Budget in Pakistan - 2010/11

[Hyde]

Please post all budget related news in this thread only so that we can better follow and discuss all budget related news in one dedicated thread only.

 

[Hyde]

Initial Rs 2.45 trillion outlay shows 6.9 percent budget deficit
​

AHMED MUKHTAR
ISLAMABAD (May 21 2010): The Finance Ministry has initially envisaged Rs 2,453 billion total outlay of the budget 2010-11 with Rs 1,711 billion tax revenue from the FBR and Rs 1,157 billion (6.9 percent of GDP) budget deficit, says an initial draft version of Budgetary Strategy Paper. This data is being reviewed for further discussions and to present to the parliament in last week of May.

The budget outlay for 2011-12 is estimated to be Rs 2,658 billion and for 2012-13 would be Rs 2,900 billion. Budget deficit for 2011-12 will be Rs 1,181 billion (6.4 percent of GDP) and 2012-13 will be Rs 1,243 billion (6.1 percent of GDP). This budget deficit is excluding grants. Target of the IMF is calculated with different pattern and that figure varies with this data of budget deficit. With grants, the deficit figure is reduced.

The BSP document reads as: "The federal government will continue the process of fiscal consolidation. The overall fiscal deficit for the government (Federal + Provinces) is estimated at 5.3 percent of GDP (at market prices) for 2010/11 reducing to 3.6 percent of GDP (at market prices) by 2012-13."

Defence spending are being upgraded from Rs 378 billion (2.5 percent of GDP for 2009-10) to Rs 442 billion (2.7 percent of GDP for 2010-11). This budget will grow to Rs 477 billion (2.6 percent of GDP in 2011-12) and Rs 500 billion (2.4 percent of GDP 2012-13).

Interest payments in debt servicing is at Rs 672 billion for 2010-11, Rs 717 billion for the year 2011-12 and Rs 774 billion for 2012-13. GDP growth rate was estimated lower by the time the document was being written and now the estimates are up and the new rate would be firmed up by end-May. Document envisaged 4 percent growth rate for next year, which the country is likely to cross this year and for next year the data will be revised.

Documents say that rigorous efforts have been put to increase the FBR revenue to GDP (at market prices) ratio from the current 9.3 percent to 12.1 percent by 2012-13. These efforts include revenue policy measures (eg introduction of VAT) and reform measures.

The tax to GDP ratio required is considerably less and is hampering public sector investment to spur growth. However, the government has agreed to introduce Value Added Tax from July 1, 2010 which is planned to result in an increase of tax revenue by around 2.4 percent of GDP over the medium-term.

The cost of running of the federal government will increase gradually. This excludes the effect of increase in pay/magnetisation of allowances, which may be recommended by the Pay and Pension Committee. However, austerity measures are being taken (including merging of ministries) to contain this expenditure.

The VAT system has a better growth potential in relation to GST because it generates extra revenue through systematic documentation of the economy. For the budget year 2010-11 and 2011-12 the estimated increase in tax revenue through the introduction of VAT is estimated at 0.8 percent of GDP (at market prices) per annum. For the budget year 2012-13 the estimated increase in tax revenue through the introduction of VAT is estimated at 0.6 percent of GDP (at market prices), says the document.

 

[Hyde]

4.5 percent growth rate eyed for fiscal year 2011
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RECORDER REPORT
ISLAMABAD (May 21 2010): Annual Plan Co-ordination Committee (APCC) scheduled to meet on Friday (today) is expected to recommend to the National Economic Council (NEC) to approve 4.5 percent Growth Domestic Product (GDP) growth rate for upcoming financial year 2010-11 premised on an improvement in supply of gas and electricity and improvement in law and order.

According to the proposed Annual Plan 2010-11 to be considered by APCC, the expected growth of GDP for 2010-11 is targeted at 4.5 percent with contribution of agriculture at 3.8 percent, manufacturing at 5.6 percent and services sector at 4.7 percent.

For 2010-11, the growth in agriculture sector will be contributed by major crops at 3.7 percent, minor crops at 3.0 percent, livestock at 4.2 percent, fisheries 2.0 percent and forestry at 2.5 percent. The industrial sector is targeted to grow by 4.9 percent during 2010-11 based on the supposition that energy shortages will decline and industry will be given priority for an improved supply of electricity and gas. Improved cotton availability will also support the textile sector.

