cpi inflation stands at 7

7/29/2019 CPI Inflation Stands at 7

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CPI inflation stands at 7.9% in December: The consumer price index (CPI) inflation increased by 0.2percent in December to stand at 7.9 percent as against 6.9 percent in November due to increase in food pricesmainly related to high consumption in winter season.According to Pakistan Bureau of Statistics (PBS), theinflation saw a decrease of0.4 percent in November whereas it witnessed decrease of 0.7 percent inDecember 2012 as compared with same month of the previous year.This is the third consecutive month whereinflation has stood below 8.0 percent. The average inflation in first half of fiscal year 2012-13 stood at 8.3

percent versus 10.9 percent in the same period last year.Core trimmed inflation has increased by 0.3 percenton monthly basis in December 2012 as compared to 0.2 percent in November 2012 which increased by 0.3percent in December 2011.The core inflation, measured by 20 percent weighted trimmed means CPI (coretrimmed) increased by 9.2 percent in December 2012 and by 8.8 percent in November 2012 on yearly basis,which increased by 10.5 percent in December 2011.The inflation witnessed on the prices of food were chicken up 10.95 percent; eggs by 8.41 percent; wheat2.78 percent; dry fruit 2.30 percent, fish 1.74 percent; wheat flour 1.50 percent; readymade food 0.66 percentand tea 0.65 percent. The non-food items prices that witnessed an increase were footwear up by 4.18 percent;woolen readymade garments 3.89 percent and dopatta 2.19 percent.The prices that decreased in the month of December were kerosene oil down by 0.96 percent and motorfuel 0.24 percent.Analysts said that average inflation would be stable at single digit around 8.5 to 9.0percent, lower than governments target of 9.5 percent provided that food and energy prices remainunder control

2)Diamer-Bhasha dam: US agrees to extend $3.5 billion, National Assembly body told:Chairman Water and

Power Development Authority (Wapda), Syed Raghib on Wednesday disclosed that United States of America

(USA) had agreed in principle to extend $3.5 billion for 4500 MW multipurpose Diamer-Bhasha dam. Total

cost of the project is estimated at $13-14 billion. Briefing National Assembly's Standing Committee on Water

and Power, he said that Asian Development Bank (ADB) was following the line of World Bank (WB) in

designating the Northern Areas as a disputed territory and therefore not meeting the requirements of their

assistance.

"We have contacted China, South Korea and Turkey for funding the key project," he continued. The

chairman Wapda further informed the committee that they had completed the studies and feasibilities in the

past three years and there was consensus among all the stakeholders. "Finance is the main problem and weare trying to convince the Asian Development Bank and World Bank to provide finance for the project," he

added.

According to him, Wapda has spent Rs 9 billion on the development of infrastructure and compensation to

land owners so far. To a question, the chairman Wapda informed the committee that 402MW electricity

would be added to the national grid by June 2013. While briefing the committee on the outstanding

electricity bills against the government departments relating to Iesco, he added that a total of Rs 15.567,68

billion was still pending against the government departments.

The committee decided that the chairman CDA would be invited in the next meeting to brief it over the

outstanding dues of Iesco against the CDA. The committee also discussed the Electricity (Amendment) Bill,

2012 and deferred discussion for its next meeting in order to enable the members of the committee to study

the bill in detail and get fruitful feedback. The committee took serious note of the absence of Minister for

Water & Power and Secretary and directed them to attend the next meeting.

The meeting presided over by Syed Ghulam Mustafa Shah was attended by MNAs Abdul Ghani Talpur, Sajjad-

ul-Hassan, Bilal Yasin, Pir Muhammad Aslam Bodla, Salahuddin, Muhammad Afzal Khokhar, Muhammad

Nawaz Allai, Rana Afzaal Hussain, Dr Abdul Kadir Khanzada, Anjum Aqeel Khan, Nawab Muhammad Yousuf

Talpur, and other officers from the Ministry of Water & Power.


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3) Failure in solving 3G licence, Etisalat issues: government relying heavily on borrowing The government

would be heavily relying on borrowing to finance the fiscal deficit, which is expected to increase significantly

in the current fiscal year due to the inability to generate the budgeted non-tax revenue of $1.6 billion on

account of Etisalat and auction of 3G spectrum.

