5 billion rupees ($902.3 million) worth of Treasury bills.

Overnight call rates ended at 12.9 percent, unchanged from the previous closing level, two traders said.

http://www.guardian.co.uk/business/feedarticle/7738744

It seems like you won't even have to wait 6 months, 6 days is more likely ... 6 weeks tops ...

http://epaper.dawn.com/ArticleText.aspx?ar...08_2008_002_003

KSE on way back to 1999 situation, as index sinks by 400 points
Updated at: 1220 PST, Tuesday, August 26, 2008

KARACHI: Karachi Stock Exchange (KSE), like other segments of the society, also seems severely rocked by the break up of the ruling political alliance, as the KSE-100 index today went reeling down by 400 points and pegged at 9408.

The market today opened in an extremely pensive environment, as the KSE like others in the country felt duped and deceived by the dud leaders of the country, from whom, they had pinned great hopes of making the democracy work and steering the country out of the lurking dangers instead of fast taking back the country to the fearsome 1999 situation, when the country was about to be declared a failed state.

Investors’ sentiments badly bruised and battered saw the market in utter lackluster, while the index kept dropping like ninepins and shortly evaporating by 400 points stood at 9,408. KSE-30 index also caved in by 520 points.

Source: The News



KSE fall to new 2-year low on coalition split

KARACHI (updated on: August 26, 2008, 12:07 PST): Shares in Karachi stock market fell over 4 percent on Tuesday as investors sold blue chips such as OGDC on fears of more political uncertainty ahead after the coalition government split overnight.

By 0530 GMT, the benchmark Karachi Stock Exchange index (KSE) was down 4.04 percent at 9,417.62 points after falling as much as 4.14 percent to a level last seen in August 2008. Shares in OGDC were down 4.5 percent.

Copyright Reuters, 2008 Source: Business Recorder

^^Oh man I sure hope the awaam is enjoying their fruits of democrazy now.

KSE may further go down.

Here is something interesting:

Selling monkeys or shares
FARIS ISLAM
ARTICLE (July 23 2008): A story poking fun at the stock market has been making the rounds lately and goes something like this: Once in a village a man appeared and announced that he would pay the villagers $10 for every monkey they caught for him. The villagers, seeing an abundance of monkeys started catching them in the nearby jungle until finding them became harder and harder, and thus they stopped.

The man then announced he would start paying $20 for every monkey caught for him, and the villagers went to work once again trying to hunt them down. With monkeys almost extinct from the region, the man increased his offer to $25, but the villagers still returned to their farming.

Seeing that the monkeys were all but gone, he announced he would up the price to $50 for any monkey given to him. The man suddenly had to return to the city for business and designated an assistant to buy the monkeys for him. With the man gone, the assistant hatched a plan and told the villagers, "look at all those monkeys the man has bought. I'm willing to sell them to you for $35 each, and then when the man returns from the city you can sell them back for $50. We can both make money and the man will never know what happened."

The villagers agreed and scraped together all their hard-earned money to be able to buy the monkeys back. They bought their monkeys back, but the man and his assistant disappeared along with the money the villagers had just paid for the monkeys.

The trick played upon the villagers by the crafty man and his assistant to many runs reminiscent of the issues facing the stock market and small investors. Satirists say as foreign assets and investment flooded KSE and the volume of shares on the index continued to rise, people were willing to pay more and more to get their shares - or monkeys - in the cage.

As the market finally grew saturated, the inherent worthlessness of the monkeys - and the bubble of the KSE - grew obvious to all. Be it the high price in bananas or political and macroeconomic instability, no outsider wants his eggs in a broken basket, his capital in an unstable country or a bunch of monkeys in a cage when bananas are going extinct in less than a decade.

Seeing the looming crises, the assistants to much of the international capital that entered the market saw "their capital was not secure" in the words of a trader and sold their shares to the people they originally bought them from - albeit at a much higher price.

A trader at the KSE mentioned to the Business Recorder that up to Rs 125 billion worth of shares was sold off as capital flight restarted and foreign money also left the country, fearing economic and political instability.

With many shares sold to small investors hoping for a quick turnover, the disappearance of buyers on the market led to our villagers being stuck with lots of monkeys - and shares - that no one really wants. For many however, teaching a monkey to dance for money is a lot easier then trying to sell on a bearish stock market.

The writer is an intern at Business Recorder newsroom and is currently studying Political Science and History at Tufts University in the United States.

Musharraf’s resignation fails to revive KSE

KARACHI: The Karachi stock market witnessed a bearish trading week on reports that the Moody’s has rated a negative outlook for Pakistan and constant pressure on the value of rupee against the greenback created panic among the investors as they offloaded their holdings, analysts said on Saturday.

