Saturday June 27, 2009


RECORDER REPORT KARACHI (June 27 2009): The State Bank of Pakistan on Friday announced that Letters of Credit (LCs) for the import of plant and machinery established before the announcement of the LTFF Scheme and retired after June 30, 2007 would also be eligible for financing under Long Term Financing Facility (LTFF). In order to further facilitate the export-oriented industries, SBP has made amendments in LTFF Scheme with immediate effect.

As per amendments LCs (sight and usance) established before the announcement of the LTFF Scheme and retired after June 30, 2007 shall also be eligible for financing under the Scheme. However, LCs, which have been retired through own sources of the sponsors of the export-oriented industries, shall not be eligible under the Scheme.

Financing for plant, machinery & equipment to be used by the export-oriented projects for regeneration of textile waste into usable fibre for producing value-added exportable products shall also be eligible under the subject Scheme.

In addition, refinancing shall be allowed to the extent of 50 percent of financing provided by banks/DFIs to the eligible borrowers availing facilities under para i & ii, while the remaining 50 percent will be financed by the banks/DFIs from their own sources as per the terms & conditions of financing banks/DFIs agreed with the borrowers.


(BRecorder)

Saturday June 27, 2009

ISLAMABAD: The government, without wasting any time to generate revenue, has started collecting 'carbon surcharge', levied on petroleum products from oil marketing companies (OMCs), from June 14, replacing petroleum development levy (PDL). The budget was announced in Parliament on June 13 and soon after the announcement of tax, customs authorities started collecting 'carbon surcharge' on petroleum products.

The OMCs have approached Petroleum Ministry saying that customs authorities have started collecting carbon surcharge from June 14 whereas previous experience shows that all budget measures pertaining to relief and taxes were implemented from July 1, start of new fiscal year. Petroleum Ministry has sought explanation from Finance Ministry about effective date of carbon surcharge on petroleum products as this seems an unusual move by the tax machinery.

Sources said that during a meeting held in the Finance Ministry on June 23, Finance Ministry officials had clarified that carbon surcharge would replace PDL on petroleum products from July 1, 2009. However, customs officials are of the view that implementation of carbon surcharge on petroleum products is applicable from June 13, the day of budget announcement.

The government has made amendment in the Petroleum Products (Petroleum Development Levy) Ordinance 1961, in the Finance Bill 2009 to replace PDL with carbon surcharge. According to the amendment, every refinery and every company shall pay to federal government carbon surcharge according to the rates prescribed in the budget on petroleum products produced by a refinery or purchased by a company for sale as specified in Fifth Schedule.

According to sources, customs authorities are collecting carbon surcharge on petroleum products following the fixed rate announced in Finance Bill 2009. According to Finance Bill, the government is to charge Rs 8 per litre carbon surcharge on high speed diesel oil (HSDO), Rs 10 per litre on motor spirit (MS), Rs 6 per litre on kerosene oil, Rs 3 per litre on Light Diesel Oil (LDO) and Rs 14 per litre on HOBC.

The government has targeted collection of carbon surcharge on petroleum products at Rs 122 billion in next financial year budget 2009-10 and Rs 12 billion collection through carbon surcharge on compressed natural gas (CNG). However, the government exempted CNG from carbon surcharge after facing severe criticism from the parliamentarians as well as public.

In Pakistan, earnings through PDL collection on petroleum products was supposed to be invested in projects aimed at development of petroleum sector, but it has never been used on such projects. It is utilised to bridge budget deficit and the government has replaced PDL with carbon surcharge aimed at meeting revenue target set for the next financial year 2009-10.


(BRecorder)

Saturday June 27, 2009

KARACHI: City Nazim Syed Mustafa Kamal Friday presented Rs 52.5312 billion budget of City District Government for the fiscal 2009-10 before the City Council.

The Rs 170.36 million surplus budget show expenditure estimates at Rs 52.3608 billion with Rs 26.6183 billion earmarked for development and Rs 25.5425 billion for non-development expenditure.

The Water Board's budget has been kept at Rs 11.3464 billion with Rs 5.7957 billion set aside for development and Rs 5.60 billion for non-development expenditure.

