In terms of public spending on education, Pakistan remains among the lowest as compared with the rest of South Asia and other low-income countries, it said. Islamabad spends only 1.6 percent of the GDP on education, while South Asian average spending remains around 2.2 percent of the GDP and other low-income countries spent 3.4 percent... Chronic child malnutrition is around 40 percent and high levels of out-of-pocket expenditures for health services hamper access of the poor to basic services, it said.

The PSDP allocation for Balochistan for this fiscal year stood at Rs42.5 billion. Prime Minister Yousuf Raza Gilani has allocated additional Rs3 billion for the development of the province, the sources said.

The profit of Pakistan Tobacco Company (PTC) plunged by 41 percent to Rs1.196 billion for the half-year ended on June 30 against Rs2.034 billion last year, primarily because of higher cost of production, a company statement said on Monday. The company announced an earning per share (EPS) of Rs4.68 for the half-year against Rs7.96 during the corresponding period last year.

India will produce a bumper crop of sugar and cotton in 2010/11 and part of the surplus is likely to be absorbed by Pakistan, where floods have ravaged both the crops in the main growing areas, industry experts said.

Pakistan’s share of $3.90 billion per annum is just one percent of the global garments trade of $361 billion and it stands at 12th position in garment and apparel exports,” Mulla quoted the data of the World Trade Organisation (WTO). He said Pakistan’s exports suffered because of the basic raw material, cotton and yarn exports in huge quantity. Bangladesh did not produce a single kilogram of raw cotton, but export readymade garments of $10.920 billion, which is three percent of the global share.“Bangladesh entered in the garments business in mid 90s and increased its exports due to better infrastructure, law and order situation, low rate of wages, efficient labour and government support, besides it enjoyed generalised system of preferences (GSP) plus regime being a lease developed country,” he said. The problems being faced by the Pakistani value-added sector included unavailability of yarn and proper infrastructure, shortage in utilities supply, inefficient labour, high labour cost, poor law and order situation and unannounced holidays, besides restricted access to foreign markets, he added.

A high level meeting, chaired by Governor Khyber-Pakhtunkhwa, Owais Ahmed Ghani Monday unanimously approved Rs 15 billion Fata Annual Development Programme (ADP) for year 2010-11. The meeting, held at Governor's House was attended by Fata Parliamentarians besides secretaries and directors of Fata Secretariat.

All Pakistan Textile Mills Association (Aptma) Punjab has welcomed the Sui Northern Gas Company Ltd (SNGPL) decision for revising gas holiday schedule for textile industry, curtailing it to two days from earlier proposed five days.

The PSM was in profit from July 2000 to June 2008 (8 years). The accumulated profit was Rs 9.40 billion, as per audited accounts for the year ending June 2008. The balance sheet for year 2008-09 showed Rs 29 billion profit and the total equity was wiped out in a matter of one year. Sources said that when Mueen Aftab Shaikh assumed charge of PSM on May 28, 2008, PSM had Rs 11 billion cash in banks, Rs 10 billion inventory of raw material, work in process and finished goods stock. He was sacked on August 18, 2009 by the Prime Minister on corruption charges, and FIA was asked to investigate the production of PSM, which dropped from 82 percent to 30 percent from June 2008 to August 2009 due to shortage of raw material. The financial liability by August 2009 was Rs 25 billion and inventory was almost exhausted. This implies that cash deprivation during the tenure of Mueen was Rs 40 billion.

The profit after tax of Hub Power Company (Hubco) has increased to Rs 5.556 billion in the financial year ended June 30, 2010 (FY10) as compared to Rs 3.780 billion earned the corresponding period on FY09. The company's earning per share increased to Rs 4.80 in the period under review against Rs 3.27 in the same period last year.

According to the WB Country Partnership Strategy, Pakistan's medium-term outlook hinges on a significant increase in tax revenues: by 2-3 percentage points of GDP by 2012/13. To meet this target, the authorities have committed comprehensive reforms in tax policy and administration. This includes quick implementation of a broad based value-added taxation (VAT) of goods and services, which the authorities plan to roll out in October 2010. However, the process is somewhat complicated as the Constitution assigns taxation of services to the provinces.

