KARACHI – Prime Minister Yousaf Raza Gilani, in the face of International Monetary Fund criticism of reporting on the country’s economy, has reshuffled senior finance officials in advance of the annual budget.

Abdul Wajid Rana takes over as finance secretary from Waqar Masood, becoming the sixth person to hold the post in the four years of the Gilani-led coalition government. Mumtaz Haider Rizvi is the new acting chairman of the Federal Board of Revenue – the second to hold that post this year. Their primary task is strengthen tax recovery to check a widening fiscal deficit.

Their performance could set a new basis for Pakistan’s relationship with the IMF, following the government’s failure to implement economic reforms under a three-year US$11.3 billion IMF loan program that ended incomplete on September 30.
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KARACHI – The International Monetary Fund (IMF) has criticized Pakistan’s economic projections, saying the country’s economic vulnerabilities will further increase in the remainder of the fiscal year ending June.

The fund has projected the country’s economic growth at 3.4%, against the government’s projection of 4.2%, and the fiscal deficit to reach 7% of gross domestic product (GDP), against the government’s revised target of 4.7% for the current fiscal year.

The IMF has criticized the State Bank of Pakistan for pursuing a more accommodative monetary policy and financing the fiscal deficit directly or indirectly through liquidity injections via open market operations. The international lender’s comments came in report following the conclusion last week of its Article IV consultation.
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KARACHI – Pakistan on Tuesday gave an unequivocal assurance to Iran for early implementation of the US$7.6 billion Iran-Pakistan (IP) gas pipeline, a week after the toughest warning issued yet by the United States to Islamabad to shelve the project.

Islamabad and Tehran vowed to intensify work on the IP project during a meeting of the Pakistan-Iran bilateral talks, which began in Islamabad this week, led by visiting Iranian International Affairs Vice President Ali Saeedlou and Pakistan’s Finance Minister Hafeez Sheikh.

President Asif Ali Zardari gave an assurance on Tuesday that his country was committed to the early implementation of the project to meet the country’s ever growing energy needs during his meeting with the Ali Saeedlou. Washington, which has intensified its efforts for increased economic sanctions against Iran, has serious reservations over the IP project.
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KARACHI – Pakistan has finally succeeded in securing a European Union preferential trade deal nearly two years after the EU proposed a relaxation of tariffs to help the South Asian country’s economy recover after devastating floods.

The World Trade Organization (WTO) on Wednesday approved the much-delayed package covering 75 items at a meeting of its Council for Trade in Goods (CTG) in Geneva. The deal was scheduled to come into effect in January last year, but it was delayed after countries such as Argentina, Brazil, India, Bangladesh and Indonesia raised objections. The tariff changes will enter into force after formal approval by the WTO General Council in March.

Under the package, the total export value of the 75 tariff lines is estimated at US$1.03 billion and the average tariff on these products is around 8.86%, or less than a quarter of the $3.80 billion value of the country’s total global exports.
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KARACHI – Pakistan’s fast-growing current account deficit is moving the country ever closer to a repeat of the 2008 financial crisis that led to a request for an International Monetary Fund (IMF) bailout, with repayment of that rescue set to exacerbate its present dire situation.

The State Bank of Pakistan (SBP), in its first quarterly report for the fiscal year 2012 issued at the weekend, said financial flows had almost dried up. The central bank is particularly concerned about the pace at which the current account has deteriorated.

The deficit widened to $2.154 billion in the first six months of the current fiscal year, compared with a surplus of $8 million in the same period last year. A weakening current account is adding to pressure on the rupee, which has fallen to a record low of 90 to the US dollar.
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