Last update: Fri, 01 Jul 2016 08pm



Visible signs of strain to the power sector have become evident in the multibillion dollar import of Liquefied Natural Gas (LNG) agreement that the incumbent PML-N government signed with Qatar during its current tenure, according to a section of the press. The details of the deal itself have yet to be uploaded on the ministry's website, or its associated departments, including Pakistan State Oil which was the signatory on behalf of Pakistan. This is in spite of repeated reminders by Business Recorder to relevant officials including the Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi to fulfil his commitment that he would upload it as soon as it is inked. The Public Procurement Regulatory Authority has also not uploaded the agreement.
Tuesday's carnage at the Istanbul Airport, one of the world's busiest, cut short 42 lives and wounded over 200 innocent people. It was the sixth major terrorist attack this year in Istanbul and the country's capital, Ankara. No one has claimed responsibly. In the past, the Kurdish separatists have been carrying out such attacks, but they targeted only police and military personnel. The latest atrocity bears all the hallmarks of an IS strike as it aimed at causing maximum loss of civilian lives at a popular tourist destination, and to hurt the country's economy. Prime Minister Binali Yildirim told journalists that "the findings of security forces indicate that the attack was committed by Daesh (IS)."
According to the Financial Stability Review (FSR) released by the State Bank on 27th June, 2016, financial system of Pakistan remains in a good shape but is also beset with certain challenges at the same time. The asset base of the financial sector has increased at a decent pace of 15.1 percent during CY15 as against the average of 12.6 percent in CY13-14. Consequently, financial depth has improved as financial assets to GDP ratio has increased to 68.4 percent in CY15 from 59.4 percent in CY14 and 56.4 percent in CY13. Advances grew at a modest pace of 8.1 percent while investments - mostly in government securities - increased sharply by 30 percent. This asset expansion was financed mainly by growth in deposits to the tune of 12.6 percent followed by financial borrowings. Asset quality improved with a reduction in infection ratio from 13.3 percent in CY13 to 11.4 percent in CY15 and a rise in provision coverage from 77.1 percent to 84.9 percent in the same period. However, banks do face a challenge in reducing the high stock of NPLs and SBP is working on various legal and regulatory measures in this regard. Operating performance improved considerably as banking sector posted record after tax profit of Rs 199 billion during CY15, ROA (after-tax) increased to 1.5 percent in CY15 from 1.1 percent in CY13 and ROE rose to 15.6 percent from 12.4 percent in CY13. The solvency also remained robust with high Capital Adequacy Ratio at 17.4 percent in CY15 compared to 14.9 percent in CY13.
The Pakistan People's Party (PPP) has followed in the footsteps of the Pakistan Tehreek-e-Insaf (PTI) in filing a reference before the Election Commission of Pakistan (ECP) against Prime Minister (PM) Nawaz Sharif, Punjab Chief Minister Shahbaz Sharif, Finance Minister Ishaq Dar, daughter of the PM Maryam Sharif's MNA husband Mohammad Safdar, and Shahbaz Sharif's son MNA Hamza Shahbaz. The reference seeks their disqualification on the basis of Articles 62 and 63 of the Constitution. However, the ECP has given both the PTI and PPP references short shrift in rejecting them as the ECP cannot entertain them in the light of the provisions of Articles 62 and 63 as well as sections 52-56 of the Representation of People Act 1976. Article 63(2), the ECP quotes, lays down that disqualification of elected parliamentarians has to follow the procedure of first approaching the Speaker of the National Assembly or Chairman of the Senate, as the case may be, to ascertain within 30 days of any such reference being moved whether prima facie a case exists for referring the matter to the ECP. In the event that the Speaker or Chairman fails to do so within the 30-day stipulated period, it shall be deemed to have been referred to the ECP. Upon receipt of such a reference, according to Article 63(3), the ECP is obliged to decide the question within 90 days, and if it is of the opinion that the member has become disqualified, he shall cease to be a member and his seat will fall vacant. Further, according to section 52(2) of the Representation of People Act 1976, a contesting candidate alone can file a disqualification reference and that too within 45 days of the election. Even a contesting candidate's reference cannot be entertained after the 45-day deadline. The question then arises, given that there are so many legal luminaries in the ranks of both the PTI and PPP, why have they chosen to ignore these clear provisions of the Constitution and law? The question strengthens the suspicion that this is mere political posturing, point scoring, and an attempt to keep the government under pressure and on the back foot.
