High budget deficit needs fiscal consolidation; high inflation major challenge as food prices rising

Lower revenue generation and higher current expenditures are underlying reasons for the Pakistan’s stressed fiscal position. Without substantially increasing resource envelope, it would be difficult to sustain fiscal deficit at manageable levels, says UN ESCAP’s Economic and Social Survey of Asia and the Pacific 2011.

It suggests the government must carefully scrutinize and reprioritize spending to create room for public investment to support growth. The budget deficit, at 6.3% of GDP in 2010, will face further pressure in 2011 as a result of the devastation wreaked on the economy by the severe floods and the consequential need for rehabilitation and reconstruction activities.

“Pakistan has been experiencing double-digit inflation over the past three years. In 2010, inflation stood at 11.7%, having decelerated from 20.8% in 2009. Increases in electricity and natural gas charges and upward revisions in petroleum prices influenced production and transport costs, causing prices of other consumer price index items to rise, as well.” Inflationary pressures increased further due to the devastation caused by the floods. Further increases in electricity and natural gas charges and reforms in the generalized sales tax will automatically contribute to keeping inflation high, at least over the medium term, added the ESCAP survey.

On exports, the survey says though exports are reviving but imports grow more rapidly and the external current account deficit came down to 2.0% of GDP in 2010 from 5.7% of GDP in 2009. The improved performance in 2010 was helped by the relatively strong recovery of exports, which grew at 9.4% in 2010, while imports continued to contract, although at the much smaller rate of 0.3%. Overseas worker remittances grew by 14% and reached close to $9 billion in 2010, helping to reduce the current account deficit. With the overall balance of payments in surplus, foreign exchange reserves reached an all-time high of about $17 billion by the end of fiscal year 2010.

On growth, the survey says despite challenging security conditions and severe energy shortages, domestic economic activity rebounded to some extent in fiscal year 2010, with economic growth accelerating to 4.1% from 1.2% in 2009. Severe floods across the country from August to October 2010, however, added to the existing difficulties of the economy. More than 20 million people (or more than 10% of the population) were affected by the floods, which also severely damaged housing, businesses, agricultural crops and physical infrastructure. Private and public losses due to floods are estimated at $9.7 billion.

Indeed, the impact of the floods on the economy will continue to be felt in the coming years as damaged infrastructure will not only need to be repaired but also upgraded to meet the needs of a modern economy. Devastation caused by severe floods in Pakistan has dampened its immediate growth prospects and GDP growth is expected to fall to 2.8% in 2011.

Record donation enables WFP to provide food aid in 20 states

The United Nations World Food Programme (WFP) has welcomed a donation of $196.6 million from Japan, the largest-ever single contribution to the agency, which will use it to provide essential food and nutritional assistance to millions of needy people in 20 countries in Africa and Asia.

The funds will also support logistics operations in eight countries where WFP has projects.

“We are extremely grateful for this substantial supplementary aid package and Japan’s continued commitment to promoting human security and peacebuilding,” said Mohamed Saleheen, director of WFP’s Japan Relations Office. “This is proof of Japan’s strong leadership in global food and nutrition security.”

The donation will benefit people in need in countries such as Pakistan, Afghanistan, Tajikistan, Sudan, Ethiopia, Kenya, Niger and Uganda.

The channelling of funds to support food assistance programmes in Afghanistan and Pakistan reflect Japan’s desire to promote peace and stability in the region, according to WFP.

The funds will be used to provide food to conflict and disaster-affected people, internally displaced persons (IDPs) and other vulnerable groups, including malnourished children and pregnant and lactating women. In Pakistan, the donation will be used to provide immediate food assistance, as well as recovery support to the survivors of last year’s devastating floods.

In Africa, the contribution will support WFP’s programmes in 17 African countries where people are in need food aid because of conflicts and weather-related shocks such as droughts and floods.

WFP’s logistics operations will also benefit from the donation, especially in Afghanistan and Pakistan, where the agency runs the UN Humanitarian Air Service, which provides critical air transport and cargo services for the humanitarian community.

High prices of dry fruit keep buyers away

Sohail Rashid

There was a time not long ago when all family members used to sit together in their houses at night close to heaters munching dry fruit, especially peanuts, and discussing what they had been doing in the day.

Times have changed now due to the unprecedented price hike in the country. Dry fruit have now become a luxury for the poor and middle-class. Family gatherings, which were a routine sometime back, have almost diminished in most houses.

Seasons and fruit go together; especially dry fruit have a unique relation with winter. People love to eat dry fruit in the chilly weather. Dry fruit are also used in summer in desserts, but in winter its consumption normally surges by 50%. But this time around, it is not the case because of their sky high prices.

A survey conducted by INFN revealed that peanuts are being sold at the rate of Rs200 per kilogram. Almond price ranges between Rs500 and Rs800 per kilogram, depending on their quality. Pistachio and ‘chilghoza’ (pine nut) are being sold at the rates of Rs800 and Rs2,000 per kilogram respectively.

Nazeer Khan, a dry fruit seller in Narankari Bazaar, said: “In winter, the sale increases manifold, especially there is a great demand for peanuts and almonds. However this time around, it is not the case as people, who are already facing a tough time, cannot afford to buy dry fruit.”

