ECONOMY OF PAKISTAN REPORT MICRO ECONOMICS

Submitted to: Sir Hamid Submitted by: Abdul Haseeb

The economy of Pakistan is the 47th largest in the world in nominal terms and 27th largest in the world in terms of purchasing power parity (PPP). Pakistan has a semiindustrialized economy,[12][13][14] which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan's economy are situated along the Indus River;[14][15] diversified economies of Karachi and Punjab's urban centers coexist with lesser developed areas in other parts of the country.[14] 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. Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term

First five decades
When it gained independence in 1947 from UK, Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates[17] were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also[18] During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing.[citation needed] Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea, copied the city's second "Five-Year Plan" and World Financial Center in Seoul is designed and modeled after Karachi. Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s.The economy recovered during the 1980s via a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers.

Recent decades
This is a chart of trend of gross domestic product of Pakistan at market prices estimated[19] by the International Monetary Fund with figures in millions of Pakistani Rupees. See also[18]

Economic resilience First five decades
When it gained independence in 1947 from UK, Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates[17] were 6.8% in the 1960s, 4.8% in the 1970s, and

6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also[18] During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing.[citation needed] Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea, copied the city's second "Five-Year Plan" and World Financial Center in Seoul is designed and modeled after Karachi. Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s.The economy recovered during the 1980s via a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers.

Recent decades
This is a chart of trend of gross domestic product of Pakistan at market prices estimated[19] by the International Monetary Fund with figures in millions of Pakistani Rupees. See also[18]

Economic resilience
Background

Historically, Pakistan's overall economic output (GDP) has grown every year since a 1951 recession. Despite this record of sustained growth, Pakistan's economy had, until a few years ago, been characterized as unstable and highly vulnerable to external and internal shocks. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (1998–2002) period —
• • • • •

the Asian financial crisis; economic sanctions – according to Colin Powell, Pakistan was "sanctioned to the eyeballs";[20] The global recession of 2001–2002; a severe drought – the worst in Pakistan's history, lasting about four years; heightened perceptions of risk as a result of military tensions with India – with as many as 1 million troops on the border, and predictions of impending (potentially nuclear) war; the post-9/11 military action in neighboring Afghanistan, with a massive influx of refugees from that country;

Despite these adverse events, Pakistan's economy kept growing, and economic growth accelerated towards the end of this period. This resilience has led to a change in perceptions of the economy, with leading international institutions such as the IMF, World Bank, and the ADB praising Pakistan's performance in the face of adversity.

Macroeconomic reform and prospects

as a result of economic growth. roads. and to replace China as the largest textile manufacturer as the latter China moves up the value-added chain. According to many sources. Pakistan is also moving away from the doctrine of import substitution which some developing countries (such as Iran) dogmatically pursued in the twentieth century. Government revenues have greatly improved in recent years. Pakistan hopes to take advantage of significant economies of scale. and its significant use of CNG in automobiles. Motorways & Strategic Roads of Pakistan. Pakistan is aggressively cutting tariffs and assisting exports by improving ports. has cushioned the effect of the oil-price shock of 2004–2005.[21] and medium-term prospects for job creation and poverty reduction are the best in nearly a decade. Pakistan's domestic natural gas production. the Pakistani government has made substantial economic reforms since 2000. a necessary step towards reversing the broad underdevelopment of its social sector. As a large country.National Highways. and the country also expects to profit from freer trade in agriculture. and a great expansion in the quantity of credit. Liberalization in the international textile trade has already yielded benefits for Pakistan's exports. electricity supplies and irrigation projects. and more efficient tax collection as a result of selfassessment schemes and corruption controls in the Central Board of Revenue – and the privatization of public utilities and telecommunications. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003. changing consumption and investment patterns in the nation. The Pakistani government is now pursuing an export-driven model of economic growth successfully implemented by South East Asia and now highly successful in China. tax reforms – with a broadening of the tax base. the World Bank reported that . Growing stability in the nation's monetary policies has contributed to a reduction in money-market interest rates. In 2005. These industries play to Pakistan's relative strengths in low labor costs.

5bn for the current fiscal year. are intended there. averaging 7% yearly GDP growth between 2003–07. "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. S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B. it may have to seek external funding as Balance of Payments support. The economy today Due to inflation and economic crisis worldwide. increasing penalties for violating corporate governance rules. the dual impact has shocked Pakistan's economy. Pakistan's economic outlook has taken stagnation."[24] During the mid-2000s.6 billion. high inflation and a crash in the value of the Rupee. New Zealand. The top five countries are Singapore. Consequently. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Exceptional policies kept Pakistan's trade deficit controlled at $13 billion. reducing the cost to register property. Pakistan comes highest in South Asia but also ranks higher than China and Russia which is at 133. A combination of decade-plus tax holidays. it was included in 2005 by the Goldman Sachs Global Economics Group as one of the "Next Eleven (N-11)" – a group of countries with economies that “might have the kind of potential for global impact that the BRICs projections highlighted."Pakistan was the top reformer in the region and the number 10 reformer globally – making it easier to start a business. zero duties on computer imports.[25] By October 2007. just several notches above a level that would indicate default. the United States. which has fallen from 60–1 USD to over 80-1 USD in a few months. Pakistan raised back its Foreign Reserves to a handsome $16.3 billion from an initial $7. Pakistan experienced a period of tremendous growth. with gaping trade deficits. the insurgency has forced massive capital flight from Pakistan to the Gulf. essentially an ability to match the G7 in size”. 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. Combined with high global commodity prices. exports boomed to $18 billion. Since the beginning of 2008.4 billion. For the first time in years. Concurrently. Hong Kong and United Kingdom. Due to its large population of 186 million. Pakistan's economy reached a state of Balance of Payment crisis.4 billion. and replacing a requirement to license every shipment with two-year duration licenses for traders. Credit .[23] The Government of Pakistan has granted numerous incentives to technology companies wishing to do business in Pakistan. revenue generation increased to become $13 billion and attracted foreign investment of $8. government incentives for venture capital and a variety of programs for subsidizing technical education."[22] Doing Business The World Bank (WB) and International Finance Corporation's flagship report Ease of Doing Business Index 2010 ranked Pakistan 85 among 181 countries around the globe.