Sources said that the high ups of Finance Ministry were no longer optimistic about the auction of 3G at $850

million in the current fiscal year and disbursement of $800 million by Etisalat for privatisation of PakistanTelecommunication Company Limited (PTCL). The chief of Etisalat recently held a meeting with Prime

Minister Raja Pervez Ashraf where he was requested to release the amount owed for PTCL privatisation.

Officials say that Etisalat remained firm in its stance and linked the release of payment to the transfer of all

agreed properties.

PM also requested Etisalat chief to participate in 3G auction. Etisalat has reportedly refused to accept the

government ofPakistan's proposal of valuing outstanding proprieties and deducting the amount from the

$800 million owed. The PM has also taken note of the undue pendency of the matter and has formed a task

force comprising of Finance Division, Privatisation Commission and Ministry of Information Technology to

negotiate with M/s Etisalat for an early settlement. At the time of privatisation of the PTCL, there were a

total of 3248 properties to be mutated in favour of PTCL. Of these, 3117 have been transferred till date

leaving 131 outstanding properties which include 32 public and 99 private. Out of the total 99 private

property holders, 20 have gone to court which has created hurdles in handing over the remaining properties.

Sources said that sale of 3G license is considered highly unlikely in the current fiscal year because of the

government's failure to hire a consultant as well as ongoing tussle between the chairman Pakistan

Telecommunication Authority (PTA) and member Finance and Technical. The process for hiring of

consultant has been delayed for a third time as the required criterion for hiring of consultant was not fulfilled

which led to objections by National Accountability Bureau (NAB). As a result, the PTA cancelled the contract

awarded to three consultants and now the process has to reinitiated for hiring of consultant. The consultants

have also expressed reluctance to carry on work with PTA and the foreign consultant hired for Rs 50 million

with Rs 10 million cheque issued in his favour has not been able to cash it.

4) Government offers to insure foreign investors: Government is offering to insure foreign businessmen toattract overseas investment to a country where thousands have been killed by Taliban and al Qaeda-linkedviolence, officials said Wednesday. A series of wealthy countries, including Australia, Britain and theUnited States advise against non-essential travel to Pakistan and this makes insurance unavailable or veryexpensive for citizens who wish to visit. But the government hopes that by offering insurance to foreignersinvited to Pakistan on business, it can help revive the flagging economy. According to the InternationalMonetary Fund, the SBP's foreign exchange reserves declined to under $10 billion in October and the deficit,excluding grants, hit 8.5 percent of gross domestic product last year."Any private or public entrepreneur inviting foreign businessmen or investors will now be responsiblefor providing insurance cover to their guests through the National Insurance Company (NIC)," saidcommerce ministry spokesman Abdul Kabir Kazi. "We have launched the scheme immediately and asked the

foreign office to dish out information about the scheme to all Pakistani missions abroad to benefit foreigninvestors and businessmen," he told AFP. Nazim Latif, pointman for the scheme, said businessmen can beinsured for $200,000, $300,000 or $500,000, depending on their length of stay."The premium for the above products will be $75, $150 and $225 respectively if a buyer stays in Pakistanfor a week; and $250, $350 and $500 for a stay beyond a month," he told AFP. In the event ofdeath, theNIC will pay out the full compensation and in case of injury, $6,000, $7,000 or $8,500 per week formedical treatment. "Normally, foreigners hesitate to visit Pakistan in business deals because of the lawand order situation in the country. We are introducing this scheme as a tool to offer them peace of mindwhen they come to our country," Latif said.


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5) NIT investment limit in SEF may be uncapped: federal government is likely to uncap investment limitsof National Investment Trust (NIT) in State Enterprise Fund (SEF) fearing that price of shares of eight publicsector entities may FALL during the process of offloading portfolio, sources close to the Finance Minister told

