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Growth and Investment
Pakistan Economic Survey 2002-03
Chapter 1. Growth and Investment
1. Growth and Investment
The outgoing fiscal year 2002-03 has witnessed a sharp recovery in economic growth accompanied by equally impressive performance of agriculture and large-scale manufacturing. Other significant achievements have been the impressive growth in per capita income, both in rupee and dollar terms, and national savings reaching new heights — exceeding total investment and suggesting a large surplus in the current account balance. When viewed at the backdrop of inhospitable external environment and uncertain geo-political situation Pakistan's growth performance has been impressive in 200203. This year has witnessed major corporate scandals and bankruptcies in the United States, resulting in bursting of the equity market bubble; rising uncertainties in the run up to war in Iraq, causing oil prices to rise sharply, and recent outbreak of Severe Acute Respiratory Syndrome (SARS) virus badly economic The world affecting scene economic business created outlook environment in Asia. There developments on international uncertainties. The real GDP at factor cost was originally targeted to grow by 4.5 percent in 2002-03, with agriculture and manufacturing growing by 2.5 percent and 5.8 percent, respectively. The growth target was largely dependent on recovery in agriculture, manufacturing, rapid growth in exports and higher level of investment. All three major sectors of the economy namely, agriculture, Table 1.1 documents the growth manufacturing and services responded positively to the incentives embodied in economic revival program and comfortably surpassed the growth targets. The real GDP at factor cost grew by 5.1 percent and was supported by a 4.2 percent, 7.7 percent and 5.3 percent growth in agriculture, manufacturing and services, respectively. The real GDP at market prices recorded an impressive growth of 5.8 percent as against a growth of 2.9 percent last year. performance of selected regional economies in 2000-03. The performance of the major growth poles of the world economy (US, Japan and Euro Area) are likely to remain subdued with Japan and Euro Area economies growing by less than 1.0 percent in 2002-03. The United States is expected to perform better as compared with last year. Developing countries as a whole is expected to grow by 4.6 percent. China and Korea in Asian region are expected to be the star performers with growth exceeding 6.0 percent. With the exception of Thailand, the other ASEAN countries are projected to grow by less than 5.0 percent. Barring Iran, the other countries in the Middle East are almost stagnating. In Africa, no country could achieve 5.0 percent growth in 2002-03. In South Asia, Pakistan is the only country which achieved more than 5.0 percent growth in 2002-03. Two points need to be noted as far as Pakistan's growth performance is concerned. Firstly, when compared with major economies of different parts of the world, Pakistan‘s growth performance has been impressive. Secondly, in a subdued global economic environment, an impressive recovery in growth simply displays Pakistan's greater resilience to external shocks.
remained subdued and global trade remained sluggish during the outgoing fiscal year.
Chapter 1. Growth and Investment Regional Growth Performance Real GDP Growth (%)
Region/Country World GDP Euro Area United States Japan Germany Canada Developing Countries China Hong Kong SAR Korea Singapore
2000-01 4.7 3.5 3.8 2.8 2.9 4.5 5.7 8.0 10.2 9.3 9.4 ASEAN 4.9 8.3 4.6 4.4 South Asia 5.4 5.9 6.0 2.2 Middle East 4.9 1.4 5.2 5.1 Africa
2001-02 2.3 1.4 0.3 0.4 0.6 1.5 3.9 7.3 0.6 3.0 -2.4
2002-03 3.0 0.8 2.4 0.3 0.2 3.4 4.6 8.0 2.3 6.1 2.2
Indonesia Malaysia Thailand Philippines
3.4 0.4 1.9 3.2
3.7 4.2 5.2 4.6
India Bangladesh Sri Lanka Pakistan
4.2 5.3 -1.4 3.4
4.4 4.4 3.7 5.1
Saudi Arabia Kuwait Iran Egypt
1.2 -1.1 5.7 3.5
2.1 -0.9 6.0 2.0
Algeria Morocco Tunisia Nigeria Kenya South Africa Source: World Economic Outlook (IMF), April 2003.
2.4 1.0 4.7 3.9 -0.1 3.5
2.1 6.5 5.2 2.8 1.2 2.8
3.1 4.5 1.9 0.5 1.2 3.0
Chapter 1. Growth and Investment
Fig-1: Real GDP/GNP Growth
10 9 8 7 6 5 4 3 2 1 0
5.7 4.9 4.2 4.0 3.5 2.8 3.8 5.1
The growth in real GNP continued to decelerate during the 1990s— declining from an average of 5.7 percent in the 1980s to an average of 4.2 percent in the first half, and 3.5 percent in the second half of the 1990s. During the first three years (2000-03) of the new decade, the real GNP grew at an average of 5.4 percent. Most importantly, the real GNP registered a handsome growth of 8.4 percent in 2002-03 as against 5.3 percent last year, mainly on account of 472.2 percent increase in net factor income from abroad, which, in turn, is the result of a sharp increase in the inflow of workers remittances and foreign direct investment in the country [See Fig-1.1]. With population growing by 2.1 percent, the real per capita GNP at market price increased by 6.6 percent in 2002-03 as against an increase of 2.1 percent last year. Notwithstanding the strong recovery in growth to 5.1 percent in 2002-03 from 3.4 percent last year, the fact remains that Pakistan‘s economic growth decelerated in the 1990s for a variety of reasons, including worsening of macroeconomic environment, serious lapses in implementation of stabilization policies and
structural reforms, adverse law and order situation, inconsistent policies, and poor governance. As against an average growth rate of 6.1 percent in the 1980s, the real GDP growth slowed to an average of 4.9 percent in the first half, 4.0 percent in the second half of the 1990s. Economic growth remained depressed for first two years (2000-02) of the new decade averaging 2.8 percent. Unprecedented drought and the events of 9/11 have been responsible for keeping the growth depressed during 2000-02. Fiscal year 2002-03 exhibits a turnaround in growth [See Fig1]. The real challenge would now be to sustain this growth momentum. The manufacturing sector grew by an average annual rate of 8.2 percent in the 1980s, slowed to an average of 4.7 percent in the first half and further to 2.4 percent in the second half of the 1990s. However, it performed well during last three years by growing at annual average rate of 7.0 percent per annum. In fact, over the last decade, the large-scale manufacturing lost almost three-fourth of its growth momentum. The services sector also slowed from an average of 6.6 percent in the 1980s to 5.1 percent in the first half
Chapter 1. Growth and Investment and further to 4.0 percent in the second half of the 1990s, losing one-third of its growth momentum during the 1990s. It started regaining its growth Table 1.1 Growth Performance of Real Sector Item Unit 1980’s 1990-95 1995-00 A. GDP GROWTH RATE % 6.1 4.9 4.0 a. Agriculture % 4.1 4.2 4.9 b. Manufacturing % 8.2 4.8 3.2 c. Large-scale Manufacturing % 8.2 4.7 2.4 d. Services % 6.6 5.1 4.0 As % B. TOTAL INVESTMENT 18.7 19.5 17.1 of GDP a. Fixed Investment 17.0 18.0 15.3 b. Public Investment 9.2 8.6 6.4 c. Private Investment As % of GDP 7.8 14.8 7.7 9.4 14.9 13.9 8.9 12.7 momentum during last three years by growing at an average rate of 4.7 percent. [See Table 1.1].
2000-03 3.6 0.5 7.0 7.7 4.7 15.2 13.4 4.9 8.5 17.0
2002-03 4.9 4.2 7.7 8.7 5.3 15.5 13.1 4.5 8.6 19.2
C. NATIONAL SAVING a. Domestic Saving
13.8 15.7 14.7 Source: Federal Bureau of Statistics
Persistence of large fiscal and current account deficits during the 1980s have been the underlying cause of macroeconomic instability, which in turn affected investment and impeded growth during the 1990s. Resultant accumulation of huge public debt put strain on development expenditure because of downward rigidity of current expenditure and structural weaknesses of tax administration that handicapped extra resource mobilization. The public sector investment has significant importance as a growth stimulus in developing countries like Pakistan. Under pressure from the resource crunch, the decline in public investment was inevitable. Total and fixed investment as percentage of GDP declined in the 1990s. Total investment and fixed investment averaged 18.6 percent and 16.8 percent of the GDP, respectively in the 1980s; declined to 17.1 percent and 15.3 percent respectively in the second half of the 1990s. The decline was mainly originated from public sector investment which averaged 9.1 percent of GDP in
1980s but declined to 6.4 percent of GDP in the second half of the 1990s. It is well-known that a stable macroeconomic environment is prerequisite to higher investment and growth. For an investment friendly environment and sustainable growth, a stable macroeconomic environment is the key and its core elements include low inflation, sustainable budget deficit, realistic exchange rates, appropriate real interest rates, and consistency in economic policy. These were exactly the things which were ignored in macroeconomic policy making during the 1990s. National saving rate also witnessed a decline from an average of 14.7 percent in the 1980s to 12.7 percent in the second half of the 1990s. Even with low investment rates, the current account showed large deficits during the 1990s. There was a shift by the end of the 1990s to finance investment from domestic sources instead of foreign resources. [See Table-1.1]. National savings as percent of GDP witnessed considerable improvement during the last three years (2000-03)
1 4.Major Crops 3.3 0.5 3.7 9.2 1.5 9. Electricity & Gas Distribution 10.6 -1.1 13.9 2.3 5.2 3. The rise in national savings owes mainly to the significant turnaround in the current account balance.GNP (Constant Factor Cost) 5.7 2.4 5.3 6. Finance & Insurance 6.9 Services Sector 6.5 4.4 9.9 -0.7 .5 9.8 .7 4.1 5.7 -17.3 6.7 -0.5 5.8 5.3 10.8 3. Although.5 6.5 -3.Livestock 5. The performance of the various components of national income over the last two The commodity-producing sector grew by 4.Small Scale 8.5 12. decades along with most recent three years. Agriculture 5.4 4. it is essential to have an insight of the growth performance of various components of gross national product for the outgoing fiscal year 2002-03.0 7. Construction 4.5 3.1 6.4 5.Minor Crops 4. Wholesale & Retail Trade 7. Storage and Communications 6.1 7.8 percent in 2002-03 as against 2.2 .Chapter 1.9 5.Services 6.4 5.4 4.Forestry 6.6 4.1 4.9 11.4 8.9 .2 2.4 3.3 5. Commodity Producing Sector Having discussed the overall growth and investment scenarios in the backdrop of structural problems being faced by the economy in the recent past.4 2.3 4.5 6.4 4.2 2.5 2.5 6.4 Source: Federal Bureau of Statistics and Economic Adviser‘s Wing.7 percent last year. A.9 2.1 -1.3 3.6 -0.1 3. agriculture grew by 4.3 5.GDP (Constant Factor Cost) 6.2 5.6 4.5 6.2 percent in 2002-03 as against almost flat growth of .3 3.8 0.4 5. Consequently.6 .9 8.8 .2 11. however the extent of shortage was relatively less detrimental. i) Agriculture The performance of agriculture in the recent past has remained subdued owing to the catastrophic drought which engulfed the entire country for three consecutive years. the improvement has mainly come from manufacturing sector but agriculture also contributed positively to this recovery [See Table 1.1 7.0 16.5 -2.3 5.2 3.Large Scale 8.2 4.7 2.0 4. Ownership of Dwellings 7.4 1.5 -3.1 8.2 5.3 3.Fishing 7.2 Growth Performance of Components of Gross National Product (% Growth At Constant Factor Cost) 1980‘s 1990‘s 2000-01 2001-02 2002-03 Commodity Producing Sector 6.3 8.0 8.7 -12.1 -10.6 1.8 4. The travails of water shortages persisted even during 2002-03.3 5.3 7.2 3.4 .4 6. Transport.3 8.2]. Growth and Investment and averaged 17.1 3. Table 1.3 -1.1 -1.9 4. Manufacturing 8.3 8.5 4.4 2.Public Administration & Defence 5.2.3 5. Mining & Quarrying 9. are summarized in Table 1.3 5.3 5.1 percent of GDP.
8 percent as compared to a decline of 1. [See Chapter-2 for details] The growth in value addition of Minor crops which contribute 16 percent of value addition in agriculture grew marginally by 0. and magnisite (7.0 percent and last year‘s growth of 4.9 percent in 2002-03 as compared with the target of 4. sugarcane.5 percent.3 percent last year.8 percent last year.3 and 2. However.5 percent. oil seeds.5 percent and grew by 9. The value added in crude oil increased by 2. The minor crops include cereals. This is the third year in a row when the value addition in cotton crops has declined.5 percent in 2000-01). pulses.5 percent in 2002-03 as against 3.5 percent. ii) Mining & Quarrying witnessed a growth of 16. Livestock sub-sector which account for 39 percent of overall value addition in agriculture has witnessed a modest growth of 2.5 percent. Large scale manufacturing sector accounting for 71.Chapter 1. fruits.7 percent last year. dolomite (3.8 percent as against a decline in value addition for the last two consecutive years and a target of fractional growth of 0. The production of milk. and 15. respectively.0 percent growth.3 percent for 2002-03.0 percent for the year and actual achievement of 3. contributed to overall increase in value added in the fisheries sub-sector.4 percent in 2002-03 as against the growth target of 3.2 percent of overall manufacturing. However. increase in production of important minor crops like chilies. The value addition in forestry sub-sector has increased by 8. 8. The principal mineral which has shown enormous growth include barite (33.0 percent).9 percent).5 percent growth and decline of 1. the production of cotton witnessed a decline of 3. Growth and Investment last year and target of 2.3 percent. egg and mutton are estimated to have gone up by 2. Within minor crops. and the availability of consumer financing iii) Manufacturing The output in the mining and quarrying sector has surpassed the target of 2. lime stone (20. Major crops accounting for 41 percent of agriculture value added grew by 5. vegetables.9. the value addition in coal decreased by 2.3 percent).9 percent. The lower growth owes to decreasing use of draught power and adjustments for inputs in the sub-sector. Improvements in macroeconomic environment. as against the target of 6. The fisheries sector The overall manufacturing sector grew by 7.3 percent). The production of timber and firewood also went up by 8. and rice witnessed increase in production by 5.4 percent). inspite of the fact that cement industry has started using coal as a major source of energy which has fuelled the domestic demand of coal. oil seeds and onion could not boost the overall growth of minor crops. and chromites (50 percent). The minerals with negative growth include sulphur (7. the production of all three major pulses witnessed tremendous growth due to introduction of new varieties of seeds.9 percent.0 percent).6 percent as against a decline of 12.8 percent and last year‘s achievement of 5. fodder and others.7 percent.0 percent last year and yearly target of 4.8 percent and in natural gas it has risen by 6.0 percent. This is the second highest growth rate recorded during the last 13 years (the first one is 9.8 percent during 2002-03. 2. sharp recovery in exports. However.7 percent last year. Major crops including wheat. The improved growth performance of agriculture is attributable to impressive recovery in the performance of major crops. Components of fisheries such as marine fishing and inland fishing.8 percent each. gypsum (33. respectively.7 percent as against the target of 5. . condiments.4 percent. recorded an impressive and broad based growth of 8.
Last year.9 percent).6 percent). respectively. beverages (18. cooking oil (6.2 percent) and motor tyres (16. Major industries that registered positive growth include sugar (13.3. services sector contributed 59 percent and 41 percent contribution came from industrial sector.1 percent of last year. petroleum products (2.Chapter 1.1 percent of real GDP growth) has come from services sector followed by industrial sector (27 percent) and agriculture (20 percent).1 percent came from services sector percentage points).0 percent). Public administration and defence has depicted a growth of 5. almost 53 percent contribution to growth (2.7 percentage point out of 5.3 percent and 1.7 The greater contribution to real GDP growth of 5. Ten out of eleven major industrial groups posted positive growth while only leather products group registered negative growth.4 percent).2 percent as against 6. vegetable ghee (7.1 percent).1 percent growth.7 percent). This suggests a balanced contribution from all the three sectors to this year‘s growth. Within this sector. The sub-sector registered a decline of 1. have maintained their estimated growth of 5. Electricity and gas distribution sector registered a decline of 3. This is the only sub-sector in commodity producing sector which registered a negative growth.3 percent.2 percent).6 percent). and cotton ginned (4.5 percent last year and yearly target of 4.7 percent).4 percent as against 4. cigarettes (7. nitrogenous fertilizer (4.0 percent positive growth and last year‘s actual achievement of 8.0 percent). motorcycles (33.5 percent.3 percent and 3.1 percent). Industrial sector contributed 1.7 percent per annum.9 percent as against an impressive growth of 8.3 percent and 6. storage and communication sub-sectors grew by 7.3 percent as against 4. paints & varnishes (63. cotton yarn (8.0 percent. The government has identified housing and construction sectors as one of the major drivers of growth and likely to announce various measures in the Federal Budget 2003-04 to encourage activities in this sector. The trend remained unchanged even during 2002-03 as the services sector grew by 5. Growth and Investment at reasonable interest rates have been responsible for strong performance of large-scale manufacturing. B.3 percent).3 percent last year and yearly target of 4. Over the last three years (2000-03).5 percent). phosphatic fertilizer (27. Agricultural contributed negatively to the last year‘s growth.4 percent in value addition during 2002-03 as against the target of 5.4 percentage points with major share coming from manufacturing sector (almost entire).1 percent. respectively as against 2. Small-scale manufacturing maintained its historical growth of 5.8 percent). soda ash (12. the large-scale manufacturing has registered an average growth of 7. cement (20. The individual industries that depicted negative growth include: sulphuric acid (5. . paper & board (15.7 percent).1 percent of last year. Construction sector grew by 3.8 percent). jeeps & cars (51. the wholesale & retail trade and transport. As evident from Table 1.2 percent).5 percent last year.6 percent). ownership of dwellings and social services. Services Sector The Services Sector has been growing at a (2.3 percent in 2002-03. Two minor sectors that is. The contribution of each sector to growth is summarized in Table-1. faster pace than commodity producing sector of the economy for quite sometime.3: Sectoral Contribution to Real GDP Growth Finance and insurance sub-sector remained depressed as far as value addition is concerned. LCV‘s (57. foot wear (6.5 percent).
4 3.4 50.4 1.2 10.4: Table 1.3 0.3 4.7 9. it has undergone considerable changes over the last three decades.Forestry 2.0 3.9 percent in 196970 to 23.2 3. storage and communication which expanded from 6.4 4.9 0. Wholesale and Retail Trade 8.5 2.4 Sectoral Share of Various Sectors in Gross Domestic Product (At Constant Factor Cost) (Percent) Commodity Producing Sector 1.1 5.9 percent in 200203.Fishing . Agriculture .7 12.1 0.6 0.6 6.7 10.7 5.4 6.2 2.4 6. Storage and Communication 7.7 9.8 15.9 9.0 100.4 5. However.02 1. Electricity & Gas Distribution Services Sector 6.0 Industry 0.5 0.1 12.6 2. The details are given in Table 1.6 50.5 17.6 6.5 3. Within commodityproducing sector.5 18.6 percent in 1969-70 to 49. This implies that the services sector has gained at the expense of the ground lost by the agricultural sector.6 10.7 percent in 1998-99 to 18.3 23.0 12.1 10.7 Real GDP (Fc) 2.9 9.4 10.4 3.Small Scale 4.7 49.2 0.8 0.5 16.GDP (Constant Factor Cost) P) Stands for provisional.4 0. suggesting an increase of 1.3 3.3 percent in 1969-70 to 9.3 percentage points in three decades but on the other hand the share of manufacturing has remained more or less stagnant in the vicinity of 17 to 18 percent over the last three decades.3 3.5 1.Chapter 1.Minor Crops .1 5.4 percent to 50.9 0.3 percent in 2002-03 while the share of services sector increased from 38. Finance and Insurance 9.4 3.0 Source: Economic Adviser‘s Wing.Public Administration and Defence 11.4 5.Major Crops .7 24.5 2.4 23. Construction 5.0 4.3 0.5 5. The share of commodity-producing sectors declined from 61.7 percentage points in three years.7 0.5 17. 1969-70 61.Other Services 12.3 1998-99 51.1 6.0 10.0 2002-03(P) 49.4 4.3 15.9 23.0 2.9 9.9 6.4 percent in 2002-03. Manufacturing .3 2001-02 49.2 2000-01 49.0 9.2 6.5 4.6 9.1 Source: Federal Bureau of Statistics.6 1.3 3.6 38.6 percent—a decline of almost 15.2 15.0 100.3 Sectoral Contribution to the GDP growth (Percentage Points) Sector 2000-01 2001-02 2002-03 Agricultue -0.4 6. Finance Division .2 3. Sectoral Shares in GDP The composition of the Gross Domestic Product has remained more or less unchanged during the decade of the 1990s. Ownership of Dwellings 10.3 0.7 10.0 38. The share of manufacturing sector increased from 16. Mining & Quarrying 3.1 9.5 3.2 0.2 15.0 100.1 100.Livestock .9 13.6 3.3 2. the share of agriculture has declined substantially from 38. Transport.1 6. Growth and Investment Table 1.Large Scale .4 13.7 50.5 17.3 0. [See Table 1.3 10.9 12.4] Within Services sector the pattern has remained more or less the same for the last three decades with the exception of changes in the share of transport.7 -0.2 6.1 0.8 9.7 percent during the same period.1 25.4 Services 2.8 2.0 100.
6 3. Fig-2: PER CAPITA INCOME 17.5. At current prices. Appreciation of exchange rate further enhanced the growth of per capita income in dollar terms.3 415 -5.2 2002-03 Rupee (1980-81 Price) US $ Table 1.7 9546 14.1 1992-93 4778 -1.0 20415 7.5 13.0 10853 13.7 443 -2.Chapter 1.7 1990-I 1990-II 2002-03 6. Sharp acceleration in real per capita income was witnessed during the last three years.2 508 14.5 -2.9 15552 17. As against an annual average rate of 1.4 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 % Growth 5. Source: 1) Federal Bureau of Statistics 2) Economic Adviser Wing .1 1998-99 4992 1.) 2000-01 5089 0.7 1.6 1990-I (Avg.6 4.1 1.8 18983 11.7 439 3.0 11674 7.7 513 1.6 22811 4.6 percent during 2002-03.5 8.3 4.3 17059 9.9 1997-98 4924 -0.9 2001-02 5214 2.3 24248 6.2 1991-92 4826 4.4 percent in the 1990s.4 percent per annum in the 1990s because of relatively slower growth in real GDP.6 28933 12.6 453 3.0 1996-97 4927 -1.4 2000-03 (Avg.0 -2.7 0. Growth and Investment Per Capita Income The real per capita income grew at an average rate of 1.4 1999-2000 5073 1.3 5.7 13271 13.5 473 -4.1 percent per annum during the last three years (2000-03) while it grew by 6. The per capita income in dollar terms increased from $ 419 in 2001-02 to $492 in 2002-03 — an increase of 17.3 419 1.0 2002-03 5558 6.3 492 17.2 1994-95 4951 2.7 1990-II (Avg.4 426 9.4 21899 7.4 percent.3 493 -3.5 Growth in Per capita Income Per Capita Per Capita Per Capita Income at Income at Income at % % % 1980-81 current current US $ Growth Growth Growth Prices Prices (Rs) (Rs) 1990-91 4639 0.2 441 0.3 438 -7.1 8.5 25767 6.5 0.2 Note: The per capita income is based on GNP market prices.3 percent in 2002-03 as against 6. the real per capita income grew at an average rate of 3.) 3.3 percent last year. The developments in per capita income are given in Table 1.) 1995-96 5016 1. per capita income grew by 12.2 1993-94 4813 0.