Chundrigar Road. The EIU estimates that inflation should drop back to single digits in 2010. a level that indicates investors believe the country is already in or will soon be in default. though it maintained the country’s rating at B2. Although less than the previous 5 year average of 7%. Source:[27] .agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty.5-4%. depending on the political environment. I. The middle term however may be less turbulent.800 basis points. according to its five year credit default swap. and that growth should pick up to over 5% per annum by 2011. it would represent an overcoming of the present crisis wherein growth is a mere 3.[26] Economic comparison of Pakistan 1999–2008 A view of I. the financial district of Karachi in Pakistan Mainstay of the economy – by region.The cost of protection against a default in Pakistan’s sovereign debt trades at 1.

71 16.86 Pakistani 126 Rupees Indicator GDP GDP Purchasing Power Parity (PPP) GDP per Capita Income Revenue collection Foreign reserves 1999 $ 75 billion $ 270 billion $ 450 2007 $ 160 billion $ 475.268.5 billion $ 925 2008 $ 170 billion $ 504 billion $1085 Rs.76 Pakistani Rupees 4. 990 billion $ 8.54 1.461 3.89 billion 2009 $ 185 billion $ 545.114 1.97 Pakistani Rupees Inflation Index (2000=100) Per Capita Income (as % of USA) 3.92 2.460 569.36 1960 1965 1970 1975 1978 1985 1990 1995 2000 2005 21 2.355 131.62 Pakistani 68 Rupees 51.093 2.07 1.740 51.64 Pakistani 100 Rupees 59.103 US Dollar Exchange 4.91 Pakistani Rupees 9.330 283. 708 billion $ 1.21 billion Rs.26 2.76 Pakistani Rupees 9.4 billion .6 billion $1250 Rs.83 2.029.581.05 trillion $ 17.76 Pakistani Rupees 4.40 3.16 1.Year Gross Domestic Product 20. 1.28 Pakistani 30 Rupees 21.96 billion $ 16.37 3.111 6.826. 305 billion Rs.058 31.41 Pakistani 41 Rupees 30.

5 billion $ 18.000 points $ 4. 549.5 billion at 9.19 billion $ 45.5 billion $ 11. and mounting inflation and current account deficits resulted in the steep decline of the Karachi Stock Exchange.5 billion $ 5. 520 billion $ 19.[citation needed] The stock market capitalisation of listed companies in Pakistan was valued at $5. lower interest rates.9 billion – – $ 18. Islamabad Stock Exchange. . However the market bounced back strongly in 2009 and the trend continues in 2011. 621 billion Stock market Main articles: Karachi Stock Exchange. and an expansion in private sector lending to businesses and consumers. Manufacturing and finance Pakistan's manufacturing sector has experienced double-digit growth in recent years.[28] But in 2008.2 billion $ 75 billion at 14.741 million in 2005 thus registering over 166% growth since 2000. rising militancy along western borders of the country.000 points $ 8. and Sialkot Trading Floor In the first four years of the twenty-first century. with large-scale manufacturing growing from a minimal 1.311. after the General Elections.Exports Textile Exports $ 7. Pakistan's KSE 100 Index was the bestperforming stock market index in the world as declared by the international magazine “Business Week”.8% by end of 2007.937 million in 2005 by the World Bank. the corporate sector of Pakistan has declined dramatically in recent times.22 billion – $ 46 billion at 9. Lahore Stock Exchange.17 billion 24% 53% Rs. As a result.9% in 2004–05 and averaged 8.4 billion $ 40. uncertain political environment. The Federal Bureau of Statistics valued the finance and insurance sector at Rs.1 billion – – KHI stock exchange $ 5 billion at (100-Index) 700 points Foreign Direct Investment External Debt & Liabilities Poverty level Literacy rate Development programs $ 1 billion $ 39 billion 34% 45% Rs. 80 billion Rs. from 2000 to 2007. A reduction in the fiscal deficit had resulted in less government borrowing in the domestic money market.7 billion Rs.45 billion – $ 26.5% in 1999 to a record 19.6 billion $ 50.300 points $ 5.

the country ranks slightly better than the median.7 billion) on poverty alleviation programs during the past four years. 2006) compared with $2600 (PPP.8 million income-tax payers in the country.[30] Poverty levels have decreased by 10% since 2001[31] Foreign Companies which provide for Pakistani middle classes have been very successful. the Central Board of Revenue estimated that there were almost 2. as development there has been far slower than in the major urban areas. 2005) in 2005 the World Bank considers Pakistan a medium-income country. Demographics Main article: Demographics of Pakistan See also: Standard of living in Pakistan With a per capita GDP of over $3000 (PPP. the size of the Pakistani middle class. cutting poverty from 35% in 2000–01 to 24% in 2006.[29] On measures of income inequality. it is also recorded as a "Medium .Middle class See also: Labour force of Pakistan As of 2011. demand for Uniliver products have recently been so high that even after doubling production the Anglo-Dutch company struggled to meet demand and it's Chairman stated "Pakistanis can’t seem to have enough". out of a population of 180 million. according to the Time Magazine.[33] Rural poverty remains a pressing issue.[32] Poverty alleviation expenditures Main article: Poverty in Pakistan Poverty in Pakistan Pakistan government spent over 1 trillion Rupees (about $16. In late 2006. For example. Representing 11% of the population of the country. under prevailing economic conditions is estimated at 20 million.

Swat.98 per manhour in 2009. The population. Japan.[37][38] Mean wages were $0.[36] In late 2006. High inflation and limited wage growth have drawn more women into the workforce to feed their families. about 168 million in 2007. is growing at about 1. Pakistan has a lower population density than Bangladesh. Relatively few resources in the past had been devoted to socio-economic development or infrastructure projects. and consequently hiring. Pakistan has a large informal economy. and life expectancy is about 64 years.[35] Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy. An influential recent study[34] concluded that the fertility rate peaked in the 1980s. excessive red tape made firing from jobs. close to the world average of 39. high birth rates and immigration from nearby countries in the past have contributed to a persistence of poverty. India. Approximately 56% of adults are literate. Kyber Pakhtunkhwa. and has since fallen sharply. In the past. in spite of cultural resistance and domestic abuse over the issue.80%. Employment The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market.[39] Tourism Main article: Tourism in Pakistan Malam Jabba Ski Resort. the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years. and the Philippines.Development Country" on the Human Development Index 2007. which the government is trying to document and assess. Pakistan . difficult.Rate of unemployment is 25%. Inadequate provision of social services. Even though it is among the seven most populous Asian nations. Pakistan has a family-income Gini index of 41.

