Sunday, 14 October, 2012

IFIs, MFIs should invest inPakistan: speakers

ISLAMABAD

ONLINE

Speakers and participants in a roundtable session stressed on the need forfinancing macro-level projects of renewable and alternative energy inPakistan by International Financial Institutions (IFIs). The roundtableheld on Saturday was the inaugural session themed ‘Deployment ofAlternative and Renewable Energy Technologies in PakistanOpportunities, Obstacles & Way Forward’ of a conference on alternativeand renewable energy sources titled “Towards an Energy Secure Pakistan”being held under the auspices of Institute of Policy Studies in collaborationwith Renewable Energy Association of Pakistan (REAP) and AlternativeEnergy Development Board (AEDB). Speakers and participants in aroundtable session stressed on the need for financing macro-level projectsof renewable and alternative energy in Pakistan by IFIs at the generationand supply end; and by MFIs at the consumer end in order to meet thegrowing demand of electricity, which would reach around 100,000 MW by2050. The session was addressed by Arif Alauddin, CEO, AEDB, KhalidRahman, DG-IPS, Asif Jah, chairman, Islamabad chapter of REAP and anumber of experts on ARE technologies such as biogas, solar, micro hydel,biomas, wind, etc. The participants discussed various opportunities andavailable ARE technologies that have rich potential to meet the increasingdemand of energy in Pakistan and urged the government to provide anenabling environment to attract FDI and facilitate and encourage the localmanufacturers and help them get adequate financing and latest technologyto develop reliable and economically viable solutions on a large scale forthe consumers. Arif Alauddin in his concluding remarks said that oneshould not compare Pakistan with countries like US, Canada, Germany oreven India, which were providing subsidies to the extent of US$0.50 toUS$0.70 per unit to the consumers. He informed that India had allocatedUS$18bn to provide subsidies on electricity to its people, adding that wehave to discuss implementable solutions to meet the energy crisis. Hefurther informed that the Asian Development Bank (ADB) offer to thegovernment of Pakistan to obtain up to US$500mn through multiannualfinancial framework (MFF) facility for renewable energy projects in thepublic sector was being utilized through setting up of 10 micro hydelprojects across Punjab worth US$140mn and other projects were alsobeing planned.

‘Energy shortage can be managedby adopting solid strategy’

ISLAMABAD

ONLINE

The Chairman Intellectual property Organization (IPO) Hameed Ullah JanAfridi has said that the phenomena of energy shortage can be managed wellby adopting a solid strategy, planning and utilization of renewable energyresources in the country. Hameed Ullah Jan Afridi stated this whileaddressing the REAP 2nd international exhibition and conference ofAlternative energy and energy efficiency commenced here on Saturdayorganized by Renewable and alternative energy association of Pakistan(REAP). He said that we need to ponder is how to put renewable energyfinancing as well as micro financing from the point of view of ruralelectrification in place so that it is readily and ubiquitously available to everyone who fulfills basic set requirement just like in western world. This resultin large section of population taking interest in the momentum to turn in toan overall on grid solar home system installed. Chairman IPO said that thereis a dire need for the relevant government quarters to announce the muchawaited residential renewable energy feed in tariffs. These residential feed intariff coupled with easily accessible financing options are essentialingredients that are a must for thriving renewable energy culture butunfortunately we are lacking on both these points. Afridi said that as perpopular residential feed in tariff and RE financing in place I m sure and veryhopeful that soon we would be very successful and role model for otherdeveloping nation to follow us as far as renewable energy is concerned.

TOKYO

APP

FInAnCE Minister Dr. AbdulHafeez Shaikh Saturday saidgrowth in economic sector ispicking up in Pakistan and itis expected to be around

four percent this year.The Finance Minister said this during

a meeting with UK Secretary of State Jus-tine Greening on the sidelines of the an-nual meetings of WB and IMF being heldin Tokyo.

Highlighting the socio-economic sit-uation, the Minister said that it is for thefirst time in the history of Pakistan thattrue democratic transition is taking placeand the economy is in good condition.