The Karachi Stock Exchange (KSE) 100-share index lost 242 points or 2.5 percent to close at 9,993.81 points as compared with the previous week’s 10,258.71 points. The average turnover volume surged by 6.32 percent to 103.35 million shares as compared to previous week’s 97.20 million shares.

Other major factors, which adversely influenced the market include uncertain political situations and disagreements amongst ruling coalition over judges’ reinstatement issue, and continuation of intense selling pressure.

Analyst at Atlas Capital Market said the KSE 100 index, despite opening the week on a positive note, plunged during later part of the trading week on account of profit-taking.

Reports of differences among coalition partners over restoration of the judiciary issue and some other lingering problems saw the 100 index sinking. Stock market remained under pressure during the last three sessions wiping out earlier gains. Higher corporate announcements by some of the leading companies failed to lure investors back owing to uncertain political outlook.

Umer Ayaz, Analyst at J S Global Securities said in addition, weak economic data coupled with net selling from foreign funds added pressure on equities and local currency. Thus, the market fell 2.5 percent last week to close at 9,994 points. Market capitalisation ended at $41 billion down 46 percent from its peak of $75 billion as of April 18, 2008.

End of political uncertainty after Musharraf’s resignation on Monday saw the KSE 100 index gain 660 points or 6.4 percent in the first two sessions. The improved investors’ confidence was also evident from better trading volumes that crossed 200 million shares mark after 41 sessions on Tuesday and stood at 211 million shares. This positive momentum however, didn’t last long as uncertainty on the political front started to reappear amid differences in ruling coalition over the reinstatement of judges.

The rupee saw a sharp recovery after political uncertainty seemed over and gained 3 percent versus the dollar in the first two sessions. However, high July current account deficit and declining forex reserves along with the new wave of political uncertainty weakened the rupee against the dollar. Foreign investors remained net sellers last week with net foreign selling of $25 million, taking 2008 to date selling to $338 million.

Ahsan Mehanti, Senior Analyst at Shahzad Chamdia Securities attributed the reasons for negative index on account of falling rupee value, S&P/Moody’s economic outlook, high interest rates, foreign selling and law and order situation in the country, which remained a source of concern. staff report


http://www.dailytimes.com.pk/default.asp?p...4-8-2008_pg5_25

Pakistan's foreign reserves are depleting by $250 million to $300 million a week,”



ISLAMABAD: Pakistan’s fast depleting foreign exchange reserves are left only for two and a half months import requirement, which is why, the economic managers of the country are seriously considering floating bonds amounting to $800 million in the international markets, a senior government official told The News.

When the new government took the charge, there was a proposal to float various bonds worth $2 billion including floating of GDRs (Global Depository Receipts) of some banks in the international market keeping in view the transparent, free and fair elections. But the government missed the bus as during that certain period of time the credit rating of Pakistan in the international market was quit reasonable.

According Finance Ministry sources, the government would soon float Workers Remittances Securitisation Bond worth $800 million to provide cushion to worsening foreign reverses situation. “The government, however, with the improvement of credit rating of the country would also come up with new proposal for floating more bonds in the international market,” said the sources in Finance Ministry

“Pakistan reserves at present stand at $10.487 billion out of which Commercial Banks have $3 billion meaning by that State Bank of Pakistan has only $7 billion with forward liability of $1.2 billion. Foreign reserves are depleting by $250 million to $300 million a week,” the official said.

“The dismal foreign reserves situation has prompted the government to tow the line of previous regime of floating bonds in the international market to arrange financial support to maintain foreign reserves at reasonable level.

“We are also going to introduce some duties on import of non-essential items to curtail import bill. The official said that some officials of Moody’s -an international credit rating agency are currently visiting Pakistan. They are meeting with Pakistan’s new economic managers and giving some tips to ameliorate the economy.

The new government took some bold steps of passing on massive increases in oil prices in the wake of hike in international market to end consumers and shown its resolve to reduce subsidy on POL products by December this year. The government also took bold steps to reduce OMCs margin and dealers’ commission and deemed duty on petroleum products in a bid to provide reduce the budgetary deficit.

The official said that government is still extending Rs21 per litre subsidy on High Speed Diesel, which the government wants to erase completely.

The government is very much on way to taking economic corrective measures and has decided to expedite and finalize the sell-off process of some government entities in next two months that include Global Depository Receipts (GDR) of Kot Addu Power Company (KAPCO), privatisation of SME Bank, sale of 90% shares of Hazara Phosphate Fertilizers Limited (HPFL) and Heavy Electrical Complex (HEC).





http://www.thenews.com.pk/daily_detail.asp?id=128496

KSE in severe crisis, index closes at 9145 points

Updated at: 1600 PST, Wednesday, August 27, 2008

KARACHI: Karachi Stock Exchange (KSE) sluggish tend further intensified, which triggered index reeling down to 9145 at the close.