ancient architecture and the Hunza and Chitral valley. The Federal Board of Revenue collected nearly one trillion rupees ($14. with its diverse cultures. Karachi. which attract those interested in winter sports. which attracts adventurers and mountaineers from around the world. Tomb of Jahangir and the Lahore Fort. Pakistan received more than 500. with many examples of Mughal architecture such as Badshahi Masjid. home to small pre-Islamic Animist Kalasha community claiming descent from Alexander the Great. attracts adventurers and mountaineers from around the world. Pakistan.Faisal Mosque in the capital Islamabad. Swat. thanks to the Hippie trail.7 million tourists to the country. Tourism in Pakistan is still a growing industry. the Federal board of Revenue. The main destinations of choice for these tourists were the Khyber Pass. Pakistan's cultural capital.[40] while it collected about 1558 billion ($18. The north part of Pakistan has many old fortresses.000 tourists annually.3 billion) during FY 2010–2011. especially K2. Pakistan's tourism industry was in its heyday during the 1970s when the country received unprecedented amounts of foreign tourists. Lahore. The Federal . Punjab province has the site of Alexander's battle on the Jhelum River and the historic city of Lahore. Gwadar and Rawalpindi. Himalayan and Karakoram range (which includes K2. The country's attraction range from the ruin of civilization such as Mohenjo-daro. Major attractions today include ruins of Indus valley civilization and mountain resorts in the Himalayas. Harappa and Taxila. Peshawar. Tourism in Pakistan has been stated as being the tourism industry's "next big thing". Shalimar Gardens. collects almost 95% of the entire national revenue. the revenue department of the Federal Government. Quetta. to the Himalayan hill stations. the second highest mountain peak in the world. The romance of the historic Khyber Pakhtunkhwa province is timeless and legendary. almost double to that of a decade ago. Karachi. Revenue Although the country is a Federation with constitutional division of taxation powers between the Federal Government and the four provinces. Peshawar and Lahore are major attractions for authentic Pakistani food and culture. The revenue collection has hovered below 10% of the GDP for the past several years. Pakistan is home to several mountain peaks over 7000 m.1 billion) in taxes in the 2007–2008 financial year. Before the Global economic crisis. people and landscapes has attracted 0.

1000. As a result. the rupee devalued by 38.10. 5. in the form of withholding taxes. Currently the newly printed 5. Recently the SBP has introduced all new design notes of Rs.5% between 1982/83 many of the industries built by his predecessor suffered with a huge surge in import costs. in order to preserve the country's export competitiveness PKR per US dollar 1995–2008 Yea r Highest ↑ Date Rate Lowest ↓ Date Rate . Dollar-Rupee exchange rate The Pakistani Rupee was pegged to the Pound sterling until 1982. and most of the Income Tax is also collected indirectly.Board of Revenue mainly relies on indirect taxation. 500.000 rupee note is the largest denomination in circulation. Foreign exchange rate The Pakistani rupee depreciated against the US dollar until the turn of the century. Pakistan's central bank then stabilized by lowering interest rates and buying dollars. 10. 20. when Pakistan's large current-account surplus pushed the value of the rupee up versus the dollar. when the government of General Zia-ul-Haq. 100. After years of appreciation under Zulficar Ali Bhutto and despite huge increases in foreign aid the Rupee depreciated. 50. stylish designs. while the design work of Rs. The new notes have been designed using the euro technology and are made in eye-catching bright colours and bold. Currency system Main article: Pakistani rupee Rupee The basic unit of currency is the Rupee. ISO code PKR and abbreviated Rs.000 note is in progress which will help the banking industry in keeping few notes in saving accounts. and 5000 denomination. which is divided into 100 paisas. changed it to managed float.

199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 5 200 6 200 Aug 05 9 PKR 30.4 billion.930 PKR 35.185 PKR 44.000 PKR 60. SBP Foreign exchange reserves By October 2007.90 PKR 53. revenue generation increased to become $13 billion and the country attracted foreign investment of $8.752 PKR 58. Pakistan raised back its Foreign Reserves to $16.50 PKR 63.50 201 October Apr PKR 80.99 Billion. On October 11. 2008 State Bank of Pakistan reported that country's foreign .550 PKR 51.6482 PKR 61. exports grew to $18 billion.[citation needed] In September 2010 According the State Bank Of Pakistan Pakistan's Foreign Reserves Stood at $16. Pakistan's trade deficit was at $13 billion.00 0 10 01 Source: PKR exchange rates in USD.266 PKR 40.7238 PKR 57.75 Nov 01 PKR 60. at the end of Prime Minister Shaukat Aziz’s tenure.9272 PKR 59.4 billion.

9 Million to $7749. it has been outpaced by the growth of the non-agricultural sectors.59 billion. and the share of agriculture has dropped to roughly one-fifth of Pakistan's economy. transportation.081 patent applications were filed by non-resident Pakistanis in 2004 revealing a new-found confidence. textiles. and cement) and services (such as telecommunications.[42] Agriculture accounted for about 53% of GDP in 1947. advertising. the country has seen rapid growth in industries (such as apparel. Structure of economy The economy of the Islamic Republic of Pakistan is suffering with high inflation rates well above 26%. and finance).[41] The foreign exchange reserves had declined more by $10 billion to an alarming rate of $6.7 Million. Over 1. In recent years. Sectors See also: List of Pakistani companies Agriculture Main article: Agriculture in Pakistan Agriculture by Province . While per-capita agricultural output has grown since then.exchange reserves had gone down by $571.

paddy (11th) Sugarcane (5th) Tangerines. as per Forbes Global 2000 ranking for 2011. . mandarin orange. Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. dry (4th) Oranges (11th) Rice. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical expertise. the statistical arm of the Food and Agriculture Organization of The United Nations. clementine (9th) Wheat (10th) Pakistan's principal natural resources are arable land and water. Seed (3rd) Dates (5th) Mango (6th) Onion. Pakistan irrigates three times more acres than Russia.Mango Orchard in Multan. Pakistan Pakistan is one of the world's largest producers of the following commodities according to FAOSTAT. Industry Main article: Industry of Pakistan Manufacturing by Province Pakistan's two leading companies. given here with the 2008 ranking: • • • • • • • • • • • • • Apricot (3rd) Buffalo Milk (2nd) Chickpea (3rd) Cotton. lint (4th) Cotton.

