Wednesday, 4 June 2014

Defence spending jacked up by 11.1%

After Rs73b increase defence budget for 2014-15 stands at Rs700.2b. PHOTO: FILE
ISLAMABAD: 
Pakistan has raised its defence spending by 11.1 per cent for the coming fiscal year amid reports that the army is preparing for the final push against Taliban militants holed up in the tribal areas bordering Afghanistan.
Defence budget has been jacked up to Rs700.2 billion for the financial year beginning July 1, compared with Rs627.2 billion allocated in the outgoing fiscal year, showing an increase of Rs73 billion. The military had sought an increase of Rs173 billion.
Military officials defended the increase insisting that Pakistani military’s expenses are the lowest in the region given the volatile security environment.
The budget document presented before the parliament did not give a breakdown of the allocations for the three forces. But according to defence ministry officials, out of the whole defence budget, Pakistan Army gets 48% while 20% goes to air force and navy’s share is 10%.
According to the budget document, out of Rs700.2 billion, Rs293.5 billion has been allocated for employees-related expenses, Rs180.2 billion for operating expenses and Rs152.8 billion has been earmarked for physical assets.
However, the figures do not include Rs163.4 billion allocated for pensions of the servicemen that would be given from the civilian budget and a separate allocation for security-related expenses in a move which, critics say, seeks to conceal the actual defence budget.
Additionally, the military would also be given Rs165 billion under the contingent liability and Rs85 billion under the Coalition Support Fund (CSF). This means that in reality a whopping Rs1113 billion has been allocated for the military, which is about 28.2% of the country’s total budget.
Defence budget has remained a sensitive and controversial subject in the country where it has never been debated in detail in the parliament. Of late, however, there have been calls for a greater scrutiny. And Senate’s defence committee recently took the initiative to publicly discuss the military spending.
Pakistan raises its defence spending every year because of its historically uneasy relations with arch-rival India.
New Delhi earlier this year jacked up military spending by 10% for the coming fiscal year as it seeks to counter China’s rapid military buildup and its traditional rival Pakistan.
Defence analysts believe given the internal security challenges much of the increase in the defence budget by Pakistan is likely to be spent on the fight against militancy.

We won't force Rakitic to stay, say Sevilla

We won't force Rakitic to stay, say Sevilla
The club have made it clear they will not keep any player who has set their heart on a transfer but insist the Croatia star will only leave for the right price
Sevilla president Jose Castro insists his team "have no need to sell" Ivan Rakitic - but says that he will not stand in his way should the midfielder ask to leave.

The Croatia international has been linked with a number of top European sides after an inspired 2013-14 season in which he led Sevilla to fifth place in La Liga and Europa League glory.

The 26-year-old's father revealed this week that La Liga's top three – Real Madrid, Atletico Madrid and Barcelona – had put offers on the table for his son's services.

While Castro admits he would not force Rakitic to stay, he claims the playmaker has had a significant contract offer from Sevilla and that the club do not need to cash in on their star man.

"The last offer we made to Rakitic was a significant percentage of our total budget," Castro told Sevilla's television channel.

"We made this offer because we want him to sign.

"We want to make sure that he stays, not that he leaves. We want the team to be strong and for all Sevillistas to enjoy it.

"We won’t make anyone stay who doesn’t want to be at Sevilla. Anyone who wants to walk through the door can do it, though it has to be at our price.

"We are relaxed and we have no need to sell."

Rakitic, whose current deal with Sevilla expires in 2015, is currently preparing for the World Cup with Niko Kovac's Croatia squad.

Fabregas should come back to Arsenal, says Cazorla

Fabregas should come back to Arsenal, says Cazorla
The Gunners playmaker is keen for the Barcelona midfielder to spurn the likes of Chelsea and Manchester City to rejoin the club whom he left for Camp Nou in 2011
Arsenal midfielder Santi Cazorla is keen for Cesc Fabregas to turn down the Premier League teams chasing him and to return to north London this summer.

It has been revealed that Manchester City are preparing a €37 million bid for the Barcelona star, who is widely expected to leave Camp Nou, but Chelsea join Manchester United, Liverpool and the Gunners in also monitoring his situation.

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Fabregas spent eight years with Arsene Wenger's side before rejoining the club who oversaw his development at youth level in 2011 and Cazorla believes that it would be a good fit for his Spain team-mate.

"I have read that Cesc could go to Chelsea but I prefer it if he came to Arsenal. He has given a lot to the club and he knows it well," the ex-Villarreal star told reporters ahead of La Roja's final World Cup warm-up game against El Salvador.

"I hope that he is happy, he chooses his club well and is comfortable there."

Cazorla argues that Fabregas's performances for Barcelona have not merited some of the criticism that has been sent his way and believes that he would be warmly welcomed back on British shores.

The playmaker added: "I don't see any differences between his performances in the Premiership and with Barca.

"His record is spectacular at Barcelona and he has demonstrated that he has adapted but they haven't given him the same value as in England.

