IMF warns G20 economic leaders that tariffs hurting global economy

BUENOS AIRES: The International Monetary Fund (IMF) warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade."It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures... is in the range of 0.5 pct of GDP on a global basis," Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne. Her warning came shortly after the top U.S. economic official, Treasury Minister Steven Mnuchin, told reporters in the Argentine capital there was no "macroeconomic" effect yet on the world´s largest economy.Long-simmering trade tensions have burst into the open in recent months, with the United States and China - the world´s No.2 economy - slapping tariffs on $34 billion worth of each other´s goods so far. The weekend meeting in Buenos Aires comes amid a dramatic escalation in rhetoric on both sides.Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States. U.S. Treasury Secretary Steven Mnuchin will try to rally G7 allies over the weekend to join it in more aggressive action against China, but they may be reluctant to cooperate because of U.S. tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures.The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to "further dialogue."German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low."I don´t expect tangible progress to be made at this meeting," Scholz told reporters on the plane to Buenos Aires.Mnuchin told reporters on Saturday that he has not seen a macroeconomic impact from the U.S. tariffs on steel, aluminum and Chinese goods, along with retaliation from trading partners. But he said there have been microeconomic effects on individual businesses, he said, adding that the administration was closely monitoring these and looking at ways to help U.S. farmers hurt by retaliatory tariffs.The U.S. dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback´s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest level in a year.

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Mangla hydropower station rehabilitation project: Transparency International smells ‘corruption’ in contract bidding process

LAHORE: Transparency International Pakistan has leveled corruption charges on the state-owned Water and Power Development Authority (Wapda) for a contract bidding process related to rehabilitation of 980 megawatts Mangla hydroelectric power station, The News learnt on Saturday.Transparency International Pakistan (TIP), in a letter to Wapda Chairman in May, said a bidder given green signal by the authority in its evaluation is not supplying current limiter and medium voltage switchgear from the qualified manufacturers, and thus “the bid shall be declared non-responsive”.Justice (retired) Zia Perwez, a trustee of TIP and former judge of Supreme Court and Sindh High Court, observed that if the bid of any bidder is not complying with the specifications the bid could not be made responsive by allowing the bidder to change the supplier.Sources said Wapda management is tight- lipped on the issue and has yet to respond to TIP’s letter. No other corrective measure has been taken by Wapda in response to charges leveled against the authority, they added.The bidding process is part of rehabilitation of Mangla hydroelectric power station, with the financing of $237 million to be contributed by Agence Francaise Development, the United States Agency for International Development (USAID) and Wapda.Sources said Wapda is currently in the process of awarding the contract for Mangla rehabilitation package 6 and 8 to a Chinese company that has offered non-qualified equipment including current limiter and medium voltage switchgear by illegally giving a chance to replace it with qualified ones.The sources said such components are key parts and have to be offered from the qualified manufactures that must have to meet the technical and commercial requirements of the tender.The sources said a bidder termed lowest and qualified bidder byWapda quoted the current limiter from a Chinese’s manufacturer that could not meet the tender specifications.There is no manufacturer in China that manufactures the current limiter according to the required tender specifications, the sources added.Another bidder quoted the current limiter manufactured by the qualified manufacturer that could meet the tender specifications but Wapda did not accept the bid in its assessment.Medium voltage switchgear, which is one of the most critical components of the project and also called the heart of any power plant, must also be from a qualified manufacturer.The second lowest bidder quoted the component that meets the required tenderrequirements and which canbe fitted in Mangla power station in the same allocated spaces.The gear is manufactured by ABB and only offered by MHDC China, the second lowest bidder, said the sources.The bidder, termed successful by Wapda in its evaluation, expressed its intent to supply the required switchgear that is single level.This entails that the offered medium voltage switchgears are with only one circuit breaker and not two in the same panel as required and hence could not be fitted in the same allocated space in Mangla power station and thus not acceptable according to the tender conditions.Sources said such changes in the bidding process are against the Wapda’s earlier stance.Last year, General Manager Hydro Development of Wapda issued a post bid clarification before tender opening, specifically for medium voltage switchgear type, stating that it is not acceptable because it is single level and thus will not fit in the allocated space of Mangla power station.The sources said the current limiter and medium voltage switchgears quoted by the bidder could not meet the tender conditions, but even then thebidder is being accommodated for the award of contract by changing equipment.A tender clause (23.3 (i) (ii)) said the bid of Chinese bidder termed qualified by Wapda contains material deviations as the offered components do not meet the technical requirements of the tender, and is a major deviation, which cannotbe corrected by changing the manufacturers to the qualified ones and should be rejected, the sources said.Originally, the Mangla hydroelectric power station had a power generationcapacity of 1,000 megawatts from 10 generating units.The plant’s capacity was reduced to 980MW as aresult of degraded equipment.The Mangla dam rehabilitation project will add 90MW to the plant’s generation capacity after refurbishing and upgrading of units 5 and 6 of the plant, along with related plant facility enhancements.Consequently, Mangla’s revenue from electricity sales is expected to increase to approximately $60 million per year.New, modern equipment will ensure the availability of spare parts for preventive maintenance, and will improve the reliability and availability of the power plant for the next 25-30 years.

