Economic Survey 2012-2013

Finance Minister Mr. Ishaq Dar presented economic survey 2012-2013Image

  • Circular debt has been stands at Rs. 500bn
  • Highest ever deficit recorded
  • Growth rate stagnates ar 3.6 pc
  • Rs 350m shortfall in revenue
  • Bad financial year
  • Minister hinted a difficult road ahead
  • Said to increase the electricity tariffs, and he said that unless they increase it, it would be difficult to reduce loadshedding
  • Has promised to eradicate circular debt of 500 billion before June 30 or in two months at worst
  • The state of economy is facing severe macroeconomic challenges which could only be taken into the right direction through a series of reforms and policies and painful action. The statement a painful action is a signal that the common man has to bear much more pains as he was doing before.
  • These policies are going to be reflected in the budget speech.
  • According to the minister the revival of the economy is the first priority of the new government, and the growth target for the next year has been set at 4.4 pc. He has also said that the investment in the infrastructure would be increased and hence the development programme has been pitched at Rs.1.155 trillion for the next year.
  • Starting off with an affirmation of  8.0 pc higher fiscal deficit than the target of 4.7 pc, senator Dar said the deficit would end up at about 8.5 pc of GDP or about Rs,. 2 trillion at the end of the year the highest in Pakistan history.
  • He said the final amount of deficit could not be estimated because of the cash accounting system in the country.
  • Finance minister also took full owner ship of the next year budget, and he has been informally engaged with the central bank, FBR and Finance Ministry.
  • He also said that there is need to recover the deficit of Rs 2 trillion, which is 8.5 pc of the GDP , he said next year the deficit would be no more than 4.5-5 pc of the GDP. This could only be done through setting difficult targets and then make every effort to achieve them. The government expenses would also be curtailed by 30 pc.
  • The GDP growth was 3.6 pc against targeted GDP of 4.3pc and another slippage was revenue was at Rs 2.381 trillion, there was a shortfall of Rs. 350 billion this year. Along with the investment was 14.2 pc against its targeted value of 14.9 pc.
  • The investment-GDP ratio stood at 12.6 pc against its targeted value of 13.3 pc. He worth mentioning that an economy could not go on without 20 pc investment to GDP rate.
  • Foreign inflows were targeted at $ 1.8 billion but it stood at only 8 million $, leaving a shortfall of $ 1 billion.
  • National saving remained at 13.5 pc of GDP which was higher than its targeted value of 12.8 pc.
  • Both agriculture and the services sector grew below par, Agriculture sector was estimate to grow at 4.1 pc but it grew at 3.3 pc, while the services sector was targeted at 4.3 pc but its actual growth remained at 3.7 pc.
  • The industrial performance grew higher than what was targeted it remained 2.8 pc against targeted value of 2 pc.
  • As far as the external front and aid is concerned the current account deficit remain at 2.9 bn $, against 2 bn $ which was set by government. The value of foreign reserves held by SBP stood at a dismal $ 6.2bn.
  • Public debt which was Rs 3trn in June 1999, had increase to Rs 13.25trn in March this year and is expected to rise in Rs 14trn at the end of the financial year, which is not sustainable at all.
  • These all loans have been utilized not for the capital investment but to finance deficit, which was a violation of the Fiscal Responsibility and Debt Limitation Act.
  • Public debt should not be more than 60 pc of GDP but it had grown beyond 62 pc

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