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SEMINAR IN ECONOMIC POLICY OF

PAKISTAN

GROUP MEMBERS

FARAZ MEHMOOD
BILAL RASHEED

15950
10321

S. FARHAN AHMED
WALEED SUHAIL

14119
10440

CURRENT ERA OF PAKISTAN

INTRODUCTION
Pakistan Muslim League-N President Muhammad Nawaz Sharif created history when he was elected as the
27thPrime Minister for the third time by securing 244 votes in the National Assembly.

ECONOMY CHALLENGES
An economy crippled with many challenges including
Energy shortages (Electricity & Gas)
Hyperinflation
Mild economic growth
High debt and large budget deficit
Pakistan's GDP growth rate for FY 2012-2013 was down to 3.59% with estimates suggesting that it will
only reach 3.65% by the end of 2013
However the government expects to increase it to 5.8% for FY 2014-2015.
Business confidence in Pakistan is at a three-year high in May 2014 largely backed by increasing
foreign reserves to $10b while it is expected that they will cross $15 billion by mid-2014
Along with that, in May 2014IMF claimed that Inflation has dropped to 13 per cent compared to 25%
in 2008
Foreign reserves are in a better position and the current account deficit has come down to 3 per cent
of GDP for 2014

FOREIGN DIRECT
INVESTMENT
Foreign Direct Investment 47.1% increase
Major dip in Telecommunication Sector $140.8 M
Petroleum refining
$14.6 M
Electrical Machinery $10.8 M
Trade
$10.4 M
Transport
$6.5M
World bank
9 April, 2014
Inflation 7.9%
Fiscal deficit
6% of GDP (improved tax collection and
expenditure)

restricted current & development

PAKISTAN GDP 2013

GDP $232.28 Billion


Growth 4.14 %

MONETARY POLICY
INTEREST RATE
Interest Rate in Pakistan is reported by the State Bank of Pakistan
The benchmark interest rate in Pakistan was last recorded at 9.50 percent.
Interest Rate in Pakistan averaged 12.50 percent from 1992 until 2014
All time high of 20 percent in October of 1996 and a record low of 7.50 percent in
November of 2002

MONETARY POLICY
INFLATION RATE
Inflation Rate in Pakistan is reported by the Pakistan Bureau of Statistics
The inflation rate in Pakistan was recorded at 4.30 percent in December of 2014
Inflation Rate in Pakistan averaged 8.02 percent from 1957 until 2014
All time high of 37.81 percent in December of 1973 and a record low of -10.32 percent in
February of 1959

FISCAL POLICY
TAX REVENUE (% of GDP)
Income Tax Revenue in Pakistan is reported by the Federal Board of Revenue
Tax revenue refers to compulsory transfers to the central government for public purposes.
Certain compulsory transfers such as fines, penalties, and most social security
contributions are excluded

FISCAL POLICY
INCOME TAX
Personal Income Tax Rate in Pakistan is reported by the Federal Board of Revenue
The Personal Income Tax Rate in Pakistan stands at 20 percent.
Personal Income Tax Rate in Pakistan averaged 21.25 percent from 2006 until 2013,
All time high of 30 percent in 2006 and a record low of 20 percent in 2007

FISCAL POLICY
CORPORATE TAX
The Corporate Tax Rate in Pakistan stands at 34 percent.
Corporate Tax Rate in Pakistan averaged 34.89 percent from 2006 until 2014
All time high of 35 percent in 2007 and a record low of 34 percent in 2014

FISCAL POLICY
SALES TAX
The Sales Tax Rate in Pakistan stands at 17 percent
Sales Tax Rate in Pakistan averaged 15.78 Percent from 2006 until 2014
All time high of 17 Percent in 2014 and a record low of 15 Percent in 2007

ACHIEVEMENTS AND PLANS

GROSS DOMESTIC PRODUCT


The economic indicators have been satisfactory enough for the World Bank to state with confidence
that a recovery is underway.
The re-emergence of GDP growth - 4.14 percent - a key feature of the year 2013/14.
The growth momentum is broad based, as all sectors have supported economic growth.
Growth rate target was budgeted by the Pakistan government at 5.1 percent for the year 2014-15 but
the IMF has reviewed it to 4.3 percent.