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Efficient water management stressed

SUKKUR: Judicial Water Commission Chairman Justice (retired) Amir Hani Muslim on Saturday stressed an efficient water management for sustainable socioeconomic development in the country that is on the verge of becoming water-stressed.“We must divert our attention and develop strategies and action plans to solve water-related issues,” Muslim said, addressing an event at US-Pakistan Centre for Advanced Studies in Water at Mehran University of Engineering and Technology, Jamshoro.The Supreme Court constituted the commission to probe into failures of authorities to solve water and sanitation issues in Sindh.The commission’s chairman said the country has witnessed devastating floods, prolonged drought, heat waves, and erratic weather patterns, which affect almost every aspect of life including agricultural productivity, livestock, food security, disease vectors, recession of the Himalayan glaciers and hydropower generation.Water availability in the Indus River has been decreasing over time. Per capita availability of water in Pakistan has been down to almost 1,000 cubic meters from more than 5,000 cubic meters in 1947. “The situation has been aggravated further due to the fact that Pakistan is considered as one of the most vulnerable countries in the world to climate change,” he added.Muslim further said water insecurity has emerged as an impediment to sustainable development in the country and inefficient management leads more than 50 percent of water. Reliable drinking water is accessible to less than 15 percent of the population.The commission’s head said inadequate sanitation leads to waterborne diseases and environmental and health issues. He called for collaboration between private and public sectors to attain the water sustainable goal of the United Nations.Mehran University Vice Chancellor Aslam Uqaili said prevailing water shortage and climate change increases responsibility of effective management of water resources and heightens the need of preparation to deal with extreme weather events. Uqaili said the university’s diploma course, ‘Flood Forecasting and Flood Hazard Management’, is an example of joint and coordinated efforts of the centre and the Sindh Irrigation Department, which provided Rs41 million to fund capacity building.

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Customs asked to verify exemptions before import clearance

