Identifier
Created
Classification
Origin
08ISLAMABAD1916
2008-05-22 11:58:00
CONFIDENTIAL
Embassy Islamabad
Cable title:
FINANCE MINISTER QAMAR SAYS BUDGET WILL BE ON TIME
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C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 001916
SIPDIS
E.O. 12958: DECL: 05/19/2018
TAGS: ECON EFIN EINV PGOV PREL PK
SUBJECT: FINANCE MINISTER QAMAR SAYS BUDGET WILL BE ON TIME
Classified by: Ambassador Anne W. Patterson for reasons 1.4 (b) and
(d)
REF: Islamabad 1900
Summary
-------
C O N F I D E N T I A L SECTION 01 OF 02 ISLAMABAD 001916
SIPDIS
E.O. 12958: DECL: 05/19/2018
TAGS: ECON EFIN EINV PGOV PREL PK
SUBJECT: FINANCE MINISTER QAMAR SAYS BUDGET WILL BE ON TIME
Classified by: Ambassador Anne W. Patterson for reasons 1.4 (b) and
(d)
REF: Islamabad 1900
Summary
--------------
1. (C) Summary: Ambassador met with Naveed Qamar, the Acting
Minister of Finance, who has replaced Ishaq Dar after the Pakistan
Muslim League-Nawaz (PML-N) Ministers tendered their resignations May
13. Qamar said that the budget would be prepared for the Parliament
to debate and pass it by the June 30 fiscal year end. While spending
will be less than last year and the GOP will seek to broaden the tax
base, the new government will continue the private sector focus of
the previous government. Coalition Support Fund reimbursements, a
possible GOP investment conference in the U.S., resumption of the GOP
privatization program, and Reconstruction Opportunity Zones (ROZs)
were also discussed. End Summary.
Finance and Privatization portfolio
--------------
2. (C) Ambassador and Economic Counselor (notetaker) met with Acting
Minister of Finance Naveed Qamar May 19. Qamar assumed the Finance
Minister portfolio when the PML-N Ministers tendered their
resignations May 13. Qamar told the Ambassador that he was also
responsible for investment and privatization issues, but not shipping
and ports, part of his original ministerial portfolio. Qamar
remarked that "we need all the help we can get." The Ambassador
explained that the USG is trying to accelerate the Coalition Support
Fund (CSF) reimbursement process so that the GOP will have the funds
in its account before the June 30 end of the fiscal year.
3. (C) Ambassador raised the up-coming USD 61.29 million payment for
the F-16 mid-life upgrade due June 15. The Minister was unaware of
it.
Private-sector friendly budget
--------------
4. (C) In response to Economic Counselor's question, Qamar said that
the budget for Pakistan's 2008-2009 fiscal year would be
investor-friendly, and that the major deviation from previous years
would be to increase the tax base and "fiscal consolidation." Former
Finance Minister Dar's May 12 speech (reftel) correctly laid out the
policy direction, Qamar said. He also plans a series of incentive
structures to increase agricultural production, but offered no
details.
5. (C) On privatization, Qamar is "very cautious because of the
Supreme Court decision" which stopped the Pakistan State Steel Mills
privatization. A new privatization board had been named. Shares in
Habib Bank will be sold, but the proposed convertible bond using Oil
and Gas Company Limited (OGCL) shares as collateral will not be
issued. In response to the Ambassador's question regarding
privatization of the Pakistan Airlines-owned Roosevelt Hotel in New
York, Qamar replied that the GOP will not sell it immediately because
they will not get an amount that is justifiable in the public eye
since U.S. taxes will constitute half the proceeds. He said that the
estimates of the likely sale price are wildly exaggerated.
ROZs
--------------
6. (C) Qamar asked for an update on the Reconstruction Opportunity
Zones (ROZ) legislation. The Ambassador explained that we were
waiting for legislation to be introduced in the House of
Representatives. Econ Counselor stressed the importance of GOP
preparations to develop an incentive structure and consider possible
ROZs in advance of the legislation's passage. Qamar promised to
coordinate ROZ preparations with the Ministers of Commerce and
Industry.
Investment conference
--------------
7. (C) Ambassador again offered to be of assistance in organizing a
Pakistan investment conference in the U.S. Econ Counselor added that
a number of investment conferences focusing on the energy sector are
ISLAMABAD 00001916 002 OF 002
being planned over the next six months, and it would be helpful to
have a single point of contact. Qamar promised a response shortly.