The International Monetary Fund (IMF) Executive Board approved the disbursement of the second-last tranche to Pakistan under the 6.6 billion dollar extended Fund Facility. While the approval was expected as the 11th Staff review had been completed successfully, a fact constantly cited by Federal Finance Minister Ishaq Dar as an indicator of the support for policy reforms ushered in by the Sharif administration. A press release uploaded on the IMF website attributes a statement to M Furusawa, Deputy Managing Director and Acting Chair, which is a major source of concern to local economists. First and foremost, while the government has cited a revised GDP growth for 2015-16 at 4.7 percent, down from the 5.5 percent budgeted; the IMF has not deemed it appropriate to adjust its own growth projection for the outgoing year and keeps it at 4.5 percent. In addition, the Fund staff has not bothered to evaluate government data - an exercise which several local economists have undertaken that reveals a growth rate of no more than 3.1 percent. And needless to add several key macroeconomic data are calculated on the basis of the growth rate; for example, tax revenue as a percentage of GDP, current expenditure as a percentage of GDP and total public debt as a percentage of GDP.
Foreign Affairs Advisor Sartaj Aziz's briefing to journalists on Monday exuded (between the lines of course) an air of gloom and paralysis as far as Pakistan's foreign policy is concerned. The briefing naturally focused on arguably the four most important relationships with foreign countries, three of whom are our immediate neighbours and the fourth a distant superpower. First and foremost, Sartaj Aziz was pessimistic regarding the prospect of ties with India improving anytime soon. Instead, he argued, the situation called for management to avoid an increase in tensions, ie, a minimalist, conservative management approach given the intractability of certain issues and the current atmosphere of a resurgence of suspicion and mistrust between Islamabad and New Delhi. Terrorism remains the main focus of the latter, while the former insists on all issues being put on the table, including the Kashmir question. Sartaj Aziz complained that India does not want to give us credit for our actions against terrorism and keeps using that as an excuse for not restarting the bilateral suspended dialogue. Normalisation of relations on India's terms was not acceptable to Pakistan, Sartaj Aziz emphasised, and neither would Pakistan back down on its principled stance (ie all issues, including Kashmir, should be on the agenda). On relations with Afghanistan, Sartaj Aziz was equally pessimistic regarding the Afghan reconciliation process. Since the prospects were not good, he argued, all now depended on the ground situation in that country. Elimination of the Afghan Taliban chief Mullah Akhtar Mansour by a drone last month had sabotaged the peace dialogue. His successor, reportedly even more a hard-liner, could not be asked to join the peace process. Perhaps the only way the Afghan Taliban could now be persuaded to return to the negotiating table would be if they failed to gain their objectives in the ongoing spring/summer offensive. In other words, only if the Taliban are convinced that they cannot gain all or any of what they want tactically or strategically on the battlefield might they be persuaded to return to talks. Pakistan could not take all the responsibility for bringing the Taliban to the table but could use whatever influence it had with the group to facilitate the process. Aziz also pointed out that the Afghan authorities were divided about engaging the Taliban and therefore clarity was lacking on how to take the process forward. Pakistan's role, Aziz underlined, could not be substituted but blamed Kabul for being bogged down by historical baggage and therefore unable to see Pakistan's major policy shift since 2013. On the repeated US and Afghan allegations of Pakistan not adequately moving against the Haqqani network, Aziz said though the objective was common, it was a matter of sequencing and timing. New co-ordination mechanisms agreed with Afghan Foreign Minister Salahuddin Rabbani in Tashkent on the sidelines of the Shanghai Cooperation Organisation (SCO) would help address those concerns, leading also to better border management, Aziz revealed (and hopefully avoid the kind of border clashes seen in recent days). If at all there was a note of optimism, it was in Sartaj Aziz's assertion that relations with the US were heading in the right direction despite recent setbacks such as the cancellation of the F-16 deal and continuing concerns about our nuclear programme. On Iran, the Advisor pointed to the balance being maintained between Tehran and Riyadh. Confirming Iranian President Rouhani's statement after his visit to Pakistan that the issue of alleged Indian intelligence agent Kulbushan Jadhav was not raised during the president's meeting with CoAS General Raheel Sharif, Aziz revealed only a general concern about such activities from Iranian soil was conveyed.
Pakistan and India were accepted as full members of the Shanghai Cooperation Organisation (SCO) on 24th June after the two countries signed the memorandum of obligations thereby triggering the final process towards full membership that is expected to take till 2017 to be completed. Its five founding members include China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan with Uzbekistan joining five years later in 2001. At present, Afghanistan, Belarus, Iran and Mongolia have observer status while Turkey and Belarus have dialogue partner status. Significantly the United States applied for observer status but was rejected in 2005 prompting analysts to maintain that the SCO may have been established to limit interference by a power outside the region in conflicts within the region, reminiscent of US military engagement in Afghanistan, or to offset Nato which formed the major portion of ISAF forces operating in Afghanistan till 2014. This view is strengthened by the SCO leaders portraying it as a new model of cooperation in international relations - a partnership instead of an alliance reflecting a multipolar world order as opposed to a unipolar world order based on US hegemony and unilateralism, as per a 2015 European Union briefing.