The growth in services sector will be contributed by transport, storage and communications by 4.6 percent, wholesale and retail trade by 5.1 percent and finance and insurance by 3.0 percent. The proposed Annual Plan 2010-11 is aimed to consolidate macroeconomic recovery and further build-upon the recovery of economic growth seen this year.

Specific objectives of the Annual Plan 2010-11 include revival of crop sector, putting manufacturing on a high growth path. Recent efforts to minimise energy shortages have borne results and this should help the revival of production in key sectors if government ensures that energy saved is directed towards productive sectors as well as maintaining a robust growth in services sector.

Pakistan's economic prospects and its future growth rests on an improvement in the overall security situation, a reduction in power shortages, sustainability in the implementation of reforms (particularly tax administration), improvement in law and order and an improvement in external resource inflow. It is also dependent on the pace of global economic recovery. The provision of increase in public sector investment hinges largely on the prospects of increase in fiscal space through increased resource mobilisation.

The measures aimed at keeping inflation at low levels are: maintaining a realistic exchange rate, keeping the budget deficit low accompanied by prudent monetary policy and avoiding food inflationary pressures. The GDP growth for the year 2009-10 was targeted at 3.3 percent to be contributed by sectoral growth rate of 3.8 percent in agriculture, 1.8 percent in manufacturing and 3.9 percent in services sector. Despite a reduction in net external inflows, the economy as a whole managed to surpass targeted levels of economic growth.

The large scale manufacturing (LSM) posted a strong positive growth of 4.4 percent for the current fiscal year. The industrial sector recorded a growth of 4.9 percent. The services sector surpassed the target of 3.9 percent and achieved a growth of 4.6 percent, contributed by wholesale and retail trade at 5.1 percent and transport & communications at 4.5 percent. However, finance and insurance sub-sector showed a negative growth of 3.6 percent. Construction recovering from a low base posted 15 percent growth.

The agriculture sector could not achieve the target and recorded a growth of 2.0 percent. The major crops sub-sector could not achieve the targeted growth rates set for 2009-10. The production of 12,698 million bales of cotton against a target of 11,819 million bales surpassed its target by 7.4 percent. The livestock sector has posted a growth of 4.1 percent. The performance in the livestock was contributed by increase in the production of milk (3.3 percent), meat (4.3 percent), wool (1.2 percent), hides (3.4 percent) and skins (2.3 percent), respectively.

Amid global uncertainty and fluctuations in agriculture prices, government support policies were directed at providing timely inputs and support services to agriculture. Farmers were encouraged to use more fertilisers because of relatively lower prices of fertiliser and higher farm incomes prospects

The fertiliser off-take increased by 32.6 percent in contrast to a decline of 9.2 percent witnessed in the July- January period last year. The urea off take rose by 19.8 percent during this period as against 2.4 percent fall seen in the preceding year. Additional factors that aided agriculture are improvement in water availability due to rainfall in third quarter, improvement in area cultivation for cotton and stable domestic wheat prices, despite substantial drop in international prices.

The impediments faced by the agriculture sector are: overall water shortages, realisation of lower prices in the preceding season for rice and sugarcane and lower credit transfer to the farmers combined with weak demand for credit. Weather conditions and water availability adversely affected the Rabi crops.

Data for July-March 2009-10 shows a growth of 4.36 percent in large scale manufacturing. Large part of recovery emanated from the consumer durables and allied industries. Moreover, the revival in construction activities in both public and private sector resulted in a sharp increase in demand for cement.

Main factors contributing to the growth in consumer durables are improvement in rural incomes and record high remittances. The factors contributing to the recovery in LSM include growth in production of jeeps, cars, tractors, motorcycles, cement, fertilisers, leather products and cotton cloth.

Drawing on growth in agriculture and manufacturing sectors and increase in trade values, the services sector surpassed its target of 3.9 percent and grew by 4.6 percent. The wholesale & retail trade activities are likely to benefit from recovery seen in commodity producing sectors. The transport, storage and communications sub-sector posted a growth of 4.5 percent due to increase seen in value addition of air and road transport, storage and telecom sector.

