April 28, 2007	Saturday	Rabi-us-Sani 10, 1428

KARACHI, April 27: Experts and analysts said on Friday that the reversal of Pakistan Steel’s privatisation decelerated the government’s privatisation process, as financial year 2006-07 proved almost negligible performance of the government in the field.

They said the government was still in a position to improve its case if it succeeds to sell some of its scheduled projects.

Latest data shows that privatisation proceeds which had been a vital part of foreign exchange earnings for the government were much lower than what the government received last year.

During July-March 2007, the government received just $133.2 million as compared to $919.3 million during the corresponding period last year. It is 690 per cent less than the previous year.

Though the government received much more in foreign direct investment as against its expectations, it left the option to extract more despite widening of current account deficit which threatens its higher forex inflows.

The forex inflows in terms of foreign direct investment reached $3.859 billion during the first nine months of the current year which was 72 per cent higher than the same period last year.

The government is expecting to earn a hefty amount through the sale of Pakistan State Oil and that could improve its privatisation performance.

“The government will earn more through issuance of GDRs of banks, like NBP and others, where it has stakes, including some government-owned oil companies and it will bring more in its forex accounts,” said an analyst.

Though the forex accounts have been soaring and the forex reserves have reached record level of $13.7 billion, the threat of widening trade deficit and current account deficit is still haunting.

“With the rise in foreign exchange reserves of the country, the size of trade deficit has further ballooned and the country’s ability to import is shrinking sharply,” he said.

The strange phenomenon that the country is loosing its ability to pay import bill while having record level of foreign exchange, could be surprising for the people but not for some experts.

“It is simple to understand. Our imports have gone up far beyond the capacity to make payments, but it is strange that the country is importing what it could have avoided, saving its precious foreign exchange,” commented a government official.During the first eight months, the country imported vegetables and vegetable products worth $693 million, prepared food-stuffs of $463 million, motor vehicles worth $823 million, textile and textile articles worth $821 million and paid $1.405 billion for freight and insurance.

“For the last six years, the government never tried to check the tendency to import goods which could be avoided or could be produced in the country,” said the official.