According to the budget, Rs 19.40 billion will be received from the Federal Government as grant while a target of Rs 8.7380 billion has been fixed for the City Government's Revenue department.

The budget reveals receipts at Rs 2.5212 billion from Municipal Services, Rs 2.4098 billion from Master Plan, dues of defunct KDA/KMC from KESC Rs 1.9830 billion, Transfer of Income from KBCA Rs 1 billion, Works and Services Rs 940.19 million, Finance and Planning Rs 909.47 million, , Enterprise and Investment Promotion Rs 651.53 million, Mass Transit Cell Rs 532.16 million, Transport and Communication Rs 245 million.

Sindh Government will pay rs 11.500 million for salaries of employees of devolved departments Justify Fullwhile KWSB's income has been estimated at Rs 11.40 billion.

Highest allocation of Rs 11.361 billion has been made for Works and Services department followed by Education Rs 10.123 billion, Health Rs 3.983 billion, Municipal Services Rs 2.941 billion, ADP Rs 2.835 billion, Share of Towns/UCs Rs 2.461 billion, Transport and Communication Rs 1.524 billion, Coordination Rs 1.299 billion, Revenue Rs 1.016 billion, Finance and Planning Rs 700 million.

Budget allocation has been made for more than 60 major projects including Rs 2 billion for infrastructure development, Rs 1.5 billion for privatization of Solid Waste Management, Rs 940 million for Taameer Karachi program, Rs 550 million for Citizen Community Board, Rs 500 million for purchase of CNG Buses, Rs 500 million for Karachi Mass Transit system, Rs 500 million for construction of parking plaza, Rs 400 million for development works of Corridor-IV, Rs 450 million for development works of UCs, Rs 370 million for wirless, video and surveillance system Phase-II, Rs 350 million for Elevated Expressway, Rs 250 million for Corridor-III, Rs 250 million for Padestrian bridges, Rs 250 million for construction and repair of roads, footpaths, culverts, chowrangis and round-abouts, Rs 250 million for Karachi Medical and Dental College, Rs 220 million for Corridor-II, Rs 200 million for road and round abouts in UCs, Rs 160 million for Karachi Institute of Heart Diseases, Rs 130 million for construction of Aiwan-e-Riffat, Rs 130 million for constructions in Landhi and Korangi Industrial areas.

The budget shows an allocation of Rs 100 million for purchase of mechanical sweeping machines, Rs 100 million for development works in industrial areas, Rs 100 million for Clifton Fish Acquarium, Rs 100 million for electric system on important roads under City Government, Rs 100 million for development of various parks of city government, Rs 100 million for road marking and traffic signs, Rs 80 million for garbage transport and development works, Rs 80 million for construction of Gattar Baghicha, Rs 80 million for Citizen Complaint and Information System.

City Government has set aside Rs 60 million for cleaning of various drains and Rs 60 million for construction and development of drains, Rs 60 million for Urban Search and Rescue system, Rs 50 million for construction of Inter-Town roads, Rs 50 million for purchase of fire tenders for Korangi Industrial area and as amount for SITE Industrial area, Rs 50 million for purchase of generators for hospitals, Rs 40 million for conversion of women library in Gulshan- e-Iqbal into hospital, Rs 40 million for kite park, Rs 40 million for nursing school and installation of lifts in Abbasi Shaheed Hospital, rs 40 million for construction of sub-way at Rafa-e-Aam Society.


(BRecorder)

Saturday June 27, 2009

LONDON: Europe's main stock markets fell on Friday, dragged down by Wall Street despite upbeat US economic data as investors locked in profits from and a three-month surge seemed to fizzle, dealers said.

"There is simply not enough positive news flow to fuel sentiment," said David Jones, a strategist at IG Index, commenting on London trading.

"After a 30 percent bounce back off the year's lows (in recent months), investors are struggling to see much upside, particularly with the prospect of the usually quiet summer period around the corner."

London's FTSE 100 index closed 0.27 percent lower at 4,241.01 points. In Paris the CAC 40 index fell 1.05 percent to close at 3,129.73 points and Frankfurt's Dax fell 0.50 percent to 4,776.47 points.