The market highly pessimistic opened in negative zone and at one point of time it was seen even going below the 9000 marks pegging at 8999, 26 month’s lowest. The investors struck by the political uncertainty and the Support Fund making no efforts salvaging the market went panicky and preferred selling shares. The benchmarks KSE-100 index at close stood at 9145, eroded by 285 points.

Turnover today higher by 10 million shares as compared yesterday aggregated to 94.4 million shares. Volume leader Zeal Pak cement shares losing paisa 3 closed at Rs1.16. Analyst believed that the market in days to come bounce back.

Link

Link

Countrywide deficit surges to 4,500MW

By Ahmad Fraz Khan

LAHORE, Aug 26: The severe power shortage in the country surged to over 4,500 megawatts when saboteurs blew up gas pipelines, causing suspension of supplies from Zamzama and Pir Koh to some power plants and forcing Pakistan Electric Power Company (Pepco) to undertake ‘unannounced’ loadshedding.

According to Pepco officials, the crisis hit the 1,326MW Muzaffargarh Power House, which on Tuesday was producing only 550MW — a loss of 776MW. Similarly, the 1,250MW Kot Addu Power Company was producing only 800MW, with a net loss of 450MW. The Faisalabad Gas Turbine Power Station, designed to produce 170MW, remained shut, and so was the 200MW rental power unit.

The company was getting only 50 per cent of its share of gas, according to Pepco’s director-general Tahir Basharat Cheema. “Pir Koh and Zamzama gas fields are offline, plunging the company in a real crunch.”

He said the situation would improve in the first week of September after Mangla Dam got filled and the run of the river increased.

Currently, Mangla Dam is generating only 350MW compared to 1,050MW produced last year. The Indus River System Authority (Irsa) was releasing only 10,000 cusecs, saving almost the same amount of water. The lake level is three feet below its optimum level of 1,202 feet.

On Tuesday, hydel generation remained around 5,600MW against the maximum possible generation of 6,600MW.

The extent of the crisis could be gauged from the fact that the company did not have enough fuel to restart even a unit of the Muzaffargarh Power House, another company official said.

“The situation at the company’s own thermal units is also messy. On Tuesday, all of them contributed only 2,000MW against 2,800MW when the oil supply situation was better.”

According to him, the company was facing a crisis in all three sources of generation — oil, water and gas. “It does not have sufficient oil because of the price factor and liquidity crunch. It does not have enough gas as a result of sabotage and because water releases are below normal owing to preference for irrigation.”

According to a Pepco press release, the pipeline supplying gas to the Sui Northern Gas Pipelines Limited (SNGPL) from the Zamzama gas field was blown up by saboteurs a couple of days ago, affecting gas supply to the Muzaffargarh Power House, Kot Addu Power Company and Faisalabad Gas Turbine Power Station.

There was an additional shortfall of about 1,000MW in the national grid because power houses were running below their capacity due to reduced gas supply.

“Under these circumstances, Pepco has to resort to forced loadsheding in a few areas. Resultantly, consumers have been facing loadsheding of relatively long hours than normal load management schedules.

“Necessary measures are being taken … to rectify the problem. It is expected that the situation will normalise by Wednesday.”

Link

Tough steps unlikely to kick-start economy

Wednesday, August 27, 2008
By Mansoor Ahmad

LAHORE: The PPP-led government must be repenting the mistake of neglecting the economy for over four months as it has now reached a stage where even the harshest measures would not be enough to give it a kick-start.

What has surprised most economists is that the present regime has penalised the electorate by increasing petrol, gas and electricity rates without having any proper economic roadmap. The rise in prices of these utilities was essential as their cost has surged but the electorate expects an improvement in economy which would offset the impact of this additional burden coupled with high food prices.

During the past four months, foreign exchange reserves have dipped to the lowest level in four years. The rupee is on a free fall and the capital market’s performance reflects the apathy of regulators. It looks that the government has lost all financial controls. On the other side, banks are in the driving seat as they continue to offer marginal returns to depositors while charging over 16 per cent mark-up from borrowers. Hoarders of grains and vegetables are minting more money than they ever made in the past.

Even the decline in rupee’s value has not put a brake on imports which continue to grow at a higher pace than exports. It is true that the economic rot started much before the transfer of power to the present regime. However, what disturbs most economic analysts is that the downturn instead of slowing down has accelerated after the change of government.

Though the last speech by former president Musharraf was a bundle of lies but he had a point when he correctly stated that thermal power generation has gone down by 4,000 megawatts compared to what Water and Power Development Authority was generating during the same period last year. This is the main reason for the high loadshedding facing the country.

Many power generation experts point out that perhaps the government is deliberately keeping production low till another hike in electricity rates.

The trade and industry is worried as credentials of some of the ruling party members are dubious. Businessmen have doubts about the transparency of economic policies and PPP leaders would have to take up the challenge of bringing fairness and transparency in policies.

