Dar projects robust economic growth

[farhan_9909]

WASHINGTON: Finance Minister Ishaq Dar has said that the government hopes to achieve 5 per cent GDP growth this year.

“We had inherited a highly fragile and broken economy… many pundits had bet the country would go into default latest by June 2014, when the reserves will be wiped out,” said the minister while explaining how the government fixed the economy in two years.

Speaking at Carnegie Endowment for International Peace, Washington, Dar said the government was now focusing on four major areas: sustained improvement, energy production, defeating extremism and enhancing education.

Dar also expressed the desire to improve trade and economic ties with neighbors, particularly Afghanistan and India.

The government took “unpopular decisions” for consolidating the national economy, such as long delayed and painful structural reforms in areas like taxation, energy and in the private sector, the minister said.

He said that the government also finalised a new IMF programme, based entirely on the economic agenda.

The minister also presented a paper in the US think-tank, highlighting various improvements in the national economy.

Economic growth averaged around 3 per cent in the five years before this government, now projected to rise to 5.1pc during 2014-15 as against 4.14pc registered during 2013-14. Last year’s growth was already the highest in the last six years.

Inflation averaged around 12pc in the five years before this government, brought down to 8.6pc in 2013-14 and is now projected to decline further to about 5pc in 2014-15. What is more significant is the year-on-year inflation, which was registered at merely 2.9pc in March 2105 compared to March 2014. This is lowest in 12 years.

Tax revenues, which had registered the poorest performances of a meagre 3pc growth in 2012-13, were up in 2013-14 by 16.44pc, rising from Rs1,946bn to Rs2,266bn.

Fiscal deficit registered at 8.2pc during 2012-13, has been brought down to only 5.5pc during 2013-14. This year’s target: 4.9pc.

Development spending:

Last year, it rose by 23pc from Rs360bn during 2012-13. This year, it will increase to Rs525bn, a nearly 24pc increase from the last year.

Credit to private sector, which had registered negative growth during 2012-13, rose by 10pc during 2013-14. It has further increased by 5pc from its level at end-June 2014.

Government borrowings from SBP: The government has continued to reduce budget’s dependence on SBP credit.

During the current fiscal year, the government retired nearly Rs.674 billion in the debt owed to the central bank.

This process will continue.

Balance of payments position: Marked improvement during the last 21 months, with current account deficit declining to less than 1 percent of GDP compared to more than 2pc in 2012-13.

Remittances: In 2013-14, the remittances rose by about 14pc, from about $14 billion to nearly $16 billion. In the nine months of the current fiscal year, remittances have shown an even higher growth rate of 15pc on the back of a considerably high base.

Exchange rate: has remained stable at less than Rs101 to a dollar for more than a year.

Foreign exchange reserves: In 2012-13, the country faced a precarious reserves position of less than $6bn and was required to pay $4.2bn falling due to IMF. On 13 April 2015, the reserves stood at $16.9bn, comprising $11.8 billion of SBP and $5.1. The HBL divestment of $764 million will take the reserves to nearly $17.7bn.

Karachi Stock Exchange Index, which stood at 19,916 on 11 May 2013, moved to 32,248 on 13 April 2015, showing an increase of nearly 62pc. The market capitalisation increased from Rs5tr to Rs7.1tr for the same period, showing a 42pc improvement. In dollar terms it increased from $51bn to nearly $70bn, showing an increase of 37pc.

Dar projects robust economic growth - Newspaper - DAWN.COM

=====================

@SBD-3

Do you think 5.1% is possible this year?i believe most likely the growth rate will be 4.6%-4.8%.

 

[black-hawk_101]

When GoP will privatize 100% the rest of the Financial sector????? I am sure this will generate more Dollars.

Tell me other than STATE BANK and National Bank. How many Financial companies are owned by GoP and how much do they worth? Expert answer. Only!

 

[Icewolf]

I believe the growth rate will be even more than 5%

 

[ajpirzada]

a growth rate of more than 5% is going to be an accounting miracle. LSM growth rate had declined to 2% during the first quarter of this fiscal year dropping from 6.3% for the same quarter in the previous year. I wonder how will the economy grow at more than 5%? ..

nonetheless, ill be interested in seeing the 'revised' growth rate for the previous year. We were told that the economy grew at 4.14% but IMF was submitted a growth rate of 3.6%.