 

[Hyde]

Government envisages $19.9 billion exports, $31.7 billion imports: APCC takes up annual plan 2010-11 today
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ZAFAR BHUTTA
ISLAMABAD (May 21 2010): The government is considering projecting an export target of $19.9 billion and import $31.7 billion for 2010-11 translating into a trade deficit of $11.7 billion or 6.1 percent of GDP. According to proposed Annual Plan 2010-11 to be considered by APCC on Friday (May 21), on account of the global uncertainty and continuous energy shortages and security situation, exports for 2010-11 are projected to grow marginally in the forthcoming fiscal year - from $19.2 billion in 2009-10 to $19.9 billion.

Imports during 2010-11 are projected to increase by 6.0 percent to about $31.7 billion from $29.9 billion estimated for 2009-10. Gross aid disbursements during 2010-11 are expected to be $3.9 billion against $3.7 billion estimated for 2009-10. Allowing for other capital inflows, the overall balance is likely to be in the deficit by $0.8 billion in 2010-11 compared to an estimated deficit of $0.3 billion in 2009-10. The gross reserves are likely to be around $15.0 billion in 2010-11, compared to $14.4 billion in 2009-10.

The targeted investment to GDP ratio is 18 percent with private sector fixed investment to GDP ratio projected to remain in the vicinity of 12 percent. The national savings as percentage of GDP will be 14.5 percent. The remaining investment is projected to be financed by foreign savings of 3.4 percent of GDP. The GNP per capita for 2010-11 is targeted at Rs 100,823. For 2010-11, remittances have been projected to be around $9.0 billion against $8.4 billion estimated for 2009-10. The current account deficit is targeted at $6.5 billion in 2010-11 or 3.4 percent of GDP.

The Monetary Policy will be co-ordinated with other macroeconomic policies to ensure price and financial stability. According to proposed Annual Plan, efforts will be made to ensure increased participation of the private sector in the growth of the financial sector especially growth of capital market besides banking. Institutions such as co-operatives and multifarious non-bank institutions will be encouraged to provide financial services to SMEs, micro enterprises and in the rural areas in order to ensure financial inclusion.

The unsustainable current account deficit of the balance of payments was a key challenge for the government. Due to a better than expected performance of exports in the months of March & April 2009-10 and robust performance of remittances, the current account deficit has reduced by more than projected. In the first 10 months of 2009-10, the current account deficit stood at $3.1 billion (1.8 percent of GDP) as compared to $9.0 billion (5.5 percent of GDP) for the same period last year.

It is expected that the current account deficit for the current financial year will remain around 3.0 percent of GDP, much lower than the target of 5.3 percent of GDP. This improvement is attributed to reduction in trade deficit and significant increase in workers' remittances. The foreign reserves stood at $15.05 billion as on April 30, 2010. The rupee has also recovered part of its losses. The average exchange rate for the month of April, 2010 was Rs 83.90/1$.

In reviewing the balance of payments situation it must be kept in mind that the improved situation also reflects lower growth in the economy which dampened imports. It was expected that trade deficit during 2009-10 will be $10.7 billion (6.2 percent of GDP). In the first ten months of 2009-10, trade deficit has been contained to $9.1 billion (5.2 percent of GDP) as compared to $11.1 billion (6.8 percent of GDP) in the corresponding period last year. This reduction has been due to positive growth of exports by 2.1 percent and reduction in imports by 6.3 percent.

Exports during July- April, 2009-10 stood at $16.2 billion as compared to $15.8 billion in the corresponding period last year, showing an increase of 2.1 percent. Component-wise analysis of exports items (during July-March, (2009-10) indicates that positive growth has been witnessed in raw cotton (141.6 percent), vegetables (76.6 percent), art, silk & synthetic textiles (75.7 percent), jewellery (74.7 percent), fruits (54.6 percent), meat and meat preparations (39.2 percent), cotton yarn (29 percent), spices (26.5 percent), cutlery (25.2 percent), fish and fish preparations (17.3 percent), chemical and pharmaceutical products (14.2 percent), made up articles (9.8 percent), petroleum products (6.8 percent), rice (6.3 percent) and towels (3.8 percent).