Economists point out that the economic scenario had drastically changed in the past decade. They say the globalisation process has reached all corners of the world and the slightest deviation from merit and transparency would have a devastating impact on the economies. Besides transparency, they suggest, the government would have to take prudent and quick decisions on economic policy.

An economist said postponing the decision on research and development support for textiles for instance had hurt exports. Similarly, the decision to apprehend hoarders, smugglers and tax under-filers could not be delayed any further as they were eating away the documented sector of the economy.

Pakistan now Asia's second worst performing market: research report

RECORDER REPORT



KARACHI (August 27 2008): Pakistan has become the second worst performing market in Asia, as after posting average annual gains of [b]28 percent during the last 10 years, it is down by 45 percent in US dollar terms in the current year from January 01, 2008 to date, analysts said.[/b]

"The slowdown in the overall economy, coupled with political uncertainty after the February election has affected investors' sentiments, Mohammed Sohail, senior analyst at JS Global Capital said in a research report and added that a decline of 19 percent in Pakistan currency to date has also eroded equity values in dollar terms.

The research report said that the global credit crunch and the turbulence in the currency markets have significantly shaken investors in the global equity markets. The emerging markets which were believed to be protracted with global credit crunch, spiralling inflation at the back of soaring oil and food prices, led these markets to drop significantly so far in the calendar year 2008. MSCI Asian Emerging Market Index is down 29 percent to date.

Analysing the performance of 13 Asian emerging countries, China 's Shanghai market ranks the worst performing market so far in 2008 with the index fell by 52 percent. This is followed by Pakistan and Vietnam which are down 45 percent and 44 percent in dollar terms, respectively.

China's Shanghai Index which had recorded a peak level of 5771 in the early 2008, is down due to rising concern over slowdown in economy and mounting inflation - or stagflation. Likewise, in Vietnam, recent ratings cut and record inflation have worsened market sentiments.

Pakistan, on the other hand, is affected both by the exogenous factors (higher international oil and food prices) and endogenous factors (political impasse). This has significantly weakened the local currency (down 19 percent so far in 2008) and forex reserves which are at 5-year low and covers less than 12 weeks of imports.

Moreover, Pak rupee is the world's fourth worst performer, behind the Zimbabwean dollar, Turkmenistan manat and Icelandic korona. Interestingly, two smaller markets Sri Lanka and Bangladesh have emerged as the best performing markets so far in 2008 with a decline of only 6 percent and 10 percent in dollar terms, the report said.


Copyright Business Recorder, 2008


http://www.brecorder.com/index.php?id=8000...m=&supDate=

========================================================================

Credit goes to People of Pakistan who voted for Democracy and removing worst dictator Musharraf
Deserves you best

The Media is reporting that they might freeze the index for the time being meaning no trading until further notice.

Why not give a 6 month break to the KSE ! I think the need the breather !! hahahaha ....

Yes everyone should just wait and hope that things get better.

Link

Govt borrowing swells to Rs58.2bn

Thursday, September 11, 2008
By Israr Khan

ISLAMABAD: Due to Pakistan economy’s burgeoning income-expenditure gap, the government’s borrowing for budgetary support increased to Rs58.24 billion during the first month of fiscal year 2008-09, depicting an increase of 40.95 per cent compared to borrowing of Rs41.32 billion in the corresponding month of the last fiscal.

During July 1 to July 26, government’s borrowing from the State Bank of Pakistan stood at Rs30.07 billion and from scheduled banks Rs28.17 billion, while in corresponding month of the last fiscal borrowing from the central bank stood at Rs41.32 billion however Rs4.07 billion were retired of scheduled banks. Economists believe that expansionary government fiscal policy is also considered as a source of diluting effects of the SBP tight monetary policy formulated for capping high inflation.

It is feared that running a loose fiscal policy may crowd out private investment in the country. Currently, inflation is touching a record high which is not only affecting the macro economic indicators but also severely disturbing social life of million of poor Pakistanis.

Besides, the loose policy had also crowded-out private investment in the country. Though public spending help in developing right infrastructure for encouraging private investment, however if surge in the government spending is not accompanied by increase in government revenue and proportionate hike in real GDP, it creates public debt and inflation respectively. The higher public spending may put upward pressure on the interest rates and thus discourage private investors to invest. It is worth-mentioning that during fiscal year 2007-08, fiscal deficit stood at Rs777 billion or 7.4 per cent of GDP against Rs398.8 billion (4 per cent of GDP) targeted for the fiscal under review.

