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Pakistan Economic Growth rate Watch Thread

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No Discussion in this thread,Only post news related to growth rate of Pakistan economy

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Dar promises steady GDP growth

WASHINGTON: Finance Minister Ishaq Dar has assured the international community that Pakistan will maintain a steady GDP growth rate despite the adverse affects of this year’s floods and the politics of sit-ins.

In his address to South Asian experts and students at Johns Hopkins University’s School of Advanced International Studies, the minister said that recent reforms had already led to “a remarkable turnaround” in almost all macro-economic indicators.

The economy was growing at a rate of 4 per cent plus, while the government was targeting a 5pc by the end of this year, taking it to 7pc in a few years, he said.
The minister also highlighted the boost in per capita income, rise in industrial sector growth to over 5pc, 6.8pc reduction in core inflation and 16.4pc expansion in revenue generation.

Mr Dar said the government had kept fiscal deficit to an acceptable 8.2pc while making an enhanced allocation of Rs 451 billion to the development budget.

He also pointed out reduction in government borrowing, a healthy increase in exports and an unprecedented success of Pakistani bonds in the international market.

The finance minister thanked Pakistani expatriates for their positive contributions through remittances, which registered a growth of 13.7pc this year, and brought $15.8 billion to the country.

The finance minister also referred to successful auction of 4G licence, which is expected to create 900,000 jobs.


In a recent statement, the International Monetary Fund (IMF), however, warned that macroeconomic imbalances and longstanding structural impediments to growth had prevented full realisation of Pakistan’s potential.

The fund which last year provided a $6.86 billion, 36-month extended loan facility to Pakistan, also noted that problems in the energy sector, security concerns, and a difficult investment climate had “combined with adverse shocks to undermine economic performance in the past decade”.

“As a result, GDP growth has only averaged 3pc over the past few years, well below what is needed to provide jobs for the rising labour force and to reduce poverty,” the IMF warned.

The report noted that with the population still increasing rapidly, Pakistan’s per capita income growth had lagged behind many emerging economies.

The IMF also noted that Pakistan’s “fiscal deficit has widened, driven by weak tax collections, energy sector subsidies, and increased provincial government spending”.

It noted out that domestic deficit financing had crowded out private sector borrowing and had contributed to inflation.

“Private sector credit has become negative in real terms, while monetary aggregates continue to be driven mainly by the government’s financing needs,” the note said.

According to the IMF, Pakistan’s external position had “weakened significantly, and central bank reserves have declined to critical levels”.

The finance minister, however, depicted a rosier picture of the economy but acknowledged that the sit-ins led by PTI and PAT had hampered the government’s efforts to accelerate economic revival.

He noted that delayed inflows of around $ 2.6 billion, including $550 million from the IMF, which would have been released upon completion of the review several weeks ago, had also hurt the economy.

“The sit-ins caused 4pc depreciation in the value of rupee, which will cost around Rs250 billion to the country,” he said.

The minister pointed out that the protests had also affected the stock exchange trading and FDI inflows.

Published in Dawn, October 11th , 2014
 

World Bank,IMF and Asian development Bank Predictions for Pakistan



*Govt Target is 5.1%


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World Bank

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WASHINGTON, October 6, 2014— Many South Asian countries show potential for accelerated growth in the short and mid-term:

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Pakistan:
South Asia’s second largest economy is expected to continue on a path of growth recovery, manageable inflation and fiscal consolidation. Real GDP growth is projected to reach 4.3 to 4.6 percent in FY2014/15, driven by services and large scale manufacturing on the supply side, and by strong remittance flows, improving private investment and renewed export dynamism on the demand side. However, this outlook is based upon the important assumption that the political events of August 2014 have not damaged investor confidence or increased overall country risk. These events have already inflicted short-term losses of 2.1 percent of GDP (early September estimates).

South Asian Countries Show Potential for Accelerated Growth

Source: World Bank forecast 4.4% growth rate for Pakistan FY2014/15

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IMF Predicts 4.3% for Pakistan

IMF raises Pakistan growth view to 4.3%


Muzaffar Rizvi / 20 August 2014

The International Monetary Fund, or IMF, has endorsed economic policies of the Pakistan government and said the country is expected to achieve 4.3 per cent gross domestic product growth in fiscal year 2014-15 compared to a provisional estimate of 4.1 per cent in 2013-14.