“We have considerable foreign re-serves”, the Minister added. He said thatdemocracy is getting strong foothold inPakistan where all the institutions areworking efficiently and independently.

Despite some security problems, thegovernment has succeeded in improvingthe economic conditions of the country,he added.

The Finance Minister said, “We haveachieved an increase of 28% in our ex-ports and the GDP growth rate is ex-pected to be around 4% this year.”

He said that the government haseliminated 392 small levies from theicountry and the custom duty on importshas been slashed in order to open theeconomy to attract the foreign direct in-vestment. He said due to governments

tax reforms, revenue collection has beendoubled since 2008.

The Minister said that the govern-ment is pursuing regional balance in de-velopment focusing on Balochistan,Gilgit-Baltistan and FATA where specialprojects have been launched to improvethe socio-economic conditions of the peo-ple. He said that after 7th nFC award theprovinces have been given more re-sources to improve the socio-economicconditions of the people.

Justine Greening, UK Secretary ofState appreciated the reforms broughtabout by the present democratic govern-ment in Pakistan. She said that UnitedKingdom will continue its support to Pak-istan to improve the economy and reducethe poverty.

Dr. Abdul Hafeez Shaikh alsoheld meeting with his Afghan coun-terpart. Both the Ministers reviewedthe economic relations between thetwo countries. They agreed to continuefurther mutual cooperation in differentspheres for the socio-economic develop-ment in the region.

He also participated in theDevelopment CommitteeMeeting of the IMF. Themeeting was addressedby World Bank GroupPresident Dr.Jim YongKim and IMF Man-aging Director Ms.Christine La-garde and theFinance Minis-ters from the differentregions.

Doc says four percent

TOKYO

AFP

The world economy needs to balance auster-ity with growth if it is to recover fully fromthe global financial crisis, a key IMF com-mittee said in Tokyo on Saturday.

“Fiscal policy should be appropriatelycalibrated to be as growth-friendly as possi-ble,” the International Monetary and Finan-cial Committee said in a communique.

The statement came after days of backand forth between those — led by Germany— urging no let-up from belt-tightening andthose arguing for a loosening of the grip ofausterity. International Monetary FundManaging Director Christine Lagarde saidon Thursday she was happy for Greece —struggling under the weight of cuts de-manded by international creditors — to havetwo more years to meet its deficit-reductiontargets. But the following day, Germany’s fi-nance minister Wolfgang Schaeuble saidthere was “no alternative” to cutting bloatednational balance sheets.

Speaking to reporters, Lagarde playeddown growing speculation of a rift on thedepth and timeline for painful austerity cutsin debt-addled eurozone economies.

“There have been a lot of debates on fis-cal adjustment. And what sometimes hasbeen presented as disagreement is moreabout perception than reality,” she said.

“We all recognise credible, medium-termadjustments are necessary in all advancedeconomies... (but) the pace and type ofmeasures obviously need to be calibrated ona country-by-country basis. It cannot be one-size-fits-all.” She added that fiscal policyalone “is not sufficient”. “On these points,there was complete agreement,” she said.

The International Monetary and Finan-cial Committee, which issued Saturday’scommunique, is a body made of up twodozen central bankers and government min-isters who advise the IMF’s board on itswork. Days after the Fund warned theworld’s economy was growing at a slowerrate than previously thought, the committeesaid there remained “substantial uncertain-ties and downside risks”.

“Key policy steps have been announced,but effective and timely implementation iscritical to rebuild confidence,” it said.

“We need to act decisively to break neg-ative feedback loops and restore the globaleconomy to a path of strong, sustainable andbalanced growth. “Advanced economies

should deliver the necessary structural re-forms and implement credible fiscal plans.Emerging market economies should pre-serve or use policy flexibility as appropriateto facilitate a response to adverse shocks andsupport growth.” The communique saidmonetary easing — like that practised by theUS Federal Reserve and other central banks— had been helpful, but it was vital that“credible medium-term fiscal consolidationplans” were put inplace.

