Sunday, 5 August, 2012

ECB saves Greecefrom bankruptcy bysecuring emergencyloans-paperThe European Central Bank

(ECB) has saved Greece from

bankruptcy for the time being by

securing it interim financing in

the form of additional

emergency loans from the Bank

of Greece, German newspaper

Die Welt said.

BERLIN

AGENCIES

The ECB’s Governing Council agreedat its meeting on Thursday to increasethe upper limit for the amount ofGreek short-term loans the Bank ofGreece can accept in exchange foremergency loans, the newspaper saidin an advance copy of the article dueto appear in its Saturday edition.Until now the Bank of Greece couldonly accept T-Bills up to a limit of 3billion euros ($3.70 billion) ascollateral for emergency liquidityassistance (ELA) but it has applied tohave this limit increased to 7 billioneuros, the daily said, citing centralbank sources. The ECB GoverningCouncil gave this wish the greenlight, the paper said. The moveshould enable the Greek governmentto access up to an extra 4 billioneuros of funds, the paper said, addingthat this should ensure the countrykeeps its head above water until the“troika” of the European Union, theEuropean Central Bank and theInternational Monetary Fund decideon the disbursement of the nexttranche of money from its aidprogram in September.

NEW YORK

AGENCIES

Investors took a second look at Thurs-day’s statement by European CentralBank President Mario Draghi and con-cluded that help was on the way, eventhough it would take more time thanmany hoped.

The U.S. jobs report showedstronger-than-expected hiring but alsoa rise in the unemployment rate to 8.3percent, which keeps alive the hope offurther support for the economy fromthe Federal Reserve.

The jobs data came at the end of avolatile week, packed with Fed and ECBpolicy meetings that disappointed thosehoping for more aid for the U.S. economyand Europe’s debt-stricken nations. Thenews dispelled some investors’ worstfears about the economy, said John Man-ley, chief equity strategist at Wells FargoFunds Management in New York.

“People got very worried over thelast weeks … but it looks like the U.S.economy is not falling off the face of theearth.” The euro rose as high as$1.2392 on Reuters data and was lastup 1.6 percent at $1.2370. The dollargained 0.5 percent against the yen, to78.60 yen, after hitting a two-week highof 78.77, according to Reuters data.

The ECB indicated on Thursday itmay start buying government bondsagain to reduce crippling borrowingcosts for Spain and , but Draghi hintedthat any intervention would not comebefore September. “A lot of market par-ticipants began to rethink yesterday’sECB statement and look at it from amore positive perspective. overall, a lotof investors thought, ‘maybe it’s not as

bad as it originally sounded,’” said PaulMendelsohn, chief investment strate-gist at Windham Financial Services inCharlotte, Vermont. Inched closer toseeking a sovereign bailout on Friday,but Prime Minister Mariano Rajoy saidhe needed first to know the conditionsas well as the form any EuropeanUnion rescue would take.

The MSCI world equity index.MIWD00000PUS was last up 1.9 per-cent. European shares ended 2.5 per-cent higher. on Wall Street, the S&P500 rallied to its highest level sinceearly May. The Dow Jones industrialaverage was up 217.29 points, or 1.69percent, at 13,096.17. The Standard &Poor’s 500 Index was up 25.99 points,or 1.90 percent, at 1,390.99. The Nas-daq Composite Index was up 58.13points, or 2.00 percent, at 2,967.90.

The Federal Reserve on Wednes-day sent a stronger signal that a newround of major support could be on

the way if the recovery did not pick up.In the oil market, NYMEX Septem-

ber crude settled at $91.40 a barrel,jumping 4.9 percent, front-monthcrude’s biggest one-day gain since June29. The unexpectedly strong U.S. jobsgrowth in July sparked upbeat sentimenton the oil demand outlook. Rose $3.04,or 2.87 percent, to settle at $108.94.Gold also climbed, with spot gold up 0.9percent at $1,604.10 an ounce.

U.S. Treasury prices fell as bench-mark yields flirted with their highest levelsin a month after a better-than-expecteddomestic jobs report spurred investors toreduce safe-haven holdings of U.S. gov-ernment debt. Benchmark 10-year Treas-ury notes were 25/32 lower in price at101-21/32 for a yield of 1.565 percent, up9 basis points from late on Thursday.

The day’s other U.S. data showedthe pace of growth in the vast U.S.services sector edged up in July as neworders gained traction.