TAX & EXPENDITURE


The government initiated reforms to increase revenues and cut public expenditure.
The government introduced taxation reforms to increase tax-GDP ratio which was only around 10%.
The reforms yielded results, increasing tax collection by 16%.
In the FY 2015 budget, the government further widened the tax net by proposing to tax a range of
commercial transactions.
The government reduced the fiscal deficit to 5.5 percent of GDP in FY2013/14 from 8.3 percent in
FY2012/13.
Tax revenues increased by almost 1 percent of GDP and under a prudent management strategy,
expenditures grew by only 3.7% against 20.4% in the previous year.
The plan is to increase the tax-GDP ratio to 15% in the next few years.

RESERVES
Although, the current account deficit is 1% of GDP (increased from 0.7% due to higher deficits in the
services account), the risk of a balance of payment crisis was minimized with a significant
strengthening of the reserve position.
The success stemmed mainly from strong remittance and significant foreign capital and financial
inflows which supported a build-up of reserves
Foreign inflows included the auctioning of $2bn Eurobond and $1.5bn Saudi grant.
Remittance touched US$15.8 billion.
In July 2014, the reserves increased to $14 billion.
This also brought stability in the foreign exchange market.
Pakistan has also raised $1 billion from international debt markets through the issuance of five-year
dollar-denominated Sukuk bonds.

INFLATION
Average CPI inflation was preserved at a single digit (8.6 %)
Better supply conditions and tight monetary policy contributed to the softening of underlying
inflationary pressures.

PRIVATIZATION
Despite opposition from unions, the government is on track to privatize state-owned entities through
the privatization commission
It wants to privatize more than 30 PSEs
The privatization of PIA and PSM - expected to take place in October 2015
Both entities top the list of enterprises inflicting billions of rupees worth of losses on the exchequer
due to mismanagement

BUSINESS
Improved business confidence brought a strong recovery in credit to the private sector, after five
lackluster years.
Lower demand for commercial bank credit by the government, due to a lower fiscal deficit, provided
necessary space to the private sector businesses to borrow from the banking system.
On November 11, 2013,Prime Minister Nawaz Sharif formally approved the Youth Business Loan
Scheme offering up to two million rupees loansto youth to start their own small-scale businesses.

CAPITAL MARKET
In June, the government completed capital market transactions by selling shares of United Bank
Limited (UBL) and Pakistan Petroleum Limited (PPL). It also auctioned 3G telecoms licenses.
Due to the news of successful program with the IMF and agreements on different projects with China,
the index of Karachi Stock Exchange (KSE) had crossed 31000 points.

ENERGY
The National Power Policy (2013) was announced to provide affordable energy in the country through
efficient generation, transmission and distribution system.
There was an increase of 11 percent in electricity generation during July-April, 2013/14.

POVERTY
The government has planned to allocate a minimum of 4.5 percent of GDP to social and poverty
related expenditures.
It expanded the scope and significantly increased the benefits of the Benazir Income Support Program
(BISP) and Pakistan Poverty Alleviation Fund (PPAF).

FOREIGN POLICY
A policy of an Afghan-led, Afghan-owned process of peace and reconciliation would be pursued by
Pakistan.
Unless the region is peaceful, our efforts for growth and development will not meet with success. I
stress on the importance of developing regional consensus on supporting a stable government and
peace in Afghanistan," said Sharif.
With India, the prime minister stressed upon the need to progressively pursue normalcy in bilateral
relations, while actively seeking solutions for all outstanding issues, including the disputed Jammu &
Kashmir region.
On relations with the US, Sharif noted that the two countries have many areas of common interest.
We will build on convergence and wherever there is divergence, we will work to try to minimise and
remove such divergence.
With China, which has always been a great friend and a significant economic partner, Pakistan will
strengthen this valuable and much appreciated strategic relationship.
With Russia, which is an important partner and regional power, we shall continue to enhance ties, the
prime ministers message said.
Europe remained an important player on the global scene and was Pakistans largest trading partner.
We would continue to engage with European countries, both bilaterally with individual countries, as
well as multilaterally with the European Union.

CONCLUSION
Energy shortages (Electricity & Gas)
Mild economic growth
Sindh Thar issue
Livestock Department has vaccinated 1.8 million animals in the last six
months and seeks to urgently vaccinate 4.5 million animals
More than 64% deaths
The children and pregnant women are the ones who are affected the worst
Poor infrastructure makes it difficult for the people to access the health
facilities

REFERENCES
http://data.worldbank.org/country/pakistan
http://www.sbp.org.pk/m_policy/mon.asp
http://www.finance.gov.pk/
http://www.tradingeconomics.com/pakistan/indicators

THANK
YOU