looks like PPP wants to go its grave much faster than intended for it

your approach is not bad, but you don't want to accept what has happened.
If you have a US banker prime minister imported from USA, to implement their interests in Pakistan, can't u call it a conspiracy?
If I didn't buy a home in USA in 2002, and prefered renting, while deciding to send dollars to Pakistan, wasn't it duty of my PM to use them wisely?
today I am not worried of US sub-prime mortgage crisis, but our country is suffering from the same crisis, why?
we expect economists to have a vision to plan well beyond 5 years. not day to day.
things are not 100% black or white, just a little flip in priorities makes the difference, that can't be felt by everyone.
our rulers simply don't believe in "Pakistan first".

Eight years of hardwork gone down the drain. The economy is being destroyed left right and centre by this coalition govt. The poor man will suffer more, more people will fall under the poverty line.But this is all irrevelant as this new govt has to remove the last block so that they can start looting without fear. Sad. But we Pakistanis brought this upon us so we should suffer the consequences.

So Schmuck you did not buy oil and mining shares in 2002, instead you sent money to Pakistan. Was this not a massive waste? If you had invested the money in these shares, the value of your money would have increased vastly and you would now have been able to send a lot more money to Pakistan.

Schmuck again you are making some fundamental economic mistakes in your analysis. The purpose of foreign reserve are not to finance investment but are there to ensure financial stability. Foreign reserve are not there to be 'spent' so the accumulation of reserves from $1 biilion to $16 billion during the Musharraf era was not a waste as this money allowed the pakistan economy to continue to grow and for the value of the Pakistan rupee to remain stable despite a ten fold increase in the cost of oil.

If the reserves had been spent, then Pakistan would be vulnerable to external shocks.

Now that the incompetent fools in the PPP/PML-N are running the economy and foreign reserves are declining fast, the safety net that these foreign reserve provided are no longer there. What has been the result of this. The Pakistani rupee has went into freefall. Within less than a year in has fallen from 60 rupees to the dollar to less than 75 rupees a dollar

The accumulation of reserve by the Musharraf government shows its long tern commitment and vision for Pakistan, I wish the conman in power put Pakistan first like Musharraf did, instead of putting themselves first.



"Sir, what have been the economic and social implications of increase in the country’s foreign exchange reserves?

One economic implication is that Pakistan has been able to manage its exchange rate without resorting to international financial institutions. We are now in a position to stand on our own feet and are autonomous in our decision-making. The social implication is that when you have a country in which 33% of our population lives below the poverty line, one question that is repeatedly asked is: what is the significance of $12 to 13 billion in reserves as far as the poor people are concerned? Those who question us must realize that the reserves are not for spending purposes but are actually an insurance policy for the future. Let me give you a simple example: when we had reserves below $ 1 billion and if there was a oil price shock then whereby the price would have shot up from $25 a barrel to $50 a barrel, the rupee would have hit Rs. 80, 90 or even 100 to the dollar simply because we could not have sustained that kind of situation. However, today we have seen that although the oil prices have gone up to $58, the exchange rate has remained stable at around Rs. 59.50. Secondly, we used to look for even $ 100 million of loan to bring in machinery into our country. However, during the last 5 years, $15 million worth of machinery has been imported out of our resources without us resorting to taking loans from anywhere. And that is laying the foundation of the future investment and growth in this country"


http://www.map.org.pk/review/0205/ih_interview.htm

don't worry ... our reserves would be <1 billion .... and close to 99' levels soon

u want debate just for sake of it.
salamz...........
btw, I won't tell u what did I do with my money, but just as a hint, I have made 20 times profit using my understanding of situation. (no double shah type thing)

History will indeed be kind to President Musharraf - He had really good intentions but unfortunately the corrupt , useless politicians have got rid of a good leader

He tried his best to take Pakistan forward admittedly made a few mistakes along the way but the intentions were good


I have absolutely no faith in the present goverment

Even a war torn country like Iraq beats us with 21 billion USD .. what a disgrace ...

still, in real wealth figures, if Pakistan had gone for gold or other currencies or commodities, it was a better option.
like building a "strategic oil reserve" @ 20-30 dollars a barrel in 2002 could have been 10-15 times more valuable than 50% depriciated 15 billion dollar reserves in March 2008. does it make sense?

I am surprised how people come to conclusions .. I am sure by average rate we should have been having not more than 4 to 6 billion US in our coffers at that time and with all sorts of free oil coming from KSA .. who would start making strategic reserves, especially when they are working over time on the issues economy at that time ! Dont' forget the attain 7% growth you do need to worry & coming back on the fact that we are never the best in planning for the future ! Americans / Europeans are ! They are dumb on day to day basis but perfectionist on planning for the next 5 to 10 years !!

Pakistan Forex Reserve Falls To $9.57
Thu, Aug 21 2008, 10:32 GMT link

Pakistan Forex Reserve Falls To $9.57 Billion In Week To Aug 16

KARACHI -(Dow Jones)- Pakistan's foreign exchange reserves fell to $9.57 billion in the week ended Aug. 16, from $9.92 billion a week earlier, the State Bank of Pakistan said in a statement late Thursday.