 

[ajpirzada]

Compare July-2013 to July-2014 with July-2014 onwards.. Industrial growth rate has declined substantially during this year. How can anyone expect a GDP growth rate of more than 5% with this data?

 

[Fracker]

I will believe once I see our export increases and import decreases.

 

[Archie]

I think its more to do with the 10% Zardari Tax imposed on the Pak economy, which was responsible for all the troubles that you people went through during the PPP rule

Add to that , the dramatic collapse in oil prices have led to significant savings in forex , not to mention an equal increase in crying by middle eastern Sheikhs , who can no longer fund solid gold Urinals

 

[ziaulislam]

WASHINGTON: Finance Minister Ishaq Dar has said that the government hopes to achieve 5 per cent GDP growth this year.

“We had inherited a highly fragile and broken economy… many pundits had bet the country would go into default latest by June 2014, when the reserves will be wiped out,” said the minister while explaining how the government fixed the economy in two years.

Speaking at Carnegie Endowment for International Peace, Washington, Dar said the government was now focusing on four major areas: sustained improvement, energy production, defeating extremism and enhancing education.

Dar also expressed the desire to improve trade and economic ties with neighbors, particularly Afghanistan and India.

The government took “unpopular decisions” for consolidating the national economy, such as long delayed and painful structural reforms in areas like taxation, energy and in the private sector, the minister said.

He said that the government also finalised a new IMF programme, based entirely on the economic agenda.

The minister also presented a paper in the US think-tank, highlighting various improvements in the national economy.

Economic growth averaged around 3 per cent in the five years before this government, now projected to rise to 5.1pc during 2014-15 as against 4.14pc registered during 2013-14. Last year’s growth was already the highest in the last six years.

Inflation averaged around 12pc in the five years before this government, brought down to 8.6pc in 2013-14 and is now projected to decline further to about 5pc in 2014-15. What is more significant is the year-on-year inflation, which was registered at merely 2.9pc in March 2105 compared to March 2014. This is lowest in 12 years.

Tax revenues, which had registered the poorest performances of a meagre 3pc growth in 2012-13, were up in 2013-14 by 16.44pc, rising from Rs1,946bn to Rs2,266bn.

Fiscal deficit registered at 8.2pc during 2012-13, has been brought down to only 5.5pc during 2013-14. This year’s target: 4.9pc.

Development spending:

Last year, it rose by 23pc from Rs360bn during 2012-13. This year, it will increase to Rs525bn, a nearly 24pc increase from the last year.

Credit to private sector, which had registered negative growth during 2012-13, rose by 10pc during 2013-14. It has further increased by 5pc from its level at end-June 2014.

Government borrowings from SBP: The government has continued to reduce budget’s dependence on SBP credit.

During the current fiscal year, the government retired nearly Rs.674 billion in the debt owed to the central bank.

This process will continue.

Balance of payments position: Marked improvement during the last 21 months, with current account deficit declining to less than 1 percent of GDP compared to more than 2pc in 2012-13.

Remittances: In 2013-14, the remittances rose by about 14pc, from about $14 billion to nearly $16 billion. In the nine months of the current fiscal year, remittances have shown an even higher growth rate of 15pc on the back of a considerably high base.

Exchange rate: has remained stable at less than Rs101 to a dollar for more than a year.

Foreign exchange reserves: In 2012-13, the country faced a precarious reserves position of less than $6bn and was required to pay $4.2bn falling due to IMF. On 13 April 2015, the reserves stood at $16.9bn, comprising $11.8 billion of SBP and $5.1. The HBL divestment of $764 million will take the reserves to nearly $17.7bn.

Karachi Stock Exchange Index, which stood at 19,916 on 11 May 2013, moved to 32,248 on 13 April 2015, showing an increase of nearly 62pc. The market capitalisation increased from Rs5tr to Rs7.1tr for the same period, showing a 42pc improvement. In dollar terms it increased from $51bn to nearly $70bn, showing an increase of 37pc.

