profitepaper pakistantoday 14th october, 2012

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Sunday, 14 October, 2012

Doc says four percent Growth picking up, expected to reach four percent: finance minister TOKYO

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APP

InAnCE Minister Dr. Abdul Hafeez Shaikh Saturday said growth in economic sector is picking up in Pakistan and it is expected to be around four percent this year.

The Finance Minister said this during a meeting with UK Secretary of State Justine Greening on the sidelines of the annual meetings of WB and IMF being held in Tokyo.

Highlighting the socio-economic situation, the Minister said that it is for the first time in the history of Pakistan that true democratic transition is taking place and the economy is in good condition.

“We have considerable foreign reserves”, the Minister added. He said that democracy is getting strong foothold in Pakistan where all the institutions are working efficiently and independently.

Despite some security problems, the government has succeeded in improving the economic conditions of the country, he added.

The Finance Minister said, “We have achieved an increase of 28% in our exports and the GDP growth rate is expected to be around 4% this year.”

He said that the government has eliminated 392 small levies from the icountry and the custom duty on imports has been slashed in order to open the economy to attract the foreign direct investment. He said due to governments

tax reforms, revenue collection has been doubled since 2008.

The Minister said that the government is pursuing regional balance in development focusing on Balochistan, Gilgit-Baltistan and FATA where special projects have been launched to improve the socio-economic conditions of the people. He said that after 7th nFC award the provinces have been given more resources to improve the socio-economic conditions of the people.

Justine Greening, UK Secretary of State appreciated the reforms brought about by the present democratic government in Pakistan. She said that United Kingdom will continue its support to Pakistan to improve the economy and reduce the poverty.

Dr. Abdul Hafeez Shaikh also held meeting with his Afghan counterpart. Both the Ministers reviewed the economic relations between the two countries. They agreed to continue further mutual cooperation in different spheres for the socio-economic development in the region.

He also participated in the Development Committee Meeting of the IMF. The meeting was addressed

by World Bank Group President Dr.Jim Yong Kim and IMF Managing Director Ms. Christine Lagarde and the Finance Ministers from the different regions.

Off tO Baku!

President Zardari to attend ECO summit being held in Baku on 15th ISLAMABAD APP

President Asif Ali Zardari is scheduled to visit to Baku, Azerbaijan to participate in the 12th Summit of the Economic Cooperation Organization (ECO) members being held on October 15.

During the visit President Zardari would hold meetings with Azerbaijan’s leadership and leaders of ECO member countries on the sidelines of the Summit. The 11th ECO summit was held in Istanbul in December 2010.

The 20th Meeting of the Council of Ministers of the Economic Cooperation Organization (ECO) will also be held in Baku on October 15.

The meeting of Council of Ministers will account for the reports of the ECO and its institutions on the progress achieved in the main activity area of the ECO that focus among other issues, on transport, trade, energy, environment and agriculture covering the period 2011-2012.

The meeting will adopt substantial decisions on the new initiatives and activities reflected in the program planned for 2012-13. The ECO Summit being held on October will mark nearly two decades of sustainable functioning of the regional organization, second largest in the world. A Baku Declaration outlining the vision and guidance for the organization will be issued at the end of the summit. The ECO is an intergovernmental organization involving seven Asian and three Euro-Asian nations. It provides a platform to discuss ways to improve development and promote trade and investment opportunities and the common objective is to establish a single market for goods and services, much like the European Union.

The ECO’s secretariat and cultural department are located in Tehran, its economic bureau is in Turkey and its scientific bureau is situated in Pakistan. The organization was founded by Turkey, Iran and Pakistan in 1985 and in 1992, the ECO was expanded to include seven new members, namely Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

Fiscal policy should be ‘growth friendly’: IMF body TOKYO AFP

The world economy needs to balance austerity with growth if it is to recover fully from the global financial crisis, a key IMF committee said in Tokyo on Saturday.

“Fiscal policy should be appropriately calibrated to be as growth-friendly as possible,” the International Monetary and Financial Committee said in a communique.

The statement came after days of back and forth between those — led by Germany — urging no let-up from belt-tightening and those arguing for a loosening of the grip of austerity. International Monetary Fund Managing Director Christine Lagarde said on Thursday she was happy for Greece — struggling under the weight of cuts demanded by international creditors — to have two more years to meet its deficit-reduction targets. But the following day, Germany’s finance minister Wolfgang Schaeuble said there was “no alternative” to cutting bloated national balance sheets.

Speaking to reporters, Lagarde played down growing speculation of a rift on the depth and timeline for painful austerity cuts in debt-addled eurozone economies.