Many financial challenges lie ahead for the government. It is likely to face a swell in security-related expenditures that ballooned from Rs378 billion to Rs442 billion last fiscal year. Debt servicing is another area to be closely scrutinized as it too enlarged to Rs873 billion, up by Rs69 billion against the projected target. There is also uncertainty about getting foreign assistance of Rs186 billion this financial year. Figures for last fiscal year are hardly encouraging. Against the budget estimate of Rs377 billion, only Rs177 billion had been received from external resources, according to the SBP report. This also included around Rs93 billion provided by IMF as bridge financing for funds pledged by the friends of Pakistan. Collecting Rs1.667 trillion in federal tax revenue is a rather ambitious target in the existing environment. Federal Board of Revenue (FBR) has already indicated that the target is on the higher side by Rs70 billion to Rs100 billion... The redeeming factors during past fiscal year encompassed 2.0 per cent reduction in current account deficit owing to robust growth in remittances (more than $8.0 billion) and decline in trade deficit as exports surged. However, will these positive developments persist in the current financial year?... The financial market correctly interpreted an upward trend in inflation and did not enthusiastically participate in Pakistan Investment Bonds auction last month. The regime had to scrap bids for it. The government’s borrowing spree from the domestic market continues as reflected by the fact that it borrowed over Rs217 billion from the inter-bank market through T-bills during the first week of current fiscal year.

When I talked to her party’s economist Qaiser Bengali, who has also worked on the issue of interest rates and growth at Social Policy and Development Centre (SPDC), he said that the SBP decision to raise the interest rate to control the surging inflation was a right decision to check rising prices. He thinks that low interest rates are misused by the speculators for hoarding the commodities... Former State Bank Governor Dr. Ishrat Husain, who had pulled down interest rate from around 21 per cent to 12 per cent during the initial years of Musharraf era, also backed the recent SBP move to inch up the interest rates. Like a true professional he said that he could bring down the interest rate because inflation rate was hovering around 4-5 per cent... But the business community feels that every little bit counts in these bad times. While the big boys may swim out of the economic deluge, the small and medium entrepreneurs who are already facing serious economic crunch may sink. One sign of Small and Medium Enterprises (SMEs) drowning is that most of them have started defaulting on their loans to the banks. In turn the medium and small banks which had gone all out for the SMEs in better economic times - in the first half of this decade - are now in serious trouble.

Shortage of funds also remains a big hurdle in timely completion of dams. The government could release only 38 per cent of funds, allocated in two years, for 13 power projects. The government allocated Rs67.6 billion and Rs139.3 billion for these projects respectively during the last two fiscal years. Delay in building six other small dams in Khyber Pakhtoonkhwa, has not only let the flood wreak havoc, but the chance of storing water for future needs has also been missed. The delayed- projects, if completed on time this year, could have contributed in restricting floods in the area. These dams are: Palai Dam in Charsadda, Karak Dam and Lowaghar Dam in Karak, Dar Malik Dam in Kohat, Khyber Bara Dam in Haripur and Jabba Dam in Nowshera district.

The provincial governments had reservations about collection of VAT on services. The provinces wanted to collect the aforesaid tax on services themselves, under the new arrangement agreed between the federal and provincial governments. However, the centre is of the view that the provinces lack the required experience and expertise for the job, due to which it could be done in a much better manner by the Federal Board of Revenue (FBR). It is hoped that the matter would be amicably resolved between the federal and provincial governments soon. VAT was to be introduced by the government, at the time of the announcement of the federal budget, 2010-11. However, things did not go according to plan due to strong opposition from the trade and industry as well as the provincial governments. Now, the government is to introduce it this October by renaming it as reformed general sales tax (GST). Since the government is under strong pressure from the IMF to deliver on the issue, it seems to have no option but to go ahead with the introduction of the reformed GST.