Dar projects robust economic growth - Newspaper - DAWN.COM

=====================

@SBD-3

Do you think 5.1% is possible this year?i believe most likely the growth rate will be 4.6%-4.8%.

1. why is PML N always quote the last year of PPPP era as a bench mark , it was election year and PPPP scrambled to get votes and give free launches. no wonder there taxation was poor and there performance worse why not use the first four years as bench mark
2. comparing a year before(2010-11) Taxation increased at similar rate of 13% without an additional taxation
3. growth rate in PPPP era was the same around 3.5-4 except the flood year where negative growth pulled down the average into 3. we are not counting the oil effect which has led to accelerated gowth in south asia
2008=4.9,
2009=0.36(flood year)
2010=2.36
2011=3.62
2012=3.82
2013=3.7=PML N
2014=4.1=PML N

4. fiscal deficit of 8% was purely due to govt paying off 500 billion rupees of circular debt in June pushing it from project 5% to 8%. I reality it was PML N who pushed it to 8% not PPPP


indeed PML N has performed better though from PL N but article is full of lies and contradictory statements

 

[Kabira]

1. why is PML N always quote the last year of PPPP era as a bench mark , it was election year and PPPP scrambled to get votes and give free launches. no wonder there taxation was poor and there performance worse why not use the first four years as bench mark
2. comparing a year before(2010-11) Taxation increased at similar rate of 13% without an additional taxation
3. growth rate in PPPP era was the same around 3.5-4 except the flood year where negative growth pulled down the average into 3. we are not counting the oil effect which has led to accelerated gowth in south asia
2008=4.9,
2009=0.36(flood year)
2010=2.36
2011=3.62
2012=3.82
2013=3.7=PML N
2014=4.1=PML N

4. fiscal deficit of 8% was purely due to govt paying off 500 billion rupees of circular debt in June pushing it from project 5% to 8%. I reality it was PML N who pushed it to 8% not PPPP


indeed PML N has performed better though from PL N but article is full of lies and contradictory statements

Growth rate for N first year was 4.1%. On going year is 2nd.

 

[Viper0011.]

Compare July-2013 to July-2014 with July-2014 onwards.. Industrial growth rate has declined substantially during this year. How can anyone expect a GDP growth rate of more than 5% with this data?

Hi - Hope you know how economy works. I'll try to address this for you but if you don't exactly understand how this works....then I'll be speaking gibberish to ya!!
GDP doesn't mean that your industry has to be running optimally. In Pakistan's case, majority of the industry had led un Zardari's time and the remainder took a hit of little electricity and companies moved to Bangladesh and Malaysia, places where people are provided with ready to go infrastructures.
But the current government had put in a different plan altogether. It understood the hundred of billions already gone from the Pakistani economy due to poor safety situation in big cities like Karachi. It knew having 2-4 hours of electricity a day won't run a business. But they needed something to kick start the economy so that it can provide more revenue and then money can be poured into projects to generate electricity and all, that way, business who left, could come back.

That's when they decided to do economic reforms to attract investors to start large scale projects, including electric production being the top one on the list. So by 2017, just the investment coming in from China should top $ 100 billion. But many billions already in pipes have already started to provide millions of new jobs to run transportation, law and order, etc. Majority of the infrastructure projects are focused on electric generation and saving water. So with so much investment, so many new jobs, and resulting tax net growth, you could expand your economy by 4-6%. Plus, remember, the 200 million people of Pakistan, still need to eat, wear clothes, shoes, drive to work or take a bus or a train, etc, which is the normal economic cycle.

 

[SBD-3]

WASHINGTON: Finance Minister Ishaq Dar has said that the government hopes to achieve 5 per cent GDP growth this year.

“We had inherited a highly fragile and broken economy… many pundits had bet the country would go into default latest by June 2014, when the reserves will be wiped out,” said the minister while explaining how the government fixed the economy in two years.

Speaking at Carnegie Endowment for International Peace, Washington, Dar said the government was now focusing on four major areas: sustained improvement, energy production, defeating extremism and enhancing education.