Business Recorder.The sources said NIT State Enterprise Fund (NIT-SEF) was launched by NITL in January 2009 on the adviceand approval of GoP for a period of three years (1st January, 2009 to 31st December, 2011) to support the

stock market at the time when there was a massive selling pressure from the local as well as foreigninvestors.The fund was financed by NBP, Slic, EOBI and a syndicate of banks led by National Bank of Pakistan.The finances were provided by these four institutions against a guarantee of Rs 20 billion issued by the GoPfor a period of three years. The fund was launched to make investments in the stocks of eight listedcompanies namely OGDCL, PPL, PSO, NBP, PTCL, SNGPL, SSGCL and Kapco wherein the GoP hassubstantial shareholding. The internal allocation of stocks of NIT-SEF to invest in the eight scrips wasfixed to avoid total investment in few select companies. After expiry of three years, the Economic Co-ordination Committee (ECC) of the Cabinet granted extension of government guarantee to NIT-SEF forfurther two years effective from 1st January, 2012 against the outstanding balance of Rs 12.20 billion providedby the financiers, ie, NBP, SLIC and banks syndicate on existing terms and conditions.Further, the ECC approved the guarantee against financing of NIT-SEF on the existing terms and conditions,subject to the condition that NIT will share its profit with the government. It was also decided that NIT

during this period will retire this entire fund gradually without causing any detrimental effect on thestock value of OGDCL, PPL, PSO, NBP, PTCL, SNGPL, SSGCL, Kapco and NIT .According to sources, NIT has now proposed a plan to offload portfolio of NIT-SEF to gradually repay itsfinancing facility. During this process of selling, the market prices of NIT-SEF stocks may go down.Therefore, in order to support the stock market, NIT might have to buy the same stocks and/or the stockswhere there is likelihood of major selling pressure in the market . NIT has to generate the liquidity byselling shares to gradually pay off the entire loan.The sources maintained that NIT is facing extreme difficulties in meeting the allocation for NIT-SEF stocks asapproved by the government which is based on total size of Rs 20 billion. NIT made a pre-payment of Rs 122billion as on 07-09-2012 to the financiers of NIT-SEF thereby further reducing the financing amount from Rs12.20 billion to Rs 10.98 billion. Besides, they are in the process of investing Rs 2.52 billion in Kapco onbehalf of NIT-SEF and have bid for 72 million shares of Kapco at Rs 35 per share along with a consortium offinancial institutions including NBP and Slic."NIT argues that they may bust investment limits of NIT-SEF fixed by the MoF, if the above investment planis executed. Therefore, the investment limits for the SEF stocks may be uncapped to accomplish the aboveobjective smoothly," the sources concluded.

6) E-banking deals rise to Rs6.5tr:The e-banking is growing with fastest speed as it has captured a huge sum

of money transactions that reached Rs6.5 trillion during the first quarter of the current fiscal.The volume

and value of e-banking transactions depicted a growth of15 per cent to 74.87 million and by 5 per cent to

Rs6.5tr respectively during the first quarter of financial year 2012-13 (FY13) compared with the same quarter

of previous fiscal year (FY12).According to State Banks Payment Systems Review released on Wednesday,

242 more Automated Teller Machines (ATMs) were installed by banks bringing the total number of ATMs in

the country to 5,987.ATM transactions have a major share of 58.6 per cent with an average value of Rs9,810

per transaction.The overall, value and volume of ATM transactions during the first quarter increased by 22

per cent and 13 percent, respectively. The share of ATMs in the total e-banking transactions in value was

6.7 per cent. According to the Review, 121 more bank branches were added to the network of Real-Time

Online Branches (RTOBs). Now 9,412 branches, out of 10,111 banks branches, offer RTOB services across the

country. The volume and value of RTOB transactions also increased by 21 per cent and 4 per cent

respectively as compared to transactions in the first quarter of the previous fiscal year.


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The number of plastic cards in the country also increased by 9.55 per cent in first quarter of FY13 compared tothe preceding quarter. About 19.67m plastic cards were issued by the end of first quarter of FY13 in thecountry. The value and volume of transactions through Point of Sale (POS) terminals stood at Rs20.8 billionand 4.3m showing a growth of 15 per cent and 5 per cent respectively as compared to the first quarter of theprevious fiscal year.

The Review pointed out that the recorded volume and value of large-value payments through Real Time GrossSettlements (RTGS) were 110,255 and Rs.38.49tr respectively in the first quarter of FY13. This showed 53.3per cent increase in value and 27 per cent increase in volume as compared to the first quarter of previous fiscalyear.

The significant increase in value of RTGS transactions is due to settlement against securities transactionswhich increased by 73.4 per cent in the first quarter of FY13 that has a major portion in RTGS transactionsfollowed by Interbank Funds Transfers and settlement of retail cheques through multilateral clearing;contributing 63.8 per cent, 28.4 per cent and 7.8 per cent respectively.

cpi inflation stands at 7

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