In order to bring back the budget on a sustainable track, fiscal deficit for 2008-09 is proposed at 4.7 per cent of GDP i.e. Rs582.3 billion. During July-June 2007-08, the government borrowed Rs461.28 billion from banks (scheduled and central bank), which is about 469 per cent or Rs380.28 billion more than the actual target of Rs81 billion for fiscal year 2007-08, while Rs359.26 billion (or 352 per cent) more than, it borrowed in corresponding period of the last fiscal 2006-07 (Rs102.015 billion). More worrisome was that the government borrowing from the SBP increased to alarming Rs633.17 billion as against Rs58.57 billion it retired last year.

Of scheduled banks, it retired Rs171.89 billion against Rs160.59 billion it borrowed in corresponding period of the last fiscal. It is also feared that if the government was unable to attract external inflows as a result of low remittances, slow down of privatization proceeds, the borrowing volume could balloon to unbearable level that could further affect the government’s efforts to rein in the inflationary pressure and bring down the poverty level in the country.

The State Bank since last year has time and again advised the government to reduce its dependence on bank borrowing especially, on SBP in order to control inflation and support the monetary policy.

According to the bank, the excessive borrowing from the SBP spur the inflationary pressure in economy due to excessive money circulation in economy. Resultantly, it becomes a source of demand pull inflation, a scenario when too much money chases too few goods. Few months back, the central bank also asked the government that the fiscal deficit be contained in years ahead to reduce the risk of crowding out of the private investment.

Besides, it should also retire borrowing from the banking system particularly from the SBP.

Link

Food inflation soars to record 34 per cent

Saturday, September 13, 2008
By Israr Khan

ISLAMABAD: Food inflation during August 2008 stood at an unprecedented 34.09 per cent, which pushed the Consumer Price Index (CPI) inflation to 25.33 per cent, an increase of 2.14 per cent over July 2008.

In August last year, the CPI inflation stood at 6.45 per cent, the Federal Bureau of Statistics (FBS) reported on Friday. According to the latest CPI snapshot of the FBS, two-month July-August 2008-09 average inflation stood at 24.83 per cent while Wholesale Price Index (WPI) stood at 34.88 per cent last year during the same period, CPI stood at 6.41 per cent and WPI at 7.81 per cent.

Huge increase in WPI-based inflation indicates further increase in retail prices of essential commodities.

It is worth-mentioning that the dwindling value of the rupee also touching lowest as a result of huge current account deficit, also deteriorating the situation and pushing prices of essential commodities up.

This also makes imports costlier, another contributing factor for inflation. At the moment the government looks helpless to rein in the spiraling inflation and save rupee from free fall. CPI that covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas.

According to it, in August 2008, transport and communication charges up by 40.50 per cent, food and beverages by 34.09 per cent, fuel and lighting 21.03 per cent, clearing laundry and personnel appearances 19.57 per cent, education 15.41 per cent, apparel textile and footwear by 14.91 per cent, house rent 14.18 per cent, household furniture and equipments 11.97 per cent, recreation and entertainment 11.73 per cent and medical expenses increased by 9.90 per cent over August 2007.

Huge price pressure of necessary kitchen items compelling households to struggle for meeting the minimum standards of living and they might have no choice but to cut down their expenditures on health and children’s education. Runaway inflation is also making it more difficult for pensioners and low income masses living on their very nominal income a month in the country.

In a bid to cope with the mounting inflationary pressure in the economy, the State Bank of Pakistan (SBP) last month raised its key discount rate by 100 basis points to 13 per cent effective July 30, 2008, which is the fourth consecutive increase in last one year. Earlier, the central bank raised the rate by 50 bps from 9.5 per cent to 10 per cent in July 2007 and some 100bps in January 2008 from 10 per cent to 10.50 per cent. In May 2008, the SBP suddenly took a tight monetary stance due to rising inflation and continuous depreciation of the rupee against the dollar and increased the discount rate by 150bps to 12 per cent.

It is interesting to note that the imported inflation (as a result of escalating crude oil prices that kissing records) was also a source of cost push inflation, caused by substantial increases in the cost of important goods or services where no suitable alternative is available.

For each one per cent increase in inflation, more and more people fall into poverty indicating that inflation was hitting poor consumers harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items, economists believe.

The CPI bulletin says that under the food and beverages group, during August 2008, tomatoes prices up by 45.53 per cent, onions 35 per cent, chicken farm 14.42 per cent, condiments 12.35 per cent, vegetables 10.33 per cent, tea 9.89 per cent, potatoes 6.14 per cent, pulse masoor 5.66 per cent, gram whole 5.27 per cent, cereals 4.19 per cent, milk products 3.77 per cent, besan 3.37 per cent and gur prices up by 3.02 per cent over July 2008.

According to the CPI, transport fare/charges up by 7.59 per cent, text books 16.69 per cent, stationery 3.50 per cent and tuition fee by 2.61 per cent over previous month.