Foreign exchange reserves held by the central bank were $6.27 billion, compared with $6.64 billion in the previous week, while foreign exchange deposits held by banks were $3.30 billion, compared with $3.28 billion the previous week, the central bank said.

Foreign currency deposits held by banks are included in the calculation of the country's total reserves, which have fallen from a record $16.39 billion in early November.

-By Haris Zamir; Contributing to Dow Jones Newswires; 91-11-41207691

(END) Dow Jones Newswires
Copyright 2008 Dow Jones & Company, Inc

I hate to say but, this is what the situation might be


16-Nov $16.49
15-Jan $15.50
20-Mar $13.80
31-Mar $13.30
3-May $12.26
10-May $12.20
22-May $11.89
2-Jun $11.18
7-Jun $10.95
12-Jul $10.83
17-Jul $10.72
7-Aug $10.16
15-Aug $9.92
21-Aug $9.57
15-Sep $9.07
15-Oct $8.57
15-Nov $8.07
15-Dec $7.57

Pakistan looking forward to $10 bn bailout by Saudis, China

Negotiations with the IMF which commenced last week for a US$10 billion bailout package for Islamabad are expected to remain inconclusive as Pakistan is set to seek direct help from Saudi Arabia and China.

The negotiations are being held by a couple of IMF officials, who met the Pakistani economic managers in a process of charting out an expression of interest for the bailout package.

“We are making efforts to prevent the drift towards an IMF-assisted bailout that would obviously cause more difficulties as it would be governed by strings that are hard to fulfill,” said a senior Pakistani official involved in the talks.

The crisis deepened last month as the foreign exchange reserves dwindled and the rising import payments became the most difficult task for the public finance heads here. Pakistan now happens to be the only country in 2008 facing by international rating companies the threat of downgrading of its import-export balancing effort from the present B-1 status and inability to make on-time payments due in foreign exchange to international exporting companies.

A committee of experts, currently working out a bailout package and keeping a tight lid on the actual situation, is busy framing a strategy on war-footing. It is reportedly framing up a “suggestion” to the federal policymakers to approach Saudi Arabia and China for a $10 billion package split by 6-4, respectively.

Pleading anonymity, The News sources revealed that next Monday would be critical for meetings of the federal cabinet’s committee overseeing the formation of a strategy in this respect. “That is going to be the day when this country would have to decide as to how the two countries would be submitted with an agenda for loan, and on what terms,” said a senior official.

“A consensus has evolved in these meetings on averting a drift back to the IMF mechanisations. A week ago, some IMF officials did visit Islamabad to offer a package, and it was a soft mark-up deal. Its tranche-payment mechanism was attractive too, as the Fund seemed ready to release $500 million every month, which is close to what the actual requirement over the current financial year’s 12-month period would be. But the strings attached would be too harsh to meet,” said the official.

When asked to provide details on these strings and the bailout package to be split between Saudi Arabia and China, he said: “I am not supposed to hand out half-cooked measures. But the main idea is that Saudi Arabia should be offering a deferred-payment scheme for the current fiscal year on the provision of petroleum products imported from that country. It should be a 12-month scheme covered by assurances that the products would be used to keep the prices stable and no further loans would be acquired from other internal or external sources against the facility thus extended, which is not a harsh string.” A $4 billion offer is expected from China, he said and added that negotiations in this respect would be brisk as “the crunch has begun telling too adversely to sustain any further.” This money would be available in tranches of $500 million once agreed upon.

Explaining the IMF strings, he said the Fund would like Islamabad to immediately stop subsidising oil, electricity, gas and food items. “That would mean an immediate jump in the inflationary trend, which would directly be impacting the export-production lines, which is not acceptable to Pakistan,” he added. Apart from this, the IMF would also like to bind the tranche release to the reappraisal of the reforms conducted in the economic-management structure of Pakistan over the past few years.

On their part, members of the committee have been suffering from acute lack of orientation as far as identifying the actual nature and handling of the crisis is concerned. At one point, the committee was about to churn out the formula for stopping imports of non-critical items, which are, otherwise, a good source of revenue, prevent smuggling and, if banned, would help save only about $48 million in payments a month. This formula is expected to be rejected as wiser heads meet next Monday, the source added.

4.5 months & already our beggers bowl is out !

So what's today's count !!! Jeez .. we are now expecting decline on daily basis !

Foreign exchange reserves slide further by $180 mn


The foreign exchange reserves of the country have further decline by 180 million dollars to 9.38 billion dollars.

According to the figures released by the State Bank of Pakistan, the foreign exchange reserves stood at 9.56 billion dollars previously.

The central bank holds 6.75 dollars while 3 billion dollars are with the commercial banks.