Dar also expressed the desire to improve trade and economic ties with neighbors, particularly Afghanistan and India.

The government took “unpopular decisions” for consolidating the national economy, such as long delayed and painful structural reforms in areas like taxation, energy and in the private sector, the minister said.

He said that the government also finalised a new IMF programme, based entirely on the economic agenda.

The minister also presented a paper in the US think-tank, highlighting various improvements in the national economy.

Economic growth averaged around 3 per cent in the five years before this government, now projected to rise to 5.1pc during 2014-15 as against 4.14pc registered during 2013-14. Last year’s growth was already the highest in the last six years.

Inflation averaged around 12pc in the five years before this government, brought down to 8.6pc in 2013-14 and is now projected to decline further to about 5pc in 2014-15. What is more significant is the year-on-year inflation, which was registered at merely 2.9pc in March 2105 compared to March 2014. This is lowest in 12 years.

Tax revenues, which had registered the poorest performances of a meagre 3pc growth in 2012-13, were up in 2013-14 by 16.44pc, rising from Rs1,946bn to Rs2,266bn.

Fiscal deficit registered at 8.2pc during 2012-13, has been brought down to only 5.5pc during 2013-14. This year’s target: 4.9pc.

Development spending:

Last year, it rose by 23pc from Rs360bn during 2012-13. This year, it will increase to Rs525bn, a nearly 24pc increase from the last year.

Credit to private sector, which had registered negative growth during 2012-13, rose by 10pc during 2013-14. It has further increased by 5pc from its level at end-June 2014.

Government borrowings from SBP: The government has continued to reduce budget’s dependence on SBP credit.

During the current fiscal year, the government retired nearly Rs.674 billion in the debt owed to the central bank.

This process will continue.

Balance of payments position: Marked improvement during the last 21 months, with current account deficit declining to less than 1 percent of GDP compared to more than 2pc in 2012-13.

Remittances: In 2013-14, the remittances rose by about 14pc, from about $14 billion to nearly $16 billion. In the nine months of the current fiscal year, remittances have shown an even higher growth rate of 15pc on the back of a considerably high base.

Exchange rate: has remained stable at less than Rs101 to a dollar for more than a year.

Foreign exchange reserves: In 2012-13, the country faced a precarious reserves position of less than $6bn and was required to pay $4.2bn falling due to IMF. On 13 April 2015, the reserves stood at $16.9bn, comprising $11.8 billion of SBP and $5.1. The HBL divestment of $764 million will take the reserves to nearly $17.7bn.

Karachi Stock Exchange Index, which stood at 19,916 on 11 May 2013, moved to 32,248 on 13 April 2015, showing an increase of nearly 62pc. The market capitalisation increased from Rs5tr to Rs7.1tr for the same period, showing a 42pc improvement. In dollar terms it increased from $51bn to nearly $70bn, showing an increase of 37pc.

Dar projects robust economic growth - Newspaper - DAWN.COM

=====================

@SBD-3

Do you think 5.1% is possible this year?i believe most likely the growth rate will be 4.6%-4.8%.

Somewhere between 4.75-5% YoY

Compare July-2013 to July-2014 with July-2014 onwards.. Industrial growth rate has declined substantially during this year. How can anyone expect a GDP growth rate of more than 5% with this data?

It is because the lack of credit absorption by the existing industries. The industrialists would only take an expansion decision as they see a permanence in growth robustness. The industrialists don't wana get caught off guard as they were when the credit bubble bursted in the later part of Mushi's regime. The first decision is to kill spare capacity by expanding working capital which reflects in 10% YoY increase in credit offtake.

 

[Bobby]

what happen to circular debt..is it in control now

 

[ajpirzada]

Hi - Hope you know how economy works. I'll try to address this for you but if you don't exactly understand how this works....then I'll be speaking gibberish to ya!!
GDP doesn't mean that your industry has to be running optimally. In Pakistan's case, majority of the industry had led un Zardari's time and the remainder took a hit of little electricity and companies moved to Bangladesh and Malaysia, places where people are provided with ready to go infrastructures.
But the current government had put in a different plan altogether. It understood the hundred of billions already gone from the Pakistani economy due to poor safety situation in big cities like Karachi. It knew having 2-4 hours of electricity a day won't run a business. But they needed something to kick start the economy so that it can provide more revenue and then money can be poured into projects to generate electricity and all, that way, business who left, could come back.