The IMF team, led by the fund’s mission chief in Pakistan Jeffrey Franks, said the fund is encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth in the country.

“Economic indicators are generally improving, with growth continuing to gain momentum, inflation on a downward trajectory, and credit to the private sector rebounding sharply,” the fund said in a statement late on Monday.

The IMF team, which refused to visit Islamabad due to opposition protest marches, held discussions in Dubai from August 6 to 18 to conduct the fourth review of the country’s IMF-supported programme under the extended fund facility. Pakistan Finance Minister Senator Mohammed Ishaq Dar led the Pakistan team to conclude the discussion that may help secure another tranche of $550 million early next month from the $6.67 billion bailout package approved in September last year. The fund’s mission chief in Pakistan described his discussions with Dar and his team as “useful”, and confident of continuing discussion in coming days to complete the programme review.

“The meetings and discussions held with Finance Minister Dar and central bank governor Ashraf Wathra have been useful. The government of Pakistan’s reform programme was broadly on track through end-June,” the IMF statement said.

“The mission made excellent progress toward agreement on key policy issues going forward. Discussions will be continuing in the coming days via videoconference from Washington, DC, with the aim of securing a timely completion of the fourth review,” it added.

The sources said the IMF team has urged the Pakistan government to take steps over the next three weeks for enactment of a law through Parliament for ensuring complete autonomy of the central bank, rationalise energy prices and resolve the political crisis at the earliest.

“These measures will enable the IMF delegates to submit a positive report to their executive board, which is due to meet between September 10 and 15 to take up Pakistan’s case for disbursement of a $550 million tranche under the $6.67 billion package,” according to sources.

They said the IMF issued the statement after its team failed to reach an agreement with visiting Pakistan delegation during negotiations lasting 12 days (August 6 to 18). The disagreement on agreement despite last ditch efforts by Dar scrapped a scheduled Press conference with Franks in Dubai on Monday.

“The mission thanks the Pakistani authorities and technical staff for their cooperation and reaffirms the IMF’s support to the government’s efforts to implement their economic reform agenda,” the IMF statement said.

According to a senior official in the finance ministry, the policy-level dialogue with IMF would take another three or four days to conclude the programme review. He did not explain the reason behind the extension in IMF talks, but sources say the fund has shown concern over ongoing protests launched by opposition parties in Pakistan to force Prime Minister Nawaz Sharif to step down.

“The political instability and civil disobedience movement against the government may cripple the Pak economy and affect revenue and tax collection targets,” sources bared, quoting what was said by fund officials.

Dar told private television channels that the IMF cancelled its visit to Pakistan over security concerns in the wake of an opposition protest in Islamabad.

“The IMF is surprised at what is happening in Pakistan,” Dar said on Samaa TV on Monday night. He said the IMF mission cancelled its visit to Pakistan as they were going to stay in a hotel just a few hundred metres away where Pakistan Tehrik Insaf, or PTI, was holding a protest.

The finance minister termed the civil disobedience movement announced by PTI chairman Imran Khan unconstitutional and illegitimate and said it seems he was implementing some foreign agenda which predicted that Pakistan could default in 2014.

muzaffarrizvi@khaleejtimes.com

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ADB projects 4.2% for Pakistan

The Asian Development Bank (ADB) has projected a 4.2% economic growth rate for this year but warned that increasing security concerns, political demonstrations and effects of recent floods pose downside risks to the Pakistani economy.

The Manila-based lending agency’s growth projection is around 1% less than the target the government has set for itself. The 4.2% projection is also half than the pace the country needs to create jobs for thousands of people every year. The projections were made in the Asian Development Outlook (ADO) Updated – its flagship annual report.

The continuation of economic reforms and efforts to improve the security environment would help business confidence and revive private investment, it added.

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The report stated that the government’s Vision 2025 also underlines that long-term development is not possible without political stability, security, and the rule of law. The ADB said several years of concerted national commitment would be required to eliminate electricity shortages and affect the structural reforms necessary to achieve high and inclusive growth.

The report argued that the projected 4.2% growth rate in the current fiscal year reflects some easing of fiscal consolidation and increased allocations for public sector development spending. But continuing reforms and a better security environment would further boost business confidence and foster private investment. It cautioned that the prospects of strong growth in manufacturing depend on further progress in easing energy shortages.

The updates came at a time when the government is struggling to cope with the challenges posed by protesters and the aftermath of floods. Due to increasing political pressure, the government has already started backtracking from committed reforms.

