Economic Survey 2008-2009: paints a dreary picture

[AgNoStiC MuSliM]

Just because you did not mention the CJP does not mean he's out of the equation, does it?

No it doesn't, but at least he's better than Dogar.

I'm intrigued, structural changes in the economy in the CoD - educate me, what are these structural changes.

I mentioned structural changes in the CoD, not economic structural changes.

The structural changes in the CoD, take those related to the judiciary for example, would help make our judicial appointment process more bipartisan, and therefore hopefully less prone to favoritism (in judicial rulings) towards one side or the other. If we can make our judicial appointments merit based instead of Jiyala based, we can increase confidence in the rule of law - and economic benefits flow from stability and the rule of law.

By the way, why take his word, why not hold his Islamist feet to the peaceful democractic Islamist fire? Why not bind him to it?

Why not? No opposition from me on that point.

if Zardari does not do it by the end of his term, he should be booted out, and hopefully the same for Nawaz when his term is over.

 

[muse]

Yes, I can now understand how the CoD will lead to a better economy, if judicial positions are not influenced by politics, govt will cease to be the trough the political pigs feed of and of course the economy will become more competitive as well.

 

[AgNoStiC MuSliM]

Yes, I can now understand how the CoD will lead to a better economy, if judicial positions are not influenced by politics, govt will cease to be the trough the political pigs feed of and of course the economy will become more competitive as well.

I can see the government not becoming the trough that is now, if an independent judiciary combined with independent law enforcement (someone has to collect the evidence and make the case still) comes into being.

Economic competitiveness is another issue altogether - on that count Nawaz holds a slight edge given the PML-N's greater preference for the free market and capitalism - but at the end of the day economic policies will make or break our economy, not the judiciary.

An independent judiciary that people have faith in is nonetheless still a critical component of building investor confidence in Pakistan.

 

[AgNoStiC MuSliM]

Well here are some good proposed structural reforms by Zardari - can't formulate proper economic policy if there is no confidence in the veracity of the underlying economic data.

Government intends to make Statistics Division an autonomous body: IMF and IFIs told​

RECORDER REPORT
ISLAMABAD (June 12 2009): Pakistan has informed the International Monetary Fund (IMF) and International Financial Institutions (IFIs) that the government intends to make Statistics Division an autonomous body that would report to the National Assembly instead of the Finance Ministry. Advisor to Prime Minister on Finance Shaukat Tarin stated this while addressing a press conference after launching the Economic Survey 2008-09.

Replying to queries about the controversy over poverty figure, he said that the methodology adopted by World Bank to assess the poverty rate was credible. According to the World Bank, the poverty in Pakistan was 17.2 percent during July-March 2007-08 but it increased by 5 percent during the last quarter of 2007-08.

He said that Musharraf government had been giving subsidy to get popular vote in the elections but the economic impact of that regime's policies has created immense problems for power producers increasing the debt manifold.

"According to local financial managers, the poverty rate in Pakistan is around 30 percent, he said adding that the government was conducting a survey to assess the rate of poverty in real terms which would give the factual position in next three months.

He acknowledged that some people had committed suicide due to poverty and added that house rent inflation was not declining and ranged between 14-15 percent. He said the government was chalking out a strategy to reduce poverty and a survey in 16 districts was in progress to identify the deserving persons.

"The government will give health insurance and launch temporary employment schemes to reduce poverty, the advisor said, adding that Benazir Income Support Programme (BISP) will also help reduce poverty. He hoped that the government would succeed in bringing inflation down to single digit level by next year. The unemployment in rural area is 5.3 percent whereas it is 8.52 percent in urban area.

Business Recorder [Pakistan's First Financial Daily]

 

[muse]

These PPP are without conscience, it seems to me and so is Nawaz, with that out of way, to "bidnes", as you will see we are in a terrible situation, with insurgency that needs the people to be won over, this PPP cannot even win over it's "friends" --oh yes, and Musharraf was bad, he wore a uniform with pride, the swine!:

In case FODP funding is delayed: IMF asked to arrange $4 billion credit line as insurance, says Tarin
MUSHTAQ GHUMMAN & ZAFAR BHUTTA


ISLAMABAD (June 12 2009): Prime Minister's Advisor on Finance, Shaukat Tarin on Thursday revealed that Pakistan has requested the International Monetary Fund (IMF) to arrange $4 billion credit line as insurance to absorb economic shocks in case of delay in payment of promised funds from Friends of Democratic Pakistan (FODP).