• • • Industries: textiles (8.[44] Other major industries include cement.8% which is likely to increase up to 5. according to SMEDA and Economic survey reports.995 Forbes Global 2000[43] Company Name Oil & Gas Development PSO Pakistan's industrial sector accounts for about 24% of GDP. contributes 16% to the manufacturing sector which also is expected to increase 25% in the next 7 years. dairy products. Auto sector presently. cement. accounting for about 66% of the merchandise exports and almost 40% of the employed labour force.[citation needed] . beverages.food processing. sugar.9% (2005) SME Sector In Pakistan SMEs have a significant contribution in the total GDP of Pakistan.5% of the GDP). The government is privatizing large-scale parastatal units. edible oil. the share in the annual GDP is 40% likewise SMEs generating significant employment opportunities for skilled workers and entrepreneurs. The total contribution of Auto industry to GDP in 2007 is 2. steel. fertilizer. and food processing. shrimp Industrial production growth rate: 6% (2005) Large-scale manufacturing growth rate: 19. clothing. while growth in overall industrial output (including the private sector) has accelerated. [35] Automotive industry Main article: Automotive industry in Pakistan Pakistan is an emerging market for automobiles and automotive parts offers immense business and investment opportunities.6% in the next 5 years. tobacco. Cotton textile production and apparel manufacturing are Pakistan's largest industries. Small and medium scale firms represent nearly 90% of all the enterprises in Pakistan and employ 80% of the non-agricultural labour force.[citation needed] Car ownership in Pakistan has risen by 40% per annum since 2001. oil refineries.429 1. machinery. paper products. and the public sector accounts for a shrinking proportion of industrial output.Global ranking 1. Government policies aim to diversify the country's industrial base and bolster export industries. chemicals. construction materials. fertilizer. These figures indicate the potential and further growth in this sector.

Pakistan was for the first time featured in the Global Services Location Index by A.[46] Textiles The Textile Industry is dominated by Punjab. Presently. or 4 – $ 5 billion for the fiscal year ending June 20 next year.T. $ 1 billion. as exports of other textile sectors grew.5 billion by 2007.S.[citation needed] In 2007. Pakistan had inherited four cement plants with a total capacity of 0. The cement sector consisting of 27 plants is contributing above Rs 30 billion to the national exchequer in the form of taxes. Head of All Pakistan Textile Association of Enterprises Anis-ul-Haq has expressed concern about the decision: “Now is the time to the textile industry out of a three-year downturn.62 billion.[citation needed] The major reason of decline of textile export of Pakistan is the Govt unhealthy policies. more than 3. In the period July 2007 – June 2008.[citation needed] Cement industry In 1947. A marked increase in software export figures are an indication of this booming industry’s potential.[47] Textile exports in 1999 were $5. Sui Northern Gas Pipelines Ltd. textile exports were US$10. » (SNGPL) notified the textile mills to reduce the supply of gas for five months.[45] By 2009.But now this excess use of this valuable resource in transport made the power sector very dangling. It has provided employment to over 50.2 billion and rose to become $10. The demand for textile products is growing.000 CNG stations are operating in the country in 99 cities and towns. Textile exports managed to increase at a very decent growth of 16% in 2006. Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55% in 2008. Kearney and was rated as the 30th best location for offshoring. The total number of IT companies increased to 1306 and the total estimated size of IT industry is $2. Pakistan is one of the largest users of CNG (compressed natural gas) in the world. “Monthly loss the textile industry because of interruptions in gas supply could reach about U. Some expansion took place in 1956–66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976–77 and continued to do so till 1994–95. and if we are not able to fulfill our current orders.[citation needed] Mining Main article: Mining in Pakistan . 3% of United States imports regarding clothing and other form of textiles is covered by Pakistan. Pakistan had improved its rank by ten places to reach 20th.5 million tons. we will lose international buyers.[citation needed] IT industry Main article: Information technology in Pakistan Pakistan’s IT industry has been rising steadily since the last three years. and 1000 more would be set up in the next two years.8 billion.CNG industry As of 2010.000 people in Pakistan.

. providing appropriate institutional and regulatory framework and equitable and internationally competitive fiscal regime. There is vast potential for precious and dimension stones. Except oil. The enforcement of Mineral Policy (1995) has paved the way to expand mining sector activities and attract international investment in this sector.000 km² of outcrops area demonstrates varied geological potential for metallic and non-metallic mineral deposits. and wholesale and retail trade about 30%. Currently about 52 minerals are under exploitation although on small scale. Duddar zinc lead. The current contribution of the mineral sector to the GDB is about 0. enforcing regulatory regime. covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Recent discoveries of a thick oxidized zone underlain by sulphide zones in the shield area of the Punjab province. In the recent past. In line with the constitutional framework the federal and provincial governments have jointly set out Pakistan's first National Mineral Policy in 1995. Pakistan has a large base for industrial minerals.[48] Transport. Based on available information. besides.00. the country's more than 6. communications. storage. Services Service Sector by Province Pakistan's service sector accounts for about 53. International mining companies have responded favorably to the NMP and presently at least four are engaged in mineral projects development. gas and nuclear minerals regulated at federal level. rock salt and other industrial and construction minerals.Pakistan is endowed with significant mineral resources and is emerging as a very promising area for prospecting/exploration for mineral deposits.5% and likely to increase considerably on the development and commercial exploitation of Saindak & Reco Diq copper and gold deposits (world's largest gold mine). The discovery of coal deposits having over 175 billion tones of reserves at Thar in the Sindh province has given an impetus to develop it as an alternate source of energy. and insurance account for 24% of this sector. exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. minerals are a provincial subject. Thar coal and gemstone deposits. The major production is of coal. duly implemented by the provinces. finance. under the constitution of the Islamic Republic of Pakistan.3% of GDP. Provincial governments are responsible for development and exploitation of minerals.

the sector has seen an exponential growth.[citation needed] The World Bank estimates that it takes about 3 days to get a phone connection in Pakistan.[52] In Pakistan. Pakistan Telecommunication Company Ltd has emerged as a successful Forbes 2000 conglomerate with over US $1 billion in sales in 2005. [51] The contribution of the telecom sector to the national exchequer increased to Rs 110 billion in the year-end 2007–08 on account of the general sales tax. activation charges and other steps as compared to Rs 100 billion in the year-end 2006–07. Norway) Warid (Parent: Abu Dhabi Group / SingTel. Pakistan won the prestigious Government Leadership award of GSM Association in 2006. one of the highest mobile teledensities in the entire world. 2. UAE/Singapore) Zong (Parent: China Mobile. 3. 4. The government is acutely conscious of the immense job growth opportunities in service sector and has launched aggressive privatisation of telecommunications. there are over 6 million landlines in the country with 100% fibre-optic network and coverage via WLL in even the remotest areas. China) . Pakistan/UAE) Telenor (Parent: Telenor. 5.Pakistan is trying to promote the information industry and other modern service industries through incentives such as long-term tax holidays. utilities and banking despite union unrest. Egypt) Ufone (Parent: PTCL (Etisalat). the following are the top mobile phone operators: 1.[50] As a result.[citation needed] Communication Main article: Communications in Pakistan PTCL's One Stop Shop in Islamabad After the deregulation of the telecommunication industry.[49] In addition. Mobilink (Parent: Orascom Telecom Holding. The mobile telephone market has exploded fourteen-fold since 2000 to reach a subscriber base of 91 million users in 2008.