Where are the optimists when you need them most...

the reserves are expected to fall 7 to 8 hundren million dollars a month and in the next 3~6 months we'd be on the same state as 1999.

May be the market is adjusting to the ugly face of Nawaz & Zardari.

Pakistan's forex reserves fall to $9.38 bln
KARACHI. Thu, Aug 28 2008 link

Pakistan's foreign reserves fell to $9.38 billion in the week that ended on Aug. 23, from $9.57 billion in the previous week, the central bank said on Thursday.

Pakistan's central bank, the State Bank of Pakistan, said its reserves fell to $6.01 billion from $6.26 billion previously, while those held by commercial banks rose to $3.37 billion from $3.30 billion.

Pakistan's foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of the country's political uncertainty.

The rupee closed firmer at 75.90/76.05 to the dollar on Thursday compared with Wednesday's close of 76.00/10, data from Reuters showed.

But traders said the long-term outlook for the currency was still uncertain.

The rupee, which has lost about 23 percent of its value against the dollar this year, hit a record low of 77.15 on Aug. 22.

That will improve our exportation capacity, is it possible to exporte GANJA and GHADDARI for a good price to JAHILISTAN?

You guys act all surprised.

This was expected.

Foreign debt payments: Pakistan urged to seek IMF help to avoid default

US-based Citibank has advised Pakistan to secure help from the International Monetary Fund (IMF) to avoid default on its foreign debt repayments in the face of an ongoing political crisis.

In a report, "Pakistan: could the political chaos lead to sovereign default?" released in New York Wednesday, Citibank cited a rising chance of default over mounting political instability, dwindling foreign exchange reserves and the weakening Pakistani rupee. "Pakistan perhaps now needs an IMF stabilisation programme to manage the dire situation," it said.

The bank said if Pakistan opted to default, it would have to reschedule all of its debt, which amounted to 2.6 billion dollars in self-issued bonds and 13.9 billion dollars in bilateral debt. "Such a rescheduling would undermine the country's ability to attract foreign investment, which is desperately needed to support a ballooning trade deficit," the report said. Citibank also said it expected the rupee's fall to continue in the light of government inaction and this week's break up of the government coalition, warning that if the currency continued slipping, Pakistan would be forced to reschedule its debt payment of around 500 million dollars due in February.

The rupee has fallen more than 18 per cent in the past four months, taking an especially hard hit since the split of the country's two major political parties. Pakistan's benchmark stock index has also lost around 45 per cent of its value in six months.

Pakistan's forex reserves fall to $8.89 billion
Pakistan’s forex reserves down to $4 bn in real terms
Thursday, September 04, 2008
The News International, Pakistan
By Khalid Mustafa link

ISLAMABAD: In a shocking situation, Pakistan is now left with foreign exchange reserves of only $4 billion, in real terms, enough to cater for the import of one month, a senior government official at the Ministry of Finance told The News.

The total forex reserves stand at $8.89 billion, out of which commercial banks have $3.38 billion, meaning that the State Bank of Pakistan possesses $5.5 billion. Out of this $5.5 billion, $1.5 billion have already been consumed because of the forward booking liabilities.

Keeping in view the fast depleting foreign reserves, the dollar-rupee parity stands at $1-Rs 77, which is alarming. Financial experts are of the view that dollar's value can cross any time Rs 80 because of the worsening reserves situation and the prevailing political uncertainty.

Some financial experts are of the view that political chaos would continue even after September 6, the day a new president would be elected, as the judges’ issue would continue to linger on and Nawaz Sharif, along with the All Parties Democratic Movement, would jointly increase the political momentum on the issue that would aggravate the situation.

This has actually left the Pakistan's economy in a lurch. Presently, there seems no light at the end of the tunnel, as the fate of oil facility amounting to $6 billion from Saudi Arabia is still in doldrums till the election of the new president.

As far as the government's request to the World Bank seeking $1 billion loan, there is no progress. The bank has, in fact, refused to extend any programme loan. According to official sources, the bank has agreed to extend project loans only.

The World Bank's top guns have conveyed to the authorities in Pakistan that the bank has linked its future programme loans to the issuance of the Letter of Credit by the International Monetary Fund (IMF).

The two installments each of $136 million from the UAE-based Etisalat Company against the privatisation of the PTCL are now overdue and the government is awaiting the delivery of $272 million. However, there is no progress on this issue.

The government, despite its tall claims, has so far failed to float the Workers Remittances Securitisation Bond worth $750 million to provide cushion to the worsening foreign reserves situation.

On the privatisation front, there seems no tangible progress on sell-off programmes. The government claims that some privatisation proceeds amounting to $1.86 billion are in the pipeline.

The government was earlier claiming that it would have inflows of $250 to $300 million as the Pakistan Telecommunication Authority (PTA) was going to issue some licenses of that value to various companies in the first quarter of the current fiscal. So far, no progress has been seen on this issue too.

The Abraaj, an Arab group that has become the new administration of the Karachi Electric Supply Company, still has not injected $400 million investment into the KESC. It means the forex reserves would continue to decline in the days to come.