Almost all other items showed a negative growth including other manufactures group (-2.5 percent) during the period under review. About 80 percent of the total export items showed a positive growth of 3.0 percent. Export data also revealed that there has been an increase of 8.4 percent in volume and a decrease of 5.4 percent in price. Factors adversely affecting our exports are: (i) slow recovery of the global economy, energy and power shortages; (ii) deteriorating law and order situation; (iii) increased competition in the international market for textile products; and (iii) high cost of doing business in the country. Exports for the full year 2009-10 are estimated to be around $19.2 billion against the Annual Plan target of $18.3 billion.

Imports during July-April, 2009-10 declined by 6.3 percent to $25.2 billion over the corresponding period last year ($26.9 billion). The items of imports which showed positive growth during July-March, 2009-10 have been sugar (622.1 percent), gold (519.9 percent), agricultural machinery (130.6 percent), mobile phones (54.6 percent), fertilisers (51.6 percent), insecticides (47.3 percent), transport group (38.8 percent), medicinal products (36.6 percent), synthetic fibre (23.9 percent), synthetic and artificial yarn (18.6 percent), textile machinery (14.2 percent), and tea (12.3 percent). Import of almost all other commodities witnessed a negative growth.

Items for which data on both volume and prices are available (55 percent of total import items) showed a negative growth of 4.9 percent. Fall in imports is broad-based across various items, contributed mainly by decline in POL imports and significant fall in the price of imports. It is estimated that imports for 2009-10 will be $29.9 billion compared to the Annual Plan target of $28.9 billion.

Workers' remittances have continuously witnessed an increasing trend during the period July-April 2009-10 touching a level of $7.3 billion against $6.4 billion in the corresponding period of last year, registering an increase of 15.0 percent. The monthly average remittances during this period stood at $730.7 million as compared to $635.6 million during the same period last year. Remittances for the full year are estimated at $8.4 billion. Remittances have shown an upward trend due to various factors prominent among which are measures taken under the Pakistan Remittance Initiative (PRI), leading to increased inflow through official channels. The return of Pakistanis working aboard with their total savings due to global economic slowdown especially in parts of the Middle East could also explain the rise in remittances.

The current account deficit was targeted at $9.4 billion (5.3 percent of GDP) against $9.3 billion (5.7 percent of GDP) recorded in 2008-09. This was largely based on higher level of workers' remittances. With the estimated trade deficit at $10.7 billion and workers' remittances of $8.4 billion, the current account deficit for 2009-10 is estimated to decline to around $4.8 billion from last year's deficit of $9.3 billion.

Gross aid disbursements during 2009-10 are expected to remain at the same level of $3.7 billion recorded last year. Allowing for other capital inflows, the overall balance is likely to be in deficit by $0.3 billion in 2009-10 compared to a deficit of $3.1 billion in 2008-09.

 

[Hyde]

Planning Commission, Finance differ over fiscal year 2011 PSDP
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RECORDER REPORT
ISLAMABAD (May 21 2010): Differences have emerged between Planning Commission and Finance Ministry over the size of federal component of Public Sector Development Programme (PSDP) 2010-11 as the former has recommended Rs 400 billion against Rs 328.3 billion with operational shortfall of Rs 28.3 billion proposed by the latter, Business Recorder has learnt.

"The total size of development budget may be around Rs 659.9 billion if Annual Plan Co-ordination Committee (APCC) scheduled to meet on Friday (today) recommends Rs 328.3 billion PSDP with operational shortfall of Rs 28.3 billion proposed by Priorities Committee with provincial share of Rs 321 billion and Erra's allocation Rs 10 billion," sources said.

"On the other side, the size of development budget 2010-11 for the whole country may be Rs 721 billion, including Rs 400 billion federal share proposed by Planning Commission and Rs 321 billion provincial share if it is recommended by APCC," they added. The APCC will meet with Deputy Chairman Planning Commission Dr Nadeem-ul-Haq to consider the PSDP size and Annual Plan. But the final decision rests with National Economic Council (NEC) scheduled to meet on May 28 with Prime Minister Syed Yousuf Raza Gilani in the chair to finalise the development budget outlay for 2010-11.