1 16.6 Resources and Uses (Rs. .9 526. Resources and uses with break-down of components are given in Table. investment by private sector will rise only gradually.7 -82.7 91.6: Source: Planning & Development Division.5 63. Billion) Resources and Uses Resources GDP (Current Factor Cost) Net Indirect Taxes GDP (Market Price) Net Factor Income from Abroad GNP (Market Price) Net External Resource Inflow Uses Total Investment Fixed Investment Changes in Stocks Total Consumption 2001-02 3578.6 620.7 % Change 12.5 billion last year.7 -157.4041.6 3628. adjusted with Rs. Growth and Investment Resources and Uses The total availability of resources in the economy are estimated at Rs.9 9.4 billion current account surplus.6 billion at current market prices as against Rs.6 3420. On the uses side enormous increase of 63.1 12.7 308.1 12.3 10.5 percent and 16.157.1 percent is witnessed in changes in stocks component mainly because of the carry-over stocks of sugar and wheat. In this year.7 percent last year stagnant while at 13. The consumption is also likely to go up by 12.8 22.0 3660.1.5 3377.1 180.7 32.1 fixed investment of remained In an percent GDP.1 4041.4018.6 4198. Both fixed and total investment is likely to increase by 10.180.5 534.4 percent.3578.5 4018.2 3578.1 billion worth of Gross Domestic Product at market prices and Rs.1 476.1 58.3 percent in the year under review. thereby registering an increase of 12. Savings and Investment Total investment rose substantially to 15.7 464.1 251.Chapter 1.3 94.6 10.1 Table 1.4 14.4 2002-03 4041. environment of unutilized capacity available with different industry.8 billion from net factor income from abroad.6 3709.9 percent.0 3044.5 percent of GDP in 2002-03 as against 14. the capacity utilization of leading industries has gone up and there are expectations that investment may start rising from the next fiscal year. The resource availability is comprised of Rs.
7 Structure of Savings and Investment (As Percent of GDP) Description Total Investment Changes in Stock Gross Fixed Investment .6 14.6 17.8 4.9 11. The wave of used where the private sector is unlikely to invest enough.6 1.3 percent in National Savings privatizations has reduced the level and scope of public sector investment through state enterprises.9 -2.1 16.5 8.4 6. Table-1. Public resources formerly used subsidize loss-making SOEs can potentially be to to be 2001-02 to 8.7 12.3 -3.8 government's greater space private sector percent.0 1.1 14.7 reflects changing patterns of saving and investment during the last five years.0 8.9 1999-2000 16.1 13.6 2000-01 2001-02 2002-03 (P) 15. and many sectors once thought to natural monopolies are now been exposed competition.9 6.4 1.2 16.3 8.4 13.0 19.9 13.0 7.6 percent in 2002-03. As such.6 13.5 4.5 14.1 15. This was in line with conscious policy decision to create for the private sector.7 15.1 5.Public Investment .6 2.7 Source: Economic Adviser‘s Wing .9 3. the investment rose from 8.Private Investment Foreign Savings National Savings Domestic Savings Note: (P) stands for provisional 1998-99 15.Chapter 1.6 1. Growth and Investment Figure-3: Savings-Investment Gap (As % of GDP) 22 21 20 19 18 17 16 15 14 13 12 11 10 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Total Investment Public sector investment marginally declined to 4. Table 1.5 percent in 2002-03 from last year‘s level of 4.6 0.9 14. The level and composition of public sector investment has changed over the past two decades.7 14.5 1.4 8.
gives us domestic savings which stood at 15. when adjusted for net income from abroad. During the last three years (2000-03) domestic savings as percent of GDP averaged 15.0 percent of GDP in 2002-03 as against 16.9 percent in the 1990s. National savings as percent of GDP rose from 17.1 percent of GDP last year.8 percentage points since 1998-99.0 percent in 2001-02 to 19. This is because of massive increase in net factor income from abroad during current fiscal year.Chapter 1.7 percent as against an average of 13. It is note-worthy that national saving rate has increased by 7.2 percent in 2002-03 mainly on account of a significant improvement in the current account balance which eliminated the need for recourse to foreign savings to finance domestic investment. Growth and Investment The contribution of national savings to the domestic investment efforts is indirectly the mirror image of the extent of foreign savings required to meet investment demand. National savings. .
Agriculture Growth (Percent) Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 Average of 1990s 2000-01 2001-02 2002-03 (P) Agriculture 4.62 6.69 15.96 -4.84 0. Agriculture grew by 4.50 -5.96 9.1).27 -0.51 2.12 4. Over the last three years in general but the first two years (2000-01 and 2001-02) of the new millennium in particular. Table 2.52 1.89 0.29 5.1) . Agriculture contributes to growth as a supplier of raw materials to industry as well as a market for industrial products and also contributes substantially to Pakistan‘s exports earnings.57 11. Any improvement in agriculture will not only help country‘s economic growth to rise at a faster rate but will also benefit a large segment of the country‘s population.64 -0.5 percent of country‘s population are living in rural areas and are directly or indirectly linked with agriculture for their livelihood.60 1. The growth.95 12.48 -15. Overall agricultural growth turned negative for these two years (See Table 2.3 percent.72 0. The travails of water shortage persisted even during 2002-03.09 4.23 6.07 Major Crops 5.02 15. however. Agriculture Agriculture sector being the lynchpin of the country‘s economy continues to be the single largest sector and a dominant driving force for growth and development of the national economy. Pakistan has witnessed crippling drought which badly affected its agriculture.54 -2.42 4. Almost 67.91 4.10 3.37 3.24 8.11 -1. Notwithstanding shortage of water.4 percent of the total work force.13 4.1).94 8. has fluctuated widely – rising by as high as 11. It accounts for 24 percent of the GDP and employs 48.83 Minor Crops 3.33 8.08 -9. Agriculture 2.69 5.Chapter 2.79 -1.7 percent and declining by 5.5 percent per annum during the decade of the 1990s (Table-2.82 .23 -9. however the extent of shortage was relatively less.1 Agriculture sector has grown at an average rate of 4.2 percent in 2002-03 (See Table 2.95 6.
Agriculture 4. contributing 16 percent to agricultural value added.9 percent and 35. Fisheries has shown a remarkable growth of 16.3 percent last year. during 2002-03. though with lesser intensity.80 0. On the other hand. 5. forestry also registered a significant growth of 8.41 Fig-1: AGRICULTURE GROWTH 20 15 10 5 0 91-92 -5 -10 -15 -20 Agri Major Crops Minor Crops 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 '01-02 '02-03(P) As stated earlier. Moreover.2 percent as compared with negative 0.8 percent last year.8 percent last year. which begins in October- .7 percent in 2001-02. Major crops. and the "Rabi".8 percent against the decline of 1.7 percent. water shortages continued.1 percent during 2001-02. [More on this issue can be found under sub-section ‗irrigation‘].2 percent against the normal rainfall of same period. The situation of major crops for the last five years is presented inTable-2. 2003) which was also higher by 4.4 percent against a negative growth of 1. heavy snowfall on the mountains during winter. respectively over Kharif 2001 and Rabi 2001-02.2. On the whole. The canal head withdrawal in Kharif 2002 and Rabi 2002-03 seasons significantly increased by 14.15 P= Provisional. Winter rainfall (January-March. Minor crops.Chapter 2. I. namely the "Kharif" the sowing season of which begins in April-June and harvesting during October-December.6 percent against the negative growth of 12 percent last year. Livestock the second largest contributor to overall agriculture value added (contributing 39 percent). depicted positive growth of 0. accounting for 41 percent of There are two principal crop seasons in Pakistan.8 percent as against a negative growth of 1. the water situation in the current fiscal year appears better than last year but remains in short supply compared with the normal supplies. The relatively better availability of agriculture value added. grew by 2.9 percent in 2002-03 as against 3. registered a sharp recovery and grew by 5. 2003 would help fill the country‘s water reservoirs and alleviate water shortages to a greater extent for the Kharif Crops 2003. ended the shortage of water for the Rabi Crop 200203. Crop Situation irrigation water has had positive impact on overall agricultural production this year and the agriculture growth is estimated at 4.
rice.5) P: Provisional.9) 46333 (-16. Thus.3) 4803 (-6. ―Kharif" crops while wheat.2) 4478 (15. tobacco. "Kharif" and "Rabi" crops is discussed in the sugarcane.9) 48042 (10. rapeseed. and sugarcane). cotton. rice.9) 10732 (-4.3) 11240 (27.7) 18227 (-4.(July-March) *: Figures in parentheses are growth rates a) Major Crops: Source: Ministry of Food. on average. Major crops.9 percent of GDP. the four major crops (wheat.8) 1652 (-0. Federal Bureau of Statistics. gram.8) Sugarcane 55191 (3.7 percent of value added in . maize.4) Maize 1665 (9. bajra and jowar are ensuing pages. barley and mustard are "Rabi" crops. It accounts for 11. The performance of the Table 2.8) 3882 (-19.0) 19024 (-9.2 Production of Major Crops (000 Tonnes) Year 1998-99 1999-00 2000-01 2001-02 2002-03 (P) Cotton (000 bales) 8790 (-4. wheat.Chapter 2.6) Wheat 17856 (-4.5) 21079 (18. cotton and sugarcane account for 90 percent of value added in major crops. Agriculture and Livestock.5) 10613 (-1.3) 1758 (5.5) 1664 (1. Agriculture December and ends in April-May.2) 52049 (8. The minor crops account for 16 percent of value added in overall agriculture.1) 10211 (-3. In addition to providing raw material to the local textile industry. agriculture and about 2. such as. The value added in major crops accounts for 41 percent of value added in overall agriculture.0) 43606 (-5.8) 1643 (-0.3) Rice 4674 (7.9) 5156 (10.2) 19235 (5. the surplus lint cotton is also i) Cotton: Cotton is the main cash crop which contributes substantially to the national income. contribute 37 percent to value added in overall agriculture. Rice. cotton.
The yield per hectare is also higher by 9.8 -5. It accounts for 6. Area. Area.3 percent over the last year.3 Production (000 Bales) 8790 11240 10732 10613 10211 % Change -4. showing an increase of 5.2 2.0 -1. Table 2.5 -1. June and July 2002 which placed a good impact on the growth of rice crop.Chapter 2.4 . Source: Ministry of Food.5 Production (000 % Tonnes) Change 4674 5156 4803 7. Rice was cultivated on an area of 2226 thousand hectares. The pest attack and shortage of irrigation water in the early Kharif season are mainly responsible for lower production.3 percent lower than last year (3116 thousand hectares). Production and Yield Area Year 1998-99 1999-00 2000-01 2001-02 2002-03 (P) (000 Hectare) 2923 2983 2927 3116 2796 % Change -1.8 percent in value added in agriculture and 1.9 10.8 percent lower than last year. It is also one of the main export items of the country.3 Cotton. production and yield of cotton for the last five years are given in Table 2. Production and Yield of Rice Year (000 Hectare) 1998-99 1999-00 2000-01 2424 2515 2377 Area % Change 4.6 3.4 percent higher than last year.3 -1. which is 15. Production of rice during 2002-03 is provisionally estimated at 4478 thousand tonnes.3 27.5 -10.3 -6. production and yield of rice for the last five years are given in Table 2.8 -7. Area.4.0 25.4 -2.8 Yield (Kgs/Hec) 1928 2050 2021 % Changes 3. Agriculture and Livestock Federal Bureau of Statistics. Cotton was cultivated on the area of 2796 thousand hectares.1 -3.3.9 6. Production of cotton is provisionally estimated at 10211 thousand bales for 2002-03.6 percent. which was 10.2 P=Provisional (July-March). Table 2.9 -4. Agriculture exported. Fig-2: Cotton production (000 bales) 14000 13000 12000 11000 10000 9000 8000 7000 6000 5000 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03(P) ii) Rice: Rice is an important food cash crop. which is 3.8 Yield (Kgs/Hec) 511 641 623 579 621 %Change -3.7 percent in GDP. The higher production is due to improved water availability during the months of May.1 6.1 7.4 Area.
farmers to grow more sugarcane.3 3882 4478 -19.9 '02-03(P) . The area.3 1836 2012 -9. Source: Ministry of Food.5 percent. Fig-3: Rice production (000 Tonnes) 5500 5000 4500 4000 3500 3000 2500 2000 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 iii) Sugarcane: Sugarcane crop is a highly water – intensive and yet an important cash crop.4 -12. Its shares in value added in agriculture and GDP are 6.1 5.2 Yield (Kgs/Hec. judicious application of fertilizer and water.5.9 -1. showing an increase of 8. Sugar production in the country mostly depends on this crop. Timely payment received by the growers during last year also induced the Table 2.9 4.) 47784 45874 45376 48042 % Change -5. as compared with last year.1 5.1 Production (000 Tonnes) % Change 55191 3.1 9.6 -4.0 43606 -5.2 15. improvement in cultural practices and better management.5 Area.Chapter 2.6 percent over the last year. respectively.9 48042 10.3 percent.0 -3. Agriculture 2001-02 2002-03 (P) 2114 2226 -11. The size of the sugarcane crop is provisionally estimated at 52049 thousand tonnes which is higher by 8. Agriculture and Livestock. The higher production is the result of increase in area. Federal Bureau of Statistics. Production and Yield of Sugarcane Year 1998-99 1999-00 2000-01 2001-02 Area (000 Hectare 1155 1010 961 1000 % Change 9.9 46333 -16.6 P: Provisional (July-March). Sugarcane was cultivated on an area of 1086 thousand hectares during the current fiscal year. though a small quantity of sugar is also produced from sugarbeet.2 percent and 1. production and yield per hectare for the last five years are given in Table 2.
Fig-4: Sugarcane production (000 Tonnes) 60000 55000 50000 45000 40000 35000 30000 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 '02-03(P) iv) Wheat: Wheat is the main staple food of the country‘s population and largest grain crop of the country. The area. The size of the wheat crop is provisionally estimated at 19235 thousand tonnes which is 5. Federal Bureau of Statistics 1998-99 8230 1999-00 8463 2000-01 8181 2001-02 8058 2002-03 (P) 8069 P= Provisional. production and yield for the last five years are given in Table 2.5 2.5 2384 5.2 2262 -2.1 MAF to Mangla reservoirs. The recent estimates of wheat production is much lower than the revised target because the crop was affected by aphid and rust attacks in the wheat growing areas as well as high temperature stress at grain formation affected the productivity of the wheat crop.) % Changes tonnes) Change 17858 -4.(July-March). Federal Bureau of Statistics.6. showing 0.8 -3.7 19235 5.1 Production Yield (000 % (Kgs/Hec. However.0 2491 14. Table 2.63 million tonnes.2 Source: Ministry of Food. Agriculture and Livestock.35 MAF additional water to Tarbella and 1.Chapter 2. (July-March) 8.3 -1.75 million tonnes. The yield per hectare also increased by 5.7 2325 -6. the wheat production target was revised upward to 20.0 21079 18.6 52049 8.8 19024 -9.4 percent.5 0. Production and Yield of Wheat Area Year (000 hectares) % Change -1.5 percent higher than last year. Agriculture and Livestock.4 Source: Ministry of Food.7 18227 -4.1 percent to GDP. Agriculture 2002-03 (P) 1086 P: Provisional.1 percent increase over last year.5 percent to the value added in agriculture and 3.3 47927 -0. as a result of the mid-February 2003 country-wide heavy rain which brought 0. .5 2170 -3.6 Area. Wheat production target was originally fixed at 19. Wheat was cultivated on an area of 8069 thousand hectares. It contributes 12.
7. Area and Production of Other Major Kharif and Rabi Crops 2001-02 Crops KHARIF: Maize Bajra Jowar RABI: Gram Barley Rapeseed & Mustard Tobacco Area (000 hectares) 942 417 358 Production (000 tonnes) 1664 216 222 2002-03(P) Area (000 hectares) 970 313 325 Production (000 tonnes) 1758 189 200 Table 2.3 P= Provisional (July-March).6 percent and 0. Agriculture and Livestock.5 percent. rapeseed/mustard. The production of gram.0 7. Total availability of edible oils in 2001-02 was 2.7.5 960 103 284 582 92 237 61 -8.2 percent. 5.9 percent and 8.7 %Change in production 5. Production of oilseed b) Minor Crops i) Oilseed: The major oilseed crops include cottonseed. During 200203. was made available through imports. local production of edible oil is provisionally estimated at 0. Agriculture Fig-5: Wheat production (000 Tonnes) 22000 20000 18000 16000 14000 12000 10000 02-03(P) 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 v) Other Major Crops Except bajra.6 -12.5 94.5 -9.634 million tonnes which is higher by 4. respectively. Total availability of edible oil from all sources amounted to 1.4 percent.155 million tonnes of edible oil was recovered from imported oilseeds.089 million tonnes.76 million tones during July-March (2002-03). rapeseed & mustard. Federal Bureau of Statistics. Local production stood at 0. 49.606 million tonnes which accounted for 29 percent of the total availability while the remaining 71 percent . jowar and barley all other major crops have registered increases over the last year‘s production. sunflower and canola etc. 9.6 percent than last year.971 million tonnes of edible oil was imported and 0. The details are given in Table 2.0 percent respectively.Chapter 2. maize and tobacco grew by 61 percent. 0.2 49. The production of bajra. jowar and barley is provisionally estimated to decrease by 12.9 0.4 Source: Ministry of Food.9 934 111 269 362 100 221 94. During this period.
5 %Change in production 8. Details are given in Table 2.7 106.0 104.5 percent) and Masoor (8.3 134.9.1 17. Federal Bureau of Statistics.7 101. ii) Other Minor Crops: The production of all the three major pulses have increased this year. Table 2. The production of chillies is estimated to have increased by 12 percent in 2002-03 over the last year .0 1701.4 34.9 1622.3 99.1 percent while that of onion estimated to increase by 17.6 84. Farm Inputs i) Fertilizer: .8 Area and Production of Major Oilseed Crops 2001-02 Area (000 Acres) Cottonseed Rapeseed/ Mustard Sunflower Canola Others Total Oil P= Provisional 7772 572 281 122 Production Seed (000 Tonnes) 3612 188 197 73 Oil (000 Tonnes) 433 60 Area (000 Acres) 6669 649 2002-03 (P) Production Seed (000 Tonnes) 3451 217 Oil (000 Tonnes) 414 69 79 371 260 99 29 223 136 52 05 606 634 Source: Pakistan Oilseed Development Board.1 12.4 27.2 115. Production of potato decreased by 1. Agriculture crops during 2001-02 and 2002-03 is given in Table 2.1 percent. Fertilizer is the major farm input in agricultural production. Production of Mash has increased by 22.7 1385.3 percent.3 -1.0 percent) during 2002-03.5 Production (000 tonnes) 26.3 2002-03(P) Area (000 hectares) 45. Agriculture and Livestock.5 22.Chapter 2. followed by Mung (16.8 261.0 93.9 Area and Production of Other Minor Crops 2001-02 Crops Masoor Mung Mash Potato Onion Chillies Area (000 hectares) 46. Table 2. Source: Ministry of Food. Domestic production of fertilizer during the first nine months (July-March 2002-03) of the current fiscal year has depicted a II.4 58.4 Production (000 tonnes) 28.0 P= Provisional (July-March).8 1721.2 45.1 219.8.0 16.4 47.5 105.
7 1.0 729. Seed Corporation in Punjab and Sindh. With the induction of private sector into seed business. ii) Improved Seed: Quality seed of improved varieties is the key to enhance agricultural productivity.0 2298.5 percent over the seed requirement in 2001-02.4 2966. Source: National Fertilizer Development Centre.0 2911.0 2925. The future challenges of free market economy and faster globalisation have further necessitated modernization of agricultural machinery through transfer of latest. therefore.Chapter 2.6 2216.3 Import 860.3 P= Provisional (July-March).7 -1. Cost of production of various crops are not competitive due to low productivity mainly due to inefficient farming practices. processing and marketing. 03. vital and demands for a comprehensive strategic planning for the future. The Department performs its functions through seventeen Seed Testing Laboratories and Field Offices.5 -22.0 2263.2 9. the use of machinery has been .1 1694.0 1.0 % Change 20.0 2929. Farm operations being time specific.5 -0.3 percent. The details are given in Table 2.2 9.8 2877. demand precision to optimize the efficiencies of agriculture inputs for higher productivity.5 -1.9 -7.8 percent.2 4.9 percent higher than the same period of 2001-02.0 500.7 4.5 thousand tones of improved seed was procured while 147.1 45.5 -1. On the other hand.0 % Change -1. During (July-March) 2002- iii) Mechanization: Pakistan food security and agriculture surpluses for export at competitive prices require efficient development and utilization of agricultural resources. processing and marketing.5 6. Departments of Agriculture in Baluchistan and NWFP have been entrusted the task of seed production.1 2423. To provide certified crop seeds to the growers in public sector.4 2291.8 579.8 Total 2746. The off take of fertilizer was also higher by 4.0 8. which was 11. Efficient use of scarce agriculture resources and accelerated agriculture mechanization is. Federal Seed Certification & Registration Department regulates the quality during flow of seed from breeder to growers.6 thousand tones of improved seed was distributed.0 % Change 12. In consideration of role of precision in farm operations. the import of fertilizer increased by 45.10. Table 2.8 2833. 197. the total availability of fertilizer is higher by 9. Seed has the unique position among the various agricultural inputs because the effectiveness of all other inputs mainly depend on the production potential of seeds. therefore.6 1716.0 662. In private sector 394 seed companies including five multinationals have been allowed for certified seed production.0 2196.10 Production and Off-take of Fertilizer ('000' N/tonnes) Year 1998-99 1999-00 2000-01 2001-02 2001-02 (P) 2002-03 (P) Domestic Production 1886.0 2285. Agriculture decrease of 1.3 Offtake 2583.3 percent.1 20.0 626. improved seed availability has increased by 16.0 % Change 9. established in various ecological zones of the country. efficient and cost effective technology to farming system.3 percent in the current year.
