the news articles

8/3/2019 The News Articles

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Assignment

of

NEWS ARTICLES &

Recommendations

Submitted By:

Tariq Mahmood Asghar

Roll # 77

MBA (A, B1)

Submitted To:

Sir Amir Rashid


2/10

Over all situation of Pakistan

From the time of partition Pakistan is being facing financial and many

economical crises. Our large part of trade is with America and now days

American economy is facing financial problems and as its gives effects on

our economy. Banks are very facing very difficulties and some international

banks also in crept situation.

A lot of investment has been taken away from Pakistan and there is no

chance of new arrival due to disturbing atmosphere. And news comes that

million of dollars have been taken out in black marketing.

On the other hand being an atomic power its still not able to fulfil its basic

energy needs like electricity. That is giving very bad footstep on its

industries and manufacturing market.

If we see on the agriculture side than we can see that people cant afford

the floor and rates of all agriculture goods are at boom and there is no

chance of rescission. Shortage of wheat is only due to lack of management

not to lack of production.

People are not trust on govt and their polices so they start tax evasion and

due to this our govt is facing lack of funds and cant take part in social

activities so many people spend their life wait of someone.

But we have impact on all over the world due to our Karachi port and as

well as its geographical situation on the map of world.

Financial Position of Pakistan in Past and Present

The per capita indebtedness of the country is US$ 509 (US$ 236 internal

debt per person, plus US$ 273 external liabilities per person), when the per

capita income of the country is only US$ 450.

The balance of Payments data also indicates that the pressure on the

external sector continues unabated, and the trade deficit is widening. The

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exports earnings of the country are not enough to finance the import

receipts, so what will finance the gap of the current balance of payments

deficit and also the debt servicing of the countrys external indebtedness.

The GDP growth rates are being undermined by the high population growth

rates and after repeated efforts the economy seems not to be picking up

over the 4.8 per cent growth rate mark. Rather the recent official reports

suggest that the economic growth rate has gone down to a little above 3

per cent. The 6 per cent GDP growth rate mark envisaged by the policy

makers seems just a mirage on the horizon. Nor it seems that the

population growth rate is not coming down from the 2.6 per cent growth

rate. In these conditions increasing domestic savings rates in order to

finance domestic investments and also realize enough resources to pay

back foreign and internal liabilities seems impossible.

Pakistan is in a situation of a classical debt trap, where new loans are

being taken in order to service old loans. A simple Debt Burden Index (DBI)

tells the story. By dividing external debt as a percentage of GDP, and the

debt growth rate by the GDP growth rate, we can clearly assess how heavy

the debt burden has become for the nation and its people.

In other words all the new debt that Pakistan envisages to receive from

different sources will be spent on debt servicing of old debt and just half a

billion dollars for showing an increase in the foreign exchange reserves of

the country. Not a single cent of this new debt will be spent on the

development projects, education, health, poverty elevation, and uplift of

women or population welfare in the country. Therefore it becomes just

ridiculous that the country should undergo such hardships and keep on

becoming insolvent by taking more debt in order to pay the old ones.

Not only that Pakistan is heavily indebted, and that the conditionality from

the World Bank and the IMF for every new loan and credit negotiated are

rapidly becoming stringent, the sanctions imposed by the international

community on the country after its nuclear blasts were harsh. The Main

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thrust of the conditions lay down by the twin international donor

organizations (IMF and the World Bank).

A weak economy means that the country can not generate enough

resources for investment purpose or in order to increase the standard of

living of its people. And interestingly enough, a weak economy, low

investments, employment and income also mean that the country cannot

even start sustaining itself neither sufficiency, nor pay back already taken

and misused loans from external and internal sources.

As part of the stabilisation package, the government withdrew its subsidy

on gas and announced that the subsidy on electricity would be eliminatedJune 2009.

Foreign-exchange reserves fell by US$690m to US$8.1bn in the week

ending September 27th. The Pakistan rupee has fallen to a record low, and

Pakistan's sovereign debt outlook has been downgraded by credit-rating

agencies.