The rankings are released by Point Topic Global broadband analysis. leading to a major re-alignment of the tradition of arranged marriages.[56] Telecom industry created of 80. The use of search engines and instant messaging services is also booming. the Pakistani telecom sector has attracted more than $9 billion in foreign investments. Recent years have seen a huge increase in the use of online marriage services.[55] The country is said to have a potential to absorb up to 50 million mobile phone Internet users in the next 5 years thus a potential of nearly 1 million connections per month.62 billion in Foreign Direct Investment (FDI) – about 30% of the country’s total foreign direct investment.1 million fixed lines.000 jobs directly and 500. for example. Pakistani society has seen an unparalleled revolution in communications. and a large English-speaking population.[57] . The Federal Bureau of Statistics provisionally valued this sector at Rs.5 million. communicating with users all over the world. Present growth of state-of-the-art infrastructures in the telecoms sector during the last four years has been the result of the PTA's vision and implementation of the deregulation policy.353 million in 2005 thus registering over 91% growth since 2000. With a rapid increase in the number of Internet users and ISPs. Nokia and Motorola along with Samsung and LG remain the most popular brands among customers. while as many as 2.[53] During 2007–08. Paging and mobile (cellular) telephones were adopted early and freely. Pakistan had 91 million mobile subscribers – 25 million more subscribers than reported in the same period in 2008. a global research centre. Pakistanis are some of the most ardent chatters on the Internet. the Local Loop installed capacity reached around 5. organisations and institutions have their own websites. As of 2007 there were six cell phone companies operating in the country with nearly 90 million mobile phone users in the country. According to the PC World. Sony Ericsson. Cellular phones and the Internet were adopted through a rather laissez-faire policy with a proliferation of private service providers that led to the fast adoption. Wireless local loop and the landline telephony sector has also been liberalized and private sector has entered thus increasing the teledensity rate.[54] • • • • • • Pakistan has more than 20 million Internet users in 2009.37 billion text messages were sent through Acision messaging systems across Asia Pacific over the 2008/2009 Christmas and New Year period. Pakistan was amongst the top five ranker with one of the highest SMS traffic with 763 million messages.By March 2009. In addition to the 3. Since liberalisation. over the past four years. In mid2008. the Pakistani communication sector alone received $1. Almost all of the main government departments.4 million are using Wireless Local Loop connections. a total of 6.982.[49] Pakistan is on the verge of a telecom revolution[citation needed] and is by far the most attractive sector in Pakistan in terms of Foreign Direct Investment coming into the country. as the subscriber base of broadband Internet has been increasing rapidly. Pakistan is ranked 4th in terms of broadband Internet growth in the world.000 jobs indirectly.

309 million in 2005 thus registering over 96% growth since 2000. lower interest rates. and an expansion in private sector lending to businesses and consumers.[62] Private sector airlines in Pakistan include Airblue.[58] A new rail link trial has been established from Islamabad-Pakistan via Teharan-Iran Via Istanbul-Turkey . finance and insurance Main articles: Banking in Pakistan and Insurance in Pakistan See also: List of banks in Pakistan A reduction in the fiscal deficit has resulted in less government borrowing in the domestic money market. tourism. The other private carrier is Shaheen Air International whose network covers the main cities of Pakistan and the Gulf.Furthermore it would promote trade. supported by robust export growth and steady worker remittances.[61] The government announced a new shipping policy in 2006 permitting banks and financial institutions to mortgage ships. the flagship airline of Pakistan's civil aviation industry. Banking.1.358.Railways Main article: Pakistan Railways A massive rehabilitation plan worth $1 billion over five years for Pakistan Railways has been announced by the government in 2005. . Wholesale and retail trade The Federal Bureau of Statistics provisionally valued this sector at Rs. has turnover exceeding $1 billion in 2005.[59][60] Aviation See also: List of airlines of Pakistan A PIA B747-367 at the Domestic Satellite of Jinnah International Airport Pakistan International Airlines. which serves the main cities within Pakistan in addition to destinations in the Gulf and Manchester in the United Kingdom. Foreign exchange reserves continued to reach new levels in 2007. and would also would serve as an effective link for the exports to Europe (as Turkey part of Europe and Asia].

In the Financial Intermediation Pillar Pakistan ranks 25th in banks.[63] Since 2000 Pakistani banks have begun aggressive marketing of consumer finance to the emerging middle class. Pakistan ranks 49th in institutional environment. This necessitates putting in place a framework to facilitate financing in the formal private sector and mobilise non-government resources for a market-based housing finance system. Stress tests conducted on June 2008 data indicate that the large banks are relatively robust.1 million backlog of housing in Pakistan for meeting the housing shortfall in next 20 years. 42nd in non banks and 17th in Financial Markets. which was released in Pakistan through the Competitiveness Support Fund (CSF) in December 2008. Under Factors. It is also estimated that 50% of the urban population now lives in slums and squatter settlements.311. a feature which has served to attract a substantial amount of FDI in the sector.[57] Public administration and defence The Federal Bureau of Statistics provisionally valued this sector at Rs. Their profits continued to rise for the next five years and peaked to Rs 84.185. Banking sector turned profitable in 2002.[64] Nevertheless.1 ($1. Under Capital Availability and Access. with the medium and small-sized banks positioning themselves in niche markets.389.376 million in 2005 thus registering over 49% growth since 2000. besides replacement of out-lived housing units. the Karachi Chamber of Commerce and Industry estimated in late 2006 that the overall production of housing units in Pakistan has to be increased to 0. is beyond the financial resources of the government.545 million in 2005 thus registering over 65% growth since 2000.[65] The Federal Bureau of Statistics provisionally valued this sector at Rs.741 million in 2005 thus registering over 166% growth since 2000. The credit card market continued its strong growth with sales crossing the 1 million mark in mid2005. Policies and Institutions pillar. Pakistan ranks 33rd.[57] Ownership of dwellings Main article: Housing in Pakistan The property sector has expanded twenty-threefold since 2001. particularly in metropolises like Lahore.5 million units annually to address 6. 50th in business environment and 37th in Financial Stability.Pakistan has been ranked 34 out of 52 countries in the World Economic Forum's first Financial Development Report. The report said that meeting the backlog in housing. allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza. The report noted that the present housing stock is also rapidly aging and an estimate suggests that more than 50% of stock is over 50 years old.[citation needed] Pakistan's banking sector has remained remarkably strong and resilient during the world financial crisis in 2008–09.[57] . The Federal Bureau of Statistics provisionally valued this sector at Rs.1 billion) billion in 2006.