KARACHI: Ministry of commerce asked the customs authorities to verify tax exemptions status of imports before clearing any consignment in a move to check inbound shipments that are the key driver to $18 billion of current account deficit, officials said on Saturday.The ministry of commerce directed the customs department, saying all import authorisations/exemptions/special permissions must be subject to verification of genuineness/authenticity from the ministry, according to the officials.The officials said the decision was taken on the alarming rise of imports. The State Bank of Pakistan data showed that imports of goods rose to $55.846 billion in the last fiscal year of 2017/18 compared to $48.683 billion a year earlier.Growing imports built up pressure on the current account deficit that widened to $18 billion or 5.7 percent of gross domestic product in FY2018, up a hefty 43 percent over the previous fiscal year.Tax officials said the ministry has deputed an official of joint secretary level as focal person to verify the authenticity of exemption certificate to grant the clearance of imports.Officials said huge quantum of imports is due to gross misuse of exemption certificates issued under various free and preferential trade agreements and special packages for various industries for import of raw materials.An official document showed that the government gave tax exemptions amounting to Rs541 billion in various heads during the last fiscal year. The last government exempted more than Rs300 billion of statutory regulatory orders related to tax exemptions after it signed an agreement with the International Monetary Fund in September 2016.The Economic Survey of Pakistan said the cost of customs duty concessions swelled to Rs198.2 billion in FY2018 compared to Rs151 billion in FY2017, depicting an increase of 31.2 percent or Rs47.2 billion. Approximately, 22 percent of customs duty exemptions were attributed to lower rates under various bilateral free trade agreements. Alone Chinese imports ate up Rs31.4 billion on account of tax concessions under the China-Pakistan free trade agreement.Tax officials said the latest ministry’s restriction on import clearance is applicable on all imports including automotive sector.The government has taken various steps to discourage imports of non-essential merchandised to save foreign exchange reserves that fell to nine billion dollars.In October last year, the Federal Board of Revenue (FBR) issued a list of 731 items, including cars as well as mobile phones on which five to 80 percent regulatory duties were imposed to discourage imports.Analysts are, however, critical of stopgap nature of regulatory duties. They said such measures could not lead to reduction in imports in the long-run. Especially, coercive duties on non-essentials could not contain their demand among the high income group.They, however, said reduction in capital-intensive imports and rupee depreciation may discourage inbound shipments.The central bank said the imports of machinery would scale back as Chinese-pledged infrastructure projects are reaching an advance stage. Energy sector is the key development component of more than $60 billion worth of China-Pakistan Economic Corridor projects.Rupee lost around 20 percent against the US dollar since December last year, making imports pricey.Currently, a mini-budget is under consideration at the top level as the economic ministries are contemplating different options to raise the additional customs duty by one percent on all the imported items or to jack up the regulatory duty on 1,550 items to discourage the rising import bills, officials said.The officials said the ministry of commerce and the FBR held different meetings to discuss the proposals. Even if the additional customs duty is placed the exemption will remain available to some items such as medicines or raw materials.

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Regulator oblivious to quality cherishes cheap medicines in market

LAHORE: Drug regulatory authority in Pakistan keenly focuses on price regulation, while taking it light to ensure purity and effectiveness of medicines being supplied to market – a fact that plays havoc with the lives of patients.As all the raw pharmaceutical raw materials are imported into the country it is absolutely essential to have a strict check on the quality of inputs being imported. Nothing should be released without proper testing or a certificate by a reputable accredited laboratory. Raw materials contaminated with injurious elements may cause more harm to the patients than cure. Pharmaceutical is a multibillion dollars trade in Pakistan and companies market only those products which are commercially feasible.Earlier this month, the Drug Regulatory Authority of Pakistan issued a ‘Recall Alert’ to 10 local pharmaceutical manufacturing companies, advising them to recall all their medicines containing contaminated raw materials imported from China. The European Medicines Agency has already issued a warning against the Chinese raw material suppliers.The substandard Chinese raw material is used to manufacture blood pressure control medicines in Pakistan. The local pharmaceutical companies were identified through customs documents.In other countries, such a directive from a regulator would automatically trigger an immediate recall from hospitals, pharmacies and patients. The identified companies claimed that they had changed the raw materials and had started supplying fresh stocks to market. This is, however, a false claim as changing a raw material in pharmaceutical products requires stability testing over a period of nine months before stocks could be released for use by patients.When a lower level or trace of a medicine subcomponent is transferred to finished products (food and medicines) it is considered harmless. But, improper manufacturing processes and monitoring can lead to its higher level in the final product, leading to toxicity damaging liver, heart and kidneys. Intake of higher level is carcinogenic.The subcomponent is a yellow, oily liquid with a faint, characteristic odor and a sweet taste. Called nitrosodimethylamine, it is an industrial by-product or waste product of several industrial processes, such as treatment of water via chlorination for use in manufacturing various products, including processed foods and medicines. The recent detection of higher levels of such component in Chinese raw materials indicates improper processes and poor monitoring at the suppliers facility.The drug regulator asked local pharmaceutical firms to immediately stop using of such raw materials from China. Surprisingly, even after several weeks of the alert, physical recall of the products containing the contaminated raw material is yet to be initiated and contaminated medicines are still being sold and prescribed by doctors in Pakistan.

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