"The fear of fiscal deficit and current account deficit still exists as oil prices are going up and workers remittances may come down," he said at a press conference after formally launching the Economic Survey 2008-09 - two days after Business Recorder revealed it.

He said that Pakistan would receive the next tranche of the 7.6 billion dollars standby loan from the IMF after the budget 2009-10 scheduled to be presented in the National Assembly on June 13. He said that the FODP had committed $5.28 billion but assured that the development programme would continue in case of delay. "We are trying to secure another standby arrangement as insurance from the IMF to continue the development programme if the FODP delays payment", he added.

He ruled out that the IMF had delayed release of $840 million tranche due to failure of the government to meet the targets agreed with the IMF, saying that Pakistan had proposed a wait to assess the measures in the budget. The figures for July-March comply with the IMF targets, he added. Tarin said the government was going to announce massive programme for development in the next budget and with the increase in GDP, the debt-to-GDP ratio would start declining.

"The government will get enough money from the FODP that would be spent on the development programme, he said, adding that $1.2 billion from the FODP would be spent on development projects. Pakistan will also secure $500-550 million from other external resources to spend on the development projects during the upcoming financial year ie 2009-10, he said.

He said the international capital market was closed to generating money due to recession and the government had no option but to seek loans from international financiers. He said that international capital market would be open next year for generating money.

Responding to a query whether Pakistan had violated the Fiscal Responsibility and Debt Limitation (FRDL) Act 2005, Hina Rabbani Khar, Minister of State for Economic Affairs said that borrowing by the present government was slightly more than allowed by the Act.

According to FRDL, the government is bound to reduce debts by 2.5 percent of GDP each year but the present government borrowed one percent in excess of what is allowed by the Act which is a clear violation.

The government under the Act also required reducing revenue deficit by June 30, 2008, which has not been implemented. The government has obtained foreign debts of $5.5 to 6 billion in just nine months of the current fiscal year, expected to touch $7 billion by year-end. Interestingly, none of the members of the parliament raised this issue in the House.

Tarin said the government would make sufficient allocation for Internally Displaced Persons (IDPs) in upcoming budget and spending on IDPs would be in shape of grants to be received from different countries and would not put pressure on inflation in Pakistan. He said that spending on defence had exceeded Rs 300 billion during the current financial year ie 2008-09.

"The subsidy to power sector had reached Rs 98 billion against the budget allocation of Rs 65 billion for the current fiscal year even though the government had not passed on full impact of power tariff determined by Nepra to consumers," he added. He said the government would focus on productive growth of manufacturing and agriculture sectors in the next budget. He said the IMF had no reservations about the tax system in Pakistan.

 

[Neo]

So much for the great turn around we were told to expect from new great 'democratic' and 'competent' government.

Consider it a glass half empty mate, it could have been much worse.
Many developped and stronger economies are shrinking, we atleast managed to grow a modest 2%.

 

[muse]

NEo


How can you say that? based on what? the huge amounts that are on the books of our lenders?

 

[Neo]

NEo


How can you say that? based on what? the huge amounts that are on the books of our lenders?

Based on real growth. Though we failed to meet many targets, except for LSM all parameters are up, agri sector even recorded 4.5% rise.

Still the poverty is rising due decline in purchasing power which is a direct result of high inflation and natural population growth (2.1%)exceeding economic growth (2.00%).

 

[muse]

Neo, examine this piece below:

Export target to be missed again
EDITORIAL (June 12 2009): The revised export target of 19.5 billion dollars may also be missed according to the latest figures released by the Federal Bureau of Statistics (FBS). The original export target, it may be recalled, was 22.1 billion dollars for the current fiscal year while total exports for the 11 months ending May 2009 amounted to 14.998 billion dollars, according to the FBS.