The ADB said Pakistan’s ability to achieve current fiscal year’s budget deficit target of 4.9% also hinges on reforms in the energy and taxation areas. While in most major categories of spending is projected to be increased by double digits, the report added that the government is expecting large savings from a 37% drop in subsidies, which is equal to 0.6% of Gross Domestic Product (GDP). It added the savings have been anticipated mainly by cutting untargeted power subsidies.

“Containing subsidies will be a challenge given overruns in recent years, and success will depend on implementing power sector reforms to raise tariffs enough to meet costs, improve collection, reduce leakage and invest in generation, transmission, and distribution systems”, it observed.

Contrary to its commitment to the International Monetary Fund, the government has already announced freezing increase in power tariffs due to fear of public backlash.

The ADB report stated that the significant power tariff increase in the previous fiscal year helped reduce subsidies, but savings were partly offset to cover improved supply.

The ADB has projected that average inflation is expected to slow down to 8.2% in this fiscal, slightly down from 8.6% in the previous fiscal year.

The ADB also revised its economic growth projection to 4.1% for the last fiscal year, up from its earlier estimates(3.5%).
It said the upturn came from improved industrial performance: a pickup in construction by 11.3%, continued growth in large-scale manufacturing at 4%, and electricity supply improved by 3.7%, owing largely to the government’s clearance of intra-industry debt.

However, it highlighted areas the government ignored in its first year. The contribution of investment was low by 0.2%. The ratio of fixed investment-to-GDP continued to decline falling to 12.4% in last fiscal year compared with 12.6% of fiscal year 2013. The private and public enterprise investment in the various production sectors slipped to 9.9% of GDP. Net exports turned negative, subtracting 0.7% from GDP as import growth outpaced export.

Published in The Express Tribune, September 26th, 2014.

Outlook: ADB projects 4.2% growth for Pakistan – The Express Tribune
 
The growth rate will surge upwards when Pakistan gets stability and energy.
 
Economy
Reflecting some improvement in electricity supply that facilitated increased industrial production, growth in the gross domestic product (GDP) of Pakistan reached an estimated 4.1% in Fiscal Year 2014 (ended 30 June 2014), unexpectedly accelerating from 3.7% in FY2013.

Reform initiated by the government helped improve economic conditions during the year. Renewed support from development partners and a $2 billion eurobond issue, the first in 7 years, helped stabilize the currency and rebuild foreign exchange reserves from very low levels. The continuation of economic reforms and efforts to improve the security environment would improve business confidence and help revive private investment.

The Asian Development Outlook (ADO) 2014 Update revises the growth projection for FY2015 to 4.2%. However, even concerted reform will need several years to eliminate electricity and gas shortfalls and to effect the change needed to lift structural constraints on growth.


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The consolidated fiscal deficit excluding grants was contained at 5.5% of GDP in FY2014, down from an average of 8.0% in the previous 3 years. This improvement came mainly from a large one-off increase in nontax revenues and a provincial cash surplus equal to 0.3% of GDP. The budget for FY2015 targets further reduction in the fiscal deficit to 4.9% of GDP through expenditure economies, reduced energy subsidies, and a provincial cash surplus equal to 0.9% of GDP.

Headline inflation increased to an average of 8.6% in FY2014 from 7.4% in the previous year, lower than the ADO 2014 forecast. Consumer price inflation was volatile through the year because of food price spikes in the first half of 2014. In response, the central bank kept monetary policy tight in FY2014, increasing the policy rate by a cumulative 100 basis points to 10%. Inflationary expectations have nevertheless stabilized according to a May 2014 joint survey of business and consumer sentiment, with respondents apparently reacting to exchange rate stability stemming from improved financial inflows in the second half of FY2014 and reduced government borrowing from the domestic banking sector to support the budget. Inflation is now expected to average 8.2% in FY2015, slightly lower than FY2014. Security challenges, floods in September 2014 in parts of the country, and political demonstrations pose downside risks to the FY2015 forecast.

The current account deficit in FY2014 was essentially unchanged from the previous year’s 1.1% of GDP and slightly below the ADO 2014 forecast. The trade deficit widened moderately, but this was largely offset by continued strong growth in remittances from overseas workers. The projection for the current account in FY2015 is unchanged.