8 2. the rainfall averaged 59. iv) Plant Protection: The plant protection measures help in increasing the per hectare yield by protecting crops from damages because.000 436.000 399. without effective protection against the attack of pests and diseases.2 percent over average rainfall.000 320.8 percent. Table 2. .5 mm indicating an increase of 4. v) Irrigation: Efficient irrigation system is pre-requisite for higher agricultural production.) during the last 25 years (1977-78 to 2002-03). Agriculture encouraged through provision of credit availability. It helps increase the cropping intensity.4 percent in the sale prices of some tractors.4 mm historically but during the monsoon season of 2002. The total inflow of irrigated water averaged at 130.000 439. During the monsoon season (July-September). Against this level of average inflow.4 1.69 MAF during 1977-78 to 2002-03.5 and 0.3 mm while the average rainfall during this period has been 66. the actual rainfall received was 69. but it declined to 87.A. thus registering a decline of 11 percent. Pesticide Registration and Testing etc. Department of Plant Protection provides facilities. respectively.7 percent. the beneficial outcome of other inputs may not be realized either. such as.000 459.000 499.000 599. Besides.6 mm. suggesting a decline of 52.9 Source: Ministry of Food.92 million acre feet (M. However.11. 18.P) MF-260 (60 H.P) MF-385(85 H.P) KOREAN LT-400D UNIVERSAL U-640(65 HP) UNIVERSAL U-530 (53-H.000 459. Despite the existence of good irrigation canal net work in the world. The canal head withdrawals averaged at 98.P) FIAT-640 (75-H. the average rainfall has been 126.P) MF-375E(75 H.000 435. Agriculture and Livestock.6 and 30.000 490.P) FIAT-480 (55-H. while private sector carries plant protection measures including ground sprays.800 317.66 MAF in 2002-03 or by 14.84 MAF in 2002-03.9 percent. Locust Survey and Control.000 375.000 2002-03 320.Chapter 2. During July-March 2002-03.4 -0. In this connection.P) 2001-02 313. prices of universal tractors Model U-640 and U-530 decreased marginally by 0.11 Price of Locally Manufactured Tractors (In Rupees) Tractor Model MF-240 (50-H.5 -0. Aerial pest Control. The details are in Table 2. No significant increase in prices of locally manufactured tractors compared with last year has been noticed as there has been only an increase of 1.4 thousand tonnes of agricultural pesticides were imported and locally formulated. during the last three year the country had experienced severe shortage of water.12 (a&b). Prices of various tractors are given in Table 2. However. the flows in major rivers have declined to 111. during winter (January to March 2003).8 to 6.000 320.000 % Change 2.F.000 320.000 585. Pakistan still suffers from wastage of a large amount of water in the irrigation process.000 435.2 6.
01 MAF compared to 18.7 35.66 87. the water availability situation both for Rabi 200203 and Kharif 2003 crops have improved.83 % Change in Kharif 2002 over 2001 17. Table 2.Chapter 2.8 14.12 (b) Rainfall Recorded During 2002-03 (In Millimeter) Average Actual Shortage (-)/excess (+) % Shortage (-)/excess (+) Monsoon Rainfall Winter Rainfall (Jul-September) (January-March) 126.61 18.88 62. as it went up to 25.63 2.2 Source: Pakistan Meteorological Department Due to the above normal winter rainfalls of 2003.66 MAF during the same period last year.8 .66 Kharif (Apr -Sep) 2002 32.26 10.12 27. Province-wise details are given in Table 2.3 4.43 MAF during the same period last year.10 0.91 0.3 .83 million acre feet (MAF).8 + 2.84 Shortage 19.9 4.93 0.13 Canal Head Withdrawals (Below Rim Station) (Million Acre Feet (MAF) Provinces Punjab Sindh Baluchistan NWFP (CRBC) Kharif (Apr-Sep) 2001 27.7 Total Source: Indus River System Authority.69 2002-03 111. the canal head withdrawals increased significantly by 35.85 % Shortage -14.9 percent and stood at 62. vi) Agricultural Credit: Credit requirements of the farming sector have been increasing over the years with the rise in .13. The canal head withdrawals in kharif 2002 (April-September) has increased by 14.9 2. During the Rabi season 2002-03 (Oct-March).7% -11.5 59.81 7. Agriculture Table 2.8 + 4.20 0.0% Inflow Canal withdrawals Source: Indus River System Authority.72 0.01 % Change in Rabi 2002-03 over 2001-02 41.9 Rabi (Oct-Mar) 2001-02 9.6 69.92 98.47 2.66.4 36.49 25.11 0.84 54.12 (a) Irrigation Water Situation Million Acre Feet Average 1977-78 to 2002-03 130.9 12. Table 2.4 66.24 24.43 Rabi (Oct -Mar) 2002-03 13.2 -19. as compared to 54.52.87 9.7 percent.
Chapter 2. 2002-03.37. In order to cope with the increasing demand for agricultural credit. as against Rs. d) Loan Under One Window Operations Since 1997. are discussed below: to play an effective role in the development of agriculture.1480. Rs. During 2002-03 (July-March). Institutional Credit to the farmers is being provided through Zarai Taraqiate Bank Limited (ZTBL).35. Availability of credit to this category now constitutes 83. Supply of agricultural credit by various institutions since 1997-98 to 2002–03 (July-March) is given in Table 2. the ZTBL provides the lion share of the total credit disbursement followed by Commercial Banks. Agriculture the use of fertilizer. ZTBL has launched One a) Production and Development Loans Agricultural loans amounting to Rs. loans of Rs. disbursed Rs. thereby registering an increase of 7.8 percent of total agricultural credit provided by the bank. 2002-03.16. Of these.5 percent. horticulture and Micro Credit etc. on farm godowns/storages. formerly known as Agricultural Development Bank of Pakistan (ADBP).4075. production loans for improved seeds.6 billion were disbursed during July-March.0 million have been disbursed for these priority items .0 billion during the corresponding period last year. Cooperatives and Domestic Private Banks.14 b) Loan to Small Farmers The Zarai Taraqiate Bank Limited (ZTBL). The agricultural loans extended to the farming community during (July-March). various varieties of orchards. pesticides and mechanization and hike in their prices.2 billion to small farmers having upto 25 acres of land during the first nine months of FY 2002-03. c) Loans for Newly Identified Priority Items For the financial year 2002-03. Commercial Banks.0 million have been allocated for priority items mainly for enhancement and improvement of irrigation facilities.
During 2002-03 (July-March). loans of Rs.6 30176. 0. to cater for input requirements at their door step.4 12.3 35002.2 37619.2565.6 44789.2 5273. Forests play an important role in land conservation. The balance is made up of irrigated plantations and Riverain forests along major rivers on the Indus plains. Table 2.21.3 -7.6 million has been disbursed through this scheme. Azad Kashmir and Northern areas is 0.7 3107.5 Total Rs. . State Bank of Pakistan. it plays an important role in Pakistan‘s economy by employing half a million people and providing one-third of the nation‘s energy needs. respectively.5 %Change * ZTBL formerly ADBP.5 14375.69. based on his input credit requirements for both Rabi and Kharif Crops. Under this scheme Rs. Million 28. Forest cover in Pakistan consists of about 4.92. Total forests area of Punjab. NWFP.Chapter 2. Thus 48% of total production loan i. Agriculture Pass Books are issued at spot to the intending borrowers. Eighty five percent of this is public forests which includes 40 percent coniferous and scrub forests on the Source: Ministry of Food. northern hills and mountains.0 9312.8 percent of its total land mass. Agriculture Window Operation to provide credit facilities. an annual loan limit is sanctioned to a borrower. Forestry Forests are the lungs of any country.5 ZTBL* 6109.2 52446. their land record is entered and loans are sanctioned at focal points whereas payments are released on the very next day from the concerned branch.e Rs.14 Supply of Agricultural Credit by Institutions (Rs. 1.5 434.42. regulated flow of water for irrigation and power generation. during peak sowing season of both Rabi and Kharif Crops.8 17.7386.6 679. e) Revolving Finance Scheme Under this scheme. reduction of sedimentation in water channels and reservoirs and maintenance of ecological balance. in million) Year 1997-98 1998-99 1999-00 2000-01 2001-02 2001-02 (JulyMarch) 2002-03 (JulyMarch) 22353.1 11298.0 29108. III. Sindh.66 million hectares. Baluchistan.0 17486. and 0. Thus.1 7.2 5124.3 3217.6 million was disbursed during (July-March) 2002-03. This limit remains operative for a period of 3 years (six cropping season) without any afresh procedural requirement and documentation.2 42852.9 5440.8 Cooperatives 578.0 24423.0 39687.15374.0 5951.8 19346.3 Domestic Private Bank 33392. 0.9 Commercial Banks 4928. 0.0 20161. Revenue Officials and Postal Authorities. mangrove forests on the Indus delta and trees planted on farmlands.33.6 million have been disbursed through One Window Operation. One Window Operation is launched with the collaboration of Provincial Governments. Though the forest resource is meager. Agriculture and Livestock. particularly to small farmers.9 27610.5 12055.7 7236.
Livestock and Poultry a) Livestock Livestock is an important sector of agriculture in Pakistan.5 billion in 200102.71 million) were planted. rehabilitation of its environment and enhancement of sustainable livelihoods of communities. Tarbela Watershed Management Project sponsored by the Ministry of Environment is an ongoing project at a total cost of Rs. The role of livestock in rural economy may be realized from the fact that 30-35 million rural population is engaged in livestock raising. 106. During 2002-03.60.5 acres of nurseries have been raised. which contributes more than US$ 400 million Pakistan‘s annual export earnings.485. having household holdings of 2-3 cattle/buffalo and 5-6 sheep/goat per family . 2576 acres planted. Government of Pakistan has prepared National Forest Policy 2002 which covers all renewable natural resources i. soil and water conservation. which accounts for 39 percent of agricultural value added and about 9. improvement of environment and uplift of socio-economic conditions of people. appropriate land use.689.4 million.Chapter 2. The main objective of this project is afforestation for the purpose of camouflage and concealment which is very important for strategic point of view.0 million.50 thousand cubic meters of firewood as compared to 274.932 million till March.75 and Monsoon 39.The main objectives of the project include. In order to promote efficient utilization and assessment to recover the full utilization of goods and services provided by the forests. The goal of this national forest policy is to foster sustainable development of natural resources. Forestry data is being updated through field oriented studies which will be useful in future strategic planning for the Development of forestry in the country. During the fiscal year 2002-03. 7. biodiversity and their habitats. forests. 14. which is almost 11.4 percent of the overall export earnings of the country.23. Forestry Sector Master Plan had been prepared in 1992-93 for a period of 25 years which is being updated through Asian Development Bank assisted project.4 percent of the GDP. to which Rs.53 thousand cubic meters timber and 450.34. IV. A mega project in forestry sector named ―Rachna Doab Afforestation Project‖ was started in July 1995 at a cost of Rs.95 thousand cubic meters firewood in 2001-02.086 acres afforestation maintained and 27 management/utilization plans have been prepared with the total expenditure of Rs. watersheds. The policy envisages to eliminate the fundamental causes of forests depletion through active participation of all the stakeholders.79 thousand cubic meters of timber and 490.51.188 million were allocated during FY 2002-03. rangelands. 2003. Tree planting campaigns are launched every year in the spring and monsoon season.0 million were allocated to conclude the on-going activities towards achievements of afforestation targets. During the year 2002-03.e. Rs. forests have contributed 298. During spring and monsoon season year 2002. Its net foreign exchange earnings were to the tune of Rs.46 million saplings (Spring 66. extension of forests. Agriculture Forests and Rangelands support about 30 million herds of livestock.
Agriculture & Livestock (Livestock Wing). b) Poultry Poultry production has emerged as a good substitute of beef and mutton.6 40. sheep. Table 2.0 7.0 1060.0 39. Agriculture and Livestock (Livestock Wing) production for the last five years are shown in Table 2.0 649.0 23.9 17.8 24.0 1010. beef. hides and skins.0 39.0 7. blood.4 123.0 " 38.9 39.5 " 36.5 41.9 2001-02 22.8 7505. Agriculture deriving 30-40 percent of their income from it.6 129.5 42.3 Source: Ministry of Food.3 (000 Tonnes) 24877.0 " 963.9 45.1 38.2 49.9 324.4 23.0 370.8 0.9 7679.7 " 17. camels.0 " 7.8 1999-00 22.17.Chapter 2.8 0.0 339.9 0.8 " 34.2 2002-03 (E) 27811.0 327.8 0.4 19.0 702.0 355.8 24.0 22.0 39.0 666.3 3.3 24. Its importance can be judged from the fact that almost every family in rural areas and every fifth family in urban areas are . Government is providing all possible incentives to develop it at an accelerated pace. goats. 8261. The livestock Table 2.9 347. mutton.8 0. The livestock production includes: milk.6 22.16. fats.0 7.3 339.3 3.8 0. Population of livestock for the last five years is given in Table 2.15.2 18. poultry meat.0 683. buffalos. The production of commercial and rural poultry is given in Table 2.8 0. wool.0 Million No‘s.0 120. horses.8 2000-01 22.3 3.2 40.3 " 117.6 331. bones. The livestock include: cattle.8 38. hair.2 2000-01 26284. associated with poultry production activities in one way or the other.3 " 316.3 3.16 Livestock Products Products Milk Beef Mutton Poultry Meat Wool Hair Bones Fats Blood Eggs Hides Skins E= Estimated Units 1998-99 1999-00 25566.0 8.3 4.1 Source: Ministry of Food.0 986.0 7860.4 50.6 52. eggs.4 0.2 2001-02 27031. asses and mules.2 0.15 Livestock Population No’s.6 37.7 44.7 19.4 126.0 1034. 1998-99 21.1 47.0 24.7 24.) Species Cattle Buffalo Sheep Goat Camels Horses Asses E: Estimated.0 " 633.9 7321.8 0.9 (Million 2002-03(E) 23.4.0 " 310.3 24.
2 6.0 9.0 2002-03 (E) 33. the government has provided the following incentives in the agricultural package: Imported plant and equipment not manufactured locally shall be subject to custom duty of 10 percent. if imported together with the plant.18 Rural Poultry (Million Nos. & livestock The production of rural poultry for 2001-02 and 2002-03 are given in Table 2.) Production Day Old Chick Cocks & Cockribs Layers E: Estimated 2001-02 32.0 2002-03 (E) 350.5 4632. institutions. Agriculture & Livestock (Livestock Wing). Locally manufactured machinery will be provided credit. The export of livestock products has been allowed.3 227.5 9.4 33. shall be subject to custom duty of 10 percent with complete exemption from sales tax. Projects will be entitled for financing by all banks and development finance The imported plant and equipment not manufactured locally.2 266. Table 2.18.17 Production of Commercial Poultry and Poultry Products Production Day Old Chick Layers Broilers Breeding Stock Poultry Meat Eggs E: Estimated Units Million No's " " " (000 Tonnes) Million No's 2001-02 334.Chapter 2.4 6.5 19. Following measures have also been taken to meet Sanitary and Phytosanitary (SPS) requirements under WTO for quality assurance and to improve exports of livestock and livestock products: . Import of breeding stock will be allowed subject to the import duty of 10 percent.0 32. Agricul -ture & Livestock ( Livestock Wing). Parts and Components upto 5 percent of initial C&F value of imported plant and equipment shall be imported at 10 percent duty.8 4423.3 18. Agriculture Table 2.0 Source: Ministry of Food. subject to maximum limit of $2.000 per person per year. Capital structure of projects in agro-food industry will be entitled to debt-equity ratio of 70:30. - For promotion of livestock and poultry. Expatriate personnel of the Units will be allowed to import food items and other consumable without any duty/taxes. with complete exemption from sales tax.6 - Source: Ministry of Food.5 279.4 264.
The National Veterinary Laboratory is under construction for drug residue testing in the livestock products.Chapter 2.7 percent) in marine and 226. Program‖ has been launched during the fiscal year 2002-03.850 m.000 persons (62. development of value added products. The Government is taking a number of steps to improve fisheries sector. Establishment of abattoirs are encouraged in the private sector. Of which. This will ensure quality in exported products. inland fisheries (comprising of rivers. inter-alia. tonnes valued at Rs.000 (37.2 billion fish and fishery products were estimated to be exported to Japan. _____________________________ Production of Fish/Shrimp Seeds" which will play a vital role for the development of fish/ shrimp farming. enhancement of per capita tonnes. share of marine sector is 480.3 percent) in inland fisheries.8 percent) were engaged in marine sector and 227. Fisheries' share in GDP. "Establishment of a Hatchery Complex for V. namely. 138.000 (62. though very little contributes substantially to the national income through export earnings. whereas the persons engaged in fisheries sector in 2001-02 were 363. Germany. During the period JulyMarch 2002-03. Agriculture the total fish production is estimated at 665.000 m. The total number of persons engaged in fisheries sector during 2002-03 is estimated at 365.000 persons137.000. Steps have been taken to improve sanitary and hygiene conditions of animal casing processing units in the country. . China etc. During the same period. A number of initiatives are also being taken by the Federal and Provincial Fisheries Departments which. 58356 m.850 m. Apart from marine fisheries.5. ponds. tonnes and inland contribution is 185. UK. include strengthening of extension services. Fisheries Fishery plays an important role in Pakistan's economy and is considered to be an important source of livelihood for the coastal inhabitants. Marine Veterinary Services in Pakistan – Rinderpest Eradication Fisheries Department is also executing a project. diversification of fishing efforts. Sri Lanka. Out of which. dams etc) are also very important source of animal protein. Middle East. tonnes. USA.000 persons (37. lakes. - consumption and up-gradation of socio-economic A project titled ‗Strengthening of condition of the fishermen's community.2 percent) in inland fisheries.
phosphatic fertilizer (27.6 percent) in food.7 percent during the current fiscal year.6 percent) in automobile group.1 percent) in textiles group. cement (20.2. The events of September 11 and their aftermath adversely affected the performance of this sector during this period.0 percent in 1990s was disappointing.9 percent) in chemical & pharmaceutical group. beverages and tobacco groups. cooking oil (6. Table 3. One of the significant development in the current fiscal year has been that the growth is broad-based and touched almost all industrial groups.8 percent) and footwear (6. Rubber & Plastics Petroleum Group 2001-02 6.6) 5. Manufacturing Mining and Investment Policies 3. has been lackluster at best in 1990s owing to host of problems like tariff reforms and escalating utility prices. and tyres & tubes (16. The production performance of selected items is given in Table 3.2 percent in the 1980s.2 percent). Ten out of eleven groups registered positive growth while leather product is the only group that registered negative growth [See Table 3.2 .7 percent and large-scale manufacturing grew by 8.8 0. food. 2002-2003 over the corresponding period of last year are automobile group (49. cotton yarn (8.4 percent). The industry seems to have adjusted itself with the challenges emanated from trade and tariff rationalization of the 1990s and increased input cost due to escalating utility tariff.March. The improvement in the domestic demand and better macroeconomic environment have caused in significant turnaround in the manufacturing sector. Individual items that registered positive growth are cotton cloth (1.6 15.2 percent). metal product. This year has seen manufacturing registering a stellar growth of 7. the growth rate of 4. machinery & equipment (18. nitrogenous fertilizer (4. The individual industries which show negative growth include vegetable ghee (7.5 percent) in non-metallic mineral products group and Jeeps & Cars (51.8 percent).9 2.Chapter 3. paper & board (15. Fiscal year 2002-03 besides 200001 has become the best performing year for manufacturing sector since 1987-88.1 18.7 percent with major contribution coming from large-scale manufacturing which recorded 8.2 percent). beverage & tobacco group( 8.5 (13. Pakistan‘s overall manufacturing sector registered a growth of 7.1 (9.7 3.5 percent).7 percent).4 -3.November and February 2001-02). In the backdrop of higher growth of 8. The large-scale manufacturing was originally targeted to grow by 6. The activity in the manufacturing sector is comprised of large-scale and small & medium manufacturing sector.1].5 2.1 percent). The main contributors to this impressive growth of 8. With the exception of these three months the growth performance depicted smart recovery during the last three years. The performance of this very important sector in general and large-scale manufacturing in particular.7 2002-03 8.5 percent in 2002-03 but the target was surpassed by a wide margin.8 percent) and sugar (13. cotton ginned (4. The turnaround in the large-scale manufacturing which started in 2000-01 continued to exhibit a rising trend barring brief interval in the last fiscal years (October .0 percent).1 Group-Wise Growth Performance (July-March) (Percent) Group Food.5 percent) textiles & apparel group (5. Mining and Investment Policies Manufacturing sector is the second largest individual sector of the economy accounting for 18 percent of the Gross Domestic Product (GDP).2) 4. cigarettes (7.Manufacturing. Beverages & Tobacco (Sugar) Textile and Apparel Leather Products Paper & Board Chemicals.7 percent growth.2 percent) and soda ash (12.2 -6.7 percent).6 percent) and LCV‘s (57.7 percent in July.
5 774.8 Overall Growth 4. Machinery & Equipment 3.1 1.2 541.Chapter 3.8 601.8 106.6 3246.2 Basic Metal Industries -4. Nos.0* 9.5 9674 58.2 % Change 8.7 59.7 Table 3.5 13.8 77.V Motorcycles/Scooters Bicycles Paper & Paper Board T.C.6 240.6 16.4 547.0 * Includes cement Source: Economic Adviser Wing.1 51.2 1561.1 16.4 340.0 95.1 18. 000 Nos.2 42691 17870 8727 125625 460. Nos. 000 tones 1721. Finance Division 16.1 97.6 2095.2 Production of Selected Industrial Items of Large-scale (July-March) Item Units 2000-01 Cotton Yarn Cotton Cloth Sugar Nitrogenous Fertilizer Phosphatic Fertilizer Vegetable Ghee Cooking Oil Cement Cigarettes Jeep& Cars Tractors L.0 7071 39.4 49.6 531.9 1627.3 41171 24331 8491 133334 546.0 2001-02 1344.5 8518 36.0 777 314.7 Metal Products.4 3263.1 416.8 -7.2 278. Mtr 000 tones 000 N. Nos. 000 Nos.6 4.2 40032 32553 6965 117858 569.2 101.8 8.5 16. Manufacturing Mining and Investment Policies Tyres & Tubes 5.5 -7.0 6. Nos.9 15.5 57.7 292. 000 tones.6 2002-03 1452.0 14.3 Automobile 2. Nos.0 670 275.Sq.7 112.3 422. tones 000 N tones 000 tones 000 tones 000 tones Bln.7 2001-02 1794.1 2905.2 -27.0 81.7 911 412.4 884 414.9 2004. 000 Nos.0 490.2 20.2 2955.9 Non-Metallic Mineral Products 1.0 555.2 834.9 140.3 9935 55.0 28166 15339 5537 94108 393.8 20.0 .V Sets Motor Tyres Billets 000 tones Mln.5 559.6 33.4 135.