GLOBAL STOCKS, oil jump onUS job gains, Europe optimism

ISLAMABAD

APP

FooD imports into the countrydecreased to $ 5.048 billionduring Financial Year (2011-12), showing negative growth of0.60 percent when compared

to the exports of $ 5.078 billion during thecorresponding period of the previous year.

The major food products that wit-nessed negative growth in imports duringthe period under review included milk,cream and milk food for infants, importsof which decreased by 2.81 percent, ac-cording to the data of Pakistan Bureau ofStatistics (PBS). The imports of milk,cream and milk food were recorded at$161.169million in 2011-12 against the im-ports of $165.834 million during 2010-11.

Imports of wheat also decreased from$10.725 million to zero, showing hundredpercent downfall while the imports ofspices decreased from $103.992 million to$100.929 million, showing decrease of 2.95percent. Imports of soybean oil also wit-nessed considerable fall of 23.18 percent bygoing down from $66.930 million in 2010-11 to $ 51.418mmillion while the imports ofsugar decreased from $684.629 million to$15.460 million, a fall of 97.74 percent.

Meanwhile, the food products that wit-nessed positive growth in imports duringthe period under review included dry fruitsand nuts, imports of which decreased by2.76 percent. Similarly, the tea importsinto the country increase by five percentfrom $334.064 million to $350.772 millionwhile the imports of palm oil increased by17.53 percent by going up from $2.020 bil-lion to $2.374 billion.

The imports of pulses (leguminous veg-etables) went up from $403.119 million to$433.436 million, an increase of 7.52 per-cent while the imports of all other fooditems increased by 22.42 percent, from$1.200 billion to $1.469 billion, the PBSdata revealed. It is pertinent to mentionhere that the overall imports into the coun-try during the period under review increaseby 11.13 percent. The imports into the coun-try during July-June (2011-12) stood at$44.912 billion against the imports of$40.414 billion recorded during July-June(2010-11), according to the date.

Food forthought…Food importsfall 0.60percent Time to cry over spilt milk

ISLAMABAD: Pakistan has faced an annual loss of around Rs.169 billion due to postproduction losses of milk despite being included in the five largest milk producingcountries of the world, say an official. The official said, the lack of infrastructure such ascooling facilities at farms or collection points as well as transportation of milk is theprime cause for the post production losses of the milk, which is being addressedthrough various development projects. However, Pakistan Dairy DevelopmentCompany (PDDC) has made some significant contribution for improvement of the dairysector for which provinces need to take up the responsibility for improving the dairysector and devise sustainable strategy for cool chain development for reducing the milklosses. For the year 2011-12, the performance of livestock sector remained somehowsatisfactory. The production of meat at 3,232 thousand tonnes exceeded its target of3,056 thousand tonnes. Production of all beef, mutton and poultry meat exceeded theirtargets. The encouraging and remarkable performance consoled farming communitystruck by floods and failures of some other production sectors. The milk production at38,690 thousand tonnes was below its target of 45,883 thousand tonnes. It is quiterelevant to mention here that the contribution of livestock including poultry in totalGross Domestic Product (GDP) at 11.6 per cent and in agriculture GDP 55 per cent isquite significant. When farmers lose their expected income from crops due to floodsand other epidemics, livestock proves itself a sustainable source of income to the poormasses. For the past many years livestock has emerged as largest single contributor tothe agriculture. A growth rate of 4 per cent was achieved in recently ended financialyear 2011-12 which was equal to the target. ONLINE

World stocks rallied, US oil jumped nearly 5 percent and the euro surged onnews US employers increased hiring in July by the most in five months andon renewed optimism that Europe was closer to action on its debt crisis

‘Iran-Afghan trade ties up by 15%’TEHRAN: The trade exchanges betweenIran and Afghanistan have witnessed a 15%increase during the current Iranian year(started on March 20) compared with thesame period last year, an Afghan tradeofficial announced on Saturday. According toFNA dispatches, Head of the IndustrialistUnion of Afghanistan’s Western province ofHarat Hamidallah Khadem made theannouncement in an interview with Jomhornews agency. He further mentioned that theincrease in the consulate services presentedby Iran has encouraged Afghan traders toboost their trade exchanges with the IslamicRepublic. Iranian Consul-General in HeratRahim Mohammadi Yekta, for his part,voiced Iran’s willingness to purchaseAfghanistan’s surplus production, includingfruits as well as industrial products. NNI

