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Pakistan to create sugar buffer stocks to stabilise price

ISLAMABAD - Pakistan's Economic Coordination committee of the Cabinet (ECC) has allowed the establishment of sugar buffer stock to stabilise sugar prices in the country.

The decision was taken at the ECC meeting presided over by the Finance Minister Shaukat Aziz.

The meeting decided to procure 200, 000 metric tonnes of sugar in two installments. The first instalment of 100, 000 tonnes will be procured by the government after Eid.

The second installment of remaining 100,000 tones will be purchased in January 2004 from mill owners who have cleared all their outstandings due to sugarcane growers and have started crushing season not later than November 15.

These measures would ensure settlement of outstanding dues to the growers and at the same time provide an incentive to sugar mills to continue its operations in ensuing crushing season.

The ECC approved the recommendation of the ministry of Food and Agriculture to export 50,000 tonnes urea to Afghanistan immediately on the condition that only manufacturers will be allowed to export and the share of export of each manufacturer will be determined according to their total share in the local production of urea. The decision would encourage increase of production of urea and encourage legal trade with Afghanistan.

The ECC also approved the proposal of ministry of water and power for signing of an MOU on New Bong Escape Project. The proposal includes ownership of the project to be transferred to the government after the concession period; payment of water use charges by WAPDA in Pak rupees to government of Azad Jammu & Kashmir.

It was agreed to improve analytical capability at MINFAL and set up a separate agriculture export unit at the Export Promotion Bureau for making better estimates of export surpluses and related analysis of global trends and availability of agricultural produce. The MINFAL and Commerce will come up with specific recommendations so as to improve agricultural variety and exports.

The ECC also approved criteria for the establishment of oil marketing companies proposed by the Ministry of Petroleum and Natural Resources. The criteria has been developed keeping in view international standard, practices and policies.

The criteria includes upfront paid up capital of Rs100 million, which would be subsequently raised to Rs500 million through debt equity ratio of 60:40, experience in oil marketing, marketing plan, investment infrastructure, financial capability and expertise and quality control in the relevant field.

The criteria would ensure transparency through across the board policy for establishment of oil marketing companies. The meeting also approved proposal for Civil Aviation Authority's swapping of expensive foreign loans with local soft loans against government guarantees. This would improve Civil Aviation Authority's cash flow, reduce the cost of borrowing and provide budgetary space for investing in creating better airport facilities in the country. The ECC noted that total amount of $25.680 million were invested abroad by resident Pakistanis in equity based projects.

Governor State Bank, Dr Ishrat Hussain informed the ECC that remittances were on target at US $ 890 million for the first quarter after adjusting for usual items like Haj sponsorship.

He told the meeting that during 2001-2002 debt servicing in cash amounted to $6.3 billion. In the year 2002-2003 debt servicing in cash was reduced to $4.2 billion, registering a decrease of $2 billion or more than 33 per cent.

The debt servicing as percentage of exports of goods and non-factor services declined from 57.2 per cent in the year 2001-2002 to 31.7per cent in 2002-2003. This indicates that country's debt burden was declining at much faster pace and the country was fast approaching debt sustainability.

Secretary Commerce informed ECC that the trade deficit has been reduced to $138 million from US $ 188.4 million in the corresponding period of last year, registering an improvement of 26.8 per cent. Exports as percentage of imports increased to 95.6 per cent during July- Sept period of 2003-04 from 93.2 per cent in the corresponding period of last year. The export of non traditional items which registered an increase were: chemicals 8.5 per cent, petroleum products 120.2 per cent, electric fans 17.9 per cent, transport equipment 175 per cent, machinery for specialised industries 46.4 per cent and footwear 2.4 per cent.