3 217. The textile vision 2005 besides providing a road map to enhance exports of textile products. especially the value added product . After suffering stagnation for 5 year.6 240. Its share in the economy. The tremendous inflow of share of textile in Pakistan‘s exports earnings is 68 investment in the sector is likely to enable Pakistan percent at its present worth of exports is around $ 7 textile industry to face formidable challenge of lifting billion. Foreign direct investment (FDI) in the textile sector is preparing itself to face the challenges of the sector doubled to US $23. emerged as one of the major cotton textile product Such investment would not only modernize this sector supplier in the world market and its share in world yarn but would likely to fuel value addition in the coming trade is about 30 percent while its share in cotton cloth years.2 195. The jet weaving sector.5 million in the corresponding period Investment Trend in Textile Sector The year under review witnessed tremendous inflow of investment in value added expansion and BMR. The textile country. the textile traditional spinning sector which is three times higher remains the backbone of industrial activity in the than envisaged in the textile vision 2005. However. Pakistan has surpassed the target with a fair margin of 55 percent.0 211. however. investment and contribution to the value added in industry.5 billion worth of investment during exports. the apparel sector only received 36 percent of Textile products are a basic human requirement the targeted investment during last three years. However. The demand for textiles segment where actual disbursement has already in the world is around $18 trillion. 000 tones 272.1 million in Jul-March 2002-03 post-quota regime in 2005. as against US $ 10.8 23. grey area of the whole investment trade is about 8 percent.9 313. sector received $ 1. textile exports started improving. During the last three years. Bulk of next only to food. employment. make it the single largest determinant of the The brighter side of the investment in this growth in manufacturing sector with 46 percent share in sector is the heavy investment in the air jet weaving overall manufacturing activity. Manufacturing Mining and Investment Policies Refrigerators Soda Ash 000 Nos. Pakistan‘s textile 2005.1 12. overall share of composition has been below target inflows in the water textile exports from Pakistan is around one percent. in terms of GDP. The value addition in the sector account for 9 the remaining vestiges of quota restrictions as stipulated percent of GDP and it employ 38 percent of industrial in the Agreement on Textiles and Clothing (ATC) after workers. the last three years. The textile vision 2005 maintained that at the initial phase heavy investment will be needed to create additional capacity in the apparel industry.Chapter 3.0 187.9 Source: Federal Bureau of Statistics EVALUATION OF SELECTED INDUSTRIES OF new capacity and up-gradation of the existing LARGE SCALE MANUFACTURING (LSM). also set benchmark investment requirements for the creation of of last year.8 215. Textile Industry production base. Inspite of the government‘s efforts to the investment to the extent of 56 percent went to the diversify export as well as industrial base. During the current fiscal year the textile sector showed greater resilience to lower cotton crop and performed well as far as production is concerned. foreign exchange earnings.
respectively. The .0 3. of revitalization of textile sector.9 -22.7 Working Capacity (000 Numbers) Spindles Rotors Looms 7113. bedwear are different from spinning sector. it is comprised of 453 textile mills (50 composite units and B. towels.8 percent.1 9173.March. thereby.3 below:various components of textile industry are given in the Table 3.0 10.0 10. home textiles.1 percent. The profiles of Table 3.0 145. during comprised of hosiery. The textile industry export of cotton yarn witnessed modest improvement consists of large-scale organized sector and unorganized both in quantity and value term during July-March cottage / small & medium units.4 6.0 66.2 percent and 2.0 4. Weaving & Made-up Sector.4 5.2 5. fabric processing 1344.0 2002-03 361. 403 spinning units) with 7.0 63. registering a growth of 8.1 -0. cotton yarn.3 Installed Capacity of Textile Industry July-March % Change 2001-02 Number of Mills Installed Capacity (000 Number) Spindles Rotors Looms 8726. towels. At present. canvas. and July.7 Source: Textile Commissioner Organization Performance of Ancillary Textile Industry The production of cotton yarn increased to Textile production is comprised of cotton 1452. The performance of 2002-03. Cotton Spinning Sector. cotton fabric. especially when a shift is taking place The spinning sector has emerged torch-bearer from lower to higher value added export products.7 3. Manufacturing Mining and Investment Policies performed well in export markets.4 7578. The quantity and value of yarn export various ancillary textile industries is evaluated as increased by 3. under:The international price of yarn continued to remain A.0 144. The knitwear and readymade garments. hosiery & year.3 thousand tones in July-March 2002-03 as against ginning. depressed for third consecutive year. garments.1 thousand tones in the comparable period of last (grey-dyed-printed).7 1.0 348. This is not a mean achievement.Chapter 3.6 Million spindles and 67 thousand rotors in operation with capacity utilization at The patterns in weaving and made-up sector 83 percent in spindles and 47 percent in rotors. 2002-03.
invested substantially in BMR for improving The locally manufactured machinery is production quality and moving towards more value supplemented with liberal imports under addition during the last two years. export potential.4. The textile industry value addition content in the form of knitwear. The sector is not Vision 2005 has focused more on providing credit and only catering for domestic demand. in quantitative terms. independent weaving units. IMF has acknowledged the The problems of power looms centered on the importance of the sector in a report and concludes that poor technology. Cotton Cloth earnings during July-March 2002-03 as compared b) Independent Weaving Units 23652 22000 c) Power Loom Sector 225258 190000 Total 259159 216947 Source: Textile Commissioner Organization. The sector served as the main Effective/ Installed strength for the down stream industry like bedwear. for crossing the big divide between the rural machines working in the country to manufacture and urban sectors.000 knitting manpower. scarcity of quality yarn and lack of Pakistan should seek to shift emphasis on textile and institutional financing for its development from the clothing to higher value added items. cotton bags and . Manufacturing Mining and Investment Policies weaving and made-up sector has three different subThe production of cotton cloth in the mill sector has increased marginally by 1.6 percent in the same period. which is because of almost 10 percent increase in unit value of cotton fabrics in the Sector (Nos.5 billion worth of being developed to earn much needed foreign investment for BMR and expansion over the next two exchange. The installed March 2002-03 while non-mill sector registered a and effective capacities in the sector are given in the phenomenal growth of 14. The performance of the down stream that offer good prospects for diversification away from sectors is evaluated below: traditional commodity exports. the textile different modes and export oriented capacity is industry still need around $ 1. There are about 15. bedwear. The government unorganized to an organized sector. for poverty alleviation and for 5. There is greater reliance on the especially to cater the needs of the high value added development of this industry because of high sector like garment industry. The down-stream industry is the most dynamic segment of the textile industry and a major contributor to export earnings. The government under Textile 60 percent capacity utilization. However.) international market. Exports from this sector have years to meet the challenges which are likely to emerge witnessed tremendous increase of 32 percent in in the post-quota regime beginning from January 2005.Chapter 3. for absorption of large pools a) of Hosiery Industry. towel. The major products are hosiery. Textile Down-Stream Industry Textile Units readymade garments. Category Capacity Capacity Worked made-ups and garments. The government has already incorporated this suggestion in Textile has realized that textile and clothing sector is one sector Vision 2005.5 million pieces of knitwear with approximately gender empowerment. increase of 18. and power looms units. canvas and tents. a) Integrated 10249 4947 D. the increase Table 3. value terms and 44 percent in quantity terms and added $ 793 million to the foreign exchange C.5 percent during Julysectors in weaving viz. but also has other facilitative support to diversify the products. for entry into the area of manufactures. The export of cotton cloth witnessed tremendous Table 3.0 percent during July-March 2002-03 in value terms however. integrated.4 percent.4 Installed and Capacity Worked in Weaving was 7.
The sector is comprised of 600 large and 4500 small units. The impressive growth in exports of knitwear is achieved despite 8. This sector.000 power looms in operation to review is the best performing year for this prepare synthetic yarn in the country.3 percent decline in the unit value in the international market.three kinds of filament yarn. there is a shift is taking place from 100 percent cotton yarn to blended yarn in the spinning sector. The garment industry provides highest value addition in the textile Tarpaulin & Canvas. The sector recorded 6. during of synthetic textile increased by 14. This sub-sector is facing multi. Art Silk and Synthetic Weaving Industry the country in both organized and unorganized The art silk and synthetic weaving industry is sector. The production capacity of this highest raw cotton-consuming sector is 100 million sq. This sector is distributed in small. most of them. having 50 production is exported. Recently.8 percent in quantity 60. the exports from the sector witnessed a decline of 10.9 percent in terms of July-March 2002-03. The industry is capable of producing 55 mostly concentrated in the informal sector and million Kgs towels per annum. as well as diversification in exportable products. However. In Pakistan. This industry. This sector is E. capacity of 2 thousand tones) and polyester filament cotton cloth or other inputs to the end user. machines and below. b) Readymade Garments. medium sector is mainly export based and 90 percent of its and large-scale units. nylon filament yarn (3 units with installed in shifting the burden of increased prices of yarn. c) Towel industry.0 percent increase in value of exports and 4. yarn (21 units with installed capacity of 95 thousand Against all these odds.000 industry like other segments of textile sector and looms are engaged in production of blended yarn and its exports increased by 18.4 percent increase in quantity terms which imply slight upward adjustment in the unit value of exports. the sub-sector has witnessed substantial growth of 25. The total installed capacity of all these units is 100 thousand tones. meters.000 looms are producing filament yarn. namely acetate rayon yarn dimensional problems like high value addition in (one unit with capacity to manufacture 3 thousand competing countries and inelasticity of the sector tones). The sector received windfall gains due to 40. Its growth primarily depends units comprising of 8 to 10 looms.0 percent increase in the unit value during July-March 2002-03 over the comparable period of last year.2 percent. generally blending ratio of cotton yarn and blended yarn is on lower side as compared to the international standards.6 percent in terms of value during JulyMarch 2002-03 over the comparable period of last year.8 percent in terms of value of exports but in quantity terms. There are on exploration of export outlets.Chapter 3. Filament Yarn Manufacturing Industry attracting considerable investment and many There are 25 units engaged in manufacturing of new units are coming up in the organized sector every year.5 percent in value terms. Manufacturing Mining and Investment Policies to $ 682 million during the same period of last d) year. quantity and 26. The sector contributed $ 800. hosiery sector has million in this period as against $ 636. It is mainly an export-based industry with lower demand from generally it is operated as family owned power loom domestic market. This industry is comprised of about 400 units supported by 6500 towel looms in F. The export terms and by 26. The year under approximately 90. About 30. against which it produced approximately 78 thousand tones per annum.2 million in started consuming synthetic Yarn for export of knitted garments which are contributing in high value addition the comparable period of last year. like others in textile sector has also .5 tones). This is a low value added subsector.
2 percent respectively while the production of slight improvement in recovery rate during the year nitro phosphate and super phosphate declined by 1.5 percent thereby showing an increase of 15. There is dire need to improve sugar recovery rate by adopting most modern techniques for cultivation of sugarcane. There was a and 4.9 million tons. Therefore. The ghee production is for cement. The production activity in ghee and cooking oil Out of these 24 units. I. Vegetable Ghee J.56 million tones during July. The ghee production is production and cartel formation by the substituted with cooking oil production for quite manufacturers. 38 are located in Punjab. out of which nitrogenous fertilizer has a capacity of 4.7 million tons. respectively. During this period. of industry. tones to 17. fertilizer has also witnessed an increase of 2.2 million tones in the last year. Out of these 10 units.8 the major factors which impeded growth in demand percent in Jul-March 2002-03.9 million tones during July-March 200203 as against 3. The overall installed years.60 million tones produced in the 2002-03 as compared to 7.7 million tones.6 million tones.7 million tons and five are in sugar.8 million capacity of the ghee and cooking oil industry is tons. partly contributed by the quality and quantity of sugarcane availability.6 percent. Out of these 77 mills.7 million tones.095 government would go a long way in promoting this sort million tones in the same period. five are in private sector with an installed capacity of 3. The sugar and stood at 3. three in Sindh and two in NWFP) with an installed capacity of 5.0 percent while that of cooking oil went up by 6. 32 in Sindh 6 in NWFP.recorded at 8. The sugar season is over in May public sector with capacity of 1.9 million 155 units both in organized and unorganized sectors.0 under review but it was because of late beginning of the percent and 10. H.9 million tons and phosphatic fertilizer has production capacity of 0.5 million tones during July-March 03 as against 0.5 percent. substantial decline in PSDP during sometime. March 2002-03 over the corresponding period of last year.5 million tones of refined agricultural production. High prices owing to inefficiencies in estimated at 2.March 2002. Cement Industry There are 24 cement units in the country with total installed capacity of 17. The importance accorded to SMEs by the cooking oil stood at 0. The total production of cement is estimated at 0. and one in AJK.700 persons.1 million tones as against 0. The Fertilizer Industry The sugar industry is comprised of 77 mills Fertilizer is one of the key inputs used in with ability to produce 5. The production of fertilizer like urea and ammonium nitrate increased by 3. the production of million tones as against 3. Manufacturing Mining and Investment Policies experienced decline in unit value of exports by 4.Chapter 3. With and the latest estimates showed production of 3.5 percent industry is confronted with low recovery rate and inefficient cost structure.7 revival of agricultural growth. The sector after privatization. during July crushing season. The industry is comprised of production capacity has doubled from 8.7 comparable period of last year while the production of percent. demand only increased by 27 percent from 7. There are 10 fertilizer units operating in the country (Five units are in Punjab. the ghee production has decline the 1990s and slowdown of economic activity were by 7.8 million tones in the corresponding period of last year. Sugar Industry G.7 million tones during the last 6 to 7 and employing 37. The production capacity has almost doubled against the annual sugar requirement for consumption as a result of addition of 25 new mills to the capacity during one decade. 4 units are in the public production is now entirely concentrated in the private sector and 20 units are in the private sector. The industry is confronted with inefficiency in production.7 million tons to 9.1 million tones in the .
The auto industry and down stream vendor industry employs more than one lac people.5 percent) and motorcycles (48. The government has formed Corporate Industrial . The installed capacity of the major components of automobile sector and production is given in Table 3. The impressive recovery touched almost every segment of the auto industry. The sick units were responsible for increase in non-performing loans during the 1990s and resultantly. the financial sector has reached on the verge of collapse.5 48.5.4 percent during JulyApril 2002-03. buses (32. Manufacturing Mining and Investment Policies same period of last year. cheaper and easy availability of car financing and changes in model.6 July-April % Change Cars Trucks Buses LCV‘s Tractors Motorcycles 122000 12500 1900 28000 33000 340000 41071 1141 1099 8491 24331 133334 32552 792 894 6315 18708 94108 Source: Federal Bureau of Statistics.9 percent). The auto industry is the fore-runner of the tremendous growth in large-scale industry. tractors (10. During the current fiscal year the automobile industry has registered enormous growth owing to declining interest rates.7 57.5 percent. Capacity 2001-02 2001-02 200203 49280 1608 1186 9969 20680 139851 51.Chapter 3.9 10. LCV‘s (57.6 percent).4 103. followed by trucks (103 percent). persistent inflow of home remittances. Automobile Industry There are 18 automobiles manufacturing units in assembling business which is supported by 850 units manufacturing auto parts. The boost in cement production is because of the rising construction activity in the country. showing an increase of 20. K. REVIVAL OF SICK UNITS The sick units are inimical to development of financial institutions. The car industry registered a growth of 51. reconstruction activity in Afghanistan and increasing development expenditure by the government. Table 3.0 32.7 percent).5 Installed and Operational Capacity of Automobile Industry (Numbers) Item Inst. The performance of automobile industry has been the best during the year under review.
In Million) Item Production Value* Net Sales Pre-Tax Profit Taxes and Duties No. Key performance indicators present the following picture of performance during July-June. 32 in Sindh and two in NWFP. 161 accounts acquired by the CIRC included 59 in Punjab. 107 billion to the nationalized commercial banks (NCB‘s) and development financial institutions (DFI‘s). CIRC is in the process of acquiring 39 cases worth Rs.4. of which forty-one cases worth Rs. Ministry of Industry & Production . (Excluding Pak Steel) (Rs. On the province basis. These units in the private sector were identified by the CIRC in consultation with the concerned banks as these units were closed for many years and owed over Rs.8 billion. of Employees * At constant prices of 1992-93. Furthermore.5.2 -8.2 billion had no assets at all and120 units involving Rs. The strategy to auction the irretrievable sick industrial units. to seven corporations with 27 units including two joint ventures under the administrative control of Ministry of Industries in 2003.0 28. government to solve the twin problems of sick industries and non. 33 cases were auctioned (23 were sold in Punjab and 10 in Sindh).3 billion were finally acquired by the CIRC.7 billion in two years of its inception against an outstanding debt of Rs.1 billion are being prepared for disposal. 2002-03 (8 months actual & 4 months projected) in comparison to the same period last year.Chapter 3. a total of 161 accounts worth Rs. After return/ withdrawal of around 139 cases worth 32.7 -13.performing loans of the NCBs/ DFIs. these public sector industries continued to operate within the general economic policy framework of focusing on optimal utilization of existing capacities and adhering to cost efficiency. Manufacturing Mining and Investment Policies Restructuring Corporation (CIRC) with a mandate to revive or dispose off 868 sick units through open public.21.60 billion in 339 sick units. The CIRC has so far acquired 161 units.16. PUBLIC SECTOR INDUSTRIES. 2001-02 6398 11358 110 2762 8793 2002-03 ** 6128 10817 141 2519 7580 % Change -7. out of the 65 cases disposed off by the CIRC. 90 in Sindh.8 Source: EAC. 10 in NWFP and two in Balochistan. 31 belonged to NWFP.6 Performance of Public Sector Industries The size of Public sector industries shrank from twelve holding corporations with 116 manufacturing units before the start of Privatization in 1990-91.5. Of the total 65 cases disposed-off by the CIRC. is the last ditch attempt by the Table 3. The CIRC has disposed of 33 cases worth Rs.3 billion.1 -5. During the period under review.
8 percent and 45.7.7 . Table 3.2 billion to Rs. 800 million and in the case of SEC.141 million (excluding Pakistan Steel) is expected as against an aggregate profit of Rs.June) Production Value Production value (at constant prices of 1992-93) of all operational units (excluding Pakistan Steel) is expected to decline by 7.Chapter 3. The SCCP and SEP have shown losses in their pre-tax profits.0 billion to Rs 2.5 billion and Rs.5 percent. 686. for 2002-2003 as against Rs. NFC & PACO have projected profit during the current year.1.7 Performance of Public Sector Industries (Overall) Rs. NFC and SCCP have reported a decline in its sales value (Including Pakistan Steel) from Rs. 10. Net Sales June Net sales (excluding Pakistan Steel) of all 2002.8 percent.110 million reported last year.Tax Profit/ (Loss) During 2002-03. 2003 is estimated at 7. respectively.580 as compared to 8.7 percent (from Rs.0 some improvement as summarized in Table 3.from Rs. Production the net sales value increase by 24. Though NFC has shown profit but its profit has declined from Rs. The decline in profit is attributed to increase in input costs.793 on end activity at Sindh Engineering depicted an increase of 40 percent while Heavy Mechanical Complex (HMC) witnessed slight improvement of 0. Pre.4 billion in last Overall Performance of Public Sector Industries year. million to Rs. showing a decline of 5. In Million) Description Production Value* 2001-02 15693 2002-03** 16111 % Change 2.0 percent . followed by the State Cement Corporation (SCCP) (58 percent).6. Manufacturing Mining and Investment Policies ** Actual for 8 months (July.7. by end June. Overall performance of public sector The net sale value of PACO registered an industries (including Pakistan Steel) has shown improvement of 16. Employment Total number of employees enrolled with all units (excluding Pak Steel). Only two corporations namely. whereas SEC & SCCP are estimated to have suffered losses in this year. NFC and PACO.2.1 percent over the last year.4 billion) during 2002-03.Feb) and expected for 4 months (Mar. an aggregate profit of Rs.9 billion and Rs. respectively thereby showing decline of 7.586 million last year to Rs.325 million this year. Production value of National Fertilizer Corporation (NFC) projected to decline by 3. 11.7 billion.4 40 percent. The remaining two corporations namely.8 billion SEC.0. The number of employees has dropped in operational units are estimated at Rs. SCCP. Decline in production was mainly due to continual stoppage/ interruption of natural gas supply. the State Engineering Automobile an increase percent and Corporation (SEC) and the Pakistan Corporation (PACO) have projected in their production value by 8.0 percent.0 percent.
The performance of 2002-03 is an indication of revival of Pakistan Steel. & Prod.8 Performance of Pakistan Steel (Rs. lack of culture of accountability and bad public image.0 -16. It was characterized with low production.) 9982 20419 650 4541 13430 % Change 10.9 274. angles. Pakistan steel has undergone a serious over-hauling to deviate from the past and its current strategy is more focused on increase in profitability with lesser investment. cold rolled coils/sheets. billets. hot rolled coils/sheets. poor work discipline.) and estimated for 4 months (Mar-June) Performance of Pakistan Steel Pakistan Steel is the first integrated iron & steel works project in Pakistan. ** Actual for 8 months (July. of Employees 25841 212 5412 24756 31237 791 7059 21010 20.0 31. nothing was done to improve the situation. The production capacity of Pakistan Steel is 1. formed sections like channels. galvanized sheets etc. low sales and high losses.20 billion. productivity growth improved to 66 per ton per employee as against historical record of 36 per ton per employee and received ISO-9001 certification for quality products.Feb. The year under review is the best performing year in the chequered history of Pak steel. pig iron.8: Table 3.0 Source: Expert Advisory Cell. in Million) Item Production Value * Net Sales Pre-tax profit Taxes & duties No.1 million tons of raw steel per annum with built-in potential to expand its capacity to over 3 million tones per annum. M/o Ind. The performance of Pakistan Steel (based on major performance indictors) during the period 2002-03 is summarized in the Table 3. 2001-02 9094 14483 102 2650 15963 2002-03 (Proj. Inspite of precarious conditions. It was established with the objective of enhancing domestic availability of basic raw material for engineering and construction industries. It facilitated establishment of downstream steel industries in the country.0 -15. increased liabilities.0 538.0 * At constant prices of 1992-93. The Steel Mill is producing coke.Chapter 3.0 71. Pakistan Steel‘s performance had witnessed many ups and downs during its fifteen years of history. . Source: Expert Advisory Cell. In this year Pak Steel touched several milestones like registering highest ever record of net sales at Rs.0 41. Manufacturing Mining and Investment Policies Net Sales Pre-Tax Profit Taxes and Duties No. low capacity utilization. surplus manpower. of employees *At constant prices of 1992-93.
and preparation of regulatory and fiscal policy options but the policy framework has remained biased against to facilitate the sector. which confront SMEs of the importance of SMEs in economic development. SMEs institutes and funds. seamless environment issues. the role of SMEDA the sector. Although. agriculture & livestock. government has opened two specialized micro-credit banks namely. Small . The government has added a professional 1980-81 to 35 percent in 1997-98 but its share in body like SMEDA to revitalize the small and medium employment in the manufacturing sector declined from 85 percent in 1980-81 to 83 percent. electricity supply. SMEs i) Punjab Small Industries Corporation comprise of heterogeneous activities but its active ii) Sindh Small Industries Corporation presence in services and manufacturing is felt iii) NWFP Small Industries Development Board prominently because of large-scale manufacturing and iv) The Directorate of Small Industries Balochistan corporate sectors‘ limitations in catering all national demand for goods and services. infrastructural problems like poor pipes. However. khushhali bank and SME bank. But. these play critical role in manufacturing sector by providing provincial organizations have not made any dent in 80 percent of industrial employment. the and expertise in development of SMEs. for the last three years the has in development of the sector has not yet provided government has brought SMEs on the forefront of the evidence of considerable improvement but it has policy making and declared it one of the four drivers of prepared pre-feasibility studies of 8 projects and is the economy. The growth of small-scale industry is working on 38 more projects. vocational training of value addition and employment generation. There is growing recognition SMEDA is also working on issues. wire rod and baling hoops. small sections. The provide technical assistance to potential small investors. The precarious percent to GDP and generating one-fourth of the conditions in industrial estates and vocational sector‘s export earnings. contributing 30 promotion of small industries. regulation and business (small. unfortunately. leather. poor technology. Manufacturing Mining and Investment Policies and Medium Enterprises Development Authority Pakistan steel is also catering for the needs of 22 downstream units in Karachi along with 21 (SMEDA) has been reinvigorated and re-organized to located in different parts of the country.Chapter 3. slag cement. light engineering and transport. downstream industries are basically producing SMEs still face difficulties in coping with skilled value added engineering goods such as steel pipes workers requirement. marketing. material (especially imported) and inadequate automotive parts etc. SMEDA is also engaged mainly hampered by the non-availability of credit with international donors to obtain their cooperation facility in the past. Realizing this constraint. Its contribution to value added institutions are never facilitative in promotion of small in manufacturing sector has risen from 27 percent in industries. SMEDA is not only working for the productivity improvements in the last two decades. slag wool. fisheries. It uplift of small and medium enterprises in the country provides employment at lesser cost and its capital but also completed studies on various crucial sectors for requirement is also low. access to raw reinforcement bars. SMEs represent a These organizations have significant component of Pakistan‘s economy in terms infrastructure like industrial estates. Pakistan economy like textile. Following organizations are involved in SMALL AND MEDIUM ENTERPRISES (SMEs) promotion of small and medium industries in the provinces: Small and Medium Enterprises (SMEs) constitute 90 percent of businesses in Pakistan. This implies industrial sector. medium and large diameter).