"It is clear that the upbeat outlook that powered the FTSE from the 3,500

mark in March to above 4,500 in early May has gone for the moment," Jones said.

In Paris, investors were "correcting the 30-percent rise in three months," said strategist Jean-Louis Mourier of strockbrokers Aurel BGC. "The correction is not finished," he added.

On the foreign exchange market, the European single currency advanced to 1.4054 dollars.

Swiss mining group Xstrata bucked the trend in London, gaining 2.52 percent. It is trying to convince rival Anglo American to merge with it, citing potential annual benefits of more than 1.0 billion dollars.

London-based Anglo American, a British-South African group, on Monday rejected the merger proposal. Its shares fell 1.47 percent on Friday, while its rival Rio Tinto lost 0.96 percent and BHP Billiton 0.70 percent.

British Airways rose 2.13 percent after announcements of pay cuts on Thursday.

Japanese shares had climbed for a third straight day on Friday, tracking the previous day's gains on Wall Street. The benchmark Nikkei-225 index rose 0.83 percent to end at 9,877.39 points.

US stocks fell as investors took profits and digested largely positive government data on personal income and spending.

On Wall Street the Dow Jones Industrial Average shed 0.64 percent to 8,418.44 in early trade after posting on Thursday its first triple-digit gain since June 1.

US consumer spending posted a modest gain in May, government data showed Friday, suggesting recovery in a key driver of the recession-mired economy.

Elswehere in Europe, Milan's Mib fell 0.58 percent to 18,832 points and Brussels' Bel-20 fell 0.12 percent to 2,013.32.

The Swiss Market Index rose 0.27 percent to 5,375.99 points, Amsterdam's AEX 0.12 percent to 254.43 points and Madrid's Ibex-35 0.20 percent to 9,986.90.

"It seems unlikely we are going to experience the sort of stomach churning sell-offs we saw earlier this year," Jones said.

"But it would not be surprising for stock markets to continue gradually

unwinding at least some of the gains of the past three months."


(AFP)

Saturday June 27, 2009

LONDON: The dollar wilted against the euro on Friday in the face of positive US economic data that encouraged investors to seek out currencies considered riskier that the greenback.


The euro in late-day trade was at 1.4054 dollars against 1.3986 late Thursday.

The dollar was meanwhile trading at 95.09 yen, down from 95.95 on Thursday.

Investor appetite for the euro increased after the Commerce Department said US consumer spending posted a 0.3 percent gain in May compared to April.

The May uptick in personal spending -- which accounts for two-thirds of US economic activity -- followed a revised flat reading for April and a 0.3 percent decline in March.

Personal incomes jumped 1.4 percent in May, the strongest gain in a year, mostly on the back of the 787-billion-dollar stimulus package launched by President Barack Obama in February, the Commerce Department said.

The hefty increase in incomes widely topped the 0.3 percent gain expected by analysts.

On Thursday the US central bank, the Federal Reserve, trimmed the size and changed the terms of some of its lending facilities, citing improvement in financial conditions and reduced usage of such programs.

"The Fed's decision... is in line with the improvement in financial markets," said analysts at BNP Paribas bank.

"This will add support to the current risk-seeking environment," the bank said, adding that the euro was set to move up to the 1.4360-dollar level, a peak last reached in early June.

Further support for currencies other than the dollar came from this week's US GDP data, which was better than expected.

The US economy shrank at a 5.5 percent pace in the first quarter, the government said Thursday in a report offering a glimmer of hope for recovery from prolonged recession.

The Commerce Department's final estimate of gross domestic product (GDP) was not as bad as last month's estimate of a 5.7 percent annualized decline in output.

"The data raises hopes that the (US) economy has reached a bottom and that second-quarter data will show further improvement in GDP," said CurrenciesDirect analyst Phil McHugh.

Rising global equity and oil markets also encouraged investors to take more risk, dampening demand for the dollar.

"Gains in stock markets and crude oil prices caused risk appetite to revive among investors, which lifted higher-yielding currencies" such as the euro, Yuzo Sakai, a forex manager at Tokyo Forex and Ueda Harlow, told Dow Jones Newswires.