Unlimited remittance of profits. Most cities in Pakistan receive substantial sunlight throughout the year. especially since 1999. dropping by 54. If the rich people in Pakistan are shifted to solar Engery that they should be forced to purchase solar panels. service fees or capital is now .6 per cent year-on-year to US$2.Social. dividends. During July–March 2005– 06. Business regulations have been profoundly overhauled along liberal lines. according to the Bank of Pakistan. community and personal services The Federal Bureau of Statistics provisionally valued this sector at Rs. remittances.22 billion and portfolio investment by 276 per cent to $407. it has just failed to oversee a similar improvement in the quality of the network for electricity supply.6% due to Pakistan's political instability and weak law and order. Most barriers to the flow of capital and international direct investment have been removed.[66] Chemicals and pharmaceuticals Main article: Pharmaceutical industry in Pakistan Foreign trade.631.6 million and portfolio investment to $407.07 children born/woman and higher in earlier years greatly reduces government ability to finance major new expansion and maintenance of electricity grid and free education and health of Pakistanis. whereas it was $108. While the government claims credit for overseeing a turnaround in the economy through a comprehensive recovery. Similar to other developing countries Pakistan can not plan or control its high population growth. aid.[68] Foreign investment had significantly declined by 2010.224 billion from only $792. the State Bank of Pakistan (SBP) reported on April 24. surpassing the government target of $4 billion. No politician or government official highlights Pakistan's wasted opportunities in education and human development because population increase of 3.[67] Pakistan has achieved FDI of almost $8.[57] Electricity Main article: Electricity sector in Pakistan For years.4 million. the shortfall can be controlled.229 million in 2005 thus registering over 78% growth since 2000. according to the latest statistics released by the State Bank.4 million during the first nine months of fiscal year 2006. and investment Investment Foreign direct investment (FDI) in Pakistan soared by 180. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity. which would suggest good conditions for investment in solar energy. the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. FDI year-on-year increased to $2. Foreign investors do not face any restrictions on the inflow of capital.1 million in the corresponding period last year.[69] Pakistan is now the most investment-friendly nation in South Asia.4 billion in the financial year 06/07. and investment of up to 100% of equity participation is allowed in most sectors. this will make the economy boost again as before 2007.

This was confirmed by the World Bank's Ease of Doing Business Index report published in September 2009 ranking Pakistan (at 85th) well ahead of neighbours like China (at 89th) and India (at 133rd). The recent improvements in the economy and the business environment have been recognised by international rating agencies such as Moody’s and Standard and Poor’s (country risk upgrade at the end of 2003). majority stakes in many corporations have been acquired by multinational groups. and the oil sector targeted to be the next big privatisation operation.[72] Foreign trade Main article: Foreign trade of Pakistan . has gained momentum.the rule. with most of the banking system privately owned. • • • • • • PICIC by Singapore based Temasek Holdings for $339 million Union Bank by Standard Chartered Bank for $487 million Prime Commercial Bank by ABN Amro for $228 million PakTel by China Mobile for $460 million PTCL by Etisalat for $1. Pakistan has been able to attract a large portion of the global private equity investments because of economic reforms initiated in 2003 that have provided foreign investors with greater assurances for the stability of the nation and their ability to repatriate invested funds in the future. with a maximum of 25% (except for the car industry).[70] Pakistan is attracting an increasingly large amount of private equity and was the ranked as number 20 in the world based on the amount of private equity entering the nation. The privatisation process.[71] Tariffs have been reduced to an average rate of 16%. foreign investors are taking a keen interest in the corporate sector of Pakistan. which started in the early 1990s. In recent years. Foreign acquisitions and mergers With the rapid growth in Pakistan's economy. Business regulations are now among the most liberal in the region.8 billion Additional 57.6% shares of Lakson Tobacco Company acquired by Philip Morris International for $382 million The foreign exchange receipts from these sales are also helping cover the current account deficit.

S.. despite government diversification efforts. refinance and reschedule its debts to its advantage.4% of GDP. roughly 5% of GDP. more than double the amount paid in FY 1989–90. . The budget deficit in fiscal year 1996–97 was 6.S. greater transparency and other governance reforms have led to upgrades in Pakistan's credit rating.[73] Increasingly. economic assistance to Pakistan was suspended after October 1990. and the impact of occasional droughts on its agricultural production have all contributed to variability in Pakistan's trade deficit. domestic political uncertainty.[75] The budget deficit in fiscal year 2004–2005 was 3. the composition of assistance to Pakistan shifted away from grants toward loans repayable in foreign exchange. fertilizer. in its war on terror. and consequently the IMF program was ended. Principal and interest payments in FY 1998–99 totaled $2. and additional sanctions were imposed after Pakistan's May 1998 nuclear weapons tests. and the Asian Development Bank) and bilateral donors. In the late 1990s Pakistan received about $2. Pakistan still has a large merchandise-trade deficit. and has bilateral and multilateral trade agreements with many nations and international organizations. Pakistan's hard currency reserves have grown rapidly. This deficit amounted to over €15 billion in 2010. the government refused further IMF assistance.1% in FY 2002–03.4% of GDP. While the country has a current account surplus and both imports and exports have grown rapidly in recent years. The sanctions were lifted by president George W. edible oil. industrial raw materials. Improved fiscal management. In the six months to December 2003. it still has a large merchandise-trade deficit.5 billion per year in loan/grant assistance from international financial institutions (e.g. chemicals.761 billion. Pakistan's exports continue to be dominated by cotton textiles and apparel. Exports grew by 19. Having improved its finances. capital goods. Despite the country's current account surplus and increased exports in recent years. The budget deficit in fiscal year 2005–06 is expected to be over 4% of GDP. Economists believe that the soaring trade deficit would have an adverse impact on Pakistani rupee by depreciating its value against dollar (1 US $ = 60 Rupees (March 2006) ) and other currencies.6 billion. Fluctuating world demand for its exports. Pakistan recorded a current account surplus of $1. All new U. Together with lower global interest rates. these factors have enabled Pakistan to prepay. Bush after Pakistani president Musharraf allied Pakistan with the U.[74] The government is also reducing tariff barriers with bilateral and multilateral agreements. With a current account surplus in recent years[clarification needed]. and consumer products. the World Bank. Major imports include petroleum and petroleum products. Past external imbalances left Pakistan with a large foreign debt burden. Annual debt service peaked at over 34% of export earnings before declining. the IMF. The budget deficit in fiscal year 2003–04 is expected to be around 4% of GDP.Pakistani exports in 2005 Pakistan is a member of the World Trade Organization.