“We bring dry fruits from as far as Balochistan, Gilgit and Afghanistan and due to imposition of various taxes we have to increase their prices,” he added.

“Dry fruit are good for health. I think their prices should not be exorbitant as most of them are produced locally,” said Zeeshan Awan, a shopper.

“In the age when people cannot afford sugar in their teacups, dry fruits have indeed become a luxury,” said Sheikh Latif, a trader.

Idrees Ahmad, a student, said that he used to eat pistachios, almonds and peanuts while studying along with his friends at night but now it was difficult to continue with that routine due to price hike.

Maryum Khan, a housewife, said that doctors recommend a handful of dry fruit every day in the winter season. She regretted that they could not afford to buy dry fruit as her husband draws meagre salary.

Special Correspondent

Tea flows in people’s veins

ISLAMABAD, December 1, 2010: Taking a look at my surroundings while taking tea from a kiosk at Saidpur Village made me realise that this drink has steadily penetrated into the routine lives of people so much so that one could hardly think of spending a day without at least a cup or two.

It could have been a convincing argument for me that the awesome surroundings of the facility has attracted so many people to the place just for the sake of tea only if I have witnessed any other tea spot where such a large number of people were not present.

The kiosks set up at different spots of the city offering ‘karak’ (strong) tea are crowded with people throughout the day who enjoy sips of hot tea while discussing various matters, most commonly political updates.

It usually happens that political discussions over a cup of tea turn into heated debates and often end up in exchange of hot words. This is the reason that many kiosks and tea shops have displayed a notice: ‘Political discussions are not allowed’.
Not only political discussions but many other issues like national security, a recent incident or any personal matter are discussed over a cup of tea. Sometimes the prevalence of tea culture in the country gives an impression that every discussion needs to be held over a cup of tea otherwise it would end on nothing but futility.

There was a time when drinking tea was considered to be a fashionable habit, but now it has become a national habit. It has interwoven in our culture. Morning, afternoon, evening or night, a cup of tea would work where no other drink could.

According to an estimate, tea worth 220 million dollars is taken by Pakistanis annually which is an undoubtedly huge amount and shows the addiction of people for this drink. One could not identify that which class use this drink the most as ‘one cup of tea’ is a sentence which is used in every office, home, kiosk, shop, market, hospital to name a few.

However the lower of lower middle class is fond of tea which contains abundance of tea leaves and sugar while the middle class and upper class mostly go for low or without sugar.

Besides that other varieties of tea are also liked by the people that include cinnamon tea, salty tea and cardamom tea.

Moreover the styles of taking tea are also different in different classes. In the kiosks and small restaurants (known as truck driver’s hotels), people take this drink while utilising the saucer as they believe it not only helps in moderating the temperature but also adds taste to the tea. It is not only that they drink from the saucer but they also make a typical noise while sipping which has become a trademark for such places.

While taking the last sip from my cup of tea, I am thinking that whatever the circumstances are a cup of tea has become an integral part of our culture which doesn’t seem to end in near future.

Pakistan to export mangoes to Japan

Yasir Ilyas

ISLAMABAD, November 22, 2010: For the first time ever Pakistan will start its export of mangoes to Japan from next year.

The decision to this effect was taken at a meeting held here on Monday between the Federal Minister for Food and Agriculture and members of delegation of Japanese Agriculture Cooperative Organization (JA).

An 8-member delegation of JA led by Yasuhiro Nakagawa, Vice Chairman JA Japan, held detailed discussion with Minister for Food and Agriculture Nazar Muhammad Gondal to find out ways and means to enhance bilateral trade. President of JA Group Kyoto Prefecture was also present on the occasion. 

Talking to the delegation Minister for Food and Agriculture Nazar Muhammad Gondal said that it is extremely encouraging that Pakistani mangoes will arrive into Japanese markets from next season. “We have ample business and investment opportunities for the Japanese investors in Pakistan,” he said.

The minister said Pakistan is the world’s fourth largest milk producer and technology to produce by- products from milk would prove extremely beneficial for the Japanese investors.

Referring to vast opportunities in the business sector he said Pakistan offers a business-conducive environment and ripe opportunities with simple procedures to enter into business deals.

Yasuhiro Nakagawa said that JA Group is involved in the farmers’ security through credit and insurance policies and marketing their products. He said that the group also deals in providing the latest farm machinery which makes it the biggest group of its kind in Japan. “We are ready to shift our technology and invest in Pakistan. I have already announced in Japan before my departure that Pakistani mangoes will come into Japanese markets from the next season”, he added.

The food minister said that Pakistan has the third largest number of animals in the world which provides an excellent opportunity for value addition to milk and processing ‘halal’ meat that has an enormous market the world over. “We are the fourth largest exporter of dates by exporting only 13% of the production (0.567 million tons). It can be greatly enhanced through the introduction of modern processing and packaging technology. Technology to process and make juices from citrus and mangoes is another potential area for investment,” he said.

Nakagawa assured that he would take concrete and practical steps to establish a long lasting business relationship with Pakistan. He said that the group has already established business models in dairy products in Australia and would replicate the same in Pakistan.

Among others who attended the meeting included secretary, additional secretary, representatives of Board of Investment and high officials of the ministry.