Comment
--------------
8. (C) Comment: Qamar has assumed one of the most challenging
portfolios, and is still learning. He is, however, well-qualified for
the job with an MBA from California State University and previous
service as Minister for Privatization and as a Member of the National
Assembly. However, he will be hard-pressed to put together a budget
before the traditional early June launch. End comment.
PATTERSON
SIPDIS
E.O. 12958: DECL: 05/19/2018
TAGS: ECON EFIN EINV PGOV PREL PK
SUBJECT: FINANCE MINISTER QAMAR SAYS BUDGET WILL BE ON TIME
Classified by: Ambassador Anne W. Patterson for reasons 1.4 (b) and
(d)
REF: Islamabad 1900
Summary
--------------
1. (C) Summary: Ambassador met with Naveed Qamar, the Acting
Minister of Finance, who has replaced Ishaq Dar after the Pakistan
Muslim League-Nawaz (PML-N) Ministers tendered their resignations May
13. Qamar said that the budget would be prepared for the Parliament
to debate and pass it by the June 30 fiscal year end. While spending
will be less than last year and the GOP will seek to broaden the tax
base, the new government will continue the private sector focus of
the previous government. Coalition Support Fund reimbursements, a
possible GOP investment conference in the U.S., resumption of the GOP
privatization program, and Reconstruction Opportunity Zones (ROZs)
were also discussed. End Summary.
Finance and Privatization portfolio
--------------
2. (C) Ambassador and Economic Counselor (notetaker) met with Acting
Minister of Finance Naveed Qamar May 19. Qamar assumed the Finance
Minister portfolio when the PML-N Ministers tendered their
resignations May 13. Qamar told the Ambassador that he was also
responsible for investment and privatization issues, but not shipping
and ports, part of his original ministerial portfolio. Qamar
remarked that "we need all the help we can get." The Ambassador
explained that the USG is trying to accelerate the Coalition Support
Fund (CSF) reimbursement process so that the GOP will have the funds
in its account before the June 30 end of the fiscal year.
3. (C) Ambassador raised the up-coming USD 61.29 million payment for
the F-16 mid-life upgrade due June 15. The Minister was unaware of
it.
Private-sector friendly budget
--------------
4. (C) In response to Economic Counselor's question, Qamar said that
the budget for Pakistan's 2008-2009 fiscal year would be
investor-friendly, and that the major deviation from previous years
would be to increase the tax base and "fiscal consolidation." Former
Finance Minister Dar's May 12 speech (reftel) correctly laid out the
policy direction, Qamar said. He also plans a series of incentive
structures to increase agricultural production, but offered no
details.
5. (C) On privatization, Qamar is "very cautious because of the
Supreme Court decision" which stopped the Pakistan State Steel Mills
privatization. A new privatization board had been named. Shares in
Habib Bank will be sold, but the proposed convertible bond using Oil
and Gas Company Limited (OGCL) shares as collateral will not be
issued. In response to the Ambassador's question regarding
privatization of the Pakistan Airlines-owned Roosevelt Hotel in New
York, Qamar replied that the GOP will not sell it immediately because
they will not get an amount that is justifiable in the public eye
since U.S. taxes will constitute half the proceeds. He said that the
estimates of the likely sale price are wildly exaggerated.
ROZs
--------------
6. (C) Qamar asked for an update on the Reconstruction Opportunity
Zones (ROZ) legislation. The Ambassador explained that we were
waiting for legislation to be introduced in the House of
Representatives. Econ Counselor stressed the importance of GOP
preparations to develop an incentive structure and consider possible
ROZs in advance of the legislation's passage. Qamar promised to
coordinate ROZ preparations with the Ministers of Commerce and
Industry.
Investment conference
--------------
7. (C) Ambassador again offered to be of assistance in organizing a
Pakistan investment conference in the U.S. Econ Counselor added that
a number of investment conferences focusing on the energy sector are
ISLAMABAD 00001916 002 OF 002
being planned over the next six months, and it would be helpful to
have a single point of contact. Qamar promised a response shortly.
Comment
--------------
8. (C) Comment: Qamar has assumed one of the most challenging
portfolios, and is still learning. He is, however, well-qualified for
the job with an MBA from California State University and previous
service as Minister for Privatization and as a Member of the National
Assembly. However, he will be hard-pressed to put together a budget
before the traditional early June launch. End comment.
PATTERSON