Wholesale Price Index (WPI): has also inched up to 35.73 per cent during the month under review as compared to 8.02 per cent in corresponding month of the last fiscal. Over the previous month, it goes up by 2.45 per cent, signals toward more price hike in the coming months. It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent, January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent, July 33.81pc and now during the month under review (August 2008), it stood at 34.09 per cent.

The government seems to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make both ends meet with soaring prices of foodstuff and medical expenses.

While, main concern is that in the basket of WPI, fuel, lighting and lubricants expenses up by 59.37 per cent, building materials 42.21 per cent, food 33.46 per cent, raw materials 23.36 per cent and manufacturers’ price up by 16.34 per cent in August 2008 over corresponding month of the last fiscal.

However, comparison of the WPI of August 2008 with the last month (July 2008), shows that during this one month wholesale prices of tomatoes up by 49.58 per cent, onions 41.20 per cent, chicken 15.49 per cent, vegetables 15.03 per cent, condiments 11.56 per cent, potatoes 11.08 per cent, masoor 8.92 per cent, tea 6.81 per cent, besan 6.76 per cent, gram whole 6.73 per cent, bajra 5.86 per cent, gram split 5.54 per cent, gur 5.46pc, wheat 5.36 per cent, salt 5.14 per cent, cooking oil 4.77 per cent, powder milk 4.27pc, milk food 3.95pc, beans 3.83pc, fresh milk 3.80pc and spices prices up by 3.66pc over July 2008.

Link

Borrowing dilutes efforts to rein in inflation

Monday, September 15, 2008

By Israr Khan

ISLAMABAD: The government is once again borrowing heavily from the State Bank, which according to the bank and the economic experts, would dilute effects of the tight monetary policy formulated for reining in the skyrocketing inflation.

For bridging the income-expenditure gap, the government during July-August 2008-09 borrowed about Rs156.73 billion from the banking system, depicting an increase of 42.36 per cent over what was borrowed in the corresponding period of the last fiscal (Rs110.09 billion), the State Bank said on Saturday.

During these two months, the government’s borrowing from the State Bank stood at Rs150.91 billion and Rs5.83 billion from the scheduled banks while in the corresponding period of the last fiscal, borrowing from the central bank stood at Rs48.95 billion and at Rs61.14 billion from the scheduled banks.

It is worth mentioning that during the fiscal year 2007-08, the fiscal deficit stood at Rs777 billion or 7.4 per cent of the GDP against Rs398.8 billion (four per cent of the GDP), targeted for the fiscal under review. In order to bring back the budget on a sustainable track, the fiscal deficit for 2008-09 is proposed at 4.7 per cent of the GDP, ie Rs582.3 billion.

During the last fiscal, July-June 2007-08, the government borrowed Rs461.28 billion from banks (scheduled and central bank), which is about 469 per cent or Rs380.28 billion more than the actual target of Rs81 billion for the fiscal year 2007-08, while Rs359.26 billion (or 352 per cent) more than it borrowed in the corresponding period of the last fiscal 2006-07 (Rs102.015 billion).

The State Bank for the last year has time and again advised the government to reduce its dependence on the bank borrowing, especially on the SBP, in order to control the inflation and support the monetary policy. As according to the bank, the excessive borrowing from the SBP spur the inflationary pressure on the economy due to the excessive money circulation. Resultantly, it became a source of demand-pull inflation — a scenario when too much money chases too few goods.

Few months back, the central bank asked the government that the fiscal deficit be contained in the years ahead to reduce the risk of crowding out of the private investment. Besides, it should also retire borrowing from the banking system, particularly from the SBP.

Currently, inflation is touching record high which is not only affecting the macroeconomic indicators but also severely disturbing the social life of millions of poor Pakistanis. For July-August 2008-09, the average CPI inflation stood at 24.83 per cent while during August 2008, it stood at 25.33 per cent. Food inflation during the month under review was at unprecedented 34.09 per cent.

Economists believe that the expansionary government fiscal policy is also considered as a source of diluting effects of the SBP tight monetary policy formulated for capping high inflation. It is feared that running a loose fiscal policy might crowd out the private investment in the country.

Public spending though helping in developing right infrastructure that help boost encouraging the private investment, however, economic pundits believe that if increase in the government spending is not accompanied by an increase in the government revenue and proportionate increase in the real GDP, creates public debt and inflation, respectively. Besides, the higher public spending may put upward pressure on the interest rates and, thus, discourage the private investors to invest.

It is also feared that if the government was unable to attract the external inflows as a result of the low remittances, slow down of privatisation proceeds, the borrowing volume could balloon to an unbearable level that could further affect the efforts of the government to rein in the inflationary pressure and bring down the poverty level in the country.

the new govt has no economic policy or vision so how can one expect the economy to be doing well?

Smegster ... what is this ? You are using figures which including post Shaukat Aziz era aka Gen. Musharaff was not controlling anything, it was already 4 months of control under the famous Ishaq Dar B.COM. ABC, DGH, QRST (Toba Tek Singh) !