That's when they decided to do economic reforms to attract investors to start large scale projects, including electric production being the top one on the list. So by 2017, just the investment coming in from China should top $ 100 billion. But many billions already in pipes have already started to provide millions of new jobs to run transportation, law and order, etc. Majority of the infrastructure projects are focused on electric generation and saving water. So with so much investment, so many new jobs, and resulting tax net growth, you could expand your economy by 4-6%. Plus, remember, the 200 million people of Pakistan, still need to eat, wear clothes, shoes, drive to work or take a bus or a train, etc, which is the normal economic cycle.

Im doing PhD in Macroeconomics. So surely you can teach me 'how this works'

and $100bn investment from China by 2017? amazing! lol

if you havent realised, our circular debt is now more than what PMLN govt cleared when they came to power. Doesnt matter how many new energy projects you build, if these governance issues are not sorted. We already have spare capacity of few thousand MW in our electricity generation. But governance is not a PMLN thing, unfortunately.

Somewhere between 4.75-5% YoY


It is because the lack of credit absorption by the existing industries. The industrialists would only take an expansion decision as they see a permanence in growth robustness. The industrialists don't wana get caught off guard as they were when the credit bubble bursted in the later part of Mushi's regime. The first decision is to kill spare capacity by expanding working capital which reflects in 10% YoY increase in credit offtake.

In my view circular debt is the key problem not lack of credit absorption. There is no point expanding business if you already have spare capacity in your factories.

And we already have capacity to produce more electricity but there are serious governance issues which stand in the way.

what happen to circular debt..is it in control now

PEW says circular debt crosses Rs600 bln due to lethargy of officials

ISLAMABAD - Pakistan Economy Watch President Dr Murtaza Mughal on Friday said that wrong decisions of the bureaucracy are behind the petrol crisis which has made life difficult for millions and hit economy.


Those who failed to take corrective measures in time should be asked to give reasons for the disaster, he said. The officials concerned continued to ignore plight of PSO despite record receivables of 235 billion and power sector circular debt hitting a record mark of Rs 600 billion, he said while talking to Islamabad Chamber of Small Traders Patron Shahid Rasheed Butt and members of business community. Dr Mughal said that PSO started defaulting on its obligations in November 2014 and the institution faced refusal by the banks for any loans. In the same month faced fine of Rs 250 million by banks, Rs 180 million demurrage charges and damages claim to the tune of Rs 65 million by foreign oil suppliers but it was not enough to get attention of the policymakers.


Unfortunately, the indifferent attitude of authorities helped circular debt engulf whole Pakistan, punish masses and hurt limping industry which should be probed. He said that Pakistan Muslim League-N led government allocated Rs 500 billion to tame circular debt after coming to power and the finance minister in the first budget speech termed it a great victory claiming to bury the problem forever. The promise of the finance minister was not kept, said Dr Mughal.

• January 16, 2015, 4:43 pm

PEW says circular debt crosses Rs600 bln due to lethargy of officials

Growth rate for N first year was 4.1%. On going year is 2nd.

actually Pakistan economy grew at two different rates last year:

1) For the IMF: 3.6%
2) For the people: 4.1%

I wonder which one will be confirmed in the revised growth rate. Lets see

 

[Neutron]

Hope for best. Chinese investment in different sectors can attract more investment from foreign investors.

 

[SBD-3]

In my view circular debt is the key problem not lack of credit absorption. There is no point expanding business if you already have spare capacity in your factories.

And we already have capacity to produce more electricity but there are serious governance issues which stand

Major industries have already installed their own power plants at least for industries in Sindh -Assuming KPK and Balochistan don't have a significant industrial base- the energy is not a problem. The small industries- which actually suffer from circular debt being dependent upon national grid- don't have any documentation of their financials.So banks prefer to Park money at comfortable rates offered by PIBs/MTBs rather than taking exposure on undocumented businesses.