Tuesday, 3 June 2014

Every Pakistani now owes Rs82,627

With debt servicing on the rise, long-term debt becomes saving grace. PHOTO: FILE
KARACHI: 
Every Pakistani is worse off by an additional Rs4,700 as the total debt stock of the country, when distributed on its population, comes to around Rs82,627 per head against Rs77,927 last year.
Pakistan’s outstanding debt has reached Rs15.53 trillion up till March 2014, rising 7.4% from Rs14.46 trillion, according to the Economic Survey 2013-14.
Major chunk of the total debt comes from domestic sources, which increased by Rs1.30 trillion to Rs10.82 trillion. External debt stock stood at Rs4.71 trillion.
The survey says that the public debt to GDP ratio improved to 61.2% from 63.9% in the previous fiscal year. But this slight improvement still falls short of meeting the 60% target set under the Fiscal Responsibility and Debt Limitation Act.
Worryingly, 47% of whatever the government generates in revenue between July-March 2013-14 went to paying off the debt against 44% in the previous year.
“Ideally, this ratio should be less than 30% to allocate more resources to social and poverty related expenditures,” the survey said.
In rupee terms, debt servicing was Rs1.15 trillion.
But what is encouraging is the fact that most of this increase in new debt came from long-duration instruments like Pakistan Investment Bonds, Ijara Sukuk bonds and Prize Bonds, which have maturity duration spreads of over 3,5, 10 or longer years.
This is particularly important since Pakistan is stuck in a vicious cycle of debt where every few months it borrows from commercial banks just to pay off past loans.
Highlighting this fact, it said that 73% of this increase in domestic debt came from permanent debt.
This has happened as the government has been sending signals to the market that it has decided to lengthen the maturity of domestic debt — a key goal it has set to manage the country’s finances.
But the survey warned that around 51% or Rs5.55 trillion of domestic debt has to be repaid within a year. That means government will once again borrow to settle these Rs5.55 trillion.
This is because of the shorter duration floating debt, which is raised by the government through treasury bills. Share of floating debt in domestic public debt stood at 50% as of March 2014 against 55% at the end of the last fiscal year.
Floating debt increased by Rs244 billion against Rs633 billion in same period of the previous year, depicting a marked improvement in debt portfolio management.
Domestic debt servicing was Rs855 billion against Rs725 billion paid in same period of previous year.
A large portion was paid against treasury bills (Rs260 billion), market-related treasury bills (Rs181 billion) and Pakistan Investment Bonds (Rs147 billion).
Pakistan’s external debt and liabilities stood at $61.8 billion as of March 31, 2014, rising by $906 million in previous nine months.
Most of this external debt is made up of loans from multilateral lenders and Paris Club. Islamabad owes International Monetary Fund (IMF) around $3.6 billion.
External debt servicing consumed $5.38 billion.
The average time when all this external debt matures and has to be paid off is approximately 10.8 years.
Sovereign guarantees
Islamabad does not include sovereign guarantees, which are basically commitments on the part of the state, in its outstanding debt obligations.
Government guarantees, which stood at Rs714.6 billion as of November 2013, came down to Rs558 billion by end March 2014, according to the survey.
This is despite the fact that the government issued fresh guarantees of Rs104 billion. No explanation has been given for such a sharp reduction in contingent liabilities.
From 2007 onwards, the government has increased the pace of giving guarantees to public sector enterprises (PSEs), which are running in loss and cannot borrow money from commercial banks due to their weak balance sheets.
These organisations include Trading Corporation of Pakistan, Pakistan International Airlines (PIA) etc.
Sovereign guarantees do not have any direct impact on the budget. These are just guarantees — promise from the government to the lender that if a PSE defaults it will step in to meet the financial commitment.
Economist Kaiser Bengali explains that it does affect lives of the citizens one way or another. “The borrowing rate for the government goes up as sovereign guarantees climb,” he says.
“International financial markets pick up the signals and then they charge our government a premium.”
But what if a PSE actually defaults? “Well the government would eventually have to foot the bill,” explains Bengali.
Such a disastrous event has not technically occurred up till now but whenever the government has sold loss-making state-run companies, it has picked up all their liabilities – spending the taxpayers’ money meant for social services such as schools, hospitals, or, say, the eradication of polio.
Take the national flag carrier, for example. Years of successive losses have wiped off PIA’s equity completely. But the airline is still running, paying salaries to 16,000 plus employees, leasing airplanes and servicing its debt by borrowing fresh loans from banks.
Now, no bank would lend billions of rupees due to the weak strength of PIA’s balance sheet. This is where government guarantees come in, which have helped the airline borrow Rs306 billion.
“If PIA does not come out of the losses and the government decides to sell it then obviously it would have to take responsibility for all those loans,” says Kaiser Bengali.
“This is actually what has happened in all such privatisations so far.”