“There have been a lot of debates on fiscal adjustment. And what sometimes has been presented as disagreement is more about perception than reality,” she said.

“We all recognise credible, medium-term adjustments are necessary in all advanced economies... (but) the pace and type of measures obviously need to be calibrated on a country-by-country basis. It cannot be onesize-fits-all.” She added that fiscal policy alone “is not sufficient”. “On these points, there was complete agreement,” she said.

The International Monetary and Financial Committee, which issued Saturday’s communique, is a body made of up two dozen central bankers and government ministers who advise the IMF’s board on its work. Days after the Fund warned the world’s economy was growing at a slower rate than previously thought, the committee said there remained “substantial uncertainties and downside risks”.

“Key policy steps have been announced, but effective and timely implementation is critical to rebuild confidence,” it said.

“We need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth. “Advanced economies

should deliver the necessary structural reforms and implement credible fiscal plans.

Emerging market economies should preserve or use policy flexibility as appropriate to facilitate a response to adverse shocks and support growth.” The communique said monetary easing — like that practised by the US Federal Reserve and other central banks — had been helpful, but it was vital that “credible medium-term fiscal consolidation plans” were put in place.

IFIs, MFIs should invest in Pakistan: speakers ISLAMABAD ONLINE

Speakers and participants in a roundtable session stressed on the need for financing macro-level projects of renewable and alternative energy in Pakistan by International Financial Institutions (IFIs). The roundtable held on Saturday was the inaugural session themed ‘Deployment of Alternative and Renewable Energy Technologies in Pakistan Opportunities, Obstacles & Way Forward’ of a conference on alternative and renewable energy sources titled “Towards an Energy Secure Pakistan” being held under the auspices of Institute of Policy Studies in collaboration with Renewable Energy Association of Pakistan (REAP) and Alternative Energy Development Board (AEDB). Speakers and participants in a roundtable session stressed on the need for financing macro-level projects of renewable and alternative energy in Pakistan by IFIs at the generation and supply end; and by MFIs at the consumer end in order to meet the growing demand of electricity, which would reach around 100,000 MW by 2050. The session was addressed by Arif Alauddin, CEO, AEDB, Khalid Rahman, DG-IPS, Asif Jah, chairman, Islamabad chapter of REAP and a number of experts on ARE technologies such as biogas, solar, micro hydel, biomas, wind, etc. The participants discussed various opportunities and available ARE technologies that have rich potential to meet the increasing demand of energy in Pakistan and urged the government to provide an enabling environment to attract FDI and facilitate and encourage the local manufacturers and help them get adequate financing and latest technology to develop reliable and economically viable solutions on a large scale for the consumers. Arif Alauddin in his concluding remarks said that one should not compare Pakistan with countries like US, Canada, Germany or even India, which were providing subsidies to the extent of US$0.50 to US$0.70 per unit to the consumers. He informed that India had allocated US$18bn to provide subsidies on electricity to its people, adding that we have to discuss implementable solutions to meet the energy crisis. He further informed that the Asian Development Bank (ADB) offer to the government of Pakistan to obtain up to US$500mn through multiannual financial framework (MFF) facility for renewable energy projects in the public sector was being utilized through setting up of 10 micro hydel projects across Punjab worth US$140mn and other projects were also being planned.

‘Energy shortage can be managed by adopting solid strategy’ ISLAMABAD ONLINE

The Chairman Intellectual property Organization (IPO) Hameed Ullah Jan Afridi has said that the phenomena of energy shortage can be managed well by adopting a solid strategy, planning and utilization of renewable energy resources in the country. Hameed Ullah Jan Afridi stated this while addressing the REAP 2nd international exhibition and conference of Alternative energy and energy efficiency commenced here on Saturday organized by Renewable and alternative energy association of Pakistan (REAP). He said that we need to ponder is how to put renewable energy financing as well as micro financing from the point of view of rural electrification in place so that it is readily and ubiquitously available to every one who fulfills basic set requirement just like in western world. This result in large section of population taking interest in the momentum to turn in to an overall on grid solar home system installed. Chairman IPO said that there is a dire need for the relevant government quarters to announce the much awaited residential renewable energy feed in tariffs. These residential feed in tariff coupled with easily accessible financing options are essential ingredients that are a must for thriving renewable energy culture but unfortunately we are lacking on both these points. Afridi said that as per popular residential feed in tariff and RE financing in place I m sure and very hopeful that soon we would be very successful and role model for other developing nation to follow us as far as renewable energy is concerned.