Pakistan is expecting dividends from factors like political stability. maintained macroeconomic stability. . technological improvements. had large markets. growing investment market. and greater profits security and of the of continuity Pakistan has been declining since 1995-96 for a economic policies. Foreign direct investment (FDI) being the single largest component of private leading capital to flows has contributed to the investment and growth in developing countries. a predictable institutional environment without excessive red-tapism has remained firm in place.Chapter 3. reduction in poverty and improvement in the living standards. had relatively poor physical and human infrastructure. The countries that have received the lion share of the surge in FDI flows during 1990s are the ones that followed open trade and investment regime. The distribution of these flows has. and bureaucracy not responding to the initiatives with conviction. pursued inconsistent economic policies. Where does Pakistan stand today? The improvement in the country‘s macroeconomic environment and upward revision of the economy‘s international credit ratings are the distinct advantages which can help in attracting inflow of foreign investment. Manufacturing Mining and Investment Policies FOREIGN INVESTMENT The inflow of foreign investment in Policies in the 1990s in developing countries have emphasized upon greater encouragement and mobilization of non-debt creating private capital flows for reducing reliance on debt flows as the vehicle for generating external resources. The countries that lagged behind in attracting FDI are the ones that faced macroeconomic instability. remained uneven. and possessed reasonably improved physical and human infrastructure. conducive macroeconomic environment. Pakistan has introduced wide-ranging reforms to attract the inflow of foreign investment. however.
4 0. (see Table 3.4 119.4 -4.3 76.2 -6.3 17.8 5.4 0.7 3.4 30.9 0.1 6.6 percent.1 22.6 28.7 122.3 11.9 97.9 2.1 14.4 17.2 4.1 2.7 July–March 2001-02 Direct Portfolio 164.9 8.1 11.4 6.Chapter 3.5 million. economic sanctions and freezing of foreign currency accounts of May 1998.6 & .6 0. 2002-03).7 -7.2 0.7 2001-02 Port folio -1.3 4.8 32.2 5.8 7.10 Inflow of (FDI) Foreign Direct Investment (In Main Economic Group) (Million US $) Economic Group 1.5 202.3 0.6 1.3 3.5 85.1 -2.8 July–March 2001-02 2002-03 32.10 ) Table 3.6 -11. the East Asian financial crises of 1997.7 -32.2 11. Pharmaceutical 1999-2000 67.6 16.0 -18.3 -0.7 112.2 0.6 0.5 11.6 0.3 1. particularly the way it was handled in the past.7 -2.9 2000-01 40.2 -6.1 2.1 17.6 484.5 1. the IPP and the HUBCO issues. low levels of foreign exchange reserves and threat of default on Table 3.0 664.9 284.5 2. Over the last three years the government has succeeded in removing various irritants which affect business and investment climate.3 2.8 2.8 0.2 4.2 0. Source: State Bank of Pakistan The emerging trend in the inflow of foreign investment is encouraging as it has already started picking-up this year.3 26.4 -10.7 6. and disarrayed relations with the International Financial Institutions(IFIs).2 -0.5 32.3 2001-02 36.2 -10.2 11.2 0. thereby. Foreign direct investment has more than doubled in the first nine months (July-March.7 1.7 -0.4 2.9 19.5 -5.1 0.2 2002-03 Portfolio 0.1 4.2 -5. showing an increase of 133.1 191. Power 2.0 Total 324.Chemical.6 -5.8 2.8 8. It is likely that foreign investment will reach one billion dollars mark by the end of the current fiscal year.3 2.6 142.9 Total 154.9 Inflow of Net Foreign Private Investment (FPI) (Million US $) Country Direct USA UK UAE Germany France Hong Kong Italy Japan Saudi Arabia Canada Netherland Others Total 326.0 -6.1 6.7 million as against US $ 284.2 0.8 287. the net foreign investment stood at US $ 664.5 Total 164.3 20.7 external payments obligations.5 Direct 163.6 23. Manufacturing Mining and Investment Policies variety of reasons including : the saturation of investment in power sector.1 92.1 2.3 1.8 474.7 -0.1 3.6 15.3 658.6 0.4 114.6 1.5 69.3 21.7 2.
Oil and Gas 5. Cement 13. Manufacturing Mining and Investment Policies Fertilizer 3.1 4. The remaining amount of inflow is unevenly distributed among various countries.8 0. Subsequent governments have attached high priority to the privatisation process in the 1990s but the .3 469.6 94. Machinery other than electrical 9.8 9.7 287.0 322.4 15.8 -34.6 2.8 121. Privatization in Pakistan is both attractive and rewarding for potential investors. The United Kingdom accounts for 30. THE PRIVATIZATION PROGRAMME present government recognized it as part of its economic policy for restructuring and revitalization of the economy.0 2. FDI inflow from UK and UAE is extra-ordinarily high because of purchasing of 15 percent stakes of United Bank by UK based Bestway group and UAE based Abu Dhabi group for $ 208 million. pharmaceutical & fertilizer group account for 13. The power sector which has remained apple of the eye of the investors for some year only accounted for 4.6 13.1 -8.1 percent of the slice while chemical.9 11.Petro-Chemical & Refining 12.9 12.8 percent). Textile 7. Beverages & Tobacco 6. privatization was very abrupt and rapid but the momentum was lost.8 4. Storage & Comm.3 percent stake in FDI.2 -5. Mining & Quarrying. Electronics 10. Financial Business 11.1 79. storage and communication group get 18. The groupwise break-up shows that financial business has accounted for largest slice of the FDI at 30.4 12.2 Source: State Bank of Pakistan Foreign Direct Investment (FDI) increased by 129 percent and stood at US $ 658.5 25.Chapter 3. government for the last three years focused and made strong progress on: Restoring and enhancing investor confidence by improving the macroeconomic climate and resolving investor disputes. The minimization of government‘s role in economic activity reinforces the need for regulation in strategic areas and the design of appropriate policies in order to ensure that the functioning of the economy is not distorted and those benefits are distributed in an equitable manner.3 201.1 percent) and Saudi Arabia (5.1 484.7 15. Recognizing this.3 36. followed by U. The program for transfer of the ownership of public assets is unambiguously predicated on the principle of reducing its direct participation in commercial activities. public opposition to privatization.6 percent while with 20.0 percent stake. In its early phase. and lack of adequate regulatory frameworks for the privatisation of utilities. The reason for slow progress on privatization during the second half of the 1990s lay in an inhospitable enabling environment.Food. U. Trade. Trade.0 10. Textile industry received 3.5 percent of FDI inflow.8 percent of FDI inflows.2 million during July-March.5 2.0 0.4 0.6 12.A.7 2.4 2.0 5. Group-wise break of FDI inflow is given in Table 3.4 10.9 8. 2002-03 as against US $ 287. 8.4 million for the same period in the previous year.E (17.1 40. Transport.2 20.7 137. transport.5 3.5 0.8 percent of stake was attracted by Mining & Oil and gas exploration.6 119.7 45.5 84.6 18.0 percent).7 42.9 41.5 23.10.4 38. promulgating a Privatisation Commission Ordinance to provide legal cover to tackle issues like investors confidence. Others Total 21.S (24.9 4.4 658. legal challenges to privatisation. Construction 4.1 274.4 0.8 5.6 4.1 68.7 49.9 14.3 29.
As regards industrial proceeds of Rs. 2002 to March. The Cabinet development could not grew up to the potential. and allocates 90 the privatization process. Manufacturing Mining and Investment Policies transparency and distribution of proceeds restructuring and strengthening the Privatisation Commission to make it a leaner. various sets of MINING & QUARRYING. publications. OGCL. The recent performance of the stock keeping with the economic environment and investment market and the improvement of the fiscal and monetary conditions. Its Committee on Privatization (CCOP) and Board of the meager share of just 0. This requires sensitive decisions privatisation rationale and process via on pricing. A number of major privatization privatisation process transactions including PSO. restructuring and rightsizing. Various regional geological surveys. material to key industries of the country.7 percent last year. Natural Gas percent during 2002-03 as against 3. the outlook for retirement and 10 percent towards poverty alleviation 2003-2004 appears bright and positive. Regulatory Authority (NGRA) and Oil & Gas This is because of concerted effort by the government to Regulatory Authority (OGRA) has started functioning boost this very important sector which play pivotal role to build credible expertise within these sectors on in economic development by providing basic raw urgent basis. from the privatization of the more straightforward hiring top class financial advisors. marble and other dimensional stones of high March. Privatization Commission Ordinance. But due to resource excluded from the Privatization Programme either for constraint and non availability of high-tech the mineral liquidation or being non-privatisable. 2. Privatization is a complex and demanding reform and every stage requires utmost appointing the Chairman as Minister for Privatisation to enhance the stature of transparency and high level of managerial. financial and privatisation and facilitate the technical expertise. 15 industrial units were quality for export purpose. silver. 2003. improving the public's understanding of transport and utilities. government's remaining shares in POL.5 Power Regulatory Authority (NEPRA).9 billion. industrial transactions to those involving the transfer of management control in services such as banking. and a three years the privatisation efforts with the laying of revamped website.97 billion were realized. ground work for the successful marketing of these major transactions faced formidable challenges due to A comprehensive privatisation program some event which delayed few privatisation for the short and medium terms was prepared while transactions. and Pak-Arab Fertilizer have been brought to a establishing or strengthening regulatory very advance stage.5 percent in the GDP does not Privatisation Commission were re-constituted during . programs. 2002. 2000 position of the government auger well for the success of increases the accountability of the PC. Pursuant to said Ordinance. 2003. National Electric The mining and quarrying sector grew by 9. Pakistan Telecommunication Authority (PTA). conducted in the recent The existing Privatisation Programme is past. and DG Khan Cement have been divested through Stock Exchange which fetched Rs. In addition. Till March. have confirmed the great potential of Pakistan in progressing satisfactorily. iron. Habib Bank. Rules & Regulations have been notified. During November. chromites. This includes 22 minerals there is a vast potential of multi-coloured transactions for Rs. interviews.Chapter 3. 128 the privatisation transactions had been completed and metallic minerals like copper. gold. platinum. Attock Refinary Ltd. With several major percent of privatisation proceeds towards debt privatisation transactions on the cards. lead and zinc. KESC.35 billion from October 1999 to granite. This implies on changing of focus frameworks. more transparent and more effective institution the last two months. During the last seminars. PTCL.
7 988 15. The government has accorded high priority .1 5. In order to accelerate the development of Year U % Share FDI S $ mineral resources in the country.5 19.8 308 7. gone up by 34 percent.9 328 9. crude foreign investment. The FDI inflow in Mining and Quarrying value addition in the sectors of gypsum has notably Sector is given in the above table 3.3 24.2 10 251.0 33. Manufacturing Mining and Investment Policies fully reflect the actual potential of the sector.7 364 10. The fiscal incentives and regulatory 9.6 21 2001-02 2.4 0. the value addition is concentrated implementation of National Mineral Policy to attract for in four principal minerals like gypsum.Chapter 3. a National Mineral million Policy is being implemented in letter and spirit during 1997-98 9 16. it is evident Table 3. Barrels 000 tones 000 tones 000 tones 000 tones 000 tones 000 tones 000 tones 000 tones 2000-01 3.3 Source: Federal Bureau of Statistics.0 33.5 17.1 18.11: Table 3.0 percent and 3. and natural gas. extraction of some important minerals is given in table3. sulpher. From the table 3.8 21.4 230 6.9 4.11. The construction mineral.4 2.1 framework is reinvigorated to attract foreign 1998-99 1 23.4 28 2001-02 3. In difficult environment FDI oil. At present.5 last three years.5 26.6 20.12 that during the year under review.5 994 14.1 percent respectively.8 4.2 15 243.0 3.6 1394 17.11 Extraction of Principal Minerals July-March Minerals Coal Natural Gas Crude Oil Chromites Dolomite Gypsum Limestone Magnetite Rock Salt Sulphur Baryte Units of the quantity Million tones 000 MMCFT Mln. the overall growth of FDI Inflow in Mining and Quarrying the mineral sectors depicts positive trend.6 1359 22. other industrial and grew by 4.8 50. These minerals account for most of remains apple of the eye of foreign investors for the last the overall value addition of the mineral sector.0 -3.12.2 16 312.6 -7.9 investment.7 2. rock salt.2 23. The three years.9 20. while the extraction of sulpher declined by 7 percent.1 16 352.3 -7.7 20 % Change 4.8 15 2002-03 2. Presently The contribution in the growth of mining & about 50 minerals are under exploitation. Major mineral quarrying sector came from coal and natural gas which products are coal.
. its share declined substantially but it is still one of the major recipients of FDI inflow.8 7 9.8 Source: Economic Advisor Wing The Foreign Direct Investment (FDI) in the Mining and Quarrying sectors was 17.) 1999-00 17.7 2001-02 2 74. but since then it has started increasing.3 54.0 percent in 19992000.7 2000-01 8 4.0 26.Chapter 3.8 2002-03* 1 37. During July-March 2002-03.March. Many foreign companies are involved in preparation of feasibilities.7 percent in 200102. oil exploration and development work in the field of mining and quarrying. Its share in total FID inflow however peaked at 54.2 * (July .3 percent in 2000-01. Manufacturing Mining and Investment Policies 12. as against 26. Nevertheless.7 20. it has become the first largest recipient of FDI inflow in 2001-02.
Income Distribution and Poverty __________________ .Chapter 4.
life expectancy has risen by four months each year since 1970. disease. the reality is more complex.4 percent between 1990 and 1999. decreasing from 1. Poverty has many faces. and better educated. which set clear targets for reducing hunger. Growth in food production has substantially outpaced that of population. Infant mortality rates have fallen from 107 per 1. environmental degradation and discrimination against women by 2015.4 percent a year between 1980 and 1990 and 2. Poverty is not having a job.fell from 32 to 25 per cent between 1990 and 1999. world leaders placed development agenda by adopting the Millennium Development Goals. Unfortunately. lack of representation and freedom. The simple extrapolation of this trend to the year 2015 results in a headcount index of about 16 per cent—indicating that the world is on track for reaching the global goal of halving poverty between 1990 and 2015. illiteracy. wealthier. Income Distribution and Poverty 4. Adult literacy has also risen. At the United Nations Millennium Poverty is hunger. and progress is less satisfactory. On average.defined as living on less than $1 per day (in 1993 dollars. Population in the developing world has grown rapidly—from 2. Per capita private consumption growth in developing countries has averaged about 1. not being able to go to school and not knowing how to read. Income Distribution and Poverty I. lack of shelter being sick and not being able to see a doctor. To accelerate progress toward this . So millions have left behind the yoke of poverty and despair. the number of income-poor in these three regions combined increased by about 7 million people each year between 1990 and 1999.Chapter 4.9 billion people in 1970 to 5. Actually. 2002]. Regional trends show that the decline in global poverty was driven by East Asia (EA) between 1993-96 and by South Asia (SA) in 1996-99. The international development community has adopted halving extreme poverty by 2015 as a central goal. Living standards have risen dramatically over the last Summit in September 2000. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness. commonly known as MDGs.1 billion in 1999 -.000 live births in 1970 to 59 in 1999.1 billion. The proportion of the developing world's population living in extreme economic poverty -. with the female-male difference in net enrollment rates decreasing from 11 percent in 1980 to 5 percent in 1997. adjusted to account for differences in purchasing power across countries) -. Furthermore. The incidence of income-poverty remained largely unchanged in sub-Saharan Africa (SSA). poverty trends for most regions showed little or no progress. The number of people below the international poverty line declined by a mere 1 per cent per year between 1990-99. Latin America and the Caribbean (LAC) and in the Middle East and North Africa (MENA). The developing world today is healthier.and many have been born into poverty. Poverty – Global Perspective decades. Substantial improvements in social indicators have accompanied growth in average incomes. and has been described in many ways. according to the latest estimates [World Bank. Governments report rapid progress in primary school enrollment.3 billion people to 1. better fed. changing from place to place and across time. And gender disparities have narrowed. from 53 percent in 1970 to 74 percent in 1998.
during this period has adopted an official poverty line based on a caloric norm of 2350 calories per adult equivalent per day1. and invest more on their poor people. clean drinking water and proper sanitation. The poverty line based on minimum caloric requirement of 2350 calories per capita per day approximates per capita expenditure of Rs. In preparation for the PRSP. the Planning Division has estimated a series of poverty estimates from 1986-87 to 2000-01 based on the respective HIES data bases. Both developed committed and to developing undertake countries their have respective Government of Pakistan has deliberated on the poverty related data and concurs with the IPRSP regarding the broad trends in the incidence of poverty.Chapter 4. limits their opportunities to secure employment. both developed and developing countries will have to join hands together to generate stronger economic growth complemented by actions to enhance the capability of poor people to participate effectively in growth process. they need to improve investment maintain climate in their countries and macroeconomic stability. The poor in Pakistan have not only low incomes but they also lack access to basic needs such as education. These estimates are reported in Table 4.1. in particular through increased market access for developing country exports. health. Pakistan‘s Poverty Reduction Strategy Paper (PRSP) has noted that while the extent and depth of poverty measured through different approaches varies depending upon the indices used and definition adopted.56 per capita per month at the prices of 2000-01 PIHS Survey . there was considerable agreement over the trends in poverty over recent years. poverty The line I-PRSP at the noted time that which Pakistan did not have an official and wellcontributed to the debate. the governance. There was broad consensus that the momentum gained in the fight against 1 The caloric norm in urban areas is 2150 calories and 2450 calories in the rural areas. 670 per month in 1998-99 and II. To facilitate in comparisons with existing measures. * The Head count ratio is based on the new estimated National Poverty Line of Rs.Yet there was considerable debate on the consistency. The vicious cycle of poverty is accentuated when the governance structures exclude the most vulnerable from the decision making process. debt relief. 748. improve poverty during the 1980‘s was lost during the 1990s when poverty continue to rise in the 1990s. The Planning Division. Poverty has many dimensions Pakistan. Income Distribution and Poverty goal. 748 per month in 2000-01. predictability and effectiveness of aid. and increase in the volume. Poverty and Inequality in Pakistan responsibilities in Monterrey and Johannesburg to achieve the MDGs. measurement and methodology of poverty accepted indicators. For developing countries. These efforts of developing countries must be complemented by stronger support from developed countries. results in their social exclusion and exposes them to exogenous shocks. rising to Rs. The latter undermines their capabilities.
b: The Head count ratio is based upon the officially notified national poverty line of Rs.6 20.99 2003 c 31.2 30.1 31. Between 1992-93 and 2000-01.56 per capita per month at the prices of 2000-01 PIHS Survey.8 28. poverty increased by about 5 percentage points to 32 percent with the biggest jump in poverty taking place in 1993-94.39 38.7 29.3 1990-91 26.Chapter 4. Overall agriculture instead of growing. Almost 68 percent people of Pakistan live in rural area and overwhelming majority of them depend directly or indirectly on agriculture for their livelihood.9 25.4 1996-97 29. a: The Head count ratio is based upon the officially notified national poverty line of Rs.8 22.1 26.54 per capita per month at the prices of 1998-99 PIHS Survey.7 26. 748. Recent estimates.8 30.91 34.6 25.1 26. Income Distribution and Poverty Table 4.6 33.1 22.6 percent in 200001.3 29.2 1987-88 29.6 28. it is inferred that the incidence of poverty has declined between 1986-87 to 1990-91.1 Trends in Poverty: Head Counts Ratio (Percent) 1986-87 Pakistan Urban Rural 29.8 Pakistan‘s agriculture. in fact shrank by 2. According to the new official poverty line.6 32. with 5% representative sample covering 726 households out of the original sample size of 14536 households. c: Head Count ratio based on the post enumeration survey of PIHS 2000-01.2 1992-93 26.6 1993-94 28. based on 5 .8 28.65 Source: Planning Commission.67 38.1 29. Subsequently the trend in poverty was reversed.67 2000-01 b 32.3 24. falling from 29 percent to 26 percent.1 26.8 22. One of the key reasons for the rise in poverty in 2000-01 has been the crippling drought which severely damaged Head Counts Ratio Trend 35 30 25 20 15 10 5 0 1986-87 1987-88 1990-91 1993-94 1996-97 1998-99 2000-01 Years 2003 29. was conducted in February 2003. 673.1 1998-99 a 30.