5 billion in 1999 to stand at $18 billion in the financial year 2007–2008. an official said.[77] Pakistan exports rice.4% of Pakistani imports and 22.One of the main reasons that contributed to the increase in trade deficit is the increased imports of earthquake relief related items.[75] The public debt of the country has surged by almost 100 percent to Rs12. Pakistan produces and exports cements to Asia and the Middle East. 2005 in Azad Jammu and Kashmir and parts of Khyber-Pakhtunkhwa. Pakistani-assembled Suzukis (to Afghanistan and other countries). electrical appliances. In August 2007. software.[76] Exports Graphical depiction of Pakistan's product exports in 28 color coded categories. the EU accounted for 12. furniture. cement. . processed food items. The EU is the single largest trading partner of Pakistan absorbing over one-third of the exports in 2003.39 billion despite the fact that the country received $10. tarpaulin and plastic sheets to provide temporary shelter to the survivors of earthquake of October 8. which is the main reason behind the all-time high trade deficit. marble.6 billion in the last fiscal year. ice cream.[79] As of April 2011. machinery and automobiles. livestock meat. The Petroleum Ministry says that this year the bill of oil imports was expected to reach $6. carpets and rugs. tiles. radars). defense equipment (submarines.6% of its exports. and many other items. oranges. chicken. engineering goods.024 trillion as of March 31. The trade deficit has increased by 14.055 trillion in 2007-2008. clothing. onyx. salt. surgical instruments. Pakistan started exporting cement to India to fill in the shortage there caused by the building boom. mangoes. sports goods (renowned for footballs/soccer balls). leather goods. 2011-2012 from Rs6. tanks.[78] Russia is a growing market for Pakistani exporters.5 percent and current account deficit has swelled by $3. wheat. cutlery. seafood (especially shrimp/prawns). cotton fiber. food items. vegetables. The rise in the trade gap was also fuelled by high oil import prices. In 2009/2010 the export target of Pakistan was US $20 billion. powdered milk.8 billion in workers’ remittances in 10 months of the current financial. In 2010. textiles. Pakistan's exports increased more than 100% from $7. especially tents.Pakistans exports stand at US $25 billion.5 billion against $4.

[81] The combined deficit in services and goods stand at $17. For the first time in years. according to its five year credit default swap. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Since the beginning of 2008.5bn for the current fiscal year. the unprecedented floods of 2010 which encapsulated 20% of Pakistan's land area.[82] The middle term however may be less turbulent. with gaping trade deficits. The gap has considerably widened since 2002-3 when the deficit was only $1.125 billion for the same year.5% of country's total export of $21.[26] Economic aid Main article: Foreign aid to Pakistan . Current account – Current account deficit for 2006-7 reached $7. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty. have caused a monetary damage estimated to be in excess of $10bn.[80] Services sector deficit for 2006–2007 stood at $4.06 billion. the floods of 2010 inflicted damage of epic proportions. However. high inflation and a crash in the value of the Rupee.External Imbalances Pakistan suffered a merchandise trade deficit of $13.653 billion which is approx 83. Much like previous natural disasters which have afflicted Pakistan. machinery and automobiles. just several notches above a level that would indicate default. S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B. which has fallen from 60–1 USD to over 80-1 USD in a few months. 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. the insurgency has forced massive capital flight from Pakistan to the Gulf.528 billion for the financial year 2006-7. and that growth would pick up to over 5% per annum by 2011. and rise in the prices of food items. Pakistan's economic outlook has taken a dramatic downturn. Concurrently. a level that indicates investors believe the country is already in or will soon be in default. though it maintained the country’s rating at B2. the philanthropic nature of Pakistani people and widespread coverage by a fiercely independent and established media has proven yet again that Pakistan is an incredibly resilient nation.125 billion which equals the services export of $4. However.016 billion up by 41% over previous year's $4.The cost of protection against a default in Pakistan’s sovereign debt trades at 1. The rise in the trade gap has been attributed to high oil import bill. Combined with high global commodity prices. as a result of which real growth is almost flat and EIU's original targets will have to be revised.800 basis points. The EIU hsd estimated that inflation should drop back to single digits in 2010. Consequently. it may have to seek external funding as Balance of Payments support.490 billion. the dual impact has shocked Pakistan's economy. depending on the political environment.136 (Goods and services).

