Macroeconomic situation and IMF engagement ECC members to be given in camera briefing

ISLAMABAD: Finance Minister Abdul Hafeez Shaikh is to give in-camera briefing to members of the Economic Coordination Committee (ECC) of the Cabinet this week on macroeconomic situation and International Monetary Fund's (IMF) engagement, official sources told Business Recorder.

An IMF team is expected next month to review Pakistan's economic performance, and its targets given to Islamabad.

Presiding over the ECC meeting on October 13, 2011, Finance Minister had stated that the ECC, being an important forum, needed to be apprised of the latest economic situation, with particular reference to IMF engagement.

He said that the IMF program is an important issue, and the varied statements being given by different functionaries of the government were creating confusion in the minds of general public.

He desired that only those functionaries may discuss this matter with the media who are aware of the latest status of the program.

According to sources, the ECC was informed that various economic indicators had shown mixed signs. Production in the Large Scale Manufacturing (LSM) sector stood at 0.7 percent in July 2011 as compared to 3.1 percent in the same period of last year.

Pharmaceuticals, fertilizer, food, beverages, tobacco and textiles were the principal contributing sectors for the overall rise in LSM. Exports increased by 15 percent, while imports also increased by 30 percent. Thus, trade deficit on year-on-year-basis during September 2011 was $ 1.2 billion. Workers' remittances amounted to $ 3.297 billion in July-September 2011-12 against $ 2.646 billion in 2010-11, showing an increase of 25 percent. Foreign exchange reserves, including FCA deposits with scheduled banks, stood at $ 17.1 billion on October 11, 2011.

The meeting was also informed that FBR collections during July-September quarter of 2011-12 stood at Rs 369 billion, as compared to Rs 294 billion in the same period of last year, showing an increase of 26 percent. Foreign direct investment (FDI) for July-August stood at $ 112 million, against $ 187 million in the same period of 2010-11, showing a decline of 40 percent.

The ECC was informed that year-on-year inflation rate based on Consumer Price Index (CPI), Wholesale Price Index (WPI) and Sensitive Price Index (SPI) for the month of September 2011 was estimated at 10.5 percent, 16.9 percent and 7.6 percent, respectively. Inflationary pressure escalated over the past few months, driven by a combination of factors i.e. food inflation caused mainly by upward adjustments in energy prices, hike in international commodity prices and increase in freight and transport charges. The year-on-year CPI based inflation was 10.5 percent in September 2011. Food inflation during September 2011 was 9.7 percent, which contributed 3.4 percentage points (or 32percent) to inflation, while non-food inflation was 11.0 percent, and contributed approximately 7.2 percentage points (or 68percent) to CPI inflation.

Regional comparison of economic indicators was also presented to the ECC which showed that Pakistan and other countries in the region were experiencing higher inflationary pressure. Pakistan's year-on-year overall inflation rate (CPI) rose to 10.5 percent in September 2011. India's last published figure was 9.8 percent (for August 2011), while that of Bangladesh was 11.3 percent in August 2011 and Sri Lanka 6.4 percent September 2011.

The stock of wheat as on Oct 10, 2011 was 8.6 million tons showing sufficient quantity of local wheat available for daily releases to mills by respective Provincial Food Department(s) and Passco. The present reported stock of sugar in the country as on 5 Oct, 2011 was slightly over 1,202,991 metric tons, compared to 568,573 metric tons last year (11 Oct, 2010). The stock of various POL products on Oct 07, 2011 was sufficient for 19 days as compared to 09 days stock on Oct 08, 2010.