Jiyeeeee Zardari Bhutto

Then there is the expenditure side.
When faced with budget deficits, all governments in Pakistan - civilian or otherwise - take the scalpel to the development budget first. The PPP stridently criticised the PML-Q government for its 'anti-people' cut in the Public Sector Development Programme (PSDP) last year; now, two months into the new financial year, a Rs. 100 Bn cut in the PSDP has been made - with no guarantee that this figure will not increase later this year. Desperate times no doubt but must development always come second?

It was already well known that the federal government’s fiscal performance in the last financial year, which ended on June 30, 2008, was dismal. Just how bad the situation was has been revealed in the provisional budgetary figures released by the ministry of finance. The numbers are sobering: a Rs. 777.2 bn budget deficit on the back of record revenues (and expenditures). The deficit target for last year was set at 4.2 percent of GDP; it ended up as 7.2%. Revelations in Islamabad since the change of government have made clear some of the reasons for the extraordinary deficit: the previous government doled out vast sums of money to the oil and power sectors to keep the prices paid by consumers low, resulting in a total subsidy bill for the federal government in the Rs. 400 bn region. For the populists proposing that petrol and electricity prices still be kept artificially low, the question is: how will the government foot the subsidy bill? Budget deficits - which occur when government expenditures exceed revenue - of the size that Pakistan built up last year are devastating for a developing economy.

For one, budget deficits are financed in the short-term by borrowing, either locally or internationally. Last year, the federal government borrowed Rs. 625.9 bn domestically, of which Rs. 519.9 bn was bank borrowing. This is a staggering amount of money for the government to be diverting to itself and away from private investment. Worse yet, such was the scale of the government's needs that it had to turn to the State Bank of Pakistan for the bulk of its domestic borrowing, essentially pouring more money into the economy, which has helped fuel inflation. This at the same time that the State Bank has been trying to fight inflation by ratcheting up the discount rate - with another hike expected at the end of the current month. There is an urgent need then to rationalise the subsidies the government provides - and an equally urgent need to save those who are at the bottom of the economic ladder from falling off it. So far the present government has appeared better at paring down oil and power sector subsidies than in providing targeted subsidies to the poor.

Crude Oil has eased off significantly .....

by nearly 35% .... you'd expect that these clowns would be able atleast get a grip of the situation now ...

Oooo wait, i am expecting too much from a bunch of incompetent douche bags!

Pakistan ranks high on the vulnerability index: WB changes lending category to ‘project loans’

Due to the high ranking in the vulnerability index, World Bank has changed its lending arrangements for Pakistan from ‘programme loans’ to ‘project loans’ resulting in releases of funds in periodical installments instead of release in one go, official sources told Daily Times on Wednesday.

Programme loans are comprised of loans for reform programme that require funding in one go for entering in to implementation phase, however, project lending requires hectic work from documentation to implementation and lending for these types of loans comes in installments keeping in view the progress on the project.

Some quarters in the government lamented that International Financial Institutions (IFIs) feel comfortable while working with non-elected governments and dictatorship. While on the other hand, IFIs always apply tough conditionalties while dealing with democratic governments.

Delay in issuance of Letter of Comfort (LoC) by the International Monetary Fund (IMF) authorities is delaying disbursement of loans from the World Bank and Asian Development Bank to Pakistan.

At present Pakistan desperately needs release of funds so that it could beef up its depleting foreign exchange reserves, stop further depreciation of Rupee as well as to meet enhanced imports requirements in the months to come.

The International Monetary Fund (IMF) will decide whether Pakistan’s economic conditions are vulnerable or not and will issue certificate to the lending institutions. At present Pakistan is awaiting for start of lending by the World Bank and Asian Development Bank, an official informed.

Vulnerability index is comprised of many factors like different economic indicators i.e. fiscal situation, economic growth, current account deficit, and inflation. The countries, whose economic indicators in negative zone face difficulties in obtaining new loans.

The country is facing tough situation on all economic fronts as economic growth remained at 5.8 percent against the target of 7.2 percent in 2007-08, foreign exchange reserves are declining at a rapid speed, inflation is ranging in double digit and current account deficit is also likely to increase against the projected figure.

During the last government’s tenure, Pakistan’s economic indicators and fundamentals were very strong and IMF had no problem in issuance of LoC to lending institutions for starting a new loan programme.

Although they have agreed to issue LoC to Pakistan, however, at present Pakistan’s economic fundamentals are not up to the mark and Fund authorities are delaying issuance of LoC till the board meeting.

Although the present government has taken bold decisions and initiatives in its honeymoon period, it failed to please the high ups in the IFIs. PPP led coalition government has taken decisions like increase in gas tariff, POL price, and electricity prices.

Forex reserves slip to $8.89bn

Pakistan's foreign reserves fell to $8.89 billion as of Sept. 3, down from $9.13 billion on Aug. 30, the Finance Ministry said, as the rupee remained under pressure having lost almost 20 percent against the dollar this year.