Fiscal policy should be ‘growth friendly’: IMF body

Growth picking up, expected to reach four percent: finance minister

ISLAMABAD

APP

President Asif Ali Zardari is scheduled to visit to Baku, Azerbaijan toparticipate in the 12th Summit of the Economic CooperationOrganization (ECO) members being held on October 15.During the visit President Zardari would hold meetings with Azerbaijan’sleadership and leaders of ECO member countries on the sidelines of theSummit. The 11th ECO summit was held in Istanbul in December 2010.The 20th Meeting of the Council of Ministers of the EconomicCooperation Organization (ECO) will also be held in Baku on October 15. The meeting of Council of Ministers will account for the reports of theECO and its institutions on the progress achieved in the main activityarea of the ECO that focus among other issues, on transport, trade,

energy, environment and agriculture covering the period 2011-2012.The meeting will adopt substantial decisions on the newinitiatives and activities reflected in the programplanned for 2012-13. The ECO Summit being held on

October will mark nearly two decades of sustainablefunctioning of the regional organization, second largest in

the world. A Baku Declaration outlining the vision andguidance for the organization will be issued at the end of the

summit. The ECO is an intergovernmental organization involvingseven Asian and three Euro-Asian nations. It provides a platform to

discuss ways to improve development and promote trade andinvestment opportunities and the common objective is to establish asingle market for goods and services, much like the European Union.The ECO’s secretariat and cultural department are located in Tehran, itseconomic bureau is in Turkey and its scientific bureau is situated inPakistan. The organization was founded by Turkey, Iran and Pakistan in1985 and in 1992, the ECO was expanded to include seven new members,namely Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan,Turkmenistan and Uzbekistan.

Off tO Baku!President Zardari to attend ECO summit beingheld in Baku on 15th

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Sunday, 14 October, 2012

Business

NEW YORK

AGENCIES

InvESTORS failed to be cheered even by datashowing Americans were the most upbeat theyhave been in five years, as well as record quar-terly profits at JPMorgan Chase (JPM.n) andWells Fargo (WFC.n). As a result, U.S. stocks

posted their worst weekly decline since June.“There’s a lot of trepidation about earnings season,”

said Randy Warren, chief investment officer of WarrenFinancial Service in Exton, Pennsylvania.

“The predictions have been for weaker earnings, andwe’ve heard a few companies saying things are slowingdown a little bit in various places, especially overseas.”

Weak global demand has heightened concerns overthe prospects for corporate earnings growth. As a group,S&P 500 companies’ quarterly earnings are expected tofall 3 percent from a year ago, according to ThomsonReuters data, marking the first decline in three years.

“Investors have been focusing on supportive centralbank polices to the exclusion of other things,” said KateWarne, investment strategist at Edward Jones in StLouis. “now with earnings season, we’re seeing some ofthose other things come back into better balance andthat’s not as good news for the market.”

The Dow Jones industrial average .DJI ended up 2.46points, or 0.02 percent, at 13,328.85. The Standard &Poor’s 500 Index .SPX dipped 4.25 points, or 0.30 per-cent, to 1,428.59. The nasdaq Composite Index .IXICeased 5.30 points, or 0.17 percent, to 3,044.11. All threeindexes were down more than 2 percent for the week.

Shares of JPMorgan, which had surged before themarket’s open, and those of Wells Fargo were lower in af-ternoon trading. Bank shares were down 2.5 percent onthe KBW Bank Index .BKX. While JPMorgan’s resultsmet analysts’ expectations, Wells Fargo came up weakerthan expected on a key performance measure. Its shareswere down 2.6 percent, while JPMorgan fell 1.1 percent.

“Bank shares as a group have had a nice move (up)this year so far,” said Ken Polcari, managing director atICAP Equities in new York. “Guidance is cautious so peo-ple are taking money off the table.” In Europe, the FTSEu-rofirst 300 .FTEU3 ended down 0.5 percent. The MSCIworld stock index .MIWD00000PUS eased 0.2 percent.