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Stocks retreat on earnings concerns, euro steady Stocks slipped on Friday as investors fretted over what is expected to be a weak corporate earnings season, while gains in the euro were checked by uncertainty over whether and when Spain would request help with its finances NEW YORK

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nvESTORS failed to be cheered even by data showing Americans were the most upbeat they have been in five years, as well as record quarterly profits at JPMorgan Chase (JPM.n) and Wells Fargo (WFC.n). As a result, U.S. stocks posted their worst weekly decline since June.

“There’s a lot of trepidation about earnings season,” said Randy Warren, chief investment officer of Warren Financial Service in Exton, Pennsylvania.

“The predictions have been for weaker earnings, and we’ve heard a few companies saying things are slowing down a little bit in various places, especially overseas.”

Weak global demand has heightened concerns over the prospects for corporate earnings growth. As a group, S&P 500 companies’ quarterly earnings are expected to fall 3 percent from a year ago, according to Thomson Reuters data, marking the first decline in three years.

“Investors have been focusing on supportive central bank polices to the exclusion of other things,” said Kate Warne, investment strategist at Edward Jones in St Louis. “now with earnings season, we’re seeing some of those other things come back into better balance and that’s not as good news for the market.”

The Dow Jones industrial average .DJI ended up 2.46 points, or 0.02 percent, at 13,328.85. The Standard & Poor’s 500 Index .SPX dipped 4.25 points, or 0.30 percent, to 1,428.59. The nasdaq Composite Index .IXIC eased 5.30 points, or 0.17 percent, to 3,044.11. All three indexes were down more than 2 percent for the week.

Shares of JPMorgan, which had surged before the market’s open, and those of Wells Fargo were lower in afternoon trading. Bank shares were down 2.5 percent on the KBW Bank Index .BKX. While JPMorgan’s results met analysts’ expectations, Wells Fargo came up weaker than expected on a key performance measure. Its shares were down 2.6 percent, while JPMorgan fell 1.1 percent.

“Bank shares as a group have had a nice move (up) this year so far,” said Ken Polcari, managing director at ICAP Equities in new York. “Guidance is cautious so people are taking money off the table.” In Europe, the FTSEurofirst 300 .FTEU3 ended down 0.5 percent. The MSCI world stock index .MIWD00000PUS eased 0.2 percent.

The euro rose against the dollar and yen but the currency looked likely to struggle for traction. A bailout request from indebted Spain is seen as positive for the euro as it would remove another layer of uncertainty in financial markets and activate the European Central Bank’s

bond-buying program, aimed at lowering borrowing costs for troubled euro zone economies.

“The latest developments do suggest that the Spanish authorities continue contemplating the possibility” (of a bailout request), said vassili Serebriakov, currency strategist at Wells Fargo in new York.

“While the timing remains highly uncertain, we still believe an aid request is more likely than not,” he said.

The dollar was off 0.1 percent against a basket of other major currencies. The euro was at $1.2952, up 0.2 percent on the day. It has traded in a tight range roughly between $1.28 and $1.3170 since mid-September.

Many markets have been stuck in narrow ranges since the start of the month as investors wait to see whether Spain requests a bailout, a prerequisite for the ECB to buy its bonds. The bloc has another opportunity to make progress with its crisis strategy when EU leaders meet in Brussels on Thursday. Brent oil fell below $115 a barrel after a prediction of a further decline in oil consumption and higher supplies offset concerns about potential output disruptions in the Middle East. Brent crude was down $1.09 at $114.62 a barrel, while U.S. crude settled down 21 cents at $91.86. The benchmark 10-year U.S. Treasury note was up 03/32 in price, yielding 1.660 percent. The Thomson Reuters/University of Michigan’s index on U.S. consumer sentiment rose to 83.1 in early October from 78.3 a month earlier, its highest since September 2007.

Meanwhile, U.S. producer prices rose more than expected in September, although underlying inflation pressures were muted.

Business 02 Geography shouldn’t matter in choice of WTO chief: Lamy World Trade Organization Director General Pascal Lamy said on Saturday that there was no system of rotating his job between countries and regions and his successor should be picked on the basis of competence alone TOKYO AGENCIES

Lamy, who will leave the WTO after two terms in August 2014, said it was up to the organization’s member countries to decide on the criteria for selecting the new WTO chief who will oversee unfinished negotiations over trade liberalization.

Emerging market countries will want to see one of their own in charge of the Genevabased trading club after the top jobs at the IMF and the World Bank went to a European and an American following a decades old tradition criticized as being out of line with the new world order.

Lamy said the selection procedure at the WTO is different.

