PRO 30-10-2012_Layout 1 10/29/2012 11:45 PM Page 1
Tuesday, 30 October, 2012
$500 million for IP g
Exports to Beijing on the up Pakistan’s exports to China rising, Beijing investing more: envoy
Iran to provide $500 million for laying Pakistan’s portion of IP gas pipeline
ISLAMABAD AGENCIES
Ambassador of the People’s Republic of China Liu Jian on Monday said Pakistan’s development is our progress and difficulties of Islamabad are our problem which we would mutually overcome soon. He said that investment climate in Pakistan is very good while government is providing best possible security to investors therefore no Chinese entrepreneur is worried to come to Pakistan. The Ambassador said that while talking to business community and Chinese Pakistanis at the house of Muhammad Raza Khan, former Chairman Coordination of FPCCI. Former President ICCI Nasir Khan and other business leaders were also present on the occasion. Ambassador China Liu Jian said that Beijing is encouraging Chinese companies to invest more in Pakistan so that this brotherly country can progress on a fast pace. Cooperation and trade between Islamabad and Beijing is increasing, bilateral trade has crossed $ 10 billion mark while Pakistan exports to China have increased by 54 per cent, informed Liu Jian.
ISLAMABAD NNI
I
RAN is to provide five hundred million dollars for laying Pakistan’s portion of the Iran-Pakistan gas pipeline project The remaining amount will be arranged by Pakistan through collection of gas infrastructure development cess. Tehran will also provide material support.
He said that China is working on 120 projects in Pakistan of which some initiatives are related to energy. Asking Pakistan to resolve energy crisis as soon as possible, he said that we would be pleased if Chinese companies are invited to take part in TAPI gas pipeline project. He said that China has become Pakistan’s largest trading partner and and the fourth largest export destination. We should further strengthen cooperation in energy, agriculture, infrastructure, financial sector, and other fields, as well as enhance people to people exchanges, he said. Both countries should try to get maximum benefit of bilateral Currency Swap Agreement and recent Agency Agreement signed between State Bank of Pakistan and the People’s Bank of China, he stressed. At the occasion, Raza Khan demanded of the government to include Chinese companies in the TAPI project. China has set a record by completing 7500 km pipeline in 18 months which means it can complete TAPI project in 4-5 months resolving energy our crisis, said Raza Khan. Nasir Khan said that China is our best and tested friend and all Pakistanis are proud of Beijing.
Politics puts Italy, Spain back in market focus Italian political turmoil and Spanish hesitancy over seeking euro zone assistance put the two countries on the front line of the currency area’s debt crisis back under market pressure on Monday as their leaders met in Madrid
g
MADRID/ROME AGENCIES
Former Prime Minister Silvio Berlusconi’s weekend threat to bring down his successor Mario Monti’s government, and regional elections in Sicily in which a protest party led by a stand-up comic polled strongly, highlighted the political risks in Italy. Rome’s borrowing costs have fallen since July partly due to the European Central Bank’s pledge to buy unlimited quantities of bonds if necessary to help states that request aid and accept strict conditions, but also due to hopes that Monti, a reformist technocrat, may stay on after next year’s general election. Italian and Spanish bond yields rose on Monday as some investors sought the safety of German Bunds, partly due to political uncertainty in the euro zone’s recession-stricken third and fourth largest economies. But Italy paid less than a month ago to sell 8 billion euros of sixmonth bills. The euro also slipped on uncertainty over whether near-bankrupt Greece, the country that triggered Europe’s debt crisis, can agree to a deal on new austerity measures and its international lenders can figure out how to make its huge debts sustainable. A German government spokesman rejected talk of any new write-down of Greek debt, this time involving official creditors, saying German law would not permit such a haircut while new aid for the struggling country was being discussed. The European Central Bank has also refused to take any losses on its sizeable holdings of Greek government bonds, saying that would be illegal. Some market players are also concerned by signs that Spanish Prime Minister Mariano Rajoy, having almost completed this year’s borrowing, will try to avoid the stigma of requesting a precau-
tionary credit line from the euro zone’s ESM rescue fund. “As time passes there should be a growing move towards pricing in an uncertainty premia to the Spanish curve ... and Berlusconi’s rant perhaps highlights the less than stable nature of Italian politics and reinjects some degree of political risk into BTPs,” said Richard McGuire, rate strategist at Rabobank. The risk premium on Spanish bonds has tumbled since ECB President Mario Draghi’s move, some Spanish banks have regained money market access and the Treasury has almost cleared its 2012 issuance needs and can soon being to prefund 2013 borrowing. But Spanish yields have stopped falling and some analysts expect them to rise the longer Rajoy holds off. In a sign of the depth of the recession battering Spain, retail sales fell at their fastest pace on record in September, hit by a hike in value-added tax, after unemployment topped a record 25 percent in August. NUDGE: Monti sought to nudge Rajoy towards applying for a rescue when the two men met in early August in the belief that Italy would benefit indirectly from a backstop for Spain, European diplomats told Reuters at the time. The Italian premier said as recently as October 12 that a Spanish aid request would help calm financial markets, and diplomats say the International Monetary Fund is also pressing for Madrid to seek for a credit line sooner rather than later. But with market pressure far less acute since the ECB announced its bond-buying policy, the incentive for Rajoy to apply has waned. Germany, the biggest contributor to the ESM, continues to insist that Spain does not need a bailout. In Italy, Berlusconi appeared to have cleared the way last week for a new political era by announcing he would not run in
a general election due in April, raising the prospect of Monti retaining a guiding role in economic policy. However, in a furious reaction to being sentenced to four years in prison for tax fraud, the billionaire former premier threatened on Saturday to unseat the Monti government and make a comeback, raising new uncertainty over the electoral outlook. Against this backdrop, Sicilians voted on Sunday for a new regional government, with an exit poll in regional capital Palermo showing the anti-establishment 5 Star Movement of comic Beppe Grillo leading with 26 percent on a low turnout. A strong performance for the 5 Star Movement, after its success in local polls in May, would reinforce its status as the main vehicle for protest against Monti’s
austerity policies and disillusion with mainstream parties. GREEK DRAMA: Greece’s foreign lenders have refused to make any further concessions on changes to labor laws contested by a junior coalition partner, the country’s finance minister said on Sunday, prolonging an impasse on a crucial austerity package. Athens has been locked in talks with its EU and IMF lenders on the austerity package for months, but a final agreement has been held up by the small Democratic Left party’s refusal to back the new wage laws. The publication of a list of more than 2,000 wealthy Greeks with Swiss bank accounts, including well-known business and political figures, has fuelled public anger at more pay and benefit cuts when the rich are
suspected of tax evasion on a massive scale. Newspaper Ta Nea reprinted the names after the magazine editor who first published the list was arrested on Sunday and was due to appear in court on Monday for violating data privacy laws. The list, given to Greece by French authorities in 2010, contains the names of 2,059 Greek account holders at HSBC in Switzerland to be probed for possible tax offences. It has become known as the “Lagarde List” after Christine Lagarde, the head of the IMF who was the French Finance Minister when the list was handed over. Greek authorities have said there is no evidence that people included in the list have violated the law, but Greek media have criticized former ministers for not investigating suspected tax evaders on the list.