Pakistanis protest against improving trade with India

MUZAFFARABAD: Hundreds of Islamist activists in Pakistani-administered Kashmir on Friday demonstrated against the government’s decision to take steps to improve trade with India.

Pakistan’s cabinet last month said it approved a proposal giving India the status of “most favoured nation” in a move towards normalising trade relations between the two nuclear-armed neighbours.

Members of banned Islamist groups including Jamaat-ud-Dawa, Jaish-e-Mohammad and Lashkar-e-Taiba, and hardline religious party Jamaat-e-Islami gathered in the main square in Muzaffarabad, the capital of Pakistan-administered Kashmir.

Protesters shouted slogans against the Pakistani government and were joined by supporters of the main opposition party of former prime minister Nawaz Sharif, an AFP reporter said.

“We will never accept this decision,” Maulana Abdul Aziz Alvi, local chief of Jamaat-ud-Dawa told the gathering.

His organisation is blacklisted as a terror group by the United Nations and considered a front for Lashkar-e-Taiba that Washington and New Delhi blamed for the killings of 166 people on November 26, 2008 attacks in Mumbai.

Protesters later blocked the main road passing through Muzaffarabad city centre by setting tyres on fire.

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Posted in: BUSINESS

Provinces borrowing heavily from SBP

KARACHI: The provincial governments have been borrowing heavily from the State Bank despite the fact that they are receiving over 57 per cent revenue from the federal divisible pool.

The transfer of allocated funds under the central pool has not been smooth, but the provinces are also responsible for mishandling even the available funds. Borrowings from the central bank may be a remedy for slow supply of allocated funds from the centre because this is an easy way to get cash. But these borrowings will cost them higher as interest on the money would significantly reduce the size of allocated revenue.

According to SBP figures on Wednesday, the provinces collectively borrowed Rs56 billion over the past four and half months.

The trend is reverse when compared with the last year’s figures. During the same period last year, the provinces retired Rs16 billion of debt from the central bank.

The Punjab government borrowed the highest amount of Rs41 billion, compared to Rs9 billion during the same period last year.

The Khyber Pakhtunkhwa government reversed its borrowing trend this year. Last year, it was a net retiree of Rs13 billion to the SBP. This year the KP government borrowed Rs14.4 billion.

The Sindh government borrowed to Rs7.7 billion. During the same period last year, it had limited its borrowing to just Rs358 million.

The Balochistan government did not borrow from the State Bank and instead retired Rs6.5 billion.

Political observes believe that the provincial governments are borrowing from the SBP to complete old projects or launch new ones to attract voters in the next elections.

But economic analysts are of the opinion that the reduced flow of the allocated funds from the centre has forced the provinces to borrow from the SBP. “There has no track record of 100 per cent timely transaction of the allocated money to the provinces, but at the same time the provinces have also never utilised even the transferred amount,” they said.

They said the provinces could adjust the borrowed amount once they received the allocated funds from the centre. It could help them complete their projects or other needs. However, they said, the interest on the borrowed money would reduce the available liquidity.

The analysts said the federal government heavily depended on borrowings, mostly from commercial banks and, therefore, it was easy to understand the difficulties in the supply of allocated money to the provinces.

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Posted in: BUSINESS