Government to take decision on PIA's future today
Karachi Stock Exchange: The government would decide about the future of Pakistan International Airlines (PIA) in the light of a presentation by the management of national flag carrier to the Prime Minister today. The management of the PIA would be presenting various options to the Prime Minister. These include a plan aimed at reducing the losses of national flag carrier by Rs 400 million to Rs 500 million by the end of December 2013 and then to achieve the break even in a year's time if everything goes according to the plan. They said that the PIA has been incurring around 3 billion losses which would be reduced to Rs 2.5 billion by the end-December 2013. Addition of some new planes to the fleet would also help achieve fuel efficiency. Management plan involves considerable reduction in losses by operating flights on profitable routes, inducting new planes and by checking pilferage in ticketing and catering. The Prime Minister would decide whether it should give the PIA business plan a chance or privatize it.
Government borrows Rs 600 billion in two months
Karachi Stock Exchange: A shortfall in the revenue collection has resulted in massive government borrowing from domestic banking sector particularly the State Bank Of Pakistan (SBP). The federal government's borrowing for budgetary support from the central bank has crossed Rs 600 billion mark in first two months of the current fiscal year. Massive borrowing from the banking system clearly reflects that the government is still facing financial difficulties, despite taking several measures to increase its revenue collection and curtail the rising expenditures. The government had increased General Sales Tax (GST) from 16 percent to 17 percent in the Budget 2014 to enhance its income. In addition, the government has increased power and gas tariff to reduce the burden of subsidies, however, the government steps for the higher revenue generation seems to have failed as the budgetary borrowing is continuously increasing, they pointed out. They said borrowing of Rs 500 billion to the power sector to settle the circular debt issue is also a reason for higher borrowing during this fiscal year. According to the State Bank of Pakistan the federal government's borrowing for budgetary support has registered a notable increase during two months of current fiscal year (FY14). The federal government budgetary borrowing rose to Rs 637 billion in July-August of FY14 against retirement of Rs 78.393 billion in the same period of last fiscal year.
Services trade deficit falls by 42 percent
Karachi Stock Exchange: Pakistani international services trade deficit stood at $159 million during July 2013 against $274.82 million recorded in the corresponding month last year, representing a decline of 42.16 percent. During the month under review, the economy hired foreign companies’ services worth $543.88 million while selling services abroad worth $384.92 million. The country’s services exports (money inflow) stood at $342.89 million and imports (outflow) at $617.71 million in same month last year, representing an increase of 12.26 percent in exports and 11.95 percent decline in imports of the country services, according to the Pakistan’s Bureau of Statistics (PBS). During July 2013, services exports declined by 20 percent and imports by 9.37 percent when compared to the previous month. During June 2013, exports stood at $481.34 million and imports at $600.12 million. The country is not expected to reverse or break-even in the services trade in the short-term given the comparatively backward services industry. Pakistan’s soaring need for foreign transport, insurance and consultancy services as well as increased expenditure on financial services will also likely contribute to the expected hike in the deficit. Pakistan’s trade deficit fell by 3.07 percent for the first two months of the fiscal year 2013/14.