Remittance inflows increased by an average of 24% year on year in July-

August 2008, to a total of US$1.2bn.

Overview of THE NEWS articles

Back to IMF: implications and prospects

By M. Sharif

It will be not for the first time that Pakistan is to seek IMF credit facility

during a distressed economic situation. Pakistan has a history of reaching

out to the IMF during such situations. But, this time it is somewhat different.

Not only the need is urgent but the requirement of infusion of foreign capital

is much more than it was earlier, last required in 2001.

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New government, new policy and new schemes

By Saadi Agha

With a new government in control, new developments were bound to

follow. Every time a particular government ends its term, it tends to boast

about the massive developments which have taken place during its term,

with specific emphasis on the alleviation of poverty and the improvement in

living standards, while the opposition survives on its criticism of the

establishment and opposes any such developments.This sort of game is

not new to Pakistan, history describes how successive governments have

thrashed all development plans carried out by its predecessors and termed

them as a fallacy to any precedent of "poverty alleviation" or any other form

of development.

The new agenda has strongly advised a new scheme of poverty

eradication, which mainly includes safety nets for the harsh situation faced

by the common man. These safety nets include the likes of income funds,

internship programmes and food subsidies. It is however, extremely

important to understand here, that although some of these plans carry

weight, others are prone to more critical thought. A careful assessment of

the programmes is followed below:

Income support fund: The budget allocation for Benazir income support

fund (BISF) programme is worth Rs34 billion, which is supposed to be

increased to Rs50 billion.

SBP may take more steps to revive consumer confidenceBy Saad Hasan and Salman Siddiqui

State Bank of Pakistan (SBP) will take additional steps in next few days to

revive consumer confidence in the banking system, a meeting of bankers

with Finance Adviser Shaukat Tarin was told here on Monday.

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Advisor to Prime Minister for Finance, Shakuat Tarin Monday hoped that

the International Monetary Fund (IMF) will endorse Pakistans proposals for

seeking its financial assistances.

We have decided to reduced fiscal deficit, keep flexible exchange rates

and net zero borrowing from the central bank.

Export target to be easily met: Mukhtar

Federal Minister of Commerce and Defence Ahmad Mukhtar has said that

despite rising cost of production and electricity charges, the countrys

exports would continue to grow and easily achieve the target of $22 billion

as previous three months saw export growth of 20 per cent.

He said though the textile sector recorded a decline of 4 per cent, other

sectors exports rose by 24 per cent, resulting in an average growth of 20

per cent since July 2008.

Analysts said that government failure to make the market support fund of

Rs20 billion functional on the given timeline and linking the lifting of floor

from market with the availability of funds to market by authorities kept

activities in market dull.

The removal of floor was scheduled for Monday, Oct 27, but KSE Board

extended it for unknown period on Sunday, Oct 26. Commenting on this

delay, analysts observed the authorities have bought time to take

appropriate measures to face the likely grim situation ahead of floor

removal.

Smart electricity metering to eliminate complaints

The government is vigorously working soon to introduce smart electricity

metering to eliminate complaints of inflated and manipulated billing.

Planning Commission Deputy Chairman Salman Faruqui said this while

inaugurating a workshop on development of integrated energy modeling

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system for Pakistan organised by the PC in cooperation with the Asian

Development Bank.

Bike assemblers hit by rising input costs, falling sales

By M Farhan Zaheer

The motorcycle industry is feeling the affects of rising cost of production,

appreciating dollar and runaway inflation resulting in low sales making it

difficult for most bike assemblers to continue operations.

Taming inflation key to economic revival

By Mansoor Ahmad

The country is facing all five types of inflation including commodity, wage,

monetary, fiscal and exchange rate and its economic revival depends on

taming inflationary pressures.

Managing inflation is a tedious job which requires prudent decisions and

strong political will of the government. All economists agree that

uncontrolled inflation being faced by Pakistan devastates the economy.

