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It is indeed a matter of concern that outstanding stock of public debt continues to rise, without any hope of reversal in its trend in the near future. According to the latest data released by the State Bank, Pakistan's gross domestic and foreign debt has jumped from Rs 14.160 trillion at the end of July, 2013 to Rs 15.807 trillion by the close of July, 2014, reflecting a rise of Rs 1.647 trillion or 11.63 percent over a period of 12 months. Both the domestic and foreign debt showed increases of varying degrees. While the domestic debt surged by 14.7 percent to Rs 10.946 trillion from Rs 9.538 trillion last year; foreign debt, mostly provided by Western donors and international financial institutions including the IMF, went up by 5.19 percent to Rs 4.861 trillion as against Rs 4.622 trillion at the end of July, 2013. The ratio of public debt to GDP, however, remained flat at around 64.3 percent but this percentage still breached the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 that requires the government to take measures to reduce public debt and maintain it within prudent limits of 60 percent of the GDP. The government nonetheless, made a deliberate effort to shift short-term debt to long-term debt as it borrowed as much as Rs 2.023 trillion through PIBs in the last 12 months that took its overall borrowings through PIBs to Rs 3.163 trillion by end-July 2014 reducing a short-term floating debt by 13.4 percent to Rs 4.553 trillion in the same period. The shift of domestic debt from 12 months and less in the form of treasury bills to three, five and 10 years tenors may raise the government's cost of PIBs Rs 40 billion due to the increase in PIB cut-off rate which was badly managed. The growing gap between the rates on T-bills and PIBs has increased from a historical one percent to two and half percent. As a consequence, there is now a complete disconnect between inflationary expectations and the SBP's discount rate; rendering monetary policy less relevant. Banks are no more lending to SMEs and are also shying away from consumer products. If the current situation persists, banks may well shy away from corporate as well. In case this happens, the productive sector of the economy would suffer with disastrous consequences.

The political transfer of Hong Kong to China in 1997 is widely considered the end of the British Empire. A 'yes' vote in favour of Scottish independence would have caused a profound blow to the United Kingdom that had administered or ruled a large number of dominions, colonies, protectorates, mandates and other territories; and by 1922 the British Empire held sway over one-fifth of world's population. British prime minister David Cameron, who was being rated by his detractors as one of the worst prime ministers in the British history, now has every reason to be delighted about the results of Scottish referendum. However, there is a growing agreement that the referendum is an affirmation of the need to ensure that all the units within the UK, other than England, need greater representation at Westminster than currently available. Out of a total of 650 seats in the House of Commons, England contributes 533, Scotland 59, Wales 40 and Northern Ireland 18.
According to data released by the Pakistan Bureau of Statistics (PBS), exports fell to 3.84 billion dollars in July-August 2014 against 4 billion dollars last year - a decline of 5.8 percent. This statistic should be a source of serious concern to the government as well as those that are being held responsible for a decline in productivity and exports namely the Pakistan Tehreek-e-Insaf and the Pakistan Awami Tehreek whose one month sit-ins in Islamabad have compromised our exporters' meetings with foreign clients for new contracts as well as transport of goods to upcountry areas leading to piling up of inventories.
The minister for Water and Power, Khwaja Asif and Secretary, Water and Power, Nargis Sethi, were severely criticised during a recent meeting of the Economic Co-ordination Committee of the Cabinet for over billing electricity consumers. This followed a meeting of the cabinet chaired by the Prime Minister who had reportedly taken serious notice of claims of over billing across the country during the last two months. The Prime Minister set up a committee to be headed by his Advisor on Energy Musaddaq Malik to submit a report on the matter while urging the Ministry to redress genuine grievances of the consumers.
Claudio Borio, Head of Monetary and Economic Unit of the Bank for International Settlements (BIS) stated that loose monetary policies had given an "illusion of permanent liquidity" spurring investors to take risky bets and fuel asset prices. Borio was referring to historically low interest rates in Western developed countries since the 1997 financial crisis as a critical monetary policy tool to deal with recession. BIS has long opposed moves to cut rates and warned that this merely whets the investor appetite for short-term high risk investments, for example the property market thereby potentially creating bubble conditions for a new market crash.
A grueling month on, the sit-inners are as far from accomplishing their mission of securing resignation of Prime Minister Nawaz Sharif as they were when they marched into the Capital on August 14 to launch a 'Naya Pakistan' and the dream merchants' utopian state. Not only has he refused to resign from his office, he has also removed from the negotiating table the trade-off he was once prepared to make in return for dispersal of sit-ins. Rightly then with no work in hand the go-betweens are left cooling their heels, making the standoff more robust. Both Imran and Qadri had arrived in Islamabad riding the high wave of self-acclaimed popularity of their mission to remove the government - and had unwittingly sworn never to return empty-handed. So what to do now that Nawaz Sharif has not resigned; and he's not even in a mood to talk. Qadri has announced his supporters will go on a hunger strike while Imran has launched a 'rebellion campaign' against the system. His hard take on the higher judiciary an evening before is a strong case in point. The PAT's Qadri, who is quite good at coining the protest jargon, had also ordered his workers to scribble 'Go Nawaz Go' slogan on the currency bills - only to be promptly checked by the central bank that this would be illegal, in response to which Qadri promptly withdrew his edict. How the 'rebellion' will play out, only the time will tell. But what is visible in plain sight is that from now on, the government is going to take on the sit-ins head-on, a sampling of which was provided by the police to puncture the PTI's 'One Nation Day' celebrations. Now Imran has given a call for "Go Nawaz Go" day to be celebrated tomorrow and has asked the people to tear their unpaid utility bills with fanfare at the dharna. With about a dozen FIRs in hand the police are now out to hound and hunt the sit-inners, a move likely to aggravate tensions. Given the danger of the sit-ins exploding into a wider clash spreading to adjacent residential areas it is quite a frightening proposition. It is therefore necessary that their contention doesn't come to a head and flow into rest of Islamabad. It's indeed a dicey situation warranting a subtle handling by both sides.
Non-profit organisations (NPOs), also usually known as non-governmental organisations (NGOs), have generally been operating freely in the country and hardly any questions were asked from them. Of late, however, some of their activities have been subjected to criticism by certain sections of society. In a move to regulate them properly, the Federal Board of Revenue (FBR) has now made it mandatory for NPOs to provide details of funding, including those from donors, to avail income tax exemptions. In order for the NPOs to avail tax rebates, various documents have to be provided to the FBR under the Standard Operating procedure (SOP) which include Memorandum of Article of Association, Trust Deed or Rules or By-laws for the operation of an NPO. It must also be declared that the said entity was not run simultaneously for commercial purpose. Exemption certificates will only be issued by the FBR after details of donors were provided as prescribed under Income Tax Rules, 2002. Besides, NPOs, are required to provide a list of beneficiaries of Rs 5,000 and above and FBR officials would examine the salary statements submitted by the NPOs to ensure that the board of governors, directors and trustees are not using the organisation for personal gains. Statements of accounts of NPOs would also be screened to ensure that funds were not used for some other purpose. In the case of universities and other educational institutions, details of investment like in vehicles and premises would be obtained for record. NPOs will only avail exemptions on those incomes whose financial details were available. In the case of missing facts or figures, NPOs will have to pay 100 percent tax liability.


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Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-1.434 bln
Exports $1.930 bln
Imports $3.364 bln
WeeklySeptember 18, 2014
Reserves $13.525 bln