Source: ADB. 2014. Asian Development Outlook 2014 Update. Manila


Pakistan and ADB
 
Govt reforms contribute to improved economic conditions: ADB

ISLAMABAD: The Asian Development Bank (ADB) in its recent report has said that economic reforms initiated by the government in the past year contributed to improved economic conditions, growth edged up, budget deficit shrank, foreign exchange reserves strengthened and a sovereign bond issue enhanced policy credibility.


The Bank in its Asian Development Outlook Update 2014 released by the Bank said that Pakistan in recent years has endured low growth, chronic power deficits and large fiscal and external imbalances.

However, several years of concerted national commitment will be required to eliminate electricity shortages and effect the structural reforms necessary to achieve high and inclusive growth.

Preliminary estimates place GDP growth at 4.1% in FY2014 (ended 30 June 2014), up from 3.7% in FY2013 and higher than the 3.4% projected in ADO 2014.

The ADB said that upturn came from improved industrial performance: a pickup in construction by 11.3%, continued growth in large-scale manufacturing at 4.0%, and electricity supply improved by 3.7% owing largely to the government's clearance of intra-industry debt.

Growth in large-scale manufacturing reflected higher production of fertilizer, electronics, chemicals, and leather, while textile production marginally declined.

More proactive policies on energy allocation and management adopted during the year helped industry grow.

However, electricity and gas shortages will continue to limit growth and drain public finances for several more years, until further governance reform and new investment take effect.

Growth in services slipped to 4.3% in FY2014 from 4.9% a year earlier largely because growth in the finance and insurance sub sector and in general government services markedly slowed. Consumption expenditure picked up, however, boosting wholesale and retail trade.

Agriculture growth slipped to 2.1% from 2.9%, reflecting bad weather in areas that produce such minor crops as pulses and potatoes, as well as weaker growth in livestock, the latter of which accounts for 56% of agricultural production.

These developments outweighed strong expansion of 3.7% in major crops underlined by bumper harvests of rice, sugarcane, wheat, and maize-but not cotton, which suffered a small decline.

Private consumption remained the largest contributor to growth in FY2014 at 4.6 percentage points, helped by stronger remittances and improved rural incomes from major crops. The contribution of investment was a low 0.2 percentage points. A 0.5% increase in gross fixed capital formation came from a 17.3% expansion in general government investment, as private and public enterprise investment fell by 2.6%.

The ratio of fixed investment to GDP continued to decline, 3.7.1 Supply-side contributions to growth Percentage points Agriculture Services Industry Gross domestic product.

Economic trends and prospects in developing Asia: South Asia Pakistan 147 falling to 12.4% from 12.6% in FY2013 (Figure 3.7.2). Private and public enterprise investment in the various production sectors slipped to 9.9% of GDP.

Net exports turned negative, subtracting 0.7 percentage points from GDP as import growth outpaced export.

Consumer price inflation accelerated to an average of 8.6% in FY2014 from 7.4% in the previous year. Year-on-year inflation was volatile, rising to 10.9% in November 2013, falling to 7.9% in January 2014, picking up again to 9.2% in April, and then falling again to 8.2% in June (Figure 3.7.3).

This largely tracked food inflation made volatile by short supplies of perishable items. Food inflation averaged 9.0% in FY2014 but ended the year at 7.4%. Following the increase in electricity tariffs in October 2013, non food inflation stabilized at around 9%, averaging 8.3% for the full year.



The ADB report said that consolidated government budget deficit was contained at 5.5% of GDP in FY 2014, down from an average of 8.0% over the past 3 years.

The improvement was mainly from a significant increase in nontax revenues and a provincial cash surplus of 0.3% of GDP as provinces spent less on development-a measure for fiscal consolidation along with reduced power subsidies.

Total expenditure declined to 19.8% of GDP in FY2014 from 21.4% in FY2013.

Current expenditure was 0.5% above the budgetary target for the year, reflecting overruns on subsidies and interest payments.

Subsidies were lower than in the previous year, by 0.3% of GDP, but surpassed the budgetary target by 0.4% of GDP notwithstanding significant power tariff increases during the year to bring income closer to cost recovery.

Savings from tariff increases were partly offset by larger power supplies that necessitated commensurate subsidy increases, turning a plus for the economy into a minus for the budget.

Interest payments increased by a marginal 0.1% of GDP to 4.5%, as interest rates on short-term domestic debt were higher than estimated.



The consolidated public sector development program was compressed to PRs 865 billion (3.4% of GDP) from the budgeted Rs 1,155 billion, and provincial development spending was reduced to nearly 30% below budget, or by 0.7% of GDP.