The euro rose against the dollar and yen but the cur-rency looked likely to struggle for traction. A bailout re-quest from indebted Spain is seen as positive for the euroas it would remove another layer of uncertainty in finan-cial markets and activate the European Central Bank’s

bond-buying program, aimed at lowering borrowing costsfor troubled euro zone economies.

“The latest developments do suggest that the Spanishauthorities continue contemplating the possibility” (of abailout request), said vassili Serebriakov, currencystrategist at Wells Fargo in new York.

“While the timing remains highly uncertain, we stillbelieve an aid request is more likely than not,” he said.

The dollar was off 0.1 percent against a basket ofother major currencies. The euro was at $1.2952, up 0.2percent on the day. It has traded in a tight range roughlybetween $1.28 and $1.3170 since mid-September.

Many markets have been stuck in narrow ranges sincethe start of the month as investors wait to see whetherSpain requests a bailout, a prerequisite for the ECB to buyits bonds. The bloc has another opportunity to makeprogress with its crisis strategy when EU leaders meet inBrussels on Thursday. Brent oil fell below $115 a barrelafter a prediction of a further decline in oil consumptionand higher supplies offset concerns about potential out-put disruptions in the Middle East. Brent crude was down$1.09 at $114.62 a barrel, while U.S. crude settled down21 cents at $91.86. The benchmark 10-year U.S. Treasurynote was up 03/32 in price, yielding 1.660 percent. TheThomson Reuters/University of Michigan’s index on U.S.consumer sentiment rose to 83.1 in early October from78.3 a month earlier, its highest since September 2007.

Meanwhile, U.S. producer prices rose more than ex-pected in September, although underlying inflation pres-sures were muted.

BEIJING

AGENCIES

The remarks by People’s Bank ofChina (PBOC) Governor Zhou Xi-aochuan come even as analystscredit policy easing from G4 central

banks - the U.S. Federal Reserve, theEuropean Central Bank (ECB), the

Bank of Japan and the Bank of England- in the third quarter of the year as under-

pinning business confidence.Chinese data on Saturday offered a sign

that G4 policy easing was being felt in theworld’s second biggest economy, with tradenumbers showing exports grew at roughlytwice the rate expected in September whileimports returned to the path of expansion.

“The data shows both imports and exportsare improving - especially a re-

bound in export growth reflects a rising confi-dence after the U.S. and European countrieslaunched further easing policies last month,”said Xue Hexiang, an analyst at Guotai JunanSecurities in Shanghai, after the trade numberswere released. Across Asia, central banks arewary about the potential inflationary impact ofthe Fed’s latest quantitative easing, dubbed QE3,as well as policy stimulus unveiled by the ECB.

Central banks “should consider drainingexcessive liquidity injected into the market andeliminate inflationary pressure in the long-term”, Zhou was quoted as saying by Xinhua,which cited the Journal of Public Research, amagazine published by the People’s Bank ofChina. China’s central bank said in Septemberthat it would “fine tune” policy to cushion theeconomy against global risks while closelywatching the possible impact from recent policyloosening in the United States and Europe.

China’s economy has slowed for six suc-cessive quarters and economists expect thatQ3 growth data due on October 18 will con-firm the slide extended for a seventh. The con-sensus forecast in a Reuters poll is for annualgrowth of 7.4 percent in Q3, down from Q2’s7.6 percent.

Under the banner of policy fine-tuning,China’s central bank cut interest rates twice inJune and July and lowered banks’ reserve re-quirement ratio (RRR) three times since late2011, freeing an estimated 1.2 trillion yuan forboosting loans. But it has refrained from cut-ting interest rates or RRR since July. Instead,it has opted to inject short-term cash via itsopen market operations into money marketsto ease credit strains.