Qatar and Oman).07 billion or 25 per cent more than $8. analysts say that a crackdown on the illegal Hundi and Hawala money transfer systems.[84] Japan will provide $500 million annual economic aid to Pakistan. Saudi Arabia.13 billion.93 million respectively. Japan. The 7 million strong Pakistani diaspora. Kuwait. UK and EU countries like Norway. Australia.18 billion. USA. The 11-month figure was $2. USA. $793. etc. UK and EU countries were $2. etc. The country received $1. the International Monetary Fund (IMF) has approved a loan of 7.6 billion in aid. 2006–2009. $1. Pakistan also receives bilateral aid from developed and oil-rich countries. overseas workers remitted over $1 billion. .38 billion.84 billion.5bn already promised to Pakistan for each of the next five years. remittances from Saudi Arabia.09 billion worth of remittances received in the same period of the previous year.[86] Overall Friends of Pakistan had pledged $1. The European Union promised $640m over four years. .6 Billion to Pakistan.74 million respectively in July–May 2009–10. which was the third consecutive month that remittances crossed this mark. The Asian Development Bank will provide close to $6 billion development assistance to Pakistan during 2006–9. Switzerland. which would help Pakistan move forward on its way to self-reliance. $1. April and May respectively. swift processing and transfer of money by the banking channel and incentives for overseas Pakistanis have encouraged them to utilise legal channels. $1.72 billion.09 billion and $320. $1. In comparison.[88] The State Bank of Pakistan (SBP) has announced that remittances sent home by overseas Pakistani workers have crossed the $10 billion mark for the first time in the country’s history as the figure reached $10. $1.[83] The World Bank unveiled a lending program of up to $6. contributed US$11. UAE. Canada. Remittances received from Norway. Australia.[85] In November 2008. while reports said Saudi Arabia had pledged $700m over two years. Switzerland. In May. GCC countries (including Bahrain. Remittances The remittances of Pakistanis living abroad has played important role in Pakistan's economy and foreign exchange reserves.1 billion in 11 months (July–May) of the current financial year.86 billion.61 billion.05 billion. The Pakistanis settled in Western Europe and North America are important sources of remittances to Pakistan. The International Monetary Fund (IMF). The flow of charity money after last summer floods has also given a boost to the remittances this year. remittances stood at $1. $2. aid strategy showing a significant increase in funding aimed largely at beefing up the country's infrastructure. they say.91 million and $229.33 billion.[87] The major source countries of remittances to Pakistan include UAE. Asian Development Bank (ADB). Kuwait. In the July– May period. Since 1973 the Pakistani workers in the oil rich Arab states have been sources of billions dollars of remittances. $1. provides long term loans to Pakistan. Qatar and Oman). Citing reasons for the sharp increase in remittances. World Bank (WB). to help stabilize and rebuild the country's economy. More recently the government of Pakistan received an economic aid of US $5bn dollars out of which the US pledge of $1bn was described as a down-payment on the previously announced $1.Pakistan receives economic aid from several sources as loans and grants.2 billion to the economy in FY2011. $1.03 billion and $1. GCC countries (including Bahrain.5 billion for Pakistan under a new four-year.05 billion in March.

State Bank of Pakistan (SBP) Yaseen Anwar said during first ten months of FY2011/12.) Pakistan has sustained immense socio-economic costs of being a partner in the international counter terrorism campaign. Pakistan’s fiscal challenges are well known and documented.060 82. with the war on terror having engulfed Pakistan's economy.103 78.[92] (Rs billion) 2004/ 2005/ 2006/ 2007/ 2008/ 05 06 07 08 09 Direct Cost 67. Japan and other countries during the 11 months amounted to $926. tax collection (see table below for the government's estimation of the cost of ‘War on Terror’ to Pakistan as published in an IMF report).Canada. which it is trying to improve.03 . privatization. the politically unpopular bill was not approved in the senate/parliament and has afforded some respite to the people of Pakistan who are already suffering from a stagnant economy and rampant inflation. Recently. According to government estimates. remittances from overseas Pakistanis rose by 20.2 billion (FY2010/11) Revenues and taxation Main article: Taxation in Pakistan Pakistan has a low tax/GDP ratio. foreign investment.[90] Government finances Fiscal budget summary • • • • • • Fiscal year: 1 July – 30 June Budget outlay: Rs 3. external conditions appeared daunting due to rising oil prices and lack of external financing.259 trillion (FY2010/11) Revenues: $19.88 billion.52 114.96 million in the same period last year. industrial output.8 billion Expenditures: Debt – external: $50 billion (2010 est.[89] Governor. However.[91] Expenditures (and the economic costs of War on Terror) Government expenditures were $25 billion (2006 est. This spillover to the rest of economy is equally clear. The current tax-to-GDP ration is estimated to be between 8%–9% which is far below developing other countries of the region such as India (15%) and Sri Lanka (18%).499 108.) Economic aid – recipient: $1.2% to $10. He explained that at start of year (July 2011). Pakistan's coalition government proposed the idea of imposing a Reformed General Sales tax which was modelled along the lines of VAT. the war on terror cost the Pakistani economy nearly US$8 billion a year in terms of lost exports. which helped Balance of Payments (BoP) despite widening of trade deficit.86 million against $740.

The sources said that the 10-year tranche was expected to be priced at around 100125%.84 563.[92] Sovereign bonds Pakistan is expected to sell a dual-tranche sovereign bond worth $750 million on March 23.875% worth Euro Bonds which were highly over subscribed[96] .89 484. industrial output. Details of amount raised in various issues is as follows: 1999 – $6230 million 2004 – $5000 million @ 6.36 677.78 360. 2006 that analysts said should ensure a favorable reception in the bond market. eroding resources for development in the country.72 278.25 billion had been anticipated for what is Pakistan’s third foray into the international debt market since 2004. the top end of the indicative yield range of 3. In addition to human sufferings and resettlement costs.79 3 0 9 7 3 '*On account of loss of exports. The heightened sense of uncertainty has contributed to capital flight and slowed down domestic economic activity. had generated $1. as frequent bombings and worsening law and order situation have taken a toll on the socio-economic fabric of the country. The 10-year tranche would be $50000 million and the 30-year portion $250 million.7 Indirect Cost* Total 3 192.00 222.75%[94] 2005 – $6000 million worth Islamic bonds[93][95] 2007 – $ 7500 million @ 6. consisting of 10-year and 30-year tranches. The bonds. the anti-terrorist campaign following the 9/11 attacks in the United States strained Pakistan’s budget. According to the IMF.40 375.[93] Government of Pakistan has been raising money from the international debt market from time to time. etc. while the longer-dated tranche was expected to be sold at around 70.875%.76 0 0 0 0 0 259.875%. tax collection.10 300. 2006.75 to 10. as allocations for law enforcement agencies had to be increased significantly. creating unease among foreign investors. foreign investment. development projects are afflicted with delays which ultimately resulted in large cost over-runs. privatization. Pricing is expected during New York trading hours on March 23. There has also been massive unemployment in the terror-inflicted regions.5 billion in orders and a total size of as much as $1.

1% o highest 10%: 27.Income distribution • • Gini Index: 41 Household income or consumption by percentage share: o lowest 10%: 4.5% .7% (1996) o middle 10%: 10.

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