2 Trends in Income Inequality Percentage Share of Income Ratio of highest GDP Growth 20% to lowest 20% Rate Lowest Middle Highest 20% 60% 20% 1979 7.8 1987-88 8. the percentage share of lowest 20 percent declined from 7.346 0.3 43. Growth itself will depend on many Table 4.373 0.6 1992-93 6.0 49.407 0. has been mixed and moderate.410 0.2 percent to 49.6 48. better educated and more productive labour force.8 2. At the macro level.400 0. conducted in February 2003.4 7.355 0.1 5.410 factors including investment climate and increased opportunities for trade access to developed markets but also.9 48.5 1984-85 7.6 5. growth serves to reduce poverty and better enables households to send their children to school and obtain proper nutrition and health care.0 percent to 6.7 percent.5 5. What is required now is to sustain the growth momentum and enhance spending on social sector to make a credible dent in poverty.6 48.0 6.0 5.2 7.0 4. The ratio of highest 20 percent to lowest 20 percent of household income gives the income gap.2 Source: Federal Bureau of Statistics. Economic growth accompanied by macroeconomic stability remains critical for Pakistan to reduce poverty.5 43.1 49. Income Distribution and Poverty percent sample (726 households out of the total sample size of 14536) of the PIHS. On the other hand.3 1993-94 6. show a marginal decline in poverty.7 percent to 45. reaching 0.2 7. It appears that the rising trend in poverty has been arrested and the process of decline in poverty has just begun.Chapter 4. middle 60 percent from 43. It is pertinent to note the increase for the highest 20 percent during the same era. The Gini Coefficient of household income had been around 0. during the latter half of the 1990s.369 0. measured in terms of Gini Coefficient and household income share of the lowest and the highest 20 percent for rural and urban areas respectively in Pakistan. while the percentage share of middle 60 percent and highest 20 percent decreased from 47.2 8. Table presents the trend summary.7 5.2 44. from 47.0 6.6 5. Consequently the income gap that declined during the 1980s. health. water and other services. .410 in 1998-99.1 1. It can be inferred that during the 1980s. a period of sluggish economic growth.0 43.8 6.3 47.3 4.6 45.2 percent.400 0.7 45.6 percent to 44.7 1985-86 7. At the household level.4 1986-87 7.4 47. the percentage share of income of lowest 20 percent increased from 7.407 in 1990-91 and 0.9 1998-99 6. showed an increasing Year Household Gini coefficient 0.35 or below since the 1960s.4 44.4 1990-91 5.3 percent and from 45 percent to 43. Income Distribution Over the years. the pattern of income distribution.7 45.3 8.5 46.1 percent.6 49.5 6.7 percent respectively. Ministry of Finance Note: Data beyond 1998-99 are not available.348 0. a healthy.0 45.2 45.3 percent to 8 percent.3 47.5 1996-97 7. growth generates greater resources which can finance improved coverage and quality of education.7 8. the period of relatively higher growth rate.
0 0.32 1984-85 7.40 1996-97 7. high incidence of health problems.35 7.31 1990-91 6.36 6. In this context the strategy called for rapid growth in agriculture. the Participatory Poverty Assessment has been conducted at 54 field sites in very poor areas across all four provinces.8 0. persistence of huge fiscal and current account deficits and consequent unsustainable debt burden.4 48.0 44. NGOs.7 47.34 1985-86 7. in setting priorities and improving implementation.4 43.4 0. and civil society.38 6.0 50.37 5. housing and construction.41 1998-99 6.8 0.8 0.3 41. Key reasons for poverty identified were lack of education and skills.Chapter 4.7 50.9 40. Information Technology sectors. inaccessibility of capital.41 1992-93 7. human development and social Table 4. these required targeted policy interventions to provide quick relief through short-term employment opportunities.5 45. FATA. .33 1986-87 8.5 0.0 39.0 0.3 0. provincial and district governments. III. rise in population. The Gini coefficient corroborates this trend.42 6. and the The formulation of the poverty reduction strategy has benefited from the participatory process and effective consultations with diverse range of stakeholders including federal.0 0. social safety nets and financial assistance.6 47. Determinants of Poverty Year Urban Share Lowest 20% Highest 20% Gini Coefficient 6.1 0.0 0.1 0. The Gini coefficient also projects the same trend-line.1 0.0 47. outcomes.1 48.9 44.38 7.0 0.9 0.3 0. increase in unemployment. Poverty reduction strategic framework factors in the following issues: For growth to reduce poverty. and weak service delivery. This economic disparity during late 1990s had its foundations upon weak macroeconomic management.37 1993-94 7. The participatory process has been further enriched by social mobilization at the grassroots level through the rural support programs spread over 49 districts.0 0.35 7.40 7. lack of Since various forms of poverty in Pakistan were acute.39 6. it must emanate from sectors that have greater potential to generate employment. NA and AJK.3 Household Income Distribution (Rural-Urban) Rural Share Gini Coefficient Lowest Highest 20% 20% 1979 8.40 Note: Data beyond 1998-99 are not available.33 Source: FBS HIES Data.32 1987-88 8. To supplement.7 0. Ministry of Finance access to justice and empowerment.9 42.0 0. Income Distribution and Poverty trend during 1996-97 to 1998-99. Further breakdown into urban and rural categories implies that poverty has an accelerating partiality in rural areas while income distribution in the urban areas improved slightly.8 40. deteriorating governance and declining savings and investment.0 0.9 46.3 49.9 48. small and medium industries.0 47.
Improvement in public service delivery required resources and improvement in governance. There was need for a strong program of monitoring and capacity development. the democratically elected Government of Pakistan has strengthened its efforts to attack poverty. Hence the need to improve access to basic needs such as primary education. Pakistan‘s poverty reduction strategy now articulates a more comprehensive framework including policies for rural development. Poverty Reduction Strategy Reduction Strategy Paper (I-PRSP). Involvement of the poor in the formulation of these policies and management of their affairs was critical in attaining the objectives of the strategy. tax and tax administration reforms. resulting in consultations at district. and there was need to forge a broadbased alliance with civil society and the private sector in this regard. rule based fiscal policy. trade liberalization. (Detailed strategic action plans relating to each sector have been described in relevant chapters of the PRSP document). Government adopted comprehensive strategy in November 2001 to supportive infrastructure. a) Accelerating economic growth and maintaining macroeconomic stability Reform efforts geared at maintaining fiscal discipline. The approach incorporates development strategy that recognizes the central role of the provinces and local governments in achieving human development goals. and to meet the twin challenges of reviving broad based equitable growth and reducing poverty. The participatory process must broaden in the formulation of the full PRSP. Detailed costing of proposed initiatives would be completed in the preparation of the provincial PRSPs. Poverty reduction has taken center stage of Pakistan‘s development policy framework recognizing that poverty alleviation is not merely a by-product of the growth process. provincial and national levels to elicit views.Chapter 4. investment augmenting building climate regulatory and privatization. as well as impact assessment. b) Investing in human capital . Building upon the poverty reduction strategy in I-PRSP and benefiting from the participatory process. financial sector reforms. gender issues. framework. population welfare services. share experiences and understand expectations of the stakeholders. and Amid the growing of recognition Pakistan that the a incidence of poverty was increasing in Pakistan. employment and the environment. preventive health care. The Poverty Reduction Strategy of the Government of Pakistan is now based on the following five pillars. articulated in the Interim Poverty Additional income alone would not eliminate poverty unless the causes of poverty were addressed. The strategy aims to provide an integrated focus on a diverse set of factors that impact poverty. The rural development program also is embedded a more in the focused targeted human interventions pillar of the strategy. Availability of adequate resources for poverty reduction programs was important in determining the effectiveness of the strategy. Income Distribution and Poverty reduce poverty. IV. in order to win the fight against poverty.
154 1.415 9.Chapter 4. when anti-poverty public expenditures declined by an average of 0. Civil Service Reforms. Khushal macroeconomic targets as envisaged in the MTBF.508 1. Employees Old Age challenge.664 189 10.097 9.331 3. Term Budgetary Framework (MTBF) in its fiscal Micro Finance.017 133. Freedom of Information Act.838 12.988 51.133 1. and Indigenous Philanthropy. Food fiscal adjustment also takes place is a significant Support Program.349 6.380 11. and Anti Corruption Strategy.588 1. The government will be spending Rs.325 5.340 4. Drought Emergency Relief however with regards to poverty outlays.798 797 293 8.644 66. FY 2000-01 FY 2001-02 Roads.290 19.179 1. Access to Justice. livestock and fisheries per annum starting FY 2001-02.457 1.200 1. Table 4.497 56. Although the government has institutionalized the Medium These include Small & Medium Enterprises. Pakistan program.536 17. Fiscal Decentralization.280 13.256 98. d) Expanding social safety nets during 1995–2000. irrigation. through Human e) Improving governance Important reforms are Political and Administrative devolution. and Housing significant shift from past budgetary performance Finance. the government is committed to raising its budgetary Fund).043 1.513 2. This reflects a and rural electrification. Private Sector Pension 161 billion on pro-poor expenditures during the Fund. V. adhering to the (Tameer-e Pakistan Program. highways & bridges Water Supply & Sanitation Education Health Population planning Social Security & other Welfare Natural Calamities & Disasters Irrigation Land Reclamation Rural Development Food Subsidies Food Support Program TOTAL 8. Public Works Program and budgetary regime.390 1.982 3. Rural Development including expenditures atleast by over 0. Benefits Institution.4 Pro-Poor budgetary Expenditures (Rs in million) c) Augmenting targeted interventions Sectors Development.370 Source: Monthly Civil Accounts In addition to the government's anti-poverty expenditures a significant amount of public .576 912 8.495 July-Mar 2002-03 5. Ensuring that these expenditures rise over the medium term while Primary programs are Zakat Program.2 percent of GDP agriculture.332 4. Income Distribution and Poverty Major thrust sectors include comprehensive reforms in education including education.061 122. Trends in PRSP Expenditures The following table gives the expenditure details on pro-poverty expenditures.25 percent of GDP per annum.211 1. health and population capacity building for service delivery National Commission on special welfare. and involvement of private sector through public-private partnerships and NGOs. current fiscal year.
223 EOBI 100.147 815 4. Through recent government initiatives such as Food Support Program (FSP).366 1.953 42.434 1.858 2. Table 4.644 4.091 10.728 270.916 1.215 7. and public-works programs.089 310 1.169 1.546 Zakat 930. .378 FY 1998-99 6.002 17.434 222 9.136.000 318.342 3.593 2.022 1.419 Total No.986 5.667 Land distributed (Acres) 153.144 4.010.803 2.294 49.197 SOCIAL SAFETY NETS (Number of beneficiaries) Food support program 1. of beneficiaries 2.358 . Pakistan Poverty Alleviation Fund (PPAF) and the Agricultural Development Bank of Pakistan (ADBP).731 1. which include: cash transfers.445 FY 2001-02 5.974 1.850 0 114.101 0 93. in-kind transfers. Income Distribution and Poverty resources are aimed at providing social protection to the poorest segments of society.553 54.657 July-Dec 2002-03 2.330 617. and micro-credit disbursements by Khushali Bank (KB).074 9.261 Micro-credit disbursements 577 TOTAL 3.100 49.890 FY 1999-00 5.243 8.084 14.722 541 3.Chapter 4.847 419 3.069 1.607 FY 1997-98 5.009.829 EOBI disbursements 1.700.365.189 103. and land transfers the government has significantly increased assistance to those most in need.947 214 9. Social safety transfers by the government are divided into three broad categories.494 2.606.750 53.5 Pro-Poor Non budgetary Expenditures (Rs in million) Sectors FY 2000-01 Zakat disbursements 1.547 2.406 15.538 1.916 State land recipients 14.552 7.231 148. Employees' Old Age Benefits Institutions (EOBI).174 6.852 7.339 0 100.932 Table 4.513 9.274 939 6.439 2.097 0 103. Government Programs in this regard are Zakat. Khushal Pakistan Program (KPP).134 5. highways & bridges Water Supply & Sanitation Education Health Population planning Social Security & other Welfare Natural Calamities & Disasters Irrigation Land Reclamation Rural Development Food Subsidies Food Support Program TOTAL FY 1996-97 4.000 225.043 5.000 132.6 Pro-Poor budgetary Expenditures (Past Trends) Sectors Roads.604 13.384 Micro-credit 48.333 3. Food Support Program (FSP).731 777 1.200.252 Temporary employment (KPP) 400.
Chapter 4. Income Distribution and Poverty Table 4.7 PRSP EXPENDITURES PRSP Non-Budgetary Expenditures (2002-2006) BASELINE PROJECTIONS (Actuals) (Based upon FY 2001-02 actual expenditures) FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 FY 2005-06 Rs. Mill % GDP Rs. Mill % GDP Rs. Mill % GDP Rs. Mill % GDP Rs. Mill % GDP 5,169 0.13 9,545 0.23 9,650 0.21 9,258 0.19 5,401 0.10
Zakat System Social Security 1,366 0.03 1,489 0.03 1,608 0.03 1,753 0.03 1,894 0.03 (EOBI) Micro credit 1,588 0.04 3,354 0.08 5,823 0.13 9,288 0.19 13,858 0.26 TOTAL 8123 0.21 14,389 0.22 17,081 0.42 20,299 0.48 21,153 0.40 SOURCE: Zakat: Ministry of Religious Affairs; Social Security: Employees Old Age Benefit Institution; Housing Finance: State Bank of Pakistan; Micro credit: Khushali Bank, PPAF, ZTBL The following table presents the recommended budgetary expenditures at the rate of 0.2 percent allocations for 2006-07 with the base year of GDP per annum. allocations being for 2000-01, increasing pro-poor Table 4.8 Future projections for Pro-Poor Budgetary Expenditures
PRSP EXPENDITURES BASELINE (Actuals) FY 2001-02 Rs. in % GDP Millions 36,836 0.99 96,659 2.59 133,495 3.58 6,340 4,644 PROJECTIONS (Based upon FY 2001-02 actual expenditures) FY 2002-03 FY 2003-04 FY 2004-05 Rs. in % Rs. in % GDP Rs. in % GDP Millions GDP Millions Millions 44,573 1.10 53,366 1.20 60,621 1.25 116,957 2.88 134,267 3.02 154,407 3.18 161,529 3.98 187,633 4.23 215,028 4.42 MARKET ACCESS AND COMMUNITY SERVICES 0.17 7,671 0.19 8,807 0.20 10,128 0.21 0.12 5,619 0.14 6,451 0.15 7,419 0.15 FY 2005-06 Rs. in % GDP Millions 68,965 1.29 177,568 3.33 246,533 4.62 11,647 8,531 0.22 0.16
Development Current TOTAL Roads, Highways & Bridges Water Supply and Sanitation Education Health Population Planning Social Security and Welfare Natural Calamities & other Disasters Irrigation Land Reclamation Rural Development Food Subsidies Food Support Program TOTAL
HUMAN DEVELOPMENT INPUTS
66,290 19,211 1,331 3,664 189 1.78 0.52 0.04 0.10 0.01 80,211 23,245 1,611 4,433 229 1.97 0.57 0.04 0.11 0.01 92,082 26,686 1,849 5,090 263 2.07 0.60 0.04 0.11 0.01 105,894 30,688 2,126 5,853 302 2.18 0.63 0.04 0.12 0.01 121,779 35,292 2,445 6,731 347 2.28 0.66 0.05 0.13 0.01
10,133 1,838 12,325 5,513 2,017 133,495
0.27 0.05 0.33 0.15 0.05 3.58
RURAL DEVELOPMENT EXPENDITURES 12,261 0.30 14,076 0.32 2,224 0.05 2,553 0.06 14,913 6,671 2,441 161,529 0.37 0.16 0.06 3.98 17,120 7,658 5,000 187,633 0.39 0.17 0.11 4.23
16,187 2,936 19,688 8,807 5,000 215,028
0.33 0.06 0.40 0.18 0.10 4.42
18,615 3,377 22,642 10,128 5,000 246,533
0.35 0.06 0.42 0.19 0.09 4.62
Source: Ministry of Finance VII. Monitoring and Evaluation Mechanisms
Chapter 4. Income Distribution and Poverty Well targeted anti-poverty outlays and social transfers are essential ingredients of a comprehensive poverty reduction strategy. The real test of public expenditures lies in their impact. One of the central components of the PRSP is creation of a system to monitor the implementation reduction and outcome The PRSP of poverty policies. monitoring Nevertheless, information/ data sources for
intermediate indicators in Pakistan are not readily available and reporting systems are not tuned for quick reporting in some cases. However, as part of the government‘s anti-poverty efforts, information systems are being developed/strengthened to track intermediate indicators, their measurement methodologies, definitions, and sources for timely and accurate review of policy interventions through a comprehensive consultative process as detailed above. This process is being pushed further as the baseline information/ data on education and health sector intermediate indicators has been finalized. Core Welfare Indicators questionnaire (CWIQ) survey will be conducted for the first time to capture data at the district level for intermediate indicators in social sectors to determine baselines and it will then be updated on annual basis. While the monitoring framework can help identify efficiency of the policies, additional work will be needed to understand why policies could not yield the desired output. Making these judgements will typically necessitate more indepth studies, focused on specific questions and using a different approach (such as detailed analysis at district level particularly when primary health care is now the responsibility of the district governments). VIII. Risks and Challenges in implementation
framework includes a set of indicators that track policy inputs, their outputs and progress towards intended policy outcomes. (pro-poor expenditures) PRSP input process have been clearly
articulated and a system to monitor these expenditures on a quarterly basis is in place. To monitor outcome with and the impact provinces in human line development, the government has established in conjunction and Ministries, a comprehensive set of intermediate and impact indicators that can be tracked on a short/medium term and long term basis, linking public expenditures with results on the ground been developed with participation of provincial governments. These expenditures are in line with the government‘s macroeconomic framework and have been protected and tracked over the medium term. Key measures taken to strengthen the monitoring institutional Management and evaluation system & include Health monitoring Information through System Education
Management Information System, annual Core Welfare Indicators Questionnaire survey for third party validation of 13 intermediate indicators in social sectors & to monitor improvement in service delivery, Pakistan Integrated Household Survey every 3rd Year to monitor outcomes, establishment of PRSP secretariats in Provinces, and formation of National Steering Committee for It needs to be appreciated that effective implementation of Pakistan‘s Poverty Reduction Strategy comes with some risks and challenges. Firstly, the efficacy of reform agenda will require pro-active collaboration among many ministries and agencies in the context of avowed
continuation of reform program and policies by the elected governments. Monitoring the review and policy adjustment. performance will be a major undertaking since Regular information on intermediate indicators there are gaps in information available. is a valuable guide for evaluating the efficiency of Developing a reliable and comprehensive public policies and the use of public funds. database for monitoring and evaluation of PRSP
Chapter 4. Income Distribution and Poverty process is a multi year undertaking. Secondly, since the PRSP approach is an innovative initiative in the provincial governments, and the provincial monitoring units are at a nascent stage having capacity constraints, therefore capacity building will need to be addressed quickly. Thirdly, the implementation of programs under the decentralized and autonomous system of district governments may be made consistent with the agreed set of preferences of the district government vis-à-vis the provincial and federal priorities. A mechanism should be in place to address any such divergence. Fourth concern is the continued support of Pakistan‘s international development partners in development process in Pakistan as waning interest could jeopardize the significant progress made over the last three and a half years. The success of poverty reduction strategy will critically depend on its effective implementation, constant evaluation of its impact and regular feedback to policy makers for appropriate adjustment in the policy and institutional regime.
Chapter 5. Fiscal Development
5. Fiscal Development
percent, leaving only 36 percent revenues to be spent on development program in general and social sector in particular; defense, civil Sound fiscal policy fosters macroeconomic administration, etc. It was a difficult task to stability, which in turn, is the cornerstone of any finance developmental activities of the successful efforts to increase private sector development Government with such a meager resources. and economic growth. Economic growth on the other hand, is the single most important factor influencing No wonder, the development budget poverty. Sound fiscal policy should therefore be continued to shrink from 6.5 percent of GDP to 3.0 regarded as a key component of any poverty reduction percent during the same period. Both physical strategy. Like many other developing countries, fiscal profligacy has been the main underlying cause of macroeconomic instability in Pakistan during the 1990s, which, in turn, has impeded the medium-to-long run economic growth prospects. Persistence of large fiscal deficit (on average, 7% of GDP) resulted in sharp accumulation of public debt—rising form Rs 928 billion in 1990-91 to Rs 3231 billion in 1999-2000. As percentage of GDP, public debt increased from 91.3 percent to 103.0 percent during the same period. As percentage of total revenue, public debt rose from 541 percent to 630.4 percent. The debt servicing liability continued to rise as a result of unsustainable rise in public debt. In 1990-91, almost 38 percent of total revenues were consumed to finance debt servicing and by 1999-2000 it reached almost 64 and human capital deteriorated sharply over the years, due mainly on account of declining public sector investment. Private sector investment also declined for two reasons. Firstly, as a result of persistently large fiscal deficits and the associated rising stock of public debt, interest rates remained high during the 1990s and crowded out private sector investment. Being complementary in nature, a decline in public sector investment caused private sector investment to decline as well. Consequently, the overall investment rate decelerated during the 1990s and ultimately reduced economic growth relative to potential. When a country sustains such a large fiscal deficit for such a long period of time, it is bound to face serious debt problem and associated decline in investment and growth, and consequent rise in poverty. This underlines the importance of a credible fiscal policy for achieving higher investment and growth.
Chapter 5. Fiscal Development serious economic distortions.
Various attempts were made in the past to Inequitable: treat individuals and business in achieve fiscal consolidation. Despite imposition of similar circumstances differently. new taxes, additional tax measures, and curtailment Tax administration and enforcement of non-essential expenditures, these efforts did not Unfair: are selective and skewed in favour of achieve fiscal consolidation, as Pakistan continued those with the ability to defeat the to sustain large fiscal deficit (on average, 7.0 % of system. GDP). Although fiscal consolidation could not be The combined effects of these weaknesses achieved, structure of taxes did improve over the resulted in low and stagnant tax-to-GDP ratio on years (More on this issue later). Why past attempts the one hand and low tax elasticity and buoyancy could not achieve desired results? The answer lies on the other. The low and stagnant tax- to-GDP with Pakistan's tax structure. ratio compelled successive governments to generate resources through surcharges and non-tax Like in most developing countries revenues [see table 5.1]. Pakistan's tax structure has suffered from several weaknesses. These are:
Complex: difficult to administer and comply with. unresponsive to growth and discretionary policy measures. In other words, elasticity of taxes was in general, less than unity.