The State Bank of Pakistan reserves fell to $5.5 billion from $5.76 billion, while those held by commercial banks rose slightly to $3.38 billion from $3.37 billion, the ministry's finance division said in a note to media received by Reuters on Friday.

Foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of the country's political uncertainty.

Don't worry, every country/region's foreign exchange reserves seem to be falling.

Japan's foreign exchange reserves fell below the $1 trillion mark for the first time in three months

http://www.tmcnet.com/usubmit/2008/09/04/3634170.htm


Taiwan's foreign exchange reserves drop 3 per cent in August

http://www.monstersandcritics.com/news/bus...cent_in_August_


South Korea's Foreign Reserves Take Another Plunge

http://english.chosun.com/w21data/html/new...0809030010.html


India's external debt up by over $50 bn

http://www.business-standard.com/india/sto...mp;autono=46074

The situation is grim we all know that. It is predicted that even the Saudis will not come for our help this time. This post is directed to Zanskar and other Bhindians pests on the forum. Why don't you go on your rat$hit forum and post GO AND MIX WITH YOUR OWN KIND. We know what is going on in our country and no need waste your valuable time. Go and concentrate on Biharis and people in Assam where they need people like you.

There are 2 simple solutions to this, which any country can implement to save its assets.

1. Give America the finger and convert all the $ into Euros.

Thats solution number one. The second solution is the Islamic solution...

2. Give America a even bigger finger, and covert all the dollars into Gold Bullion.

Dollar is getting stronger, so keeping the dollar seems to be a good short term solution.

Long term solution, convert to Euros, Gold bullion.

Put our own house in order (seems to be a tall ask for the douchebags in the parliament).

World Bank refuses to provide 'emergency package'

The World Bank has categorically refused to entertain a request of the government of Pakistan (GoP) for granting it a $500 million emergency package to bail it out of the worsening financial crisis, and has advised the policy-makers in Islamabad to approach International Monetary Fund (IMF) for any such support.

The World Bank has disconnected negotiations with the economic team of the government for the 500 million-dollar 'emergency package' with the comment that it was not its job to provide any 'emergency package' or 'support' to any country, and if Pakistan needed a special emergency financial support to get some breathing space on the economic front it could approach IMF whenever it wished.

The officials in Islamabad, who were the part of the negotiation team that held a series of talks with World Bank officials in and out of Pakistan for securing 500 million-dollar 'emergency package' during last three months have been found totally upset over the new development. The World Bank's 'no' to Pakistan for special financial support package has been a cause of serious concern to them.

The government economic team is confused as no other option is available with it to explore any other window for having any emergency financial support to offset the pressure on the ailing economy.

Pakistan had made a formal request to the World Bank some three months back for getting from it a $500 million emergency package when 'Finance Minister' Ishaq Dar led a delegation to visit Washington for talks with World Bank and IMF. This was followed by a number of meetings between government officials and World Bank authorities.

Interestingly, the World Bank had set a number of harsh conditionalities for Islamabad to qualify for $500 million special emergency package, and the government had taken a number of measures to meet most of them. These included deletion of subsidies the government was picking up on petroleum products and rising electricity rates out of any proportion for all consumers categories.

The PPP-led government felt level of urgency and wasted no time to pass on major portion of the oil subsidy to the consumers and at the same time revised power tariff more than one time during the last few months. These harsh decisions have brought severe criticism from all quarters of the society but they could not help the government to secure much- needed emergency package from the World Bank.

What finger are you talking about? You need to raise your hand to give the finger. Pakistan has knelt before Americans with its hands crossed. Converting Dollars into Euros??!! Where are the $$$ All I heard that we only have about $4 Billion left

The world has made its mind to dissmentle Pakistan, why they would give loans to this country? Pakistan need to sort out its house and then she will be able to give away loans not get loans.

The World (Asswipe) Bank refuses to provide loans to Pakistan, because they know that the one in power is a theif like themselves. So why would a theif give a loan to another theif, when they know that they ain't getting the money back and that by the time this theif (inbred $wine zardari) through with Pakistan, there wouldn't be a country left standing.

Prof Zardari and Prof Nawaz can easily bring about the end of W.B and IMF...Insh'Allah they will put their skills where necessary.

good, positive thinking
everybody should use their skills positively to help Pakistan

Mr 10%'s skills

Opening Swiss bank accounts
Taking bribes
Covering up the murder of his brother in laws


Ganja's skill

Hijacking planes full of school childrens
Sending goons to storm the supreme court


A wonderful combination

Indeed...let's hope IMF and W.B hire them.

Pakistan Considers Asset Sales to Bolster Economy: New York Times

Pakistan plans to sell valuable energy assets, beginning with a major gas field, as it tries to reap billions of dollars from deals with investors in industries like banking and farming.

The move comes as Asif Ali Zardari, the widower of former Prime Minister Benazir Bhutto, is stepping in as president.