You should have taken figures of February 2008 .. & even in this you must realize that those figures were the beaten up figures of 1 years of anarchy & terrorism which was thrust upon us prior to the elections !

Must7 you are totally correct, for an accurate comparison we should use figures from when the democRATS took over in feb 2008 (i.e when the forex reserves were over $15 billion and KSE was over 15,000).

The only reason I did not use these figures was because I know the mentality of the Musharraf Hater, they look for any excuse to blame the problems on Musharraf.

After August this excuse should no longer work as Musharraf was no longer president

To all the lover of demoCASHY this thread is about the economy after Musharraf so please feel free to defend and highlight all the economic policies that the present government of looters is following.

If you are proud of DemoCASHY you should be willing to defend the economic policies of this government (just like l am happy to go through why I am in favour of the economic policies pursued by Shakaut Aziz)

Dr Atta-ur Rehman resigns as HEC Chairman

ISLAMABAD, Oct 9 (APP): Dr Atta-ur Rehman Thursday resigned from the offices of Chairman Higher Education Commission. The spokesperson of the HEC also confirmed his resignation and said that no one has yet been appointed in his place.

Prof Dr Atta-ur-Rahman, TI, SI HI, NI, is a leading scientist and scholar in the field of organic chemistry with over 700 publications in the field of his expertise.

He has also the credit to revive the higher education system and research activities in Pakistan.

At present, Dr Atta-ur Rehman holds different positions including Director of H.E.J. Research Institute of Chemistry at Karachi University, Coordinator General of COMSTECH and Chairman, Higher Education Commission with the status of federal minister.

He had been conferred on different awards in recognition of his eminent contributions in the field of Organic Chemistry including Nishan-e-Imtiaz (2002), Hilal-e-Imtiaz (1998), Sitara-e-Imtiaz (1991) and Tamgha-e-Imtiaz (1983).

Besides this, he also achieved Grand Decoration of Honour in Gold with Sash for Services to the Republic of Austria, Honorary Doctor of Education honoris causa (Coventry University,UK) (2007), ISESCO Prize (2001), ECO Prize (2000), First Muslim scientist to receive the UNESCO Science Prize (1999), Federation of Asian Chemical Societies Award, Hiroshima, Japan (1997), First Prize at the 6th Kharazmi Festival in Iran (1993), The Islamic Organization Prize by Government of Kuwait (1988) and Honorary Doctorate of Science (Sc.D) from University of Cambridge (1987).
APP

Bad luck for Pakistan

Situation of Pakistan is getting from bad to worse and people are losing jobs rapidly. In such situation, I am hoping for another sweets distribution ceremony on roads. Obviously, due to gift of Musharraf, we would not see blank TV screens, but most likely the result this time would not have the word ... 'bloodless' (that is my hope and wish).

http://www.dawn.com/2008/10/31/ebr3.htm
Car vendors cut 17,500 jobs in six months
By Aamir Shafaat Khan

KARACHI, Oct 30: Substantial decline in orders for parts and accessories has forced the car vendor industry to undertake massive downsizing of workers, daily wagers and staffers. An estimated 17,500 is believed to have lost their jobs in the last five to six months.

One of the leading car makers, having more than 50 per cent market share, has massively reduced its production for the current year against its projected target and also for the next year, thus showing a clear signs of recession hitting the local industry.

Other car assemblers are also reviewing their production plans for the next year amid lingering economic meltdown.

Pak Suzuki Motor Company Limited (PSMCL) has surprised its vendors by disclosing in recent meeting on October 29 that it could only produce 74,865 units from January to September this year against its projected target of 133,000 units (cars and light commercial vehicles) in 2008.

The company would produce 16,035 units more in October to December period thus achieving a total production of 90,900 this year, showing a fall of 32 per cent. According to some vendors the Pak Suzuki has planned to assemble 90,000 units in 2009 as the company believes that the country is facing severe economic crisis thus resulting in bottoming out car and LCV sales.

PSMCL has asked its vendors to fasten their seat belts in view of the prevailing uncertain situation.

Vendors anticipate another round of big layoffs next year in case car assemblers drastically cut down production.

They said the vendor industry would suffer losses as they had already made huge investments after Pak Suzuki announced its projected production of 1330,000 units for 2008.

Sources in the car industry said that Pak Suzuki was reported to have laid down 250 jobs (daily wagers and contract staff) in the last six months and hinted at axing 200 more.

However, the official spokesman of PSMCL Shafiq Ahmed Shaikh denied such reports saying that “so far no permanent workers and officers have been removed from their jobs. As far as daily wagers are concerned they come and go.”

He said that the current situation in terms of production and sales of cars had been unsatisfactory.

Adviser and former chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Shariq Suhail told Dawn that he had personally terminated 150 people in his company out of 350 in the last few months in which 100 people had been removed in just one month.

