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THE ECONOMY OF PAKISTAN- Some

Thoughts

Presentation by:PROF. DR. KHAWAJA AMJAD SAEEDPrincipal HAILEY COLLEGE OF BANKING & FINANCEUniversity of the Punjab, Lahore.Email: principal@hcbf.pu.edu.pk

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WELCOME TO OUR

PROGRAM

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PRESENTATION

1 Overall Framework PEST Formula 2 Constitution of Pakistan3 Global Tributes to Pakistan4 GDP5 Federal Budget 2006-076 Growth in Federal Government Revenue7 Corporate Income Tax Rates8 Energy9 China Factor 10 Pakistan-Economy Final Review

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1: OVERALL FRAMEWORK

P Political

E Economic

S Sociological

T Technological

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2: CONSTITUTION OF PAKISTAN

Article Focus03 Elimination of Exploitation18 Freedom of Trade, Business or Profession37 Promotion of Social Justice

and Eradication of Social Justice

38 Promotion of Social and Economic Well-being of the People

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1: World Bank - Managing Director October 2006

1. Rich in Human Capital

2. Impressive Record

- Growth

- Development

- Poverty Alleviation

3. Continuous Economic Reforms

3: GLOBAL TRIBUTES TO PAKISTAN

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4. Inflation-Down

5. Government: 5-10 Years Plans

- Water

- Energy

- Food Security

- Infrastructure

- HRD

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6. Privatization Program

7. Gawadar-Corridor

- Trade

- Transportation

- Energy

- Central Asia & China.

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2: IMF-September 2006

Tributes

1. Excellent Medium Term Planning

2. Strong FDI

3. Growing Domestic Investment

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3: Economic Freedom Index 2006Pakistan 110 better than India

India 121

4: Opacity Index

Economist London Pakistan rated higher

than India

5: Moody’s Investors Service-2006Pakistan’s Rating Improving B2 to B1

Foreign and Local Currency Bonds

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4: GDP

PakistanAverage Four Years 7.0%2005-06 6.6%Others World 4.8%Euro 1.3%USA 3.5%Japan 2.7%Germany 0.9%

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China 9.9%

Asian South Asian 5.0%

- India 8.0%

- Pakistan 6.6%

- Sri Lanka 5.9%

- Bangladesh 5.8%

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5: FEDERAL BUDGET 2006-07Outstanding Features

1. Record ADP Rs 435b2. Record Allocation to Provinces:

- Revenue Budget Rs 378b- ADP Allocation Rs 115b

3. Record forecast for Rs 1,083bCurrent Revenue

4. Special Allocations ADP- Programs Rs 34b- Areas Rs 17b- ERRA Rs 50b

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6: GROWTH IN FEDERAL GOVERNMENT REVENUE

Year Rs b % Growth Index

2005-06 1,096 214 -05 900 175 -04 791 154 -03 721 141 -02 624 122 -01 553 1081999-00 513 100Source: Excerpted from Pakistan Economic Survey 2005-06, Statistical Appendix, Table 4.3.

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7: CORPORATE INCOME TAX RATES

Year Public Company%

Private Company %

Bank%

2004

35 41 44

2005

35 39 41

2006

35 37 38

2007

35 35 35

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8: ENERGY

A: Needed

1. Cheap

2. Abundant

3. Environmental Friendly

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B: Electricity Use %

1. Households 43

2. Industry 28

3. Agriculture 12

83

4. Commerce 07

5. Others 10

100

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C: Energy Perspective MW

Short Term

2007 1,000

Medium Term

2008-2010 45 Power Plants 8,600

Long Term

31 Projects (Hydel & Nuclear) 19,150

28,750

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Impact

Job Creation

- Direct 08 Lac

- Indirect 16 Lac

24 Lac

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D: Installed Generation of Electricity Capacity %

1. Wapda

(Hydel 58% + Thermal 42%) 58

2. IPPs 30

3. KESC 09

4. Nuclear 83

100

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E: Issues MW

1. Untapped Hydel Potential 50,000

2. Line Losses

3. Solar Energy

4. Wind Energy

5. Austerity/Consumption Planning

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9: CHINA FACTOR

1. Population Currency

1.3b Renminbi (Yaun)

2. Language

Mandrin

3. World Ranking & other Economic Data

Exports 4th

GNP 6th

Per Capita $960

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3. World Ranking & other Economic Data

Inflation 0.8%

Unemployment 2%

4. Strengths

1. High Domestic Market

2. Food Self Sufficiency

3. Mineral Resources

4. Diversified Industrial Sector

5. Low Wages

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6. Rapid Sustained Growth 7. Growing Exports8. Hong Kong as a Financial Sector 9. Heavy Investment in Communication

and in IT Sectors5. Weaknesses

1. Corruption2. Underemployment 3. Geographical Disparities 4. Poor transportation

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Export-Destination %

1. USA 22

2. HK 18

3. Japan 18

4. Taiwan 13

5. South Korea 10

6. Germany 06

7. Others 13

Total 100

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6. Contributions to Pakistan

1. Karakrum Highway

2. Heavy Mechanical Complex

3. Chasma Nuclear Plant

4. Gawader

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7. Upcoming Investment

1. Five years Linkage

2. Private Sector Industrial

Estate in Punjab

- Gawader

- Refinery

- Other Investment

- 32 Point joint statement

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10: PAKISTAN-ECONOMY FINAL REVIEW

Positive

1. GDP Growth 7%

2. KSE Bullish

3. FDI Robust

4. Consumer Credit from Growing

5. Poverty Alleviation 10% down Levels since 2000

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Negative

1. Income Distribution Skewed

2. Trade Gap Widening

3. Growth Non Sustainable

Source: Edited from IBP Newsletter, November 2006.

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