In London trade on Friday, the euro was changing hands at 1.4054 dollars against 1.3986 dollars late on Thursday, 133.88 yen (134.22), 0.8523 pounds (0.8546) and 1.5237 Swiss francs (1.5301).

The dollar stood at 95.09 yen (95.95) and 1.0824 Swiss francs (1.0937).

The pound was at 1.6481 dollars (1.6368).

On the London Bullion Market, the price of gold climbed to 942 dollars an ounce at the fixing from 937.25 dollars an ounce late on Thursday.


(Reuters)

Saturday June 27, 2009

NEW YORK: The Nasdaq rose on Friday, on strong demand for Palm's Inc's Pre smartphone, while the Dow was dragged lower by sliding oil prices and strength in some financial stocks helped cushion the S&P 500's decline.

The technology-heavy Nasdaq outperformed, helped partly by gains in Palm after it posted a narrower-than-expected loss late on Thursday and said demand was strong for its new Pre smartphone. Palm shares jumped nearly 16 percent to $16.22.

Weighing on sentiment, a jump in the savings rate suggested that the debt-burdened US consumer may not drive the economy out of recession as fast as hoped.

Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being stored away. Savings jumped to a record annual level of $768.8 billion, the highest level since record keeping began in 1959.

Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio, said that while he did not put too much store on the savings data alone, the trend in the United States was toward more saving and less spending.

"The US markets are probably going to lag the rest of the world because we have a need to pay down debt, increase our savings rate and be better stewards of our own capital, which might lead to lower consumer spending versus the rest of the world," Stimpson said.

There was a strong surge in trade late in the session, pushing volume significantly above last year's daily average, as Russell Investments announced the final reconstitution of the widely followed Russell 3000 index.

But the session was relatively quiet for most of the day after a busy week that included Federal Reserve Chairman Ben Bernanke's contentious appearance on Capitol Hill and the sale of a record $104 billion in US Treasury debt.

The Dow Jones industrial average dropped 34.01 points, or 0.40 percent, to 8,438.39. The Standard & Poor's 500 Index fell 1.36 points, or 0.15 percent, to 918.90. But the Nasdaq Composite Index gained 8.68 points, or 0.47 percent, to 1,838.22.

The Chicago Board Options Exchange Volatility Index or VIX, Wall Street's most popular indicator of investor anxiety, closed at 25.93, its lowest level since Sept. 12, the Friday before Lehman Brothers went into bankruptcy.

For the week, stocks finished mixed. The Dow slid 1.19 percent and the S&P 500 fell 0.25 percent, while the Nasdaq rose 0.59 percent.

The S&P 500 has climbed as much as 40 percent since hitting a 12-year closing low in early March. But the rally has stalled in recent weeks as investors look for more signs of an economic recovery. Some analysts are expecting a significant pullback in stock prices over the summer.

"Today is a real mixed market without any significant trends," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. "Generally there is a lack of conviction about what the next direction for the market will be."

Oil settled below $70 per barrel, hitting energy bellwethers Chevron Corp, down 1.4 percent at $65.95, and Exxon Mobil Corp, off 1.2 percent at $68.05.

Goldman Sachs was among the financial sector's stronger stocks, up 1.6 percent at $146.74, while JPMorgan added 0.9 percent to $34.45.

Analysts noted stocks were buffeted by profit taking after Thursday's 2 percent gain, as well as by end-of-quarter "window dressing." This can add volatility as portfolio managers sell stocks with big losses and buy some of the quarter's best-performing issues to help improve their returns.

Trading volume was heavy on the New York Stock Exchange, with about 2.35 billion shares changing hands, far above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 4.31 billion shares traded, sharply above last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,833 to 1,170 while on the Nasdaq, there were 1,714 advancers and just 937 decliners.


(Reuters)

Saturday June 27, 2009

NEW YORK: Oil prices fell Friday as traders booked profits from a strong rally and fretted about lackluster US consumer spending and new unrest in oil-producing Nigeria.


New York's main futures contract, light sweet crude for delivery in August, tumbled 1.07 dollars a barrel to close at 69.16 dollars. It had risen 1.56 dollars Thursday.

In London, Brent North Sea crude for August dipped 86 cents to 68.92 dollars.