They say governments have to keep a balance between growth and

inflation because inflation can neither be suppressed nor be allowed to go

out of hand.

ZTBL plans to innovate agriculture technology

Zarai Taraqiati Bank Ltd (ZTBL) plans to train farming community on

modern farm practices and adoption of innovative agriculture technology intheir fields.

The Bank is revamping its technology department after about 20 years and

a committee of agriculture experts has been constituted to report and

recommend measures on war footing for the promotion of agri. Technology.

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A talent pool of subject specialists to train, guide and disseminate

information on diversified agriculture activities and technical knowhow, is

being created.

Moodys cuts Pakistan rating as forex pile falls

Pakistans credit rating was cut on Tuesday by one level to B3 by Moodys

Investors Service, which warned of further cuts given the depletion of the

countrys foreign exchange reserves.

Moodys retained a negative outlook which it had imposed last month after

Pakistans rapidly deteriorating external liquidity position accompanied a

stalling of economic reforms and mayhem in its domestic politics.

Oil companies face problems in import

A top petroleum industry official on Tuesday warned that companies are

facing problems in importing oil due to their poor financial position and

countrys negative credit rating which has made bank financing scarce.

Punjab industrial zones to install power plants

Punjab has allowed all industrial zones to install their own power plants so

that they could be able to cope with ongoing energy crisis.

Work on 1,000 projects stopped

Work on over 1,000 development projects worth billions of rupees has been

halted owing to a massive cut of 65 per cent in fund releases, The News

has learnt.

Actual funds released by the Ministry of Finance were only Rs20 billion in

the first quarter (July-September) of 2008-09 under the Public Sector

Development Programme (PSDP) against an allocated amount of Rs56

billion in accordance with approved cash plan.

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This has adversely affected over 80 per cent development projects out of a

total of 2,000 projects in PSDP list, a senior official of the Planning

Commission confided to The News here on Wednesday.

Country not in danger of default: SBP chief

Pakistan is in no danger of defaulting on its debt and is still considering

whether to expand on technical help from the International Monetary Fund,

its central bank governor said on Wednesday.

Shamshad Akhtar said a technical package would be announced in due

course but that the country was still mulling over its options for finding

capital to deal with a balance of payments crisis that has rocked its

economy.

We are taking steps to build up the reserves. We are developing a

macroeconomic stabilisation package which will help us attract capital

flows, said Akhtar, governor of the State Bank of Pakistan.

FORECASTING

If we think that this is temporary condition and it will solve soon, that is not

possible. If we want to solve our problems and economy and financial

problems then we have to take some serious step and we have to make

the focus on some special arias (Agriculture, Industries, Trade, and

SUPPLY LABOUR TO DEVELOPED COUNTRIES.

We must depend on ourselves not to take loan from other resources

because our lot of resources gone in interest.

Outlook for 2009-10

Political stability is unlikely to improve significantly in 2009-10. Inter-

party political rivalry will continue unabated, and the country's securityproblems will remain unresolved.

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Relations with the US are likely to deteriorate as a result of the newly

announced US policy of conducting military operations in Pakistani

territory without the permission of the Pakistani government.

Economic policy will remain focused on crisis management for the

remainder of 2008 and into 2009. Despite a shortfall of US$10bn to

meet short-term liabilities, Pakistan is loathed to turn to the IMF for

assistance.

In future tax rates will expect to increase, we can see now on most of

the product tax rates are increased and expected to increase.

Industry sector will also disturb by govt. polices because taxes are

increasing due to this prices are also increasing and on the other side

purchasing power is decreasing thats why people buy lesser goods.

Pakistan is going to take loan from IMF which will cause serious

economical and cultural problem for the Pakistan economy.

Pakistan is facing serious war & terror issue, which cause

disbursements in Pakistan, there is no political & economical stability in

Pakistan therefore no foreign investor want to invest in Pakistan.

Pakistan is facing unemployment because of light crises. The light

crises destroy the industries of Pakistan which decreases the business

growth and result into unemployment.

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