Tax revenues fell short of their FY2014 target by 4.0%.


Federal Board of Revenue tax collection continued to be lower than targeted for another year because planned tax measures could not be fully implemented.

Non-tax revenues were 4.3% over the budgeted amount, reflecting the one-time receipt of $1.5 billion from Saudi Arabia for project development and $1.1 billion from the auction of the 3G/4G mobile telecommunications spectrum in the last quarter, as well as a large profit remittance from the State Bank of Pakistan (the central bank).

Responding to inflation and pressures on the exchange rate in the first half of FY2014, the central bank increased its main policy rate in September and November by a cumulative 100 basis points to 10% (Figure 3.7.4).

It kept the policy rate unchanged in the second half of FY2014, even as inflationary expectations eased and the currency appreciated. Large foreign inflows during this period allowed the government to reduce budgetary borrowing from the central bank, which dropped to PRs197 billion in FY2014 from Rs 507 billion in 3.7.5 Budget borrowing from banks.

On gross disbursements, the amounts disbursed by banks either in Pakistan rupees or in foreign currency against loans during the month. It includes loans repriced, renewed, or rolled over during the month.

In case of running finance, the disbursed amount means the maximum amount received by the borrower at any point during the month.

The current account deficit equaled 1.2% of GDP in FY 2014, marginally up from 1.1% in FY 2013 despite strong 13.7% growth in remittances from workers overseas (Figure 3.7.6).

The trade deficit widened by 7.7% as imports grew by 3.8%, reversing a decline of 0.5% in FY 2013, and export growth remained modest at 1.5%.

It is too early to gauge the benefits from preferential access to the European Union under Generalized System of Preferences Plus status, effective from 1st January 2014.

Exports of textiles, which account for somewhat over half of exports, grew by 6.4%, reversing declines of 1.8% and 0.6% in the previous 2 years.

However, textiles appear to be the only export category to post a significant gain.

The services account deficit widened, as inflows from the Coalition Support Fund were lower than in FY 2013.

The ADB report said that capital and financial inflows were very strong in the second half of FY 2014 with two notably successful eurobond placements, the one-off receipt of $1.5 billion from Saudi Arabia, and disbursements of program loans from multilateral agencies.

After 7 years without access to international capital markets, the government placed $2 billion in dollar-denominated eurobonds, half maturing in 5 years and the other half in 10 years, in offers that were substantially oversubscribed.

Reflecting the large capital inflows, net liquid official reserves swelled to $9.1 billion at the end of June 2014 from a low of $3.2 billion the previous January.

Nevertheless, reserves remained low at the end of the fiscal year, cover for only 2.2 months of imports of goods and services.

Along with the increase in reserves, the Pakistan rupee appreciated to PRs 97.5 to the dollar in March 2014 and broadly stabilized at this rate to the end of FY2014.

This followed depreciation of about 6% in the first 7 months of the year-and preceded a fall to Rs 102.6 in early September 2014 in response to demonstrations that began in August.

In real effective exchange rate terms, the rupee appreciated by 5.6% in FY2014, with possible adverse implications for export competitiveness.

Projections for FY2015 assume that the government will make satisfactory progress on its economic agenda to reform the energy sector and state-owned enterprises, rationalize import tariffs, and improve the business climate.

Energy reforms include moving toward market-based pricing and improving system governance, efficiency, and sustainability. A major power tariff revision was made in October 2013, and a further increase is planned for FY2015. The government has developed a plan to sell shares of some listed public sector enterprises in capital markets and is prioritizing others for restructuring before privatization.

The projected decline in the deficit assumes a provincial cash surplus equal to 0.9% of GDP. The budget envisages current expenditures increasing by only 1.6% from the estimated out turn in FY2014.

While most major categories of spending increase by double digits, including a 10% increase in salaries and pensions and a 15% increase in interest payments, large savings are expected from a 37% drop in subsidies, equal to 0.6% of GDP, achieved mainly by cutting untargeted power subsidies.

Containing subsidies will be a challenge given overruns in recent years, and success will depend on implementing power sector reforms to raise tariffs enough to meet costs, improve collection, reduce leakage, and invest in generation, transmission, and distribution systems.

Power tariff increases in FY2014 helped reduce subsidies, but savings were partly offset by subsidies to cover improved supply.