"There are a lot of concerns about the spending data," said Ellis Eckland, an independent trader.

"We are in the driving season and the (gasoline) demand remains weak," he added.

The Commerce Department reported US consumer spending rose a tepid 0.3 percent in May from April, mainly as a result of a massive government stimulus launched by President Barack Obama.

The data showed that the personal savings rate shot up to a 16-year high, indicating consumers were wary of spending amid rising unemployment and plummeting home values.

The report particularly weighed on markets because consumer spending accounts for two-thirds of US economic activity and is considered key to recovery from the severe recession that began in December 2007.

Traders focused on the weakness in US gasoline demand in the run-up to the July 4 Independence Day holiday, which falls on Saturday this year.

"Normally, demand for gas should be peaking as the July 4 holiday approaches," said Mike Fitzpatrick of MF Global.

The American Automobile Association (AAA) earlier this week projected that the number of Americans taking off for the long holiday weekend, with July 3

being celebrated as the holiday this year, would fall 1.9 percent from 2008.

Meanwhile, the market kept an eye on rebel violence in Nigeria that has crippled oil supplies.

Crude futures had bounced higher in earlier trade after Nigeria's main rebel group said it had launched a fresh attack against an oil installation in the south of the country.

"The intensity of recent attacks have taken the market by surprise and tightened West African oil supplies," MF Global's Fitzpatrick said.


(AFP)

"Pipeline bombings, attacks on oil and gas installations, and the kidnapping of industry workers over the past several years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 2.5 million barrels per day," he said.

Saturday June 27, 2009

ISLAMABAD: The government of Pakistan and the Asian Development Bank (ADB) on Friday signed a loan agreement for 'Accelerating Economic Transformation Program (Subprogram-2)' amounting to $500 million, which is second part of a larger program of about $1.5 billion, over a period of four years, to support Pakistan in dealing with the challenges created by the unprecedented international food and energy crisis.


The agreement was signed here in Economic Affairs Division (EAD) by EAD Secretary Farrakh Qayyum from the Pakistan side and Rune Stroem, ADB Country Director in Islamabad. The program will help the Pakistan government to remove fundamental distortions to support economic transformation and strengthen the financial sector.

The principal objectives of the program are: (i) to achieve a sustainable higher economic growth in the medium term, (ii) expand its social safety net and make it more targeted to protect the poor and vulnerable from the adverse impact of the recent global developments, (iii) adopt structural reforms to address inefficiencies in the agriculture sector, particularly with respect to wheat markets and food security policies, and (iv) take measures to address the energy crisis.

Rs 41 billion in the financial year 2008-09 was allocated for safety net cover up to $5 million to poor families. Through Benazir Income Support Program, a cash grant of Rs 2,000 is provided every alternate month to qualifying families based on a means-tested selection criterion using computerised national identity cards (CNICs). The Program is to help to empower women by paying benefits to the female head of the family who is required to have a computerised national identity card.

Formula-based scheme has been established with the introduction of market based pricing system for setting the support price for formers, taking into account the cost of production, regional prices, import export prices, domesting and global market conditions. The price of wheat for flour millers should reflect all related costs. In this way, wheat subsidies will be reduced to the minimum.

The Government has adopted the Power sector circular debt resolution plan which includes (i) confirmation of the amount of overdue debt owed by government and others; (ii) development of a financing plan showing when and how the Government will pay its debt; (iii) tariff adjustment and other measures to prevent reoccurrence of circular debt; (iv) measures that will improve finance, accountability and corporate governance of public sector entities in the power sector; and (v) implementation timetable and monitoring framework.

To strengthen the financial and operational autonomy of the Financial Market Unit (FMU), amendment has been made in the anti money laundering law to improve the financial market governance. To ensure the sustainability of these reforms and promote transparency in the implementation, Government shall provide quarterly progress to the ADB on the status of implementation to promptly and proactively address any implementation issue that may arise.

An action plan is prepared in this regard and first quarterly review mission will be held at the Federal and the Provincial level in the fist week of July 2009. Slow moving projects, which are causing cost to the government, will be reviewed to clean up the portfolio and bring the number of projects to manageable level.

(BRecorder)