ISLAMABAD – Chairing first meeting of the Economic Coordination Committee (ECC) of the Federal Cabinet after Shaukat Tarin’s resignation, Prime Minister Yousuf Raza Gilani on Tuesday gave political colour to the state of economy as against the ground realities.
An official statement quoted the Prime Minister as saying during the meeting that within a period of two years, important economic targets had been achieved and the economy was back on the path of stability and progress. On the other hand, the GovernmentÂ’s own estimates have shown that it had missed the targets both deficit and revenues, let not talk about the inflation. Meanwhile IFIs with the International Monetary Fund on top of them have also termed the economy as still fragile despite emergence of recovery trend.
However, the Prime Minister stated that foreign exchange reserves were at a respectable level, workers remittances had shown impressive growth and revenue collection had improved.
According to the Prime Minister, the investorÂ’s confidence is also improving and manufacturing has started picking up. This turn around is a result of prudent economic decision making by the Government. The ECC decisions reflect the true aspirations of democratically elected Government for the welfare of people and alleviation of poverty.
The Prime Minister said that he introduced the system of obtaining endorsement of the Cabinet to all decisions of the ECC with a view to providing broad-based ownership to these decisions and then decided to bring these decisions to the Cabinet for information and discussion.
He bagged the credit for the GovernmentÂ’s subsidy of Rs 3 billion through Utility Store Corporation on the occasion of Eids, the price control on sugar, intervention price mechanism on wheat and rice that according to him have resulted in impressive growth in the agriculture sector reducing poverty from the rural areas.
In pursuance of earlier decision of the Cabinet, the Prime Minister directed setting up of Price Control Committees at the district, tehsil and town level throughout the country. The Committees should ensure availability of essential food items particularly sugar at the affordable prices to the common man, he added.
He desired timely implementation of the Cabinet decision regarding import of sugar so as to ensure smooth supply of white sugar in April. The ECC was informed that sufficient stocks of sugar were available and the Government would be able to purchase sugar at the most competitive rates which would reflect a saving of US $180 million.
Approving the import of 0.4 million tons of urea through TCP and its distribution by NFC / NFML for Kharif 2010, the ECC decided to import urea up to 0.1 million tons out of 0.4 million tons for remaining Rabi and Kharif season 2009-10 by TCP through Karachi Port immediately.
The ECC also endorsed its earlier decision of restoration of Pakistan Oilseeds Development Board (PODB).
While considering incentive package for investment in petrochemical complex Naphtha Cracker (NC), Polythylene (PE) Polylene (PP), the ECC allowed extension in the financial closure for a period of 12 months with effect from date of issuance of the approval.
Regarding deepening and widening of Port Qasim Navigation Channel, the ECC decided to accord approval for Sovereign Guarantee, enabling loan financing for the project.
In the light of recommendations of the Tariff Anomalies Committee, the ECC approved imposing 5 percent regulatory duty on the import of pigment thickener (PCT 3906.9030) and acrylic thickener (PCT 3906.9040).
In order to discourage export of waste and scrap of aluminium and copper, and promote export of value-added products manufactured from locally available raw materials, the ECC approved imposing 25 percent Regulatory Duty on the export of waste and scrap of aluminium and copper along with bars, rods, ingots, slabs and billets, etc made of these materials.
During the meeting, Ministry of Industries and Production made a presentation on the National Fertilizer Strategy. The ECC set up a Ministerial Committee to make final recommendations.
While discussing post Balancing, Modernisation and Replacement (BMR) concession for feed gas for M/s Pak American Fertilizer Limited and allocation of 16 mmcfd gas from SNGPL system for expansion in fertilizer expansion by Pak Arab Fertilizers Limited, the ECC accorded approval to the following recommendations of its sub-committee on this issue; The deadline for signing of GSA as given in Fertilizer Policy 2001, under clause 2.1.4 may be extended to 30th June 2012. Ministry of Petroleum and Natural Resources and the Ministry of Industries & Production need to review the cross subsidy / fertilizer feed gas price provisions under Fertilizer Policy 2001.
On Ministry of Food and Agriculture proposals regarding mechanism for procurement of rice directly from the small farmers, the ECC decided that the State Bank may ensure in time availability of Commodity Finance by the consortium of banks to enable PASSCO to start physical operation from 1st October in Sindh and 1st November in Punjab; limit on maximum quantity to be accepted from a single farmer up to 500 Mds should be strictly enforced; verification of land record by the provincial agriculture department / revenue authorities to ascertain the authenticity of the growers by a committee constituted by the provincial government be ensured; provincial government / local administration shall monitor the rice mills operation and facilitate PASSCO in its operation of procurement of paddy; capacity building of PASSCO & provincial agriculture / food departments, to enable these organisations for timely and responsive intervention in procurement of Paddy/other crops.
The ECC reviewed the indicators of the national economy with core inflation excluding food and energy decreased from 10.7 percent in December 2009 to 10.3 percent in January 2010. House Rent index has also declined from 18.4 percent in May 2009 to 13.4 percent in January 2010. CPI-based inflation stood at 10.8 percent in July – January 2009-10 as compared to 23.9 percent in the same period last year. Food inflation stood at 10.9% as against 29.8% last year. At the same time, non-food inflation stood at 10.7% as against 19.3% in the corresponding period of last year.
The Sensitive Price Index (SPI) for the week ending March 04, 2010 increased by 0.40 percent over previous week (Feb 25, 2010) and averaged 16.99 percent over the corresponding week of last year. Inflation (Y-o-Y) on the basis of SPI has been showing decreasing trend since the first week of February 2010.
The stock of wheat as on March 01, 2010 amounted to 5.1 million tons as against 1.2 million tons in the same period last year, thereby showing a higher stock of about 3.9 million tons as compared with the last year. As far as allocation and lifting position of wheat made from PASSCO for the year 2009-10 are concerned, the provinces / agencies have so far lifted 62.0 percent (1,085,864 m/tones) of their total allocated quantity (1,762,801 m/tones).
The Quantum Index of Large-Scale manufacturing (QIM) has registered a positive growth of 1.4 percent during July-December 2009-10, against negative growth rate of 5.4 percent during comparable period last year, while it grew by 6.8 percent during December 2009 over the same month last year. Imports recorded growth of 31.3% in January 2010 over the same month of the last year. Trade deficit improved by 22.0% to $8.4 billion in July-January 2009-10 from $10.8 billion in the same period last year. Workers remittances amounted to $5,198.1 million in July-January 2009-10 as against $4,277.3 million, showing an increase of 21.5% over the same period last year. Foreign exchange reserves stood at $14.8 billion as on March 03, 2010 – up from $6.4 billion on November 25, 2008.