Inefficient: raises little revenue but introduce Table 5.1 Fiscal Indicators as Percent of GDP (MP) Overall Fiscal Deficit Total Expenditure Current Development* Total Rev. Revenue Tax NonTax
GDP Real Growth
4 13.E: Budget Estimates.5 4. B.6 6.1 4.5 20.7 26.2 19.2 13.4 3.7 3.2 4.3 23.2 5.0 3.3 17.6 1.4 4.9 3.4 13. ** Fiscal deficit figure for these years is after adjustment of statistical discrepancy.0 22.1 6.8 7.6 5.9 19.7 13.0 15.3 18.9 13.9 2.6 2.1 17. it is a fact that over the years the structure of current expenditure has become inflexible.4 7.4 22.7 13.4 7. Large resources were pre- empted by expenditure of essential and obligatory character.9 24.2 3. (Budget Wing) deficit of autonomous bodies.8 Public Sector Development Program plus surplus/ Source: Finance Division.5 21.2 13.9 19.8 22.4 7.4 5. Fiscal Development 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00** 2000-01** 2001-02** 2002-03 (BE) * 5. such as debt servicing.2 23.5 4.2 18.2 5.2 17.6 25.7 6.2 17. Figure-1: Revenue-Expenditure Gap (As % of GDP) 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Revenue Expenditure On the expenditure side.8 14.8 18.9 16.5 17.7 4.5 8.9 12.5 6.1 3.7 4.4 5.0 18.1 16.3 16.5 3.4 22.8 19.4 13.3 19.Chapter 5.6 5.8 18.1 8.2 12.7 26.1 3.5 18.5 3.4 3.4 13.8 2.1 5.2 2.7 3.1 20.0 22.2 3.7 22.6 20.6 4.5 2.1 6.6 12.5 4.9 15.4 2.4 3.3 4.8 4.8 16. Almost 64 percent of total revenues were devoted to debt servicing .9 5.3 18.1 6.
servicing the country's public debt puts large claims on government resources. Decline in development spending has not only caused deterioration in human and physical infrastructure but has also constrained the future growth potential of the country. with a view to reducing tax rates. the rising trend in the interest burden on public debt threatened the sustainability of the macroeconomic stance. broadening the tax bases to hitherto untaxed or under taxed sectors. In addition.Chapter 5. The reduction in tax rates was intended to stimulate investment and production on the one hand and promote voluntary tax compliance on the other. Without going into the details as well as to conserve space. all these reforms are documented in Box-I. which reduced the Government's capacity to spend on key development activities. Broadening of tax bases was intended to ensure fair distribution of tax burden among various sectors of the economy. and shifting the incidence of taxes from imports and investment to consumption and incomes. it also created a need for higher taxation which undermined efficiency. this decline has occurred primarily at the cost of development expenditure. Second. FISCAL REFORM . The government began to launch a wide-ranging tax and tariff reform on the one hand and fiscal transparency on the other. the total expenditure-toGDP ratio exhibited a declining trend in the 1990s. leaving little room for economizing Realizing the weaknesses of Pakistan‘s tax structure a concerted effort was launched some three and a half years ago. Persistently large fiscal imbalances therefore raised two major concerns. Fiscal Development alone. First. Although. expenditure.
Separation of audit and accounts: legislative measures adopted. To create taxpayer friendly environment a new income tax ordinance on universal self assessment basis with system selected audits.189 new income tax payers and 34000 sales tax payers to the tax base. Fiscal Development Box-I FISCAL REFORMS INTRODUCED DURING LAST THREE YEARS TAX REFORMS All tax whitener schemes eliminated. Greater public access to fiscal data has been ensured through publication of quarterly fiscal reports.‖ Publication of fiscal reports verified by the AGPR. the Sales Tax Automated Refund Repository (STARR) has been set up.Chapter 5. Wealth tax abolished. tax ombudsman‘s office established. Restrictions on agriculture exports removed. spread over 2001-03: Maximum tariff brought down to 25 percent in 2002-03 from 92 percent a decade ago. Fiscal reform unit established. GST broadened and streamlined. while ensuring no inadmissible payments. Promulgation of anti-dumping law consistent with WTO. This exercise added 234. Fiscal responsibility law is expected to be put before the parliament by end-June 2003. A Pilot Customs Administration Reform Project would be established by November 2003. Developing an automated assessment and valuation system Large taxpayer unit has been established in Karachi Medium taxpayer unit established in Lahore A model medium taxpayer unit has started working in Lahore to test the re-engineered income tax system TARIFF REFORMS Public announcement of tariff rationalization. number of taxes at the federal and provincial level has reduced. Import liberalization measures adopted for agricultural and petroleum products. Minimizing the use of excise duties in tariffs. minimal exemptions. FISCAL TRANSPARENCY The government is already on road to Accountable Fiscal Management Framework (AFMF) that specifies assurances of accountability and transparency of fiscal management. To give an end to multiplicity of taxes. processing and sanction of refund claims. and more equitable rates have been introduced. . Grass roots reforms in tax administration started. This will help in development of paper less (Electronic) receipt. Number of tariff slabs reduced from 13 to 4 in the same period. A two-tier agricultural income tax introduced. In order to ensure expeditious Sales Tax refund payments. Formation of ad-hoc public accounts committees at federal and provincial level. Tax survey and documentation exercise undertaken. For effective dispute resolution mechanism. Establishment of ―new system of financial controls and budgeting.
reflecting not only the effectiveness of their tax administrations but also taxpayers attitude towards taxation and towards government in general. In fact. Taxpayers will comply better if they believe that failure to pay due taxes entails substantial risk of . First. There are many lessons that can be learnt from other countries‘ experiences where they have tried to improve tax administration. Developing countries exhibit a wide variety of tax compliance levels. Tax administration plays a crucial role in determining the real (or effective) tax system. tailored to the available resources. a critical core of local expertise is needed to take full advantage of such assistance.Chapter 5. Tax collection system designed to eradicate corruption and evasion has mostly failed. tax structure and tax administration are interdependent and should be considered as such. While some crucial initial technical support can sometimes be obtained from foreign experts. as opposed to the statutory tax system. Strategy in this context simply means a comprehensive plan that assigns clear priorities to the tasks that must be performed. Successful tax administration reforms must have these three main ingredients. It is therefore. The best reform strategy applied to the most simplified system will fail if there is a lack of political will to implement it. Corruption and tax evasion are widespread. as well as a certain degree of technical competence. There is. however. Third ingredient for successful reform of tax administration is a strong commitment to reform at both policy-making and managerial levels. The goal of tax administration is to foster voluntary tax compliance. that is. and commitment. will ensure improved tax administration in any country. It should be emphasized that gimmicks or quick fixes are not of much use in resolving tax administration problems. indicating that these problems are structural in nature. strategy. generally argued that tax administration is tax policy in developing countries. it is critical to ensure that changes in tax policy are compatible with administrative capacity. an essential pre-condition for the reform of the tax administration is the simplification of the tax system to ensure that it can be applied effectively in the generally low compliance contexts of developing countries. It is time consuming and requires patience. and that. Indeed. there is a growing conviction among tax policy specialists in developing countries that policy change without administrative change is nothing. Tax compliance will increase if there is an effective tax administration. Even more important is the presence of a managerial team fully committed to taking the steps necessary to improve the quality of tax administration. The main reason for this failure is that most tax administrations systems have been influenced by the structure of tax systems in developing countries. with full political support of the highest authorities. Fiscal Development TAX ADMINISTRATION REFORM Tax administration plays a vital role in the success or failure of any attempt to reform taxation. no single set of prescriptions—no secret recipe—that once introduced. especially in developing countries. there is a need for a strategy for the successful reforms of the tax administration. simplification. Second.
the ability of the tax administration to impose effective penalties is perhaps the best way to shape the behaviour of taxpayers. October. In a country where the degree of compliance is low. While sales tax is already on self assessment basis. the Government of Pakistan approved a medium-term program for reforming tax administration in November 2001.f. 2002 to facilitate taxpayers. Rawalpindi Peshawar. Some of the milestones already achieved under tax administration reform are summarized below: i) Re-organization of CBR Headquarters on functional lines CBR was administrated on cylindrical basis in the past where policy and operational functions were performed by the same Member. Five such MTU will be set up in Karachi.e. stop filing. audit. and income tax. If tax compliance is to improve. Fiscal Development being penalized in a relatively severe fashion. The unit has 300 Karachi based large taxpayers and covers 50% of the revenue of the country's largest city. 2002 at Karachi. the tax administration must have effective action to deal with these shortfalls. Fully cognizant of the fact that the success of tax reform would depend on the effectiveness/efficiency of tax administration. CBR has developed a Custom Administration Reform Plan (CARE) and has decided to start a pilot project to test the new approach for imports and exports. and delinquent taxpayers. involving 34 verifications and 62 steps. Since then. 1. The Karachi International Container Terminal (KICT) which clears 25% of imports through Karachi sea port has been selected as the pilot site. fiscal policy. Its performance has so far been impressive and has encouraged the government to set up another LTU in Lahore in February 2004. encompassing all the three domestic taxes i. Establishment of Large Taxpayer Unit Large Taxpayer Unit (LTU) has been established from July 1. income tax has also been brought under the USAS through the Income Tax Ordinance 2001.e. Sales Tax Automated Repository (STARR) Project Refund iv) v) ii) vi) . Universal Self Assessment System Universal Self-Assessment System (USAS) is the corner stone of the reform strategy of CBR. and human resource management. The government is currently examining the process to bring custom collection also under self assessment coupled with audit based on risk assessment for various classes of taxpayers. tax evaders. Customs Administration Reform (CARE) The existing cumbersome manual system is highly personalized. central excise duty. Five new Members from private sector have been recruited to look after the specialized skills like taxpayer education. iii) Medium Taxpayer Unit A model Medium Taxpayers Unit (MTU) has started working in Lahore w. sales tax. Quetta and Islamabad by July 2004. There is a face to face contact between taxpayer and tax collector and the taxpayer have to bear extra cost on account of inefficiency of the system. major efforts have been made to improve tax administration. information technology. The crucial test of an effective tax administration is that how effectively it deals with unregistered.Chapter 5.
3 percent. The software has been developed and central data base office has been established. A new income tax organizational structure containing functions of taxpayer service. All the laws. enforcement. collection. revenue deficit has been narrowed. 5 to 7 taxpayers‘ facilitation centers at the various stations of the country will be established. overall budget deficit as percentage of GDP has declined.0 percent of viii) . 152 billion more revenue or tax collection has increased by 49. OUTCOMES OF REFORMS The wide-ranging tax and tariff reform as well as reform in tax administration have started paying dividends. vii) Taxpayers Facilitation Centers With a view to promote voluntary compliance in a self assessment system of tax administration. legal and enforcement powers are exercised by one person is being replaced by a functional system. fully automated. Income Tax Organization Structure The existing structure of income tax. (ii) Implementing new and effective decision making processes. Pakistan is now moving towards fiscal consolidation but much more efforts will be needed to achieve consolidation on a sustained basis During the last four years.Chapter 5. legal. The implementation of the first phase has been completed and the system is being evaluated and reviewed for the development and implementation of the second phase of the project. and (v) Redundancy planning and sequencing. A home grown automated reengineered Tax Management System has also been developed which will drastically reduce the locations as well the personnel in the income tax organization. the CBR has collected Rs. The reform of tax administration is not only focusing on a change in skills but major efforts are underway to transform the organizational culture. and primary surplus has increased. The strategy revolves around information technology based processes. These include (i) HR audit. The second phase will be implemented by July. audit. rules. taxpayer education and facilitation has been given a priority. which is circle based where all administrative. enabling quick refund and identifying high risk cases for scrutiny and audit. The implementation of IT software and hardware. Consequently. (iv) Improved compensation package. public debt. Fiscal Development The reengineering and automation of sales tax refund system has been identified as essential component of the reform of sales tax. 2003 and on its completion the sales tax refund system will be transformed into a simpler. circulars have been placed on website. both in absolute term as well as in percentage of GDP has declined. (iii) Competency /Skill enhancing training programs. risk based system. Significant improvements in human resource management function are in hand. judicial. information technology. Taxpayer facilitation centers are being established. HRM and internal control has been developed and is being presently tested at MTU in Lahore. The overall fiscal deficit which averaged almost 7. By July 2004. Tax collection by the Central Board of Revenue (CBR) has picked up. and efficient use of technology is aimed at achieving the objective of minimum taxpayer interface and to allow the tax administration to be taxpayer friendly while reducing compliance costs. information processing.
Reduction in relative share of trade taxes and increases in the relative shares of taxes on income and consumption could be taken as evidence of an improvement in the tax system. the share of indirect taxes declined from 82 percent to 68 percent during the same period.2 percent. Even within the indirect taxes. Table 5. Revenue deficit (the difference between total revenue and total current expenditure). Its shares in total taxes and indirect taxes were 22. Improvement in revenue deficit would increase national savings which. the share of direct taxes in total taxes (collected by the CBR) increased from 18 percent to 32 percent—almost doubled in 13 years (See table 5. the structure of taxes has undergone considerable changes since the beginning of the 1990s.6 percent in 2002-03. respectively. The share of sales tax on the other hand increased dramatically from 14.0 percent of GDP to 1.0 percent. Primary balance (total revenue minus non-interest total expenditure) remained in surplus to the extent of 1. would reduce the country's dependence on foreign savings to finance domestic investment.5 percent of GDP.2 Structure of Federal Tax Revenue Tax Revenue As % of Direct GDP Taxes (Rs.6 percent to 66 percent in indirect taxes during the same period.5 percent. dramatic changes have taken place.4 percent to 45 percent in total taxes and from 17. Accordingly.2). Collection from custom duty used to account 45 percent of total tax collection and 55 percent of indirect taxes in 1990-91. Pakistan has also witnessed significant changes in its tax structure. Revenue efforts should be assessed in terms of the objective of improving the underlying structure of the tax system. respectively in 1990-91. These have now been reduced to 10. Its share has now been reduced to 13 percent and 19 percent. This is the result of the tariff reform implemented by the successive governments since 1990-91. has been narrowed from 3.3 percent and 15. Fiscal Development GDP during the 1990s.2).5 percent and 27. has been reduced to 4. Central excise as a tax is loosing its importance and gradually being faded out. Billion) Break-up of Indirect Taxes Central Custom Sales Excise Year Total (CBR) Indirect Taxes . in turn. Firstly. An improved tax structure would reduce the dead weight loss associated with raising a given amount of revenue. a measure of government dis-saving. As a result of reforms. Notwithstanding improvements in various fiscal indicators.Chapter 5. respectively during the same period (See Table 5. to place the public finances on a permanently sound basis.
2] 234.4) (18.7) 61.9) (15.2 [67.0] 29.5 (18.0 51.1 [64.7 55.0) 59.4] 36.5] 267.3 ] 148.7 47.3) (32.6 [31.6 116.7 308.5 31.5 [76.0 153.9) 86.0 (46.0] 110.5] 124.0 (54.0 44.6 [64.0 11.0 12.5 (49.2) (27.3) (26.7 [24.1 (24.2] 91.0] 198.0 11. Fiscal Development 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03(B.5 (52.0 11.0 153.9) (17.0] 129.8) (26.8] 112.7] 312.6 [32.0 43.Chapter 5.6 (26.6 392.0 [79.4] 78.5 23.0 (54.5) 61.0 30.0 [20.E) 111.8 (33.6] 190.4) (27.0 (43.3 403.9 62.0 10.0 [18.3) (30.0 142.1] 103.2] 261.5) (26.9) (18.2 30.7 [68.0 (47.0] 43.0 11.6) (26.0 [30.0 [67.5 226.3) (57.0) (36.8] 142.6] 116.1] 85.0 [82.4 34.0 282.5) 62.9) 74.4) (49.2) (26.0 13.1 11.0 [69.0) (26.0 16.0 268.0] 113.1) (28.7) (20.2 172.3 72.8 166.Source: Central Board of Revenue ] are shares in total taxes while the figures in parentheses ( ) are individual taxes in taxes.8) 89.0 12.3 11.5 346.5 50.9) (65.6 49.2 (18.4 [65.6) 65.1) 64.0 21.7) 65.6 47.1] 62.0 [29.0 55.0 [27.5 53.9) 77. 20.4 [35.0 25.1 [74.0 56.7) (18.0 293.0 12.3) (63.9) (23.9] 164.3 [35.6 11.0 [70.7) (23.0 60.7) (28.0 50.0 (39.0 [72.9] 190.5 [35.6) (27.8] Note: Figures in square brackets [ shares of the indirect Fig-2: Federal Tax Collection (1990-91 & 2002-03) (% Share) .4 [25.5 [32.9 460.3) 47.0 205.2) .0 11.9] 197.
1% C. enshrined in a Fiscal Responsibility Law. Pakistan has already drafted a rule-based fiscal policy. Pakistan has succeeded to a considerable extent in changing the composition of its taxes but much more effort will be needed to enhance the share of direct taxes in total taxes. The rule basically represents the constraints and prevents government taking fiscally irresponsible route.1% Custom 45. fiscal deficit has Although tax reform and reforms in tax administration have started paying dividends in terms of higher tax collection. and will be presented to the Parliament before the end of the current fiscal year for legislation.Excise 22. a rule-based fiscal policy is absolutely necessary for achieving long-run fiscal sustainability.0% Direct Tax 31.0% Sales Tax 43.8% The pace of changes in tax structure. fiscal consolidation requires prolonged .Chapter 5.0% 2002-03 Custom 15.0% Sales Tax 15. Fiscal Development 1990-91 Direct Tax 18. Prolonged commitment to fiscal discipline can only come from a rule-based fiscal policy.0% C. The basic philosophy of tax and tariff reform has been to move away from investment and production based taxes to income (direct taxes) and consumption (sales tax) based taxes. persistence of large fiscal deficit has been the major source of macroeconomic instability in Pakistan during the 1990s.Excise 10. Pakistan sustained a budget deficit of 7. the share of sales tax increased from 36 percent to 66 percent. commitment to fiscal discipline. CONSOLIDATED BUDGETS (FEDERAL & PROVINCIAL) IN 2002-03 As stated earlier.0 percent of GDP. gained considerable momentum over the last four years. particularly in indirect taxes. For a country like Pakistan which remained fiscally irresponsible for a very long period of time. On the other hand. The share of custom collection declined from 33 percent to 19 percent while the share of central excise declined from 31 percent to 15 percent since 1998-99. As a result of sustained efforts. On average.
5 71.1 15.9 -29.7 179.1 5.3 4.8 892.7 42.8 4.1 152.7 72.5 422.9 54.2 3.0 4.Civil Govt.) 553.8 97.3 4. Overall Fiscal Deficit As % of GDP (mp) 16.9 13.3 74.6 envisaged for 2002-03 with a fiscal deficit target of 4.9 126.Interest .3 for details].9 66.7 212.8 543.7 15.Privatization Proceeds Total Revenue .9 12.Chapter 5.2 5.6 245.2 17.7 134.9 645.8 3.2 -13.Interest Payment .9 19.8 146.1* 189.2 524.Non-Tax Revenue Total Expenditure Current Expenditure .8 56.0 -186.1 478. Further fiscal consolidation was succeeded in achieving the fiscal deficit target of 4.8 18.8 -179.6 166.E) 706.3 30.4 186.0 92.6 -13.Non-Bank .1 3. Fiscal Development been on declining trend since 1999-2000.2 17. Statistical Discrepancy C.2 0.0 21.8 4.6 23.7 8.1 459.5 5.5 728.7 479.3 6.0 8.3 Consolidated Budget (Federal and Provincial) (Rs. Table 5.3 3.7 120.0 22.3 530.0 111.9 6.0 234.4 717.2* 700.8 14.1 2.0 2.4 13.0 2001-02 (R.2 89.8 3.4 2002-03 (M.All Others ii) Provincial b) Development Expenditure PSDP** c.7 59.4 102.0 -33.0 826.2 101.1 163.0 57.0 -189. Billion) 2000-01 (P.Tax Revenue .3 158. Total Revenue a) Tax Revenue i) Federal .6 125. As a result of prudent fiscal declined to 5.6 13.Surcharges .0 % Change 13.0 0.0 19.3 403.Defense PSDP C.5 23. Overall Fiscal Deficit Financing i) External ii) Domestic .9 85.0 22.9 3. Total Expenditure a) Current Expenditure i) Federal .1 12.1 553.2 70.A.6 - .2 18.9 4.4 30. Fiscal deficit percent of GDP.Other ii) Provincial b) Non-Tax Revenue B.0 175.5 6.CBR . .8 22.0 441.9 115.5 185.1 82.3 1.Bank .0 56.5 392.B.3 149.6 3.6 percent of GDP in 2002-03 [See Table 5.0 6.3 - A.E) 624. Pakistan this point in 2001-02.5 131.Defense .2 12.1 18.2 458.1 5.2 percent in 2000-01 and remained stable at management and better tax enforcement.
A: M. Fiscal Development GDP at Market Price (Rs Bln) P.7 Provisional Actual Source: Finance Division.20 billion for CBR bonds) is not being included.Chapter 5.52 billion (Rs.32 billion for KESC recapitalization and Rs. A statistical discrepancy of Rs. (Budget Wing) Modified Budget Estimates One off expenditure of Rs.E: * ** 3423 3629 4018 10.B. The difference between development expenditure and Public Sector Development Program (PSDP) is the net lending to PSEs. 13 billion is adjusted for OFD calculation. .
2002-03.1 percent current fiscal year.3 billion which is 1.3 percent consist of revenue collected by the Central Board of higher than last year. and year's refund /rebate was extra-ordinary high as some other minor collections.154. There is a last 2001-02 and the first quarter (July-September) of the need to examine the higher refund/rebate during current fiscal year (2002-03) when it grew by 16.Chapter 5. sales tax grew by modest 4.1 import stage shows an increase of 18. cement. Fiscal Development Total revenue is estimated at Rs. respectively. thus surpassing the target by a small margin Stagnation in growth in central excise is mainly due (See Table 5. the and 16. The per cent of non-tax revenues. The and provincial tax revenues which grew by 15. The overall refund stood revenue spinners (cigarettes.706. natural gas.1 percent. POL product) to custom duty. It may be pointed out that last Revenue (CBR). this increase 2002-03 as against Rs.9 percent of the total revenues and 21.5 billion—almost same as of last year. registering an increase of 59. largely come from sales tax and custom duty.1 billion against the target of Rs Rs.9 percent higher than last year in receipts grew by 15. imported goods. The slower growth of noncollected from domestic economic activity grew by tax revenue is because of decline in the profits of State percent. The analysis of individual taxes reveals interesting developments. CBR Revenue government had decided to clear backlog. including raw materials for The consolidated (federal and provincial) tax revenue consumer and capital goods. While overall tax products.0 percent. The 16.6 percent.4 percent overall sales tax on net basis stood at Rs. The consolidated tax billion which is 19. tax revenue grew by 15.1 billion in collection increased by 15. More importantly.0 percent in the first ten (e. Net tax collection during the first ten months (July-April) of the current fiscal year The net collection of central excise stood at (2002-03) stood at Rs 352. thereby.8 percent over the collection generated in the last quarter (April-June) of year‘s extra-ordinary high refund. This impressive growth in .0 percent higher than last year.7 percent while non-tax revenue the same period. This is also true for direct taxes The CBR sustained the momentum of tax where the refund is higher by 35.0 percent.0 billion. respectively.1 and 22. at Rs.624.4). beverages and beverages unusually higher refund of last year (Rs. Sales tax collection at constitutes 78.3 percent higher refund/rebate on sales tax over the last year‘s extra-ordinary refund/rebate is a matter of serious concern.7 percent. The federal tax receipts total refund/rebate on sales tax was 16.35. 68. The profits of SBP declined because it activity in the country. surcharges (gas and petroleum).5 billion mainly emanates from substantial increase in federal which is only 1. As against the target growth of 14. Six major months of the current fiscal year.4 billion) in the concentrates) have contributed around 88 percent to the total central excise collection during July-April. The collection on account of custom duty stood at Rs 53.69. The higher level of economic actively pursued the sterilization policy to neutralize the activity is also reflected by increased demand for monetary impact of massive inflow of foreign exchange.4 percent. showing an increased level of economic 29 Bank of Pakistan. has registering an increase of 13.1 billion last year.g.6 percent lower than POL same period.0 the transfer of several major revenue spinners to percent.9 percent. This increase Direct taxes on net basis stood at Rs. 109.0 billion on net basis. 351.