Industry demands markup into single digitKARACHI: Trade and industry hasdemanded of the government to reduceinterest rate in the forthcomingMonetary Policy by the State Bank ofPakistan (SBP). The Korangi Associationof Trade and Industry (KATI) patron in-chief S M Muneer, Chairman EhteshamUddin, All Karachi Industrial Alliance(AKIA) President Mian Zahid Hussain,Vice Chairmen, Hasham A Razzak, TariqMalik and prominent industrialist SyedJohar Ali Qandhari said that SBP isscheduled to announce Monetary Policyon August 10, 2012 and Governor SBPYasin Anwar should reduce bank interestsignificantly as mark up rate in Pakistanis still highest in the region. They saidthat due to high mark up rates inPakistan industry is suffering badly andthe volume of non-performing loans(NPLs) is increasing alarmingly. Muneersaid that the State Bank of Pakistan(SBP) statistics revealed that anincremental of 10 percent or Rs 56.54billion has been witnessed in total NPLsof banking industry during CY11 said areport. NNI

Rs 169b lost due to postproduction of milk losses

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02

Sunday, 5 August, 2012

Business

NEW DELHI

AGENCIES

INDIA’S economic growth could fall tonear six percent this year with the coun-try facing the spectre of its third droughtin a decade, a top government policy-maker says.

In the last few months, the outlook for theonce-booming economy has worsened, hit bygovernment policy paralysis, steep interest rates,nosediving business confidence, the eurozonedebt crisis and now growing worry of drought.

“If we factor in that agriculture which will notbe strong ... (growth) will be closer to six percent”for the fiscal year to March 2013, Planning Com-mission Deputy Chairman Montek SinghAhluwalia told reporters in New Delhi.

His forecast, delivered Friday, is down fromthe 6.5 percent expansion India notched up last

year, and far below the close to 10 percent ex-pansion seen during a good part of the pastdecade. It comes comes as private economistsalso pare their growth estimates for Asia’sthird-largest economy, citing concern about“deficient” monsoon rains that sweep Indiafrom June to September.

A survey of economists and industry lead-ers by the Associated Chambers of Commerceand Industry of India, released Saturday, saidthe weak monsoon and a deteriorating globalsituation were expected to lower growth to 6.0-6.3 percent.

The projected growth is far below the 7.6percent expansion forecast for this year in theCongress-led government’s March budget.While around six percent growth is still muchfaster than most other countries, the left-lean-ing government says India needs much highergrowth to lift the living standards of its hun-

dreds of millions of poor.on Thursday, the weather office said the

monsoon rains were likely to be “15 percent defi-cient” — bad news for farmers with over half ofIndia’s arable land lacking irrigation.

If the rains do not improve, 2012 may turnout to be another drought year in India, whichis one of the world’s biggest consumers and pro-ducers of food with its population of 1.2 billion,experts say.

A drought is declared if rainfall is below 90percent of average annual levels. The monsoon sofar has been more than 20 percent below average.

In 2009, India was hit by its worst drought innearly four decades. The country also suffered adrought in 2002.

Goldman Sachs economist Tushar Poddar ex-pects even lower expansion, saying in a new noteto clients he was revising down his growth fore-cast to 5.7 percent from an earlier 6.6 percent.

Lagging behindelectronically

ISLAMABAD

ONLINE

only 25 percent of low-income countries processcash transfers and socialbenefits electronically andthis percentage is onlyslightly higher for publicsector salaries andpensions, said Gaiv Tata,World Bank Director,Financial Inclusion GlobalPractice. He said thismeans that manygovernments arestretching limitedresources, and spendingmore than they should onpaying benefits andsalaries. “Improvementsthat make governmentpayment programs moreefficient, safer and moretransparent can cut related administrative costs by as muchas 75 percent. As part of its commitment to helpinggovernments modernize in this area, the World Bank isreleasing “General Guidelines for the Development ofGovernment Payment Programs”, which promotes bestpractices and establishes standards for developing andimproving government payments programs. Millions ofpeople in developing countries worldwide receive theirsalaries, benefits and pensions through government-to-person (G2P) payments. But in many cases, they are notbeing delivered in a cost-efficient way. The report focuses oncases such as Brazil’s “Bolsa Familia” social safety netprogram, where the government saved 75 percent onadministrative costs by going electronic. Bolsa Familiaeasily brought universal coverage to 12.4 million low-incomeindividuals, representing about 30% of the population belowthe poverty line. By providing beneficiaries with access to apayments account, G2P programs can also expand financialinclusion for millions of the unbanked by serving as theirgateway to other financial services. Programs like “BolsaFamilia” provide a lifeline to low-income families so thatthey can spend on essentials such as food and education.More efficient government payment programs not onlyoptimize government payouts, but they can also improverevenue generating activities. “It is estimated thatgovernment expenditures and tax collections, which makeheavy use of government payment systems, amount to 15percent-45 percent of the GDP,” explained MassimoCirasino, World Bank Manager of Financial Infrastructure.“More efficient electronic payment systems not only save thegovernment money, they can also potentially benefittaxpayers and all other users of electronic payments.”