“I don’t think this is a geographic rotation system,” Lamy told Reuters in an interview on the sidelines of the semi-annual International Monetary Fund and World Bank meetings in Tokyo. “There is nothing in the rules of the WTO that say that if somebody came from this country, then the next one should come from this country. I think what really matters is that it’s not a diplomatic game. It’s a headhunting game.” Formal nominations are not due until December, but trade diplomats are already assessing chances and gathering names.

Two candidates have formally declared their interest: Ghana’s former trade minister Alan Kyerematen and new Zealand’s current trade minister Tim Groser. Trade diplomats expect more candidates to emerge.

Asked about Ukraine’s decision to tell its trading partners it wanted to raise maximum tariffs on hundreds of imported goods, a move criticized as a threat to open trade, Lamy said the WTO verdict would depend on what concessions Ukraine was ready to offer in return.

He said WTO rules allowed a member to take such steps if it offered to reduce protection on other products and ultimately it was a matter of negotiations between Ukraine and its trading partners.

“The spirit is that if you make your economy less open on one item, you have to compensate by opening (the) economy on another item. So it is the process of negotiation,” he said. “I wouldn’t pre-qualify this. If Ukraine wants to increase its protection on some items and decreases its protection on other items, we have to look at the balance before making a judgment.”

Ukraine has expressed its intention to raise

tariff ceilings without any precise number.

The move drew criticism from at least 19 nations arguing it could undermine the very basis of the $18 trillion global trade system.

On Lamy’s watch as head of the WTO, he has witnessed the stalling of decade-long talks on trade liberalization known as the Doha Round. But he said he saw promising signs that some progress was possible and that he was “cautiously optimistic” now as opposed to “cautiously pessimistic” a year ago.

“I think there is a bit more momentum.

And it took a bit of time for the members to realize that the big deal was not available in a short time and to realize that, if that was the situation, they nevertheless had to try and move trade opening forward,” he said.

“Especially in a situation where we know that opening more trade is a low-cost solution to stimulating growth. So there is also a sort of crisis exit component in this, let’s say, new attitude.”

China central bank chief wary of QE3 inflation risk: paper China’s central bank governor has warned that quantitative easing policies worldwide could cause inflationary risks, state news agency Xinhua said on Saturday BEIJING AGENCIES

The remarks by People’s Bank of China (PBOC) Governor Zhou Xiaochuan come even as analysts credit policy easing from G4 central banks - the U.S. Federal Reserve, the European Central Bank (ECB), the Bank of Japan and the Bank of England - in the third quarter of the year as underpinning business confidence.

Chinese data on Saturday offered a sign that G4 policy easing was being felt in the world’s second biggest economy, with trade numbers showing exports grew at roughly twice the rate expected in September while imports returned to the path of expansion.

“The data shows both imports and exports are improving - especially a re-

bound in export growth reflects a rising confidence after the U.S. and European countries launched further easing policies last month,” said Xue Hexiang, an analyst at Guotai Junan Securities in Shanghai, after the trade numbers were released. Across Asia, central banks are wary about the potential inflationary impact of the Fed’s latest quantitative easing, dubbed QE3, as well as policy stimulus unveiled by the ECB. Central banks “should consider draining excessive liquidity injected into the market and eliminate inflationary pressure in the longterm”, Zhou was quoted as saying by Xinhua, which cited the Journal of Public Research, a magazine published by the People’s Bank of China. China’s central bank said in September that it would “fine tune” policy to cushion the economy against global risks while closely watching the possible impact from recent policy loosening in the United States and Europe.

China’s economy has slowed for six successive quarters and economists expect that Q3 growth data due on October 18 will confirm the slide extended for a seventh. The consensus forecast in a Reuters poll is for annual growth of 7.4 percent in Q3, down from Q2’s 7.6 percent.

Under the banner of policy fine-tuning, China’s central bank cut interest rates twice in June and July and lowered banks’ reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan for boosting loans. But it has refrained from cutting interest rates or RRR since July. Instead, it has opted to inject short-term cash via its open market operations into money markets to ease credit strains.

China’s annual rate of inflation was 2 percent in August, half the 4 percent targeted by the central bank, though nudging higher from July’s 1.8 percent rate. The PBOC has fought hard to bring inflation down from a three year peak of 6.5 percent hit in July 2011 and is determined to contain price pressures. Consumer price data for September is due to be published on October 15 and the benchmark Reuters poll has a consensus forecast for annual inflation of 1.9 percent.

Meanwhile China’s long-term inflationary pressure could be alleviated by the slowing rate of acquisition of foreign exchange reserves, Zhou said. China’s official reserves, the world’s largest at $3.29 billion as at the end of September, have been relatively steady this year as global trade has slowed and Chinese exports along with it.

Sunday, 14 October, 2012