GNP to reach $150 billion, per capita income $950 this year

[Neo]

GNP to reach $150 billion, per capita income $950 this year

ISLAMABAD (May 22 2007): Despite high international oil prices and devastating earthquake 2005, the economy has grown on an annual average of 7.5 percent during the last four years 2003-06. This year, 2006-07 by achieving growth rate of over 7 percent, the GNP would reach about $150 billion and per capita income around $950.

The growth is broad-based agriculture sector particularly on account of wheat, pulses and sugarcane production and livestock development has achieved a high growth rate of 5 percent in 2006-07, large-scale manufacturing has grown in double digits and growth in services sector has also been robust.

Total investment has increased tremendously in recent years. It reached all-time record level of Rs 1,900 billion in 2006-07 and National Savings at Rs 1,500 billion.

Total foreign investment is rising every year. This year it is expected to reach to $6 billion - highest in South Asia. The workers' remittances an important component of national savings is increasing fast. It will be around $5.5 billion by end June 2007. Tight monetary policy is pursued by the State Bank of Pakistan to control rising inflationary pressures.

The fiscal accounts have considerably improved in recent years. Revenues are buoyant, expenditures are rationalised. Revenue deficit is eliminated and public debt and fiscal deficit has been brought to a sustainable level. It is expected that CBR collection would exceed the target of Rs 835 billion in 2006-07.

Although the trade deficit is on the higher side, rising FDI and workers' remittances over $6 billion and $5.5 billion respectively would keep the external account position comfortable. Foreign exchange reserves currently stand around $14 billion expected to reach around $14.4 billion by end June representing about seven months of imports an improvement of $1.1 billion over the last year level.

The public expenditure on social sectors has increased from Rs 103 billion in 2001-02 to Rs 228 billion in 2005-06 reflecting an increase of 22 percent per annum.

The pro-poor expenditure has also increased sharply by 27 percent annually from Rs 180 billion 2001-2002 to Rs 464 billion in 2005-06. In terms of GDP, the expenditure during this period has increased from 4 percent to 6 percent.

Poverty has declined significantly from 34 percent in 2001 to 24 percent in 2005. Situation should further improve with the good agriculture growth this year. Unemployment rate has declined from historically high level of 8.3 percent in 2001-02 to 6.2 percent in 2005-06.

Knowledge based economy, technology driven development, innovation, value addition, and establishment of quality/accredited laboratories and achievement of MDGs and long-term objectives of the Vision 2030.

For this purpose, Planning Commission is striving hard for just and fair treatment to all and carries everybody along in development of every inch of Pakistan on the basis of equality. Smooth working, growth and equitable development are underlying principles of our development process.

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[Neo]

All set to achieve economic stability: report

LONDON (May 22 2007): The economic growth of Pakistan has been described as one of the world's most dramatic turnaround stories, says a report in May's issue of The Banker, a leading magazine in the global financial industry. In his article on Pakistan, writer Jules Stewart says Pakistan looks set to achieve economic stability, a goal many thought impossible.

Pakistan, he wrote, was a verge on default in 1999 when President General Pervez Musharraf came into power. His Finance Minister and now Prime Minister Shaukat Aziz put in place an urgent package of macro-economic reforms aimed at stabilising economy.

At that time, Pakistan was facing an external debt of $37 billion, coupled with huge fiscal and current account deficits. Tax revenue was almost non-existent, exports were stagnated and foreign exchange reserves had shrunk to a dangerously low level.

The stabilisation plan put in place was highlighted by exchange rate liberalisation and the strengthening of foreign reserves, which now stand at over $13 billion compared with $1 billion when the programme was launched. In this period, domestic debt as a percentage of GDP has been managed down to half the 1999 level.

Although, according to Stewart Pakistan has not been able to completely eliminate the imbalances in its economy but a leading banker Farrukh Khan of BMA Capital has spoken about strong foreign direct investment inflows, along with remittances and the ability to borrow in international markets.

However, the writer has noted long term, imports and exports need to come into balance. According to Khan, domestic demand has been the engine of growth. Between 20 million and 30 million people now earn $8000 to $10,000 a year, making the current rate of growth sustainable.

He also says the general election later this year does not pose a threat to the reform process. The present government has been most aggressive in taking the reforms forward. Those living below poverty level account for 25 percent of the population compared with 33 percent a few years ago.

Standard Chartered was the latest of the big ticket acquirers, having recently paid nearly $500 million for Union Bank, one of the most dynamic players in Pakistan's banking sector. More take-overs are in the pipeline.

The article has quoted another leading banker Reza-ur-Rahim of J.P. Morgan as saying that law and order scarce has been blown out of proportion.' We need to portray the softer side of Pakistan because the actual situation is quite different in what people see on their television screens.

A lot is going well in Pakistan. FDI is up, privatisation is moving ahead, the deficit is under control, poverty is reducing and the government is not letting the upcoming elections dictate their policy decisions." The government, says Stewart is now pushing for the second generation of reforms, a task being handled by Ashfaque Khan, Director-General of the government's debt office who is responsible for monitoring the implementation of the new Fiscal Responsibility and Debt Limitation Act, which binds current and future governments to abide by prudent economic policies.

Khan says that once the current high demand for imported capital goods has been satisfied, the current account deficit will decline to normal levels. In his interview with Governor, State Bank of Pakistan, Shamshad Akhtar, she says financial reform needs a progressive mindset, which the present government has provided. Akhtar pointed out that the SBP monetary policy looks at the dual objectives of promoting growth while maintaining price stability.

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[Shehz]

Old News, but very relevant: http://www.dailytimes.com.pk/default.asp?page=2007\04\23\story_23-4-2007_pg7_17

ISLAMABAD: Prime Minister Shaukat Aziz said on Sunday that the government of China and Pakistan agreed to enhance cooperation in conventional and nuclear energy during his recent visit to China.

Briefing journalists on the visit at Prime Minister’s House, Aziz said Pakistan’s energy needs were increasing by 10 to 12 per cent annually due to economic growth and the country was examining options to meet the energy needs. He said nuclear cooperation with China would only be for peaceful use of energy.

Referring to Iran, he said the country had a right to civil and peaceful use of nuclear energy under strict IAEA guidelines. He said Pakistan was against nuclear proliferation and Iran should also avoid it.

The PM said that record growth would be achieved this year with per capita income approaching $950. He said that next year’s per capita income was expected to reach $1,000, finally making the country a middle-income nation. He said bumper crops were expected and rural areas would be developed at a faster rate.