The Public Sector Development Program is slated to increase by 36%. The budget plan makes more resources available for public investment and, in particular, social protection, for which allocations have been increased by 38% to Rs 97.1 billion from Rs 70.0 billion in FY2014.

Total expenditure is budgeted to increase by only 1.1% in absolute terms, bringing it down to 19.5% of GDP from 19.8% in FY2014.

On the revenue side, the FY2015 budget includes measures to expand the tax base by removing exemptions and concessions, penalizing non-filers, rationalizing tax rates, and reducing tax leakage through better administration.

These measures are expected to generate additional revenue equal to 0.8% of GDP. Federal Board of Revenue tax collection is projected to increase to 9.7% of GDP from 9.0% in FY2014.

However, tax increases will be offset by a 24.0% drop in nontax revenue, which was buoyed in FY2014 by the one-off receipt of $1.5 billion from Saudi Arabia and large proceeds from the auction of the 3G/4G spectrum.

As a result, budget revenues are expected to increase only marginally in FY2015 to equal 14.5% of GDP, up from 14.3% in FY2014.

Consumer price inflation is expected to average 8.2% in FY2015, slightly down from 8.6% in FY2014.

The ADB report said that business and consumer sentiment survey in May 2014 found inflationary expectations had steadied, apparently reflecting improved exchange rate stability and much lower domestic borrowing for budgetary support as development partners help finance the government's economic program.

While the increase in public sector salaries and some increase in electricity tariffs will exert upward pressure on prices, declining international commodity prices and a relatively stable exchange rate should help contain inflation.

On the supply side, food prices will remain a key determinant of inflation as in recent years.

The central bank intends to stay vigilant on monetary policy and keep inflation in a range of 7.5%-8.5%.

Continued strong inflows of remittances are expected to help limit the current account deficit to 1.3% of GDP in FY 2015.

Manufacturing should benefit from better electricity supply, allowing a boost in textile production.

With access to the European Union under the Generalized System of Preferences Plus, exports are projected to increase by 4.0%.

Imports are projected to advance by 5.0%, a rate essentially unchanged from FY2014, reflecting a marginal increase in growth, easing prices for oil and other commodities, and continued stagnation in private investment.

The current account deficit is expected to be financed by continued modest flows of private direct and portfolio investment, sustained multilateral and bilateral lending to support the government's economic reform program, and planned government borrowing from international capital markets.







Copyright APP (Associated Press of Pakistan), 2014
 
Pakistan Base year is not changed as we have believed in 2013 and instead will be changed in FY 2015-16.Considering that Pakistan informal GDP is more than 50% of Pakistan formal GDP,Expect a huge increase in GDP

Base year for national accounts to change every 10 years: Dar
ISLAMABAD, Dec 11 (APP): Federal Minister for Finance, Economic Affairs Senator Mohammad Ishaq Dar Wednesday said government had decided to change the base year for national accounts after every ten years, and the next re-basing would be held in the financial year 2015-16.Highlighting the change of base years from time to time, the Minister said that the base year for the national account was changed in financial year 1980-81, then in the year 1999-2000 and the last base year was changed in the year 2005-06.He stated this while addressing a press conference here after presiding over the meeting of the Board of Directors of Pakistan Bureau of Statistics (PBS).

Associated Press Of Pakistan ( Pakistan's Premier NEWS Agency ) - Base year for national accounts to change every 10 years: Dar
 
Economy on growth path, Dar invites investors to invest in Pakistan

Tuesday, 28 October 2014 17:27

ISLAMABAD: Reiterating government's firm commitment to cope with all challenges for putting the economy on growth path, Finance Minister, Senator Muhammad Ishaq Dar Tuesday invited foreign investors to explore investment opportunities in various sectors as Pakistan was the choicest place for investment.

The minister was addressing International Investment Conference organized by Board of Investment with an aim to highlighting the investment regime and available opportunities for investment in various sectors of the economy.

More than 350 invitees including 241 foreigners from all over the world including Australia, Bahrain, China, Denmark, France, Finland, Italy, Japan, Korea, Malaysia, Neatherland, Newzealand, Qatar, Russia, Saudi Arabia, Singapore, Thailand, Turkey, UAE, UK and USA participated in the conference.

"Investors from across the globe are welcome to invest in Pakistan and the government would ensure level playing field," Dar said.

He said Pakistan was focussed on improving investment climate through implementation of Investment Strategy 2013-17.

