Democratic presidential candidate plans to meet with Pakistan’s Prime Minister in Washington; Monday, President Bush met with Gilani.

More: continued here

KARACHI: Continuing its struggle against runaway consumer prices, the State Bank of Pakistan (SBP) has raised its key interest rate by 100 basis points to 13 percent.The central bank has warned that failure to do so would hurt the economy even more as inflation remains rampant owing to excess money supply and continuous rise in food and fuel prices.State Bank Governor Shamshad Akhtar announced an increase in a monetary policy statement that focused heavily on what she called a “totally unsustainable” level of government borrowing.Aside from the fiscal deficit, Pakistan is also faced with a widening current account deficit, dwindling foreign exchange reserves and inflation at a three-decade high, running over 21 percent and likely to worsen.”Hence considering the risk related to rising external current account and fiscal deficit and worsening inflation outlook, the State Bank has decided to raise the policy rate in line with the market expectation by 100 basis points to 13 percent,” Akhtar said.The central bank left banks” cash reserve ratio at 9.0 percent and statutory liquidity requirement at 19.0 percent, although some analysts had expected these to go up too.The central bank chief said the fiscal deficit in the 2007/08 financial year that ended on June 30 was equivalent to 8.3 percent of GDP.She said the government had borrowed 204 billion rupees between January and March and 283.9 billion from April to June. In the last two days alone, it borrowed 55 billion rupees, she added.The current 2009/2010 fiscal year need to be one of “consolidation and containment”, but the target of 4.7 percent of GDP was already under stress, Akhtar warned.She said it was “a pre-requisite” that the government should retire 21 billion rupees of debt in each quarter of current fiscal year.

More: continued here

Democratic presidential candidate Barack Obama discussed mortgage relief with Treasury Secretary Henry Paulson on Tuesday and met with Pakistan’s prime minister during a mix of private discussions on economic and international issues.

More: continued here

KARACHI: Investors at the Karachi Stock Exchange were in a fix on speculation over the discount rate.The benchmark KSE 100-index fell 130 points to close at 10,448. Investors expecting another increase in the discount rate by state bank opted for quick exits at the start of trade today. Rumors that the rate may be increased by more than 100 basis points invited a fresh round of selling, forcing the benchmark down to an intra-day low of 10,255.However, as the recently announced equity market fund sought fresh interest in select scrips, the index recovered partially by the trade’’s close.Sources say, the fund bought up to 300 million rupees worth of undervalued equities today. Volumes improved to 113 million shares as against 83 million traded yesterday.While the brunt of selling pressure was felt in main board stocks, the broader market also came under pressure. Out of 265 active scrips, 156 declined, while 98 advanced and 11 remained unchanged.

More: continued here

Democratic presidential candidate Barack Obama planned to meet Tuesday with the prime minister of Pakistan, one of a series of private sessions for discussions ranging from international to economic concerns.

More: continued here

India and Pakistan have fought two of their three wars over Kashmir, and the frontier has been largely quiet since the 2003 cease-fire agreement.

More: continued here

ISLAMABAD: Syed Naveed Qamar Federal Minister for Finance, Privatization Investment has said the government will continue to provide Research Development (RD) support up to June 30 for the Textile sector after necessary finalization by the Economic Coordination Committee (ECC). He announced the decision during a meeting with a representative delegation of Pakistan Apparel Forum having representation of Pakistan Hosiery Manufactures Association (PHMA), Pakistan Readymade Garments Manufacturers Exporters Association (PRGMEA), PN SA and PCFAA, a press release said. The Finance Minister directed the Federal Bureau of Revenue (FBR) to examine the Withholding Tax issue being faced by garment industry exporters and submit a report to take prompt decision to facilitate the industry. He assured the delegation that the government would make all out efforts to resolve the market access issue being faced by the industry. He asked the industry to cooperate with the government to keep the economy healthy, which would be equally beneficial for the business groups. The business groups were aware of the economic conditions of the country, which was a part of global phenomena and the business groups could be helpful in improving the economic scenario through dedicated efforts and joining hands with the government. Earlier, the leader of the delegation of Pakistan Apparel Forum M.Naqi Bari apprised the Minister regarding the problems being faced by the industry and assured full support to the government in improving the economy.

More: continued here
Pakistan News

BEIJING: Denmark’’s cross-country mountain bike champion Peter Riis Andersen, who was to compete in the Beijing Olympics has failed a drugs test, the Danish sporting federation DIF said. Andersen, 28, one of 84 Danish athletes selected to take part in the Games, tested positive for the banned blood booster EPO. The DIF have expelled him from the Olympic squad. Denmark’’s anti-doping committee has carried out 163 tests on their Olympic athletes so far. Andersen’’s test, carried out on June 25, is the only positive.

More: continued here
Pakistan News

SINGAPORE: World oil prices rose on Tuesday but remained well off record highs reached earlier this month, as the market watches for more signs of slowing demand, analysts said. New York’’s main contract, light sweet crude for September delivery, rose 36 cents to 125.09 dollars a barrel after advancing 1.46 dollars to close at 124.73 Monday at the New York Mercantile Exchange. Brent North Sea crude for September delivery was 42 cents higher at 126.26. The contract climbed 1.32 dollars to settle at 125.84 on Monday in London.The benchmark New York contract has lost more than 22 dollars while Brent has fallen more than 21 dollars since both struck all-time highs above 147 dollars on July 11.

More: continued here

President Bush took care to say it twice after his meeting with Pakistan’s new prime minister: The United States respects Pakistan’s sovereignty.

More: continued here