Growth continues in telecom sector

Tele-density reaches all-time high of 78%, up 3% from 2013. PHOTO: FILE
KARACHI: 
The spectrum auction – would create 900,000 new jobs in the country; increase data penetration by up to 10% during the next three years and increase GDP growth by 1.5% to 1.8%, according to the Economic Survey of Pakistan, which was revealed by Finance Minister Ishaq Dar on Monday.
As per details of the document, the country’s telecommunication sector continued its growth trend as the overall tele-density reached an all-time high of 78% during July-March period for the fiscal year (FY) 2014, up by three percentage points compared to 75% as of June 30, 2013.
Telecom sector indicators showed positive growth during the nine-month period ending March 31, 2014. Telecom sector’s revenues, during the review period, reached Rs345.5 billion and total investment in the sector stood at $556 million, according to the Survey. The sector contributed Rs67 billion in taxes to the national exchequer during the first six months of FY2014, the document revealed.
The finance ministry’s review of the telecom sector’s performance showed that major growth arose in the cellular mobile segment. The number of mobile phone subscriptions in the country grew from 127.7 million as of June 30, 2013 to 136.5 million by the end of March, 2014.
Despite high competition and low tariffs, the telecom sector had stable revenues, the document stated. It earned Rs38 billion a month on average during the first nine months of FY2014, compared to a monthly average of Rs37 billion in FY2013.
Telecom sector has been contributing significantly to the national exchequer in terms of taxes, regulatory fee, activation tax and other charges. It is one of the highest contributors to the national exchequer, putting Rs119 billion a year – $1.2 billion in today’s exchange rate – on average during the last five years.
The telecom sector paid Rs11 billion a month in taxes during the first half of FY2014 compared to an average Rs10 billion it put in the national kitty every month during FY2013.
The first 10 months of FY2014 remained significant for the telecom sector that took a giant leap forward in the world of technology by conducting next-generation mobile services (NGMS) licence auction that earned the country more than $1 billion, according to the Economic Survey.
The government raised $1.11 billion from the spectrum auction on April 23, 2014. In addition to the bid amounts, the operators also have to pay a 10% advance tax on the total auction winning price to Pakistan Telecommunication Authority (PTA), which will take the auction’s total revenue to $1.22 billion.
Moreover, investment in the telecom sector is expected to increase in FY15 due to unsold spectrum, according to the Economic Survey – the government could not sell the entire spectrum as the 850 MHz spectrum was reserved for a new player and another 10MHz of spectrum in 4G band remained unsold in this year’s auction.

X Men: Apocalypse will have ‘mass destruction’

X Men: Apocalypse will have ‘mass destruction’
Bryan Singer says 'X Men: Apocalypse' will have 'more mass destruction' than previous films in the franchise. 
The 48-year-old filmmaker - who helmed the forthcoming 'X-Men: Days of Future Past' - revealed 2016's sequel to the upcoming film will have a character who allows them to delve into aspects which the previous pictures haven't dealt with.
He explained to Total Film magazine: ''Apocalypse' will also have more of that mass destruction that 'X Men' films, to date, have not relied upon. There's definitely now a character and a story to allow room for that spectacle.'
In the 'X-Men' comic books Apocalypse refers to a villainous rival, who is the world's first mutant, and Singer revealed the film, which will be set in the 80s, will explore the 'ancient mutants'. 
He added: 'We're going to deal with the notion of ancient mutants - the fact that they were born and existed years ago. But it will be a contemporary movie - well, it'll take place in the 80s ... The 80s is a period now - it's hard for me to believe that.'
Singer will produce and co-write the script with 'Days of Future Past' scribe Simon Kinberg and the writers of 2003's 'X2', Dan Harris and Michael Dougherty.

Angelina Jolie predicts George Clooney will marry first

Angelina Jolie predicts George Clooney will marry first
Angelina Jolie predicts George Clooney will get married before her.
The 'Maleficent' actress has been engaged to the 53-year-old actor's close pal Brad Pitt for more than two years, but believes the newly-engaged 'Gravity' star will marry his fiancée, Amal Alamuddin, before they tie the knot.
Asked who will walk down the aisle first, the 38-year-old actress told 'Entertainment Tonight': 'Probably George.'
The 'Monuments Men' star will reportedly exchange vows with British lawyer Amal on September 12 in Italy before hosting other celebrations in London and Lebanon, where her parents are from.
Meanwhile, Angelina revealed that her and Brad's six children, Maddox, 12, Pax, 10, Zahara, nine, Shiloh, seven, and five-year-old twins Knox and Vivienne, are still coming up with 'crazy ideas' for where they should get married.
She said: 'Yeah, they've got a lot of crazy ideas -- and I'm sure most of them will win out. So yes, they'll be the ones deciding when it comes and how it's done, I'm sure.'
But the brunette beauty recently insisted she and Brad, 50, currently have no plans to become husband and wife.
She said: 'We don't have any plans to get married at the moment. Nothing is organised. Nothing is ready. I don't have a dress. It matters to us in a very private way. But we also understand that we're public people.'