Talking about economic policies, the minister said the government has embarked upon an economic reform agenda that focuses on four Es including Economy, Energy, Extremism and Education-Health.

He said that despite the challenges at domestic as well as external front, the government was committed to put the economy on the right track and ensure micro economic development in the country.

"We will put the economy on the path of sustainable growth, no matter what impediments," the finance minister remarked.

He said that government would not tolerate any obstacle or hinderance in its will to reform the economy adding no one will be allowed to play with economy.

The minister said that long-marches and sit-ins have delayed some transactions and important visits of foreign dignitaries, however the government was determined to continue its journey towards progress.

The minister said the government was committed to bring micro economic stability in the country and would ensure 7% growth rate by 2018.

The inflation would be contained in single digit, forex reserves will be boosted to $22 billion while the investment to GDP ratio would go upto 20%, and tax to GDP upto 14%.

The industry would grow at 8%, public debt would be reduced at 55%, and expenditures on education would go up 4%.

He said the economy was in a shabby condition when his government came into power.


The growth rate was less than potential, inflation at an average of 12% for the past five years, tax to GDP at 8%, Fiscal Deficit at 8.8 percent, the public debt at 63.9% and above all there were international predictions that Pakistan would default by June 2014.

He said the energy sector was on the brink of collapse when the

government inherited that and after coming into the power, the government cleared off the circular debt that helped to bring into system about 1700 megawatt electricity, reducing loadshedding and helping enhance industrial growth.

The government performed well as shown by various indicators as FBR revenues increased by 146% in last fiscal year, home remittances went up from $13.93 billion to 15.83 billion, showing a growth of 13.7% whereas inflation remains in single digit.

The trade deficit also decrease whereas large sector manufacturing witnessed 4% growth, agriculture credit went up from Rs.336 billion to Rs390 billion, forex reserves reached at $14 billion and overall GDP was recorded at 4 percent and forex reserves reaching to $14 billion.

He said the government has been successful in tapping international capital market after a gap of 7 years while it was in process of divestment of 7.5% OGDCL shares costing $800 million and launch of Sukuk bond next month.

He said the government has embarked upon an economic reform agenda that focuses on four Es including Economy, Energy, Extremism and Education-Health.

The minister said the smooth transition of power from one democratic government to another in 2013 was a historic development in Pakistan.
Copyright APP (Associated Press of Pakistan), 2014
 
Old news but worthy enough to add it related to the change in base year of Pakistan GDP

Last time when Pakistan changed the base year,Our was increased by 19.5%

The official said the fiscal deficit has been set at 4 percent of the gross domestic product, or Rs 199 billion in absolute terms.

The re-basing exercise in August will keep the absolute number unchanged at Rs 199 billion, but in percentage terms, the deficit is likely to decline to 3.3 percent of GDP.

The official said if the deficit isn't revised downward after August, "then we (would) have to borrow more, which isn't the case." There was confusion over the size of the fiscal deficit after the government announced earlier this month that it will change the base year for its national accounts. The announcement resulted in an increase in the size of the economy by an impressive 19.5 percent to $82.4 billion from $69 billion.

Pakistan, IMF to discuss base year change
 
Old news but worthy enough to add it related to the change in base year of Pakistan GDP

Last time when Pakistan changed the base year,Our was increased by 19.5%



Pakistan, IMF to discuss base year change

But sir, what does this actually change?

Government has weathered a crisis for now, but it does not seem to be geared up to meet the challenges confronting our economy.
 
But sir, what does this actually change?

Government has weathered a crisis for now, but it does not seem to be geared up to meet the challenges confronting our economy.

I don't know much about the change in base year since my field is related to medicine @Lil Mathew can help.

The Govt indeed is better than PPP for economy but not as much as i expected it last year after the initial quarter impressive reforms leading to 5%+ growth rate.
 
I don't know much about the change in base year since my field is related to medicine @Lil Mathew can help.

The Govt indeed is better than PPP for economy but not as much as i expected it last year after the initial quarter impressive reforms leading to 5%+ growth rate.

I think change of base year allows the government to make claims of lowering the deficit without actually having done anything. Experts would know, but many others like myself might find it hard to distinguish the change.

I think the political instability has cost us a good bit. A responsible opposition improves government performance by criticizing wrong moves and forcing reforms.
 
I think change of base year allows the government to make claims of lowering the deficit without actually having done anything. Experts would know, but many others like myself might find it hard to distinguish the change.