Planning Commission has opposed the size of PSDP at Rs 300 billion given by Finance Ministry, saying that it would not meet the funds requirement of the ongoing projects. Out of the Rs 328.3 billion proposed federal share with Rs 28.3 billion operational shortfall in development budget, federal ministries share has been estimated at Rs 192.6 billion, Rs 34.4 billion for special programmes for 2010-11.The allocations for special areas stand at Rs 32 billion, Rs 69.3 billion for the corporation, Rs 162.9 billion for social sector, Rs 153.7 billion for infrastructure and Rs 11.7 for production supporting sector.

Social sector allocation includes; Rs 24.2 billion for education and higher education, Rs 21 billion for health, Rs 5.7 billion for Population Welfare Programme and Rs 9.2 billion for ensuring good governance. Within infrastructure, Rs 38 billion, Rs 32.8 billion and Rs 81.3 billion have been proposed for Water, Power and Transport & Communication sectors, respectively.

 

[Hyde]

Government likely to earmark Rs 90 billion for BISP for 2010-11
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RECORDER REPORT
ISLAMABAD (May 21 2010): Government is likely to earmark Rs 90 billion for Benazir Income Support Programme (BISP) for financial year 2010-11. In Annual Plan 2010-11, an allocation of Rs 90 billion for BISP has been proposed. Microfinance facility worth Rs 36.0 billion has also been recommended to be provided to 2.25 million people. Allocation for People's Works Programme for 2010-11 is proposed at around Rs 34.4 billion.

Two additional activities to be carried under this Programme are: (i) vocational and professional training programmes of one year, 3-6 months and 4-week duration apart from advanced diploma programme of two or more years; and (ii) Benazir Health Card Scheme to be introduced initially in 15 districts.

The government has taken various steps to provide relief to the poor/vulnerable groups and to secure them against different types of shocks faced by rising food prices and slow down of economic growth.

These measures are: (i) an allocation of Rs 70 billion for BISP in 2009-10, launched in 2008-09. Under BISP a poverty exit strategy known as Waseela-e-Haq was launched during 2009-10 in order to promote self-employment among women or their nominees with the objective of improving their livelihood; (ii) Peoples' Works Programme to generate income and employment opportunities at the local level and help build needed social and physical infrastructure. Rs 31.0 billion was spent under this Programme during July- March, 2009-10 out of the annual allocation of Rs 35 billion; (iii) microfinance Network consisting of a host of institutions like Pakistan Poverty Alleviation Fund, Rural Support Programmes, Khushali Bank, First Microfinance Bank, Kashaf Foundation, etc, expected to disburse micro credit of Rs 31 billion to about two million.

 

[fawwaxs]

 

[sajjad11]

More U.S aid for Pakistan,by Hillary Clinton today 22 October 2010

Next fisical year Pakistan will be pay more then Ten Billion U.S.Dollars interest to IMF & World Bank 1/3 of Budget of Pakistan. That money will be go in Allies
She's laughing on?


pokets.They were already Pick up back lone money in shape of consulting, contracts,kickbacks.Pakistan will continued Supprot in war on terror.Allies
continue gain advanteges of Unipolar superpower. Pakistan continue in pain in shape of bomb explosions by artificial Taliban and Mujahideen created by International spy agensies.Also US$150 billion economical lose in last 30 years.

profilefacts blogspot /2010/10/more-us-aid-for-pakistanby-hillary

 

[Hyde]

More U.S aid for Pakistan,by Hillary Clinton today 22 October 2010

Next fisical year Pakistan will be pay more then Ten Billion U.S.Dollars interest to IMF & World Bank 1/3 of Budget of Pakistan. That money will be go in Allies
She's laughing on?


pokets.They were already Pick up back lone money in shape of consulting, contracts,kickbacks.Pakistan will continued Supprot in war on terror.Allies
continue gain advanteges of Unipolar superpower. Pakistan continue in pain in shape of bomb explosions by artificial Taliban and Mujahideen created by International spy agensies.Also US$150 billion economical lose in last 30 years.

profilefacts blogspot /2010/10/more-us-aid-for-pakistanby-hillary

The site you mentioned at the bottom of your page didn't work for me

Can you provide any proof of your claims?

Are you going to pay more than 10 billion dollars in interest next year?