China’s annual rate of inflation was 2 per-cent in August, half the 4 percent targeted by thecentral bank, though nudging higher from July’s1.8 percent rate. The PBOC has fought hard tobring inflation down from a three year peak of6.5 percent hit in July 2011 and is determined tocontain price pressures. Consumer price data forSeptember is due to be published on October 15and the benchmark Reuters poll has a consensusforecast for annual inflation of 1.9 percent.

Meanwhile China’s long-term inflationarypressure could be alleviated by the slowing rateof acquisition of foreign exchange reserves, Zhousaid. China’s official reserves, the world’s largestat $3.29 billion as at the end of September, havebeen relatively steady this year as global tradehas slowed and Chinese exports along with it.

TOKYO

AGENCIES

Lamy, who will leave the WTO after two termsin August 2014, said it was up to the organi-zation’s member countries to decide on thecriteria for selecting the new WTO chief whowill oversee unfinished negotiations overtrade liberalization.

Emerging market countries will want tosee one of their own in charge of the Geneva-based trading club after the top jobs at theIMF and the World Bank went to a Europeanand an American following a decades old tra-dition criticized as being out of line with thenew world order.

Lamy said the selection procedure at theWTO is different.

“I don’t think this is a geographic rotationsystem,” Lamy told Reuters in an interview onthe sidelines of the semi-annual InternationalMonetary Fund and World Bank meetings inTokyo. “There is nothing in the rules of theWTO that say that if somebody came from thiscountry, then the next one should come fromthis country. I think what really matters is thatit’s not a diplomatic game. It’s a headhuntinggame.” Formal nominations are not due untilDecember, but trade diplomats are already as-sessing chances and gathering names.

Two candidates have formally declaredtheir interest: Ghana’s former trade ministerAlan Kyerematen and new Zealand’s currenttrade minister Tim Groser. Trade diplomatsexpect more candidates to emerge.

Asked about Ukraine’s decision to tell itstrading partners it wanted to raise maximumtariffs on hundreds of imported goods, a movecriticized as a threat to open trade, Lamy saidthe WTO verdict would depend on what con-cessions Ukraine was ready to offer in return.

He said WTO rules allowed a member totake such steps if it offered to reduce protec-tion on other products and ultimately it was amatter of negotiations between Ukraine andits trading partners.

“The spirit is that if you make your econ-omy less open on one item, you have to com-pensate by opening (the) economy on anotheritem. So it is the process of negotiation,” hesaid. “I wouldn’t pre-qualify this. If Ukrainewants to increase its protection on some itemsand decreases its protection on other items,we have to look at the balance before makinga judgment.”

Ukraine has expressed its intention to raise

tariff ceilings without any precise number.The move drew criticism from at least 19

nations arguing it could undermine the verybasis of the $18 trillion global trade system.

On Lamy’s watch as head of the WTO, hehas witnessed the stalling of decade-long talkson trade liberalization known as the DohaRound. But he said he saw promising signsthat some progress was possible and that hewas “cautiously optimistic” now as opposed to“cautiously pessimistic” a year ago.

“I think there is a bit more momentum.And it took a bit of time for the members torealize that the big deal was not available in ashort time and to realize that, if that was thesituation, they nevertheless had to try andmove trade opening forward,” he said.

“Especially in a situation where we knowthat opening more trade is a low-cost solu-tion to stimulating growth. So there is also asort of crisis exit component in this, let’s say,new attitude.”

Stocks retreat onearnings concerns,euro steadyStocks slipped on Friday as investors fretted over what is expected tobe a weak corporate earnings season, while gains in the euro werechecked by uncertainty over whether and when Spain would requesthelp with its finances

World Trade Organization Director General Pascal Lamysaid on Saturday that there was no system of rotating hisjob between countries and regions and his successorshould be picked on the basis of competence alone

China’s central bank governor has warned that quantitative easing policies worldwidecould cause inflationary risks, state news agency Xinhua said on Saturday

Geography shouldn’t matterin choice of WTO chief: Lamy

China central bank chief wary of QE3 inflation risk: paper

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