Because of a hefty oil bill and a slowing economy, Pakistan is struggling under its biggest budget deficit in a decade, $21 billion; inflation that hit a 30-year high, 24.3 percent, in July; and fast-rising unemployment that is projected to reach 6.6 percent in 2009. Government leaders are eager to raise money, quickly.

“The government is going through all their funding options,” a banker advising the Pakistani government said. Financial advisers to the government spoke on the condition of anonymity so as not to alienate their client.

The Qadirpur gas field in Pakistan, a natural gas reserve of 2.9 trillion cubic feet in the Indus River flood plain, may be one of the first big-ticket sales. The field, the second-largest in the country, is valued at about $3 billion.

Bids for the field, about 260 miles northeast of Karachi, may be submitted in the next week or so, bankers say. Likely bidders include foreign companies already involved in Pakistan’s energy industry, like Kuwaiti state corporations and OMV, a private Austrian energy company.

“They’re testing the market with an auction,” said an energy banker who asked to remain anonymous because he was pricing the deal for a client.

The selling of the Qadirpur field could be controversial because it is considered a strategic asset. Pakistan imports more than three-quarters of its petroleum and is struggling to become less dependent on imports. But a person close to the deal said there were no guarantees that the field would be sold. He characterized the bid solicitation as an informal process. He asked not to be named because he was not authorized to speak publicly about the deal.

Some investors are questioning the wisdom of Pakistan’s selling valuable assets and are wondering whether sales will be conducted transparently and fairly.

But there is no question that the country needs to raise money, analysts said.

Pakistan’s economic situation is “a result of rising commodity and food prices, exacerbated by a lot of pre-election spending by the previous government,” said Gareth Price, head of the Asia Program at Chatham House, a research center in London, referring to the general elections held in February.

In an effort to win votes, the previous government, led by Gen. Pervez Musharraf, kept subsidies high on food, electricity and oil, helping drive up the budget deficit.

The sale of the Qadirpur field is part of a full-scale review of the biggest energy company in Pakistan, Oil and Gas Development, which owns 75 percent of Qadirpur. The review is being led by Merrill Lynch.

Pakistan’s privatization commission said in late August that it also planned to offer stakes in Kot Addu Power on international stock exchanges this year and to privatize Hazara Phosphate Fertilizers. It invited bidders for 51 percent of Jamshoro Power, a long-discussed privatization deal. Salt and coal mines are also scheduled to be privatized.

The list of state assets for sale may not necessarily be followed by deals, analysts warned. “Talk of investing huge sums of money doesn’t always materialize, because people are put off by the political machinations” in Pakistan, Mr. Price said.

Pakistan’s “economic curse” is that the ruling elite — civil servants, politicians and the military — have worked in their own interest, not that of the wider population, limiting how much capital the country can raise, he said.

One possible source of new investment is the Middle East.

“There is a cultural and long-term affinity between the two regions,” said Youssef Nasr, the chief executive of HSBC in the Middle East. Saudi Arabia and Abu Dhabi, in particular, have been strong supporters of Pakistan.

Investors from the Middle East have already bought stakes in telecommunications, banking and industrial companies in Pakistan and have been pleased with the results, he said.

One area of cooperation between Pakistan and the Middle East may be agriculture. The arid climate of the Middle East, coupled with rising food prices, has ignited fears about food security. Pakistan, meanwhile, has swaths of arable land that is lying fallow. Government officials on both sides are exploring links that could lead to joint farming ventures, Mr. Nasr said.

“It’s not going to be a huge industry, by international standards,” he predicted, but it could be large enough to make a difference to Pakistan’s economy.

The Pakistani government plans to raise money in ways besides asset sales and joint ventures. Pakistan’s central bank said on Thursday that it would sell bonds compliant with Islamic law in the domestic market and that the World Bank would “fast track” $1 billion in planned investments in the country.

Attempts to privatize and sell some state-owned assets have proved contentious. The government’s plans to sell Pakistan Steel to a group of investors in 2006 were overturned, in part because the agreed-upon price was deemed to be about a third of the $1 billion value. Other sales of equity stakes have gone through with less controversy. In June 2007, United Bank Limited of Pakistan raised $650 million on the London Stock Exchange.

One bright spot for the county’s economy has been remittances, or money transferred home by Pakistanis working outside the country, which are on the rise, Mr. Price said. The government is lobbying to get more permits for workers to travel to the Persian Gulf, from which most remittances are sent.

Pakistan won't be going to IMF: Zardari

Pakistan will not seek an assistance package from the International Monetary Fund, but will 'tighten its belt,' the country's new president Asif Ali Zardari said after being sworn in on Tuesday. Zardari, in a joint news conference in Islamabad with Afghan President Hamid Karzai, apologised in advance for the hardships people would face as a result of the austere measures that needed to be taken.

