Pakistan economy

Pakistan economy

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  Topic of Presentation Lackof consensus Pakistan Economy Presented to : Ma’am Shumaila Presented by : Salman Jabbar
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  Contents  Why EconomyMatters  Economy of Pakistan  Crisis In Economy  The Economy Today  Why Have we Landed in Such a Difficult Situation?  WHAT NEEDS TO BE DONE? 2
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  WHY ECONOMY MATTERS? Economy affects the lives of the people of Pakistan  Two Pillars of the State – Strong Economy - Strong Defense  A strong economy can ensure strong defense; it will enhance country’s power and hence make the country’s defense even more stronger  Economic Backwardness generates violence, social conflicts and political turmoil. 3
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  WHY ECONOMY MATTERS? Power can lead to prosperity and prosperity may generate more power  Former US Secretary of Defense Robert McNamara said that “Security means development and without development there is no security”.  According to historian Paul Kennedy, “a nation’s military strength rests on its economic strength”  What is military strength? It is nothing but power. What is power? It is the ability to influence the behaviour of others in accordance with one’s aims and objectives4
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  Economy of Pakistan The economy of Pakistan is the 27th largest economy in the world in terms of purchasing power, and the 45th largest in absolute dollar terms. Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. 5
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  Statistics  Rank: 28th Currency:1 Pakistani Rupee (PKR (Rs. = 100 Paisas  GDP: $431.2 billion  GDP growth: 2.0% (2009 est  GDP by sector: agriculture 19.6%, industry: 26.8%, services: 53.7% (2016  Inflation (CPI): 11.17% (2009-2015) 6
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  Statistics  Population belowpoverty line: 23% (2007  Labor force: 55.88 million (2009 est  Unemployment: 15.2% (2009 est  Main industries: textiles, chemicals, food processing, steel, transport equipment, automobiles, machinery, beverages, construction, materials, clothing, paper products 7
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  External  Exports :$17.87 billion (2009 est.) (67th in rank  Export goods: textile goods (garments,, cotton cloths,), rice, leather goods, sports goods, chemicals, manufactures, carpets and rugs  Main export partners: United States 22.4%, UAE 8.3%, UK 6%, China 15.4%, Germany 4.7% (2006 est.) 8
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  Public Finances  Publicdebt: $50 billion  Revenues: $23.21 billion  Expenses: $30.05 billion 9
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  Crisis In Economy The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India  Inflation remains the biggest threat to the economy, jumping to more than 9% in 2005 before easing to 7.9% in 2006  In recent few years, load-shedding has destroyed industrial growth in Pakistan. 10
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  The ECONOMY today Due to inflation and economic crisis worldwide, Pakistan's economy reached a state of Balance of Payment crisis. "The International Monetary Fund bailed out Pakistan in November 2008 to avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from an initial $7.6 billion.  Since the beginning of 2008, Pakistan's economic outlook has taken stagnation. Security concerns stemming from the nation's role in the War on Terror have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year 11
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  Why Have weLanded in Such a Difficult Situation?  Economy Never Received Due Attention by the Outgoing Government  Political Instability continued since March 2007  War on Terror  Deteriorating Security Environment  Frequent Changes in Economic Team  Absence of Key Ministers for six months  Weak Economic Team  Food & Fuel Price Shocks  12
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  Why Have weLanded in Such a Difficult Situation?  Energy Mismanagement Resulting in “Crisis”  Weak Governance  Weakening of Key Economic Institutions  Ministry of Finance  State Bank of Pakistan - Planning Commission  No Interaction of Government with Private Sector  Deliberate or Incompetence? 13
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   Newly ElectedGovernment must bring a strong economic team  Political Leadership must provide full support to the team  No Room for Business-as-usual Policy  Extraordinary situation Demand Extraordinary Measures  Financial Discipline is the key to success  Bring Budget Deficit down to 3.0 – 3.5 percent of GDP in the next 3-5 years • 14
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  WHAT NEEDS TOBE DONE? Undertake wide-ranging structural reforms - Taxation side - Expenditure side - Accelerating Privatization - Power Sector Reform - Circular Debt Issues - Correcting the Manufacturing defects of the NFC Award - Strengthening of Infrastructure - Strong Linkages with Private Sector - Road show in major capital markets 15
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  WHAT NEEDS TOBE DONE?  Challenging Time Ahead but Surmountable  New government appears to be the continuation of the previous regime  Weak Economic Team  Same old Economic Team  Why should we Expect Different Result?  New Government has thus far borrowed from the SBP Rs. 15.3 billion per day as compared with Rs. 1.3 billion per day by the previous regime 16
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  WHAT NEEDS TOBE DONE?  • Implementation of the IMF conditionality's will be extremely painful for the people  • The new program of the IMF is not likely to be completed  • The general perception is that IMF wishes to keep Pakistani economy hanging in balance during the US withdrawal out of Afghanistan 17
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  Thank You 18