I think the political instability has cost us a good bit. A responsible opposition improves government performance by criticizing wrong moves and forcing reforms.

Yeh.. You are right.. Changing base year helps to show decrease in fiscal deficit percentage related to gdp and also this is only a statistical comfort... It does not allow the country to escape the consequences of the high fiscal deficit if it were not reined in quickly...
But changing base year also have many advantages..
1. It will give more updated gdp data to analyse the countrie's economy..
2.By showing low fiscal deficit and high gdp, country can convince global rating agencies to upgrade countrie’s sovereign ratings.
3. By adding more unorganized sectors, we get more accurate picture of countries economy..
Every governments usually revises the method of calculating national accounts and other macro data every five years, bringing in a newer base year and adjusting for changes in the economy. Thus nominal gdp figure will increase, real gdp figure also will increase( really base year is used to find real gdp growth by avoiding inflation effects)..
Real gdp= no. of products units*price of that unit in base year..
Nominal gdp increase will also take place as more under-represented and informal economic sectors included..
 
As i had said,IMF will eventually upgrade our Growth rate within this year,

IMF predicts 5pc growth, reduction in inflation

WASHINGTON: The International Monetary Fund has predicted five per cent growth for Pakistan in the medium-term and easing of inflation to below 8 per cent in fiscal 2014-15.

In a detailed report on the country’s economic performance, released on Tuesday evening, the IMF warns that political and security conditions in the country continued to pose a serious challenge to the national economy.

The report predicts that in the medium-term, the growth is expected to rise to around 5pc, due mainly to easing fiscal adjustment and improvements in structural bottlenecks in the energy sector, public enterprises, and the investment climate.

Take a look: IMF lifts growth forecast for Pakistan

Average inflation is expected to ease to below 8pc in fiscal year 2014-15 and fall further thereafter, as inflation expectations will be anchored by tight monetary policy and sustainable fiscal policy.

Foreign exchange reserves are expected to exceed $14 billion by end-June 2015 — a coverage ratio of over three months of imports.

The current account deficit is expected to widen to about 11/2 pc of GDP, driven by stagnant exports while non-oil imports pick up. The sharp decline in world oil prices should help contain import growth.

Reserves accumulation will be supported by the State Bank’s intervention in the foreign exchange spot market, privatisation proceeds, multilateral disbursements, and external private financing.

But the report also warns that slippages in policy implementation could impede investment and weaken growth prospects, undermining progress in macro-stabilisation.

Political and security conditions remain challenging.

Recent political unrest, terrorist threats with attendant military operations in the border region with Afghanistan, sectarian violence, and urban criminal activity all pose significant risks.

Recent floods present additional downside risks to growth and fiscal performance.

The report notes that the country continues to face external vulnerabilities. Reserves levels and coverage ratios remain insufficient. Downside risks include weakened global economic conditions, which could impair exports and hurt remittances; and global financial volatility, which could make debt issuance more difficult and costly.

Sustained decline in oil prices also poses an upside risk, which may help ease balance of payments pressures and boost growth.

The IMF reminds the government that structural reforms are critical for achieving high and sustainable growth. It notes that the government’s reform agenda is moving forward, focusing in particular on energy sector reform, public enterprises, import tariffs, and the business climate.

The comprehensive energy sector reform is addressing long-standing issues of price distortions, costly subsidies, collection problems, supply and distribution deficiencies, and governance and regulatory weaknesses.

The IMF notes that the government is on track to reduce the electricity subsidy to 0.7 pc of GDP in fiscal 2014-15, through the surcharge implemented in October 2014 and tariffs adjustments planned for January and February 2015.

The Fund hopes that reduction in electricity subsidy, together with improved efficiency and collection, will also help reduce the circular debt arrears.

For the gas sector, construction of a liquefied natural gas terminal is nearly completed, which will improve supply and help reduce the cost of electricity generation. New gas prices will be announced by January 2015.

The government’s commitment to privatisation of public sector enterprises remains strong. The government is moving forward with the offering of a number of enterprises for privatisation, and plans to accelerate the pace of offerings/transactions in the coming year.

Trade reform is focusing on simplifying tariff rates, shifting most items to a lower rate, and eliminating trade statutory regulatory orders that establish special rates and/or nontariff barriers.

IMF predicts 5pc growth, reduction in inflation - Pakistan - DAWN.COM
 

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