Some bankers have said they would welcome Pakistan entering an IMF programme, as it would help restore investor confidence in a country suffering deteriorating economic fundamentals and prolonged political uncertainty. The international bond market has already priced in a possible default. Goodwill towards Pakistan's five-month-old civilian government, however, should translate into loans of billions of dollars needed to avoid a default early next year, analysts say.

The international community is keen to see democracy succeed in a Muslim nation that is on the frontline in the war on terrorism and whose support is crucial to the success of the Nato mission to stabilise Afghanistan. Analysts hope the government led by Prime Minister Yousaf Raza Gilani, a Zardari nominee, will act fast to avert an economic crisis now that the presidency issue has been settled. "Gilani and his cabinet will face up to the challenge," Zardari said.

Saudis to reduce financial support

The Saudi authorities have given a green signal for its special oil facility (SOF) for Pakistan but they might curtail this facility to $1.2 billion, much lower than $5.9 billion Pakistan expected.

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Country may not get $8 billion-10 billion from foreign sources

Pakistan's immediate financial requirement of approximately $8 billion to $10 billion is unlikely to be met from foreign countries, international lenders and donor agencies which are being proactively pursued by the government. Sources told Business Recorder that the government is in a fix as it does not want to go to the IMF programme.

While other options for the country are not viable to meet this huge demand for injections. It is clear to all that the International Monetary Fund (IMF) programme is offered on very tough conditions, which are difficult to fulfil both from economic and political perspectives.

Sources said that the target of $10 billion is very challenging. The inflow of loans is not that high even in the aftermath of 9/11, 2001 when, as a reward for President Musharraf's unconditional support for the US-led war on terror, bilateral and multilateral agencies had injected huge amounts into Pakistan economy.

At the present moment in time, in spite of the democracy dividend, analysts are cautioning the government about the considerable difficulties in generating such a large amount from China, the US, Saudi Arabia, and some of the Gulf countries--an amount for which there is no precedent.

In 2001-02, Pakistan received $3.795 billion. This was the highest figure for one year, recorded in the current decade. In 2002-03, the loans declined to $1.37 billion, and in 2003-04, the total volume of loans reached $2.07 billion. In 2006-07, the inflow again surged to $3.51 billion. And, in 2007-08 (July-March), total loans procured from bilateral and multilateral sources were $1.8 billion.

Sources said that if one looked closely at facts, foreign loans are unlikely to cross $4 billion a year mark even if Pakistan is supported by the US, the European Union, Saudi Arabia, and GCC countries along with the World Bank, IMF and other institutions. In addition, they point out that Pakistan just does not have the absorption capacity for even the amount of loans it has already procured--a fact reflected by commitments exceeding disbursements every single year.

A former finance minister, Sartaj Aziz, told Business Recorder that for political and economic reasons, Pakistan must not go to the IMF. He said that it was a positive sign that the government was not going to go the Fund for assistance.

He said there were some positive indications from the US and Saudi Arabia, who were waiting for political stability after Musharraf's resignation. He said that Pakistan needed to focus on agriculture for overall development of the economy and employment generation. Another economists, Senator Khurshid, hailed Zardari's statement of not going to IMF. The Fund's conditionalities are always tough and anti-growth.

Pakistan will have to keep its economy mortgaged to IMF, and even budgetary decisions would be made on its advice, he said. Pakistan has about $9 billion reserves, enough to pay for two months' imports, and efforts are underway to muster financial help from China, Saudi Arabia and some Gulf countries.

Forex reserves fall $30m to $9.1bn

Foreign reserves fell to $9.10 billion in the week that ended on Sept 6, from $9.13 billion in the previous week, the central bank said on Thursday.

The State Bank of Pakistan said its own reserves fell to $5.72 billion from $5.76 billion previously, while those held by commercial banks rose to $3.38 billion from $3.37 billion.

Associated Press of Pakistan reported last week that the United States reimbursed $365 million for Pakistan in payment for its operations and logistical support for the war against terrorism.

Analysts said this may have prevented a steeper fall in foreign reserves. Currency reserves have been falling at a rate of around $800 million a month since peaking last October.

Foreign reserves hit a record high of $16.5 billion in October last year but have been depleted due to a soaring oil import bill, and a retreat by foreign investors in the face of mounting political uncertainty.

This is what I predicted on 21st Aug. Pretty close, eh??

16-Nov $16.49
15-Jan $15.50
20-Mar $13.80
31-Mar $13.30
3-May $12.26
10-May $12.20
22-May $11.89
2-Jun $11.18
7-Jun $10.95
12-Jul $10.83
17-Jul $10.72
7-Aug $10.16
15-Aug $9.92
21-Aug $9.57
15-Sep $9.07
15-Oct $8.57
15-Nov $8.07
15-Dec $7.57

I do not think pak economy has done much worse than Indian or Chinese economy. When time got tough after subprime crisis all three economy has seen their inflation trippled, stock market loose almost half of their values, economic growth has slowed and sevear stress on forex reserves. Pak economy was at much weaker platform at the begning so figures look emplified but they are largely comparable to its peer.