There is nothing sacrosanct about export targets as they consist of an educated guesswork on the part of the government based on the agriculture output of those crops that are exported, their likely value addition along the manufacturing chain and indeed on the state of the economy of major buyers of our products.

Fiscal year 2008-09 was characterised by an unprecedented rise in load shedding which, together with high interest rates, the outcome of negotiations with the International Monetary Fund (IMF) as part of the 7.6 billion dollar stand-by arrangement, led to a negative 7.7 percent growth in large scale manufacturing (LSM).

This, in turn, had obvious repercussions on industrial output in general, including that of our major export industries. If one sprinkles the element of a global recession and the fact that most of our export items are consumer items which are the most affected during a recession one can easily understand the raison d'etre of our inability to meet the export target.

Critics of the system allege that the government's way of doing business may also contain an element of deliberate over estimation of exports as it would have allowed the government some manoeuvrability in its ongoing negotiations with the IMF - a manoeuvrability that is time bound as it would automatically end at or near the end of the year.

Such an approach is not unique to the present dispensation. Be that as it may the time of reckoning has come and the government will have to make adjustments in the budget to ensure that the pressure on the balance of payment eases in the forthcoming fiscal year.

The two obvious ways of reducing such a pressure are reducing imports and/or promoting exports. Import reduction at this point in time would largely depend on the international price of oil which has reached 70 dollars per barrel. According to data released by the Petroleum Ministry the methodology used for implementation of the Petroleum Development Levy (PDL) implies zero revenue for the government once the price of oil reaches 70 dollars per barrel.

In other words either the forthcoming budget is likely to incorporate a different methodology for a tax on this product, a major source of meeting revenue targets to contain the budget deficit during the current fiscal year, or it will have to widen the scope of other taxes sufficiently to meet the revenue targets.

Exports however can and must be increased through revisiting policies that apply to our major export items. It must be noted that cotton and related products account for a major source of our export revenue. While recession did impact negatively on sales abroad yet the government can undertake measures/policy revisions to support the sector.

Cotton and related industry must be supported through incentives but unfortunately these may not be adequate if load shedding continues on the present scale. Thus energy, as a major input in most manufacturing, must be the major priority of the present government that is now into second year of its tenure.

As matters stand today the comfort zone in this regard is not that high with banks refusing to extend credit to rental power projects, consisting of short term measures to meet the energy deficiency, and hydel dams as well as Iran-Pakistan gas pipeline still a long way away from operation.

 

[Neo]

Muse, projected growth was indeed $22.1 billion revised to $19.5 billion. Last year exports recorded $19.2 billion so there's almost no decline.

We're hit by severe energy crisis which is much worse than last year. With decline in LSM one should expect same trend in exports. Luckily we're able to maintain last years figs.

 

[muse]

Neo

One of us is reading these figures wrong:


it

may be recalled, was 22.1 billion dollars for the current fiscal year while total exports for the 11 months ending May 2009 amounted to 14.998 billion dollars, according to the FBS.

 

[Neo]

That may be the case Muse but I don't have much faith in our accounting and reporting system. May and June are traditionally known for high exports, lets wait till all the data has been processed.
I'm still hopeful that we'll end close to last years $19 billion.

 

[Neo]

Pakistan's trade figs 2003-2008:

Pakistan?s Import Management Strategy

 

[TopCat]

Changing the govt in the middle financial disaster will worsen the situation. I am sure PK govt is doing what it can to coome out of this dismal situation. They must be given time, at least 3-5 years.

 

[AgNoStiC MuSliM]

Based on real growth. Though we failed to meet many targets, except for LSM all parameters are up, agri sector even recorded 4.5% rise.

Still the poverty is rising due decline in purchasing power which is a direct result of high inflation and natural population growth (2.1%)exceeding economic growth (2.00%).

And the world bank says it declined significantly:

http://www.defence.pk/forums/economy-development/27672-17-poverty-rate-pakistan-world-bank.html

Of course our people are arguing it went up significantly - to over 30%.

Perhaps the WB figures have some truth behind them given the growth in the agricultural sector, and given that over 60% of the population is rural.