The Economic Co-ordination Committee (ECC) of the Cabinet, which met with Finance Minister Naveed Qamar in the chair on Tuesday, removed 5 percent cap for tariff and approved a status of a distribution company for Karachi Electric Supply Company (KESC). It, however, noted that the issue of tariff for KESC would be determined by Nepra.
The committee was apprised that exports had gone up by 29.5 percent in July as compared to the corresponding month of last year. Similarly, tax collection was up by 40.6 percent, rising from Rs 50 billion to Rs 70 billion, and remittances were up from $496 million to $627 million in July, showing an increase of 26.5 percent.
Foreign direct investment (FDI) was up by 76 percent, which indicated confidence of foreign investors in Pakistan''s economy. The ECC was also informed that the prices of wheat, wheat flour, rice, vegetable oil and ghee and some pulses were stabilising but at higher levels. It was told that higher CPI-based inflation in July 2008 against July 2007 was because of the base effect, as prices of several items were low in July 2007. However, as we move forward in the current fiscal year, the base effect will play its role and the overall rate of inflation will start decelerating.
The ECC was informed that the government had put in place stringent monetary and fiscal policy measures to curb aggregate demand with a view of slowing import growth and improving the country''s trade and current account deficit.
The meeting was informed that the government was seriously considering to discourage imports of non-essential items, conservation of energy and fuel efficiency including accelerating the privatisation process. The ECC was informed that there were sufficient stocks of sugar with Trading Corporation of Pakistan and the government would ensure that sugar was available for the consumers during Ramazan at reasonable rates. The government will not hesitate in releasing sugar from TCP stocks to keep the price at a reasonable level.
The ECC approved the summary of the Ministry of Defence for operational restructuring of PIA with the direction to the airline to present its business plan in the next ECC meeting. The ECC approved the joint management of Heavy Mechanical Complex by the Ministry of Industries and Strategic Plan Division. The ECC also approved the Ministry of Industries'' proposal regarding PASDEC to arrange loan amounting to Rs 400 million from the banking sector at market rate with GOP guarantee to be used for development of marble cities.
The ECC accorded its approval to magnetising the tariff on domestic PTA at the rate of 7.5 percent in the form of compensatory support to eight PTA users. On the current international prices of PTA, the financial impact is estimated to Rs 3.5 billion.
The ECC formed a committee, headed by Minister for Port and Shipping Qamaruz Zaman Kaira, to present a report to recover foreign currency loans from the private sector. Other member of the committee is Secretary Finance. The committee will be assisted by Secretary, Economic Affairs Division and the State Bank of Pakistan. The ECC approved an incentive package proposed by the Ministry of Industries and Production for foreign investment in Petro-chemical sector.
Tariff determination will be done by Nepra. The ECC constituted a committee to resolve the matter of all outstanding payments to NTDC and other public sector organisations. The committee is to be headed by Minister for Finance, and comprising of Secretary Finance, Secretary Water and Power, and Secretary Privatisation Commission along with Wapda Chairman and Pepco Managing Director.
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