Economic and Business Updates - From 27th September to 03 October, 2010

• The implementation of reformed general sales tax on goods and services is put off for one month – from October 1 to November 1.

• The State Bank of Pakistan raises for the second time in two months its policy rate by 50 basis points to 13.5 per cent.

• The federal government enhances the rates of profit on the National Savings Schemes with effect from October 1.

• The government will pay a sum of Rs902.8 billion during the current financial year to service both its domestic and external loans.

• The SBP announces increase in markup rates up to 70 basis points for the Export Finance Scheme and Longterm Financing Facility following the IMF condition to eliminate subsidies on all these schemes.

• The country’s total liquid foreign exchange reserves touch an all-time high of $16.78 billion on better inflows sent by overseas Pakistanis.

• The country still faces over Rs500 billion circular debts due to none-payment of dues by different stakeholders in the power and oil sectors.

• The SBP warns that increase in electricity rates, induction of the reformed GST and the continued government reliance on borrowings from the State Bank, will add to uncertainty surrounding inflation expectations, and the inflation for FY 11 will be 14.5 per cent.

• The US and Pakistan sign a five-year partnership agreement under which $831 million will be utilised on various programmes.

• The European Union imposes new duties on plastics from Iran, Pakistan and the United Arab Emirates on the plea that they are illegally subsidising exports to Europe’s growing soft-drinks market.

• The Economic Coordination Committee of the Cabinet turns down an industries ministry proposal to increase the price of imported urea in a bid to justify a rise in its price by local manufacturers.

• The National Electric Power Regulatory Authority reduces power tariff of distribution companies by 33 paisa per unit under the monthly fuel adjustment formula.

• The Pakistan Electric Power Company is charging 25 per cent higher tariff from agriculture consumers for the last several months on verbal instructions from the finance ministry.

• The federal government directs the Trading Corporation of Pakistan to auction 50,000 tons of imported sugar in the open market to generate funds for opening letters of credit for the remaining contracted quantity of sugar.

• A Foreign consortium company of Canada and China announces to set up a wind power project of 200MW in Pakistan with an estimated cost of $500 million.