US President Barack obama, in a bid to muster inanother foreign policy triumph in the lead up tothe Presidential Elections, has pulled out new

sanctions against Iranian oil. The sanctions “forbid” for-eign banks from assisting Tehran in selling its oil by anymeans whatsoever, which, if Bloomberg is to be believed,cost the country around $133 million every day in lost rev-enues. Following the EU embargo which kicked in fromJuly 1 this year, this is another move to tighten the screwson Iran’s uranium enrichment program designed osten-sibly to give Tehran the nuclear wherewithal to wreakhavoc in what is undoubtedly the most volatile region onearth. Even so, with the West refusing to play ball on theoil front, there are quite a few other players warming upin the ballpark: the emerging markets.

New Delhi follows Beijing and Tokyo in offering in-surance to the tankers that are transporting crude oilfrom Tehran. Indian Shipping Corp would begin

services to Iran, with insurersfrom India vowing to five $100

million cover for each voyagealong the lines of Europeancompanies that used to give

unlimited insurance in case ofspills, collisions and other risks.

India is one of a dozen Iranian oil importers thathave been “given temporary exemption” from the sanc-

tions and is the third biggest purchaser of Iranian crudeoil. Now with the insurance issues settled, MRPL

(Mangalore Refinery & Petrochemicals Ltd),which is India’s biggest Iranian crude buyer,

and other Indian proces-sors can now fill in the oilvoid that has also exacer-

bated in-dustries in

C h i n a ,South Korea

and Japan.

The insurance settlement was extremely important be-cause most of the oil tankers delivering oil to these coun-tries were insured by Western companies – 95 percent ofthe tankers are insured by P&I Clubs which is a London-based group.

The Indian hierarchy – and by that we mean RajanMathai and Jaipal Reddy, the respective Foreign Secretaryand oil Minister – are adamant that New Delhi would onlyfollow the sanctions that are imposed by the UN, and isn’tpaying much heed to what Washington or Brussels haveto say about the issue. This is an intriguing turn of events,for New Delhi hobnobbing with Washington has beenpretty patent of late, and it would be a leaf out of Victorianirony, if it were India to come to Iran’s rescue as Washing-ton vies to stampede on Tehran fiscal nerve-center.

Furthermore, Hajara has also iterated that leading in-surers – like United India Insurance Co and also GeneralInsurance Corp – are set to offer lower cover for the ship-

ments from Iran when juxtaposed with what the Euro-pean counterparts put on table. And the insurers are alsogoing to offer a further $50 million for ‘hull and machin-ery cover’ and another $50 million for ‘protection and in-demnity per voyage’, Hajara has claimed. So yes, India ispretty clear where it stands on the Iranian sanctions, asthe emerging markets’ love-in with Tehran’s black goldlooks likes giving Uncle Sam a mini-predicament in hisquest to desiccate Iran’s oil supply to the world.

India’s stance is of course great news for Iran, andeven China, with the former looking for options to fill theexport void created by last month’s EU oil embargo, andthe latter knowing that it’s not alone in questioning thelegitimacy of what are evidently unilaterally imposedsanctions. New Delhi giving Beijing reassurances, helpingout Tehran, and threatening to estrange Washington:when exchequers cry out for some much needed influx,oil politics can throw in quite a few oddballs.

India to Iran’s rescue?As Washington

throws in another

sanctions curveball

towards Tehran,

ironically it is New

Delhi that looks like

being the emergency

pinch-hitter

KUNWAR KHULDUNE SHAHID

CRUDE AWAKENING

INDIA’S ECONOMIC growth seen lower as rains play truant

Only 25% lowincome countries

process cashtransfers

electronically

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