The State Bank of Pakistan governor told the Economic Coordination Committee of the cabinet which held its meeting here at the Prime Minister’ office under the chair of Finance Minister Senator Mohammad Ishaq Dar that the SBP had received the first installment of US $ 550 million from the International Monitoring Fund thus increasing the Foreign Exchange Reserve to US $ 10.4 billion.
The SBP governor disclosed this when the ECC was discussing the foreign exchange reserves position of the country.
The meeting which continued for over seven hours was attended by Minister for Industries and Production Ghulam Murtaza Jatoi, Minister for Information and Broadcasting Senator Pervez Rashid, Minister for Planning and Development Ahsan Iqbal, Minister of State for Information Technology Anusha Rehman, the FBR chairman, the SBP governor, the Board of Investment chairman and senior officials of the ministries of finance, water and power, planning and development, commerce, communications and industries.
While reviewing the key economic indicators of the economy, the reasons behind the increase of inflation were analysed thread bare. The finance minister said the prime reason behind the increase of inflation was that artificial inflation rates were maintained by the previous government by holding back increase in tariff rates, which should have been passed over by the previous government including the caretaker set-up. The meeting noted that the rising trend had now been stemmed in during the last week.
While expressing satisfaction over the stock position of sugar in the country which is at present 2.229 million tons, the ECC directed the TCP to purchase 100,000 MT to maintain strategic reserves. Similarly, the ECC was told that presently the wheat stock was 7.043 tons compared to 6.750 tons in the corresponding period last year.
The ECC expressed satisfaction that there were 85 days of oil reserves in the country, compared to 29 days in the corresponding period last year. This improvement the ECC noted had come about as a result of clearance of circular debt by the government.
The ECC was informed that export in the month of July, 2013, increased by 9 percent to US$ 2.62 billion.
The ECC also discussed the need for a comprehensive strategy to bring in quantum growth in the exports of the country as the exports during the last few years have been hovering around $ 25 billion annually. The finance minister said that value addition, focus on non-conventional items and identifying of new markets was necessary for increase in export.
The ECC decided to constitute a committee with Deputy Chairman, Planning Commission, Federal Minister (Ahsan Iqbal) as its chair.
The terms of the reference of the committee are to suggest concrete recommendations for quantum increase in exports of the country. The chairman, BOI secretaries commerce, planning, finance, and chairman FBR would be its members. The committee would submit its recommendations to the ECC within a month.
The ECC expressed satisfaction over the increase in collection of revenues by the FBR which had increased over 20 percent in July-August 2013 as compared to the corresponding period last year. The ECC expressed the hope that the FBR would redouble its efforts to achieve the target of Rs 2475 billion.
The ECC was informed that large scale manufacturing had shown an increase of 4.2 percent. The ECC, however, expressed dissatisfaction over the negative growth in sectors like engineering products, automobiles, wood products, electronic and fertilizers and it also directed the ministry of industries to examine the decrease of growth in those sectors and come up with concrete recommendations to improve these sectors.
While discussing a proposal for an interim relief for the Pakistan Steel Mills, the ECC decided that the chairman board of investment and ministry of industries should come up with a proposal for long-term solution of the problem in the next meeting.
The ECC also decided that the Pakistan Steel Mills would remain a public sector enterprise as they seek a strategic partner with a minority stake who can run the management of the Steel Mills.
The ECC decided to approve a three months bailout package of Rs 2.9 billion out of which Rs 1.5 billion would be released in September, Rs 700 million in October 2013 and Rs 700 million in November. This will include workers salary of two months.
The ECC reviewed the present stock position of sugar in the country and it was informed that in view of surplus position in the country, an expected bumper crop sugar mills may be allowed:
To export a total of 500,000 MT tons of sugar, 250,000 tons by October 2013 and the remaining in November 2013; sugar stocks position in the country will be reviewed on monthly basis; quota should be allocated on first come first served basis by the SBP; export should be made against irrevocable letter of credit or a contract with 25 percent advance; shipment should be made within 45 days of the registration of contract with the SBP; non-refundable advance payment to be forfeited in case of non shipment within 45 days.
THE SBP SHOULD ARRANGE VIA ITS WEBSITE
For on line submission of applications for quota by the sugar mills; full disclosure of the record of quota allocation and its utilisation for the purpose of transparency which can be viewed by public.
The ECC took this decision subject to the condition that the sugar industry will clear the outstanding dues towards growers at the earliest and will start crushing of sugarcane in Sindh by November 1, 2013, and Punjab by November 15, 2013.
The ECC also decided that inland subsidy be reduced from Rs 1.75 to Rs 1.00 per kg. The decision is likely to earn a foreign exchange of $ 540 million. The ECC would continue to monitor the sugar situation in the country and shall protect the interest of consumers and stability of sugar prices in the country.
The ECC also directed the ministry of water and power to present a summary to streamline the process of purchase of electricity from sugar industry.
The ECC on the recommendation of the engineering board and a committee comprising board of investment, industry and commerce approved M/s Yamaha Motorcycle Industries to have qualified under the new entrant policy for motorcycle industry as an industry with new technology.
The decision will clear the way for a Foreign Direct Investment of US $ 150 million. The ECC noted that this was the first foreign investment in the country which reflected the confidence of the foreign investors in the investment and economic policies of the PML-N government.
It would be pertinent to mention here that Yamaha Motorcycle had been running from pillar to post for the past four years trying to seek government clearances on various counts. The Pakistan Poverty Alleviation Fund also made a comprehensive presentation to the ECC about its performance and plans to enhance its work and effectiveness.