He said there were total 350 PAAPAM members and there had been wide-scale job cuts in every industry. “If a careful estimate of 50 persons is taken in one company, then the vendor industry has offloaded around 17,500 workers and staffers from their jobs in the last few months,” he added.

Shariq said that job cuts were being made owing to plunging car production and sales as rising food inflation had severely impacted the cost of living of people who have now restricted the purchase of luxury items.

Besides, the falling value of the rupee against the various currencies had made import of auto parts and accessories costlier.

Managing Director of Yusuf Industries and former chairman PAAPAM Mohammad Ashraf Shaikh said that he had also retrenched at least 150-175 jobs from its two factories out of total workforce of 400 in the last one month.

“I have made another list of 16 who will lose their jobs next month,” he added.

He feared that vendors could not sustain losses for long period and may have to cut jobs for their survival amid falling volume of car sales and production.

Another leading vendor said that he had reduced workforce (daily wagers, permanent staff and contractual workers) of his company to 350 from 600 in just two months.

Sources in the car industry said that makers of Honda cars had also slashed their production of City and Civic. They said that the company which was rolling out 32,000 units in 2006, cut down production to 16,000 units in 2007 and 12,000-12,500 units in 2008.

A Honda dealer, who asked not to be named, said he used to sell 120 units a month a year back and now he sold around 80 units a month.

The new Toyota Corolla and other models, produced by Indus Motors, were also facing problems. An authorised dealer said that after a fresh increase in price of new Corolla 1,300cc on October 20, the new booking orders or on-spot buying had dropped to only four to five cars a day as compared to 10-15 prior to price hike.

He said that car leasing and financing by banks had almost finished after suspension of scheme by many banks in view of rising cases of defaults coupled with very high markup rate of 20-22 per cent and rising prices. He added that only 20 per cent cars were now being sold through leasing and car financing as compared to 60 per cent six months back.

According to quarterly results, Pak Suzuki posted a profit of Rs0.64 billion during January-September 2008 as compared to Rs2.5 billion in the same period last year, showing a decline of 75 per cent.

Indus Motors posted profit of Rs0.05 billion in July-September 2008-2009 as against Rs0.9 billion in the same period of 2007-2008.

The cumulative auto sales (cars and LCVs) had already declined by 44 per cent in July-September 2008-2009 as compared to the same period of last fiscal due to slowdown in economy, halt in production of Toyota Corolla, increasing prices of cars and high rates of financing.

It is sad that a country that has small industry compared to its population size and produces very little what it needs, seeing decline in industrial output. This is sad as it shows people are getting poor and demand is reducing, plus decline in industrial output means unemployment and further increase in poverty. Present situation is sad period for Pakistan and future of Pakistan.

Link: http://www.dawn.com/2008/11/18/top9.htm

Industrial output down 6.2pc in first quarter

By Mubarak Zeb Khan

ISLAMABAD, Nov 17: Pakistan’s industrial output declined by 6.20 per cent in the first quarter of the current fiscal year because of the global financial crisis.

The World Bank and IMF have already said that Pakistan’s economy is facing difficulties which will be aggravated by the global crisis. Massive layoffs in textile and electronic industries are feared in the next few months.

According to figures released by the Federal Bureau of Statistics on Monday, many sub-sectors of large-scale manufacturing, including automobile and electronic goods, did not perform well during the July-Sept period, indicating that the 6.1 per cent growth target in the LSM sector set for 2008-09 may not to be achieved.The cost of production in the industrial sector has increased because of the rising utility bills and interest rates.

The FBS figures showed that production of cotton yarn declined by 0.55 per cent, cotton cloth 0.88 per cent and power-looms by 64.42 per cent.

In the electrical sector, production of refrigerators declined by 1.60 per cent, deep-freezers 29.22pc, air-conditioners 22.55pc, electric bulbs 21.04pc, tubes 11.14pc, motors 32.43pc, meters 18.91pc, switchgears 22.78pc, electric transformers 5.86pc, TV sets 10.83pc and bicycles 14.49 per cent during the July-Sept period.

Iron and steel production declined by 1.50 per cent, ###### iron 10.95pc, billets 39.26pc and HR sheets 22.04pc. The production of vegetable ghee dropped by 12.49pc and cooking oil by 8.55pc.

In the automobile sector, production of buses declined by 41.25pc, jeeps and cars 47.16pc and motorcycles 8.49pc.

The industrial growth has been declining for the past three years. The growth, which was 19.9 per cent in 2004-05, dropped to 5.4 per cent in 2007-08 because of capacity constraints and high cost of doing business, resulting in the closure of a large number of units.

As a result of the decline in the industrial output, the import bill of consumer and electronic goods surged during the July-Sept period. The slump also badly affected the export of textiles.