Indian Forex kitty shrinks by a record $6.5 bn

ADB forecasts 4.5pc growth, 20pc inflation

Inflation will be the highest and the economic growth will be the lowest in Pakistan among all South Asian countries because of increasing insecurity at Western borders, says Asian Development Bank Outlook 2009, which forecasts missing of all economic indicators.

The ADB, a Manila based Development Bank, in its Outlook 2009 has said Pakistan’s economy will grow at the rate of “only 4.5 per cent” during the ongoing financial year. The Gilani-led government has targeted 5.5 per cent economic growth.
“With continued high oil prices, an ongoing power deficit, and tightened demand management polices to correct macroeconomic imbalances, economic growth in FY 2009 is put at only 4.5 per cent.”

Contrary to the government estimate of 11 per cent average price hike at the end of the year, the ADB has predicted 20 per cent inflation, which is the highest among eight South Asian countries.

“With the government setting out to progressively rationalise the oil subsidy by passing on higher prices to consumers and by reducing the subsidy between the full-cost producer price and tariffs charged for electricity, average inflation is projected to reach 20 per cent.”

The ADB projects political tensions will lessen leading to a more stable political environment, though uncertainty and security concerns will continue to affect economic decision making and investors’ confidence. “Potential risks (to economy) include further increase in political uncertainty and a deterioration in the security situation on the country’s western borders.”

Terming financing of the large fiscal and the current account deficits “major challenges for Pakistan” the ADB says the current account deficit will remain at 8 per cent of GDP, which is marginally less than the last year’s 8.4 per cent. The budget deficit will likely exceed the government target of 4.7 per cent of the total size of economy.

Chief Economist Planning Commission Dr Rashid Amjad commented on the ADB report, “We are in the first quarter of financial year and global situation is unfolding.” He said Pakistan’s economic growth would depend on how agriculture and manufacturing sectors perform. The annual average inflation may exceed the government target but would likely ease in the second half of the year, which would keep it below the ADB projection, he added.

The Outlook 2009 says State Bank of Pakistan’s policy to increase interest rates to control inflation is not working effectively. “To the extent that inflation in Pakistan is driven by high commodity prices, monetary tightening will have a limited impact on inflation and will most likely aggravate the economy’s other structural problems.”

The report also forecasts a large trade deficit even if the government achieves 10 per cent exports growth and earns US $ 22.1 billion with slower growth in industry and weak global demand conditions. In agriculture sector, cotton production is likely to fall short of target due to a reduction in the sown area and to a meal-bug virus attack. On demand side, private consumption in fiscal year 2009 will be hit by higher prices as food, oil and power subsidies are rationalised.

Pakistan's forex reserves drop to $8.91 bln
Thu Sep 18, 2008 link

KARACHI, Sept 18 (Reuters) - Pakistan's foreign reserves fell $190 million to $8.91 billion in the week that ended on Sept. 13, from $9.10 in the previous week, the central bank said on Thursday.

Pakistan's central bank, the State Bank of Pakistan, said its own reserves fell to $5.52 billion from $5.72 billion previously, while those held by commercial banks rose marginally to $3.39 from $3.38 billion.

Pakistan's foreign reserves hit a record high of $16.5 billion in October last year but have dwindled due to a soaring import bill, and foreign investors's withdrawal due to political uncertainty gripping the country.

Some inflows are expected in coming weeks, including $1 billion from the World Bank, $500 million from the Asian Development Bank (ADB).

An expected Saudi oil facility would also help Pakistan save foreign exchange. But all of these have still to materialise.

The rupee hit a record low of 77.77 rupees to the dollar in early trade on Thursday and dealers said they expect pressure to remain.

The current account deficit widened sharply to $2.572 billion in July and August, the first two months of the 2008/09 fiscal year, which is equivalent to about 1.6 percent of gross domestic product (GDP), compared with a full-year target of 6.0 percent of GDP.

The consumer price index in August rose 25.33 percent from a year earlier, compared with a full-year target of 12 percent for this fiscal year. (Reporting by Sahar Ahmed; Editing by Simon Cameron-Moore

Foreign exchange reserves rise by $186.1 mn
Updated at: 2040 PST, Thursday, October 09, 2008

KARACHI: Foreign exchange reserves of the country have shown some recovery after a very long peiod as they increase by 186.1 million dollars to 8.32 billion.

Data released by State Bank shows that between 25 September and October 4 it's reserves rose by 180.3 million dollars to touch 4.9 billion.

While those held by commercial banks inched up by 5.8 million dollars to stand at 3.46 billion.

Asian Development Bank on Sept. 30 approved a 500 million dollar loan to help Pakistan deal with mounting economic woes.

The first installement of the loan has come in and this has augmented the reserves..

The country's foreign exchange reserves hit an all-time high of $16.5billion in October last year, but have been falling since due to weak economic fundamentals, political uncertainty andsecurity concerns.

http://www.thenews.com.pk/updates.asp?id=57370