47 9. duty rates on over 2500 tariff lines were reduced.12 19. the average custom duty rates on total imports as well as dutiable imports have fallen to as low as 9.76 888.2 Central Excise Gross Refund/Rebate Net B.01 16.3 Customs Gross Refund/Rebate Net Total Tax Collection Gross Refund/Rebate 375.02 33.87 33. and Pakistani rupee was appreciated by 3. Indirect Tax Gross Refund/Rebate Net B.01 35.98 154.74 118.56 59.89 35.91 0.75 59.89 35. Billion) July-April 2001-02 A.75 242. Direct Tax Gross Refund/Rebate Net B.32 11.52 3.21 162.18 35. respectively.4 Federal Tax Revenue Collection During July-April.59 15.1 Sales Tax Gross Refund/Rebate Net B.11 38.05 59.51 128.65 297. 2002-03 (Rs.18 16.53 69.34 54.1 percent and 15.09 13.67 -7.48 123.40 197.42 68.51 193.46 -0. Fiscal Development custom collection is realized even when the maximum duty rate was slashed from 30 percent to 25 percent.Chapter 5.32 19.60 15.6 percent.59 53.76 0.83 22.99 108.93 257.8 percent during the first ten months of the current fiscal year.25 68.63 0. It is important to point out that as a result of tariff reforms.95 July-April 2002-03 % Change .44 35.89 -1.95 -1. Table 5.03 -39.12 25.57 109.40 420.
8 10.1 27.7 31.0 16.7 10.7 23.5 16. If the performance of the first ten months is of any indication it is highly probable that the CBR is going to achieve the target of Rs 460 billion in the current fiscal year.3 7.9 4.892.7 32.6 13.6 16.8 37.5 Custom 3.9 39. Oct.9 26.0 37.1 352.6 3.9 4.6 4.10 15.5 3.9 31. March April July-April 4.728.5 billion which is 8.0 26.8 7.4 34.1 Indirect Taxes Central Excise 2.6 3.6 33. Total Expenditure Expenditure on the other hand was prudently managed.6 15.8 53. Jan.8 billion (81.9 306.5 Month-Wise Tax Collection.8 14.6 36.1 35.6 4. Nov Dec. There are three major components of current expenditure.02 Source: Central Board of Revenue Table 5.2 14. 2002-03 (Rs.3 percent of GDP last year has declined to 18.0 percent higher than last year.5 27. and expenditure on civil administration. especially in the areas of domestic sales tax and custom duties.0 Source: Central Board of Revenue The overall performance of tax collection during the first ten months of the current fiscal year has been quite encouraging.9 38.6 4.7 27.892. Out of the consolidated expenditure of Rs.6 11.3 5.8 26.4 23.4 3.2 17.6 10. interest payments.5 2001-02 2002-03 19. the current expenditure is estimated at Rs.8 22.3 6.4 22. is a clear indication of the pick up in domestic economic activity. Fiscal Development Net 306.2 19.1 23.0 11.5 14.6 19.6 33.5 billion for 2002-03.3 14.9 18.5 7. The on-going reform in tax administration is also responsible for better performance of revenue collection. defense.2 24.9 15.6 25.1 13. Feb.8 12.8 11.4 3. a) Interest Payments .3 6.1percent in the current year.13 352. namely.6 27.7 percent of total expenditure) while development expenditure (PSDP) amounted to Rs.0 154.8 3.1 15.7 4.0 billion (15 percent of total outlay).8 29.0 44.134.6 Total Tax Collection % Change Over Last Year July Aug Sep.0 5.2 34.6 19. Total expenditure is estimated at Rs.3. This is the first time in many years that the CBR has over performed and this performance was not achieved by holding refunds or over reporting the revenue figures (the revenue collection numbers are now reconciled regularly with the offices of AGPR and SBP before their publication).0 242. the current expenditure which was 19.Chapter 5.9 109.1 4. The improved revenue collection.4 3.3 41.3 16. As shown in Table-5. Billion) Months Direct Tax Sales 12.0 Total 18.
Chapter 5.[See Table 5. In absolute term. 149. However.9 billion which is 2.3 percent in 2001-02.261. This revenue. PSDP also supports the government reforms intended to improve public expenditure management in the social sectors and movement from good to effective governance. At least 40 per cent of the resources have been provided for social sectors. 90 billion are for Federal and Rs.1 per cent in 2002-03. d) Provincial current expenditure Provincial current expenditure grew by 5. Defense expenditure was 6.9 percent in 2002-03.8 billion — a reduction of 13.3]. provincial current expenditure as percentage of total expenditure has been declining during the last three years— declining from 23. Its share in current expenditure. This decrease should be seen in the context of an average increase of almost 15 percent per annum during the second half of the 1990s. defense expenditure was 25 percent and 32 percent of total and current expenditures.2 billion of last year's.175.0 per cent over last year.6 percent of GDP last year. It has accounted for 7. 241.4 percent of GDP during 2002-03 as against 8.expenditure gap is financed through external and domestic sources. provincial current expenditure has declined from 4.4 billion or 4. led to an overall fiscal deficit of Rs.4 percent in 2002-03—increasing from Rs. respectively in 2002-03. respectively in the beginning of the 1990s but was targeted to decline to 16. Of this.3 percent over the last year. 126.3 percent of GDP in 1990-91 and was targeted to decline to 3.185.0 percent of current expenditure and 1.6 billion to Rs.1 percent to 3.5 percent.186.0 percent of total and current expenditures. It was budgeted to decline marginally in terms of percentage of GDP from 4. The developments in revenue and c) General Administration The third major component of current expenditure is expenditure on General Administration.9 percent of current expenditure and 1.6 per cent in 2002-03.2 percent in 2000-01 to 21. This decrease is attributed to the proper debt management and sharp decline in interest rates.3 per cent in 2001-02 and further to 33.6 percent in 2001-02 and further to 27.9 percent. interest payment which was of Rs. b) Defense expenditure Defense expenditure in 2002-03 was budgeted at Rs.57. Fiscal Development stands at Rs.4 percent and 20. 44 billion for provinces. Rs. Out of the . It may be pointed out that defense spending has been continuously declining over the last one decade. The approved overall size of the current year‘s PSDP is projected at Rs.1 billion.8 percent in 2001-02 and further to 4.7 percent in 2000-01 to 31.0 billion against the last year figure of Rs.6 percent in 2000-01 to 37. dropped from 38. Public Sector (PSDP) Development Programme The size of the Public Sector Development Programme (PSDP) during the current fiscal year is projected to increase by 6. Expenditure under this item expenditure sides.6 percent of GDP.134 billion as against Rs.158.8 percent higher Interest payments is the single largest item of total as well as current expenditures.2 per cent in 2002-2003. however. and further to 20.0 billion in 2001-02 declined to Rs. As percentage of GDP.9 percent in 2000-01 to 4. as described above.7 per cent during 2002-03.0 billion thus showing an increase of 6. Its share in total expenditure declined from 34. Similarly. than last year.
7 billion which are 21.9 billion or 45 percent is financed from domestic sources. and Rs. Tax Revenue .4 13.4 billion.1 billion).83. Non-Tax Revenue Total Revenue (A+B) DD.0 100.9 12.0 57.9 30. financing from non-bank sources amounted to Rs.0 4.3 21.2 458.4 -0. % Share Billion 459. 193.5 billion which is 10.0 84.Interest Payments .CBR Revenue .452.8 15. The remaining gap of Rs.4 billion is estimated to be higher by 13.0 56.1 3.Civil Administration .6 Federal Government Budget 2001-02 and 2002-03 2001-02 (R.7 90. Total development expenditure is estimated at Rs. The notable thing about the federal budget is that revenue is made to grow at a faster pace than expenditure and interest payments have come down substantially [See Table 5.0 billion in 2001-02. Current Expenditure . Billion 530.2 100.9 66.2 9.12.3 8.9 54.1 19. Development Expenditure F.5 billion.Chapter 5. The net federal tax revenue receipts are estimated at Rs.6 23.0 % Change 2002-03/ 2001-02 15. The tax revenue is to increase by 15.1 660.6 percent on net basis.530.3 13. F. As shown in table 5.707. FEDERAL BUDGET.2 622.3 billion for 2002-03 are 13.3 98.3 124.Defence .PSDP . Total expenditure of Rs.2 16.660.6 245.6 Item A.0 billion would be amassed through privatization proceeds.4 percent mainly because of better tax administration and reforms in the CBR (Central Board of Revenue).0 2002-03 (M. Within domestic sources.0 15.2 billion) and non-tax Table 5.0 29. These revenue receipts comprise tax revenues (Rs.9 per cent higher than that of the previous year. (Budget Wing) . 119.3 158.5 6.0 2. the budgeted federal gross revenue receipts of Rs.3 403.Surcharges B.8 21.9 -8. financing from external sources amounted to Rs.4 100.584.6 -13.6 percent than last year.7 4. The share of provinces is Rs. The CBR revenue is estimated to grow by 13.6 69.102.5 13.0 76.3 543.3 149. Total Expenditure (D+E) Source: Finance Division.6].7 707.6 per cent higher than revised estimates for 2001-02.E.7 100.4 % Share 80.8 78.2 39.2 98. 2002-03 revenue (Rs.130.8 130. Fiscal Development gap of Rs.2 billion are allocated for retirement of debt to banking system.1 percent higher than revised estimates of Rs.5 billion or 55 percent.Net Lending R.6.9 9.1 billion while Rs.0 524.B.E) Rs.5 10.29.186.0 22.4 23.E) Rs.101.7 212.E: Revised Estimates E.7 584.8 0.9 119.3 69.
6 87.F.7 7.4 percent and non-tax revenue is estimated at Rs.1 10.5 0.1 billion.5 16.1 22.9 28.1 3.6 3.E) 11.1 261. Fiscal Development M. budget outlay of marginally by 1.4 19.4 112.8 9.4 percent higher than the outlay of last year (Rs.1 13.9 46.3 77.0 19.5 24.6 percent to development expenditure.7 325.E) 8.B.0 22.5 13.6 39.8 8.0.E) 2.3 102.8 65. Out of total budget outlay of Rs. 40.1 28.7 Provincial Budgets At a Glance (Rs.8 200203 (B.9 3.1 267.1 20.2 137.6 32.0 27.Cap.9 45.5 4.5 45.1 billion. (a+b) Source: Finance Division.P witnessed highest increase of 46.1 8.1 8.F.9 200203 (B.3 124.6 32.Chapter 5.9 281.2 19.9 percent of overall revenue Table.E) 7.4 85.0 1.0 81.6 9.5 56.W.2 24. followed by Punjab (10. In spite of declining share of development expenditure in total expenditure. 2001-02 and 2002-03 are presented in Table-5.1 26. 281.7 200203 (B.8 Sindh 200102 (R.5 billion which is 45 percent higher than last year. which is 15.5 294.32.7 4.9 4. i) Dev. PROVINCIAL BUDGETS The total outlay of four provincial budgets for 2002-03 stood at Rs.3 17.E) 23.7 percent in budget outlay over last year (Rs.Rev.7 Baluchistan 200102 (R.5 1. which are 21.5 percent).8 3.0 percent.W.4 9.7 0.7 200203 (B.5 16. revenue receipts for 2002-03 receipts and amounted to Rs.2 17. b) Development Exp.8 8.E: Modified Budget Estimates.4 28.8 57. The interdependence and .8 137.8 percent higher than last year.0 193.4 19.9 5.7 7.5 175.0 17.9 33.5 6.7 11.5 59.6 117.4 percent went to current expenditure and 17.9 7.7 12.5 230.0 24.8 14.4 70.3 percent over last year while current expenditure is to grow by 16.0 25.4 84.3 Total 200102 (R.7 7.1 22. 325. are estimated at Rs.1 0.261.9 25.0 97.7.E) 12.3 N.7 billion). 325.52 3.0 99.5 219.8 billion). the allocations for development expenditure are higher by 12.2 1.Account Total Exp.4 241.7 200203 (B.E) 2.Account ii) Dev.4 50.1 Provincial Taxes Share in Federal Taxes All Others Total Tax Revenues Non-Tax Revenues Total Revenues a) Current Exp.0 8.4 percent. (PF Wing) SLIPPAGES ON REVENUE AND EXPENDITURE DURING LAST THREE YEARS Slippages on targets are quite normal through-out the world.P 200102 (R. billion) Punjab Item 200102 (R.E) 0. 82. Tax revenue accounted for 88.2 40.7 25. 294. Baluchistan increased The overall provincial Sindh (11. The main components of the Provincial budgets.1 billion.8 51.5.E) 0.E) 21.9 percent) and However.5 17.0 4.4 88.6 billion which is higher by 19. The N.2 101.
During the last three years some slippages from the original budgeted figures have taken place.2 percent — almost equal to population growth rate. fiscal prudence prevailed and slight slippages have taken place on both revenueexpenditure sides. The year‘s target was fixed on the assumption of considerable increase in the tax revenue as a result of tax survey and documentation drive. The fiscal year 2001-02 was an extraordinary year. catastrophic drought badly affected agriculture as well as overall economic growth. The reform needed due time to pay dividend. Pakistan economy in general and world economy in particular faced formidable challenges in post 9/11 developments and war on terrorism. Fiscal Development global integration has made the job of forecasting even more difficult. The fiscal deficit target was over-ambitious at 3. The achievement of targets is subject to prevalence of normalcy in many tangible and intangible variables. The course of events did influence the actual outcome. the outcome of fiscal deficit was close to the target [See Table 5. Policy makers were extra cautious about the target of fiscal deficit in the backdrop of last year‘s experience and Table 5. In general.Chapter 5. In the year 2000-01. The revenue stream from external trade badly affected and shortfall in revenue demanded prudence to prevail on expenditure side.6 percent of GDP. This was a Herculean task to reduce deficit this magnitude. The economy grew by 2. Billion) 1999-2000 Budget Actual % age Estimat Outco Variati es me on Budget Estima tes 2000-01 Actual Outco me % age Variati on Budget Estima tes 2001-02 Actual Outco me % age Variati on consequently.8 Slippages in Revenue-Expenditure (Rs. expenditure was sliced considerably to meet the fiscal deficit target. Even in the face of extra-ordinary developments.8]. The fiscal deficit just finished near the target. However. over ambitious revenue target and exogenous shocks (both external and internal) have been responsible for the slippages in revenueexpenditure accounts. Items . There are inherent problems in the structure of the economy also but many external and internal developments do affect projections in both ways. The first year of the period under review (1999-2000) witnessed massive swing in expenditure and relatively lower slippage on the revenue side. Pakistan was forced to divert extra amount on defense spending due to tension on its eastern borders. On the expenditure side the government has retired its debt with the financial institution to strengthen them.
no serious efforts were made to slow down the pace of rapid accumulation of both domestic and external debt. rising real cost of government borrowing (both domestic and foreign).2 -2.8 6.9 -5.8 3. .75 844.2 186. and declining real government revenues. The causes of rapid growth in domestic and external debt are multifaceted. By late 1990s.1 4.1 5.6 179.9 -189. Fiscal Development A.6 553. While the debt problems were in the making for decades.Chapter 5.9 4. Pakistan already entered in a debt trap situation.8 -5.7 717. stagnant exports.1 -5. from grant and soft term assistance to hard term loans. Another source of rising debt has been the changing nature of composition of debt—that is.4 162. Pakistan‘s domestic as well as external debt reached alarming proportions and posed great danger to the economic future of the country.9 536.97 608.7 743.2 112. and poor implementation of foreign aided projects. Total Revenue Receipts (Net) Total Expenditure Overall Deficit Fiscal Deficit As % of GDP 570.97 657.6 8. (ii) imprudent use of borrowed resources such as wasteful government spending.1 5. They included: (i) persistence of large fiscal (7% of GDP) and current account (almost 5% of GDP) deficits.8 826. By the end of the decade of the 1990s.76 770.1 683.3 206.9 624.0 -9. undertaking of low priority development projects.2 PUBLIC DEBT The persistence of large fiscal and current account deficit for extended period of time covering two consecutive decades (1980s and 1990s) has had its manifestation through the unprecedented rise in public debt.
and crossed 100 percent by mid-2000.Chapter 5. By any standard.6 percent of the GDP to Rs. It stood at Rs 1.2 percent of GDP by end June.5 percent—a decline of almost 4 percentage points in one year is simply remarkable. The rising stock of public debt has had serious implications for debt service obligations. public debt was 55.2 percent to 43. as percentage of the GDP.7 trillion or 52. Pakistan public debt became unsustainable and the growing debt servicing liability made fiscal adjustment more difficult. however. As percentage of the GDP. [See Table 5.9 trillion or 47. increased to 49 percent in 1990. Public debt consists of debt payable in rupee and debt payable in foreign exchange. its relation with government revenues is an important indicator of debt burden.2 percent of GDP in 2002-03. Debt payable in foreign exchange stood at Rs 96 billion in 1980. and further to 52. Since public debt is to be serviced in rupee. the share of public debt in rupee increased from 38.5 percent to almost 49 percent by mid-2000. Public debt payable in rupee has increased in absolute term from Rs 1.74 trillion during the outgoing fiscal year. 2001. increased to Rs 428 billion in 1990 and shoot-up to almost Rs 1. debt payable in foreign exchange in rupee term jumped from Rs 1. public debt payable in foreign exchange declined from 61. thus registering a decline of more than 7 percentage point of the GDP in one year.6 percent by mid-2000. increased to 92 percent in 1990. Fiscal Development Figure-3: Trends in Public Debt (As % of GDP) 120 115 110 105 100 95 90 85 80 75 70 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 Pakistan public debt grew by an average rate of 18 percent and 15 percent per annum in the 1980s and 1990s. On the other hand. Resultantly in terms of as percentage of the GDP. As a result of sharp depreciation of exchange rate (17%) in 2000-01.71 trillion last year to Rs 1.7 trillion by mid-200. 2 trillion or almost 59. it has declined from 47. Over the last two decades.9]. the government has not only succeeded in arresting the rising trend in external debt but exchange rate appreciation has also helped in reducing debt payable in foreign exchange by more than Rs 85 billion. During the outgoing fiscal year 2002-03.9 percent in 1980. Public debt was 317 percent of total revenues in 1980 .5 percent to 51. debt payable in foreign exchange stood at 34 percent in 1980.2 percent during the same period.
7 4018. Considerable progress has been made towards addressing Pakistan‘s debt problem during the last two years. * End March @ Excluding FEBC.0 158.6 630. Fiscal Development increased to 505 percent by 1990.Chapter 5. It has now been reduced to 515.3) [47.1 Public Debt As % of (i) GDP (MP) 55.2 3231.6) [42. the reduction in fiscal and current account deficits.4 678.1 Total Revenue 49.2 percent of GDP in 2001-02 from an average of almost 7 percent in the 1990s and further to 4.5 2003* 1744.9 (48.4) (51.6] [59. is presented below in Table 5. The main features of the strategy included among others. As a result of the overall decline in the term structure of interest rate.6 2000 1575.0 624. Current account balance has turned surplus in 2001-02 and projected to remain in surplus in 2002-03.0 3753. The government has also set up a Debt Office in the Ministry of Finance to institutionalize its debt management capability.1 504.1 2001 1728.5] 95.2 Debt Payable in Rupees@ As % of i) Public Debt ii) GDP Debt Payable in Foreign Exchange As % of i) Public Debt (61.1) ii) GDP [34.5] 2025.2 3423.8 90.8 512. US dollar bearer certificates and Special US dollar bonds. Fiscal deficit has been reduced to 5. The progress towards stabilizing the country‘s debt situation during the last two and half years in general and during the first nine months of the current fiscal year in particular.5) (53. It was the realization that some two years ago.6 End June 1990 373. and was 679 percent in 2001.1 3628.7) (52.1 706. a formal debt reduction strategy was launched by the government for the first time in the country‘s history.0) [50.9.6 percent in 2002-03.8] 427.9].9) [43. reduction in cost of borrowing.8 (38. Table 5.9 91.8 592.9 percent in 2002-03 [See Table 5.7 102. The Paris club debt rescheduling has not only provided substantial debt relief to Pakistan but has also opened avenue for it to achieve debt substantially. FCBC.3 (46.8 3694.9 Source: Debt Reduction and Management Committee Report and D.7 101.9 Public Debt (Rs billion) 1980 59.2] 1983.9] [52.2) (54.8) [50.5 GDP (MP) 278.7 109.7 (ii) Total Revenue 317.5] 1898.0] 1655.4] [48.0 (46.M Wing Finance Division.8 3147. DOMESTIC DEBT .5) [21.8 2002 1711.0 515.8 3642.2 873.2] [54. against an average deficit of almost 5 percent of GDP in the 1990s.2] Total Public Debt 155.0) (53.5 553.4 801.6 (46. and strong financing support on concessional terms from the IFIs.3 (47. the cost of borrowing from both the domestic and external sources has declined.7] [47.
Persistence of large fiscal deficit in the 0.4 1999-00 1641.7 billion or 2.6 2000-01 1799.absolute term rose only by Rs 13.Chapter 5. will help Pakistan achieve a sustainable debt stood at Rs 1799 billion in 2001-02. during the first nine months (Julylong-term).1 percent in 2002-03.7 percent. During the decade of the percent in 2001-02 and is projected to decline 1990s. Fiscal Development The nomenclature of domestic debt in end of March 2003.6 407.6 billion in 2000-01 (a The trend in domestic debt over the last reduction of Rs 41.0 billion or by related). it stood at Rs 1770. As shown in Table 5. floating debt (short-term) and un. domestic debt 1990s has caused domestic debt to grow at an has declined from 52.3%).4 324. domestic debt grew at a rate of more than further to 44. It may be seen 16 percent per annum.9 317.7 286. As percentage of GDP.10.6 billion.2 349.March) of the current fiscal year.10 Domestic Debt (Rs billion) 1997-98 Total Domestic Debt . domestic debt in funded debt (mostly national saving scheme. Pakistan consists of permanent debt (medium and In other words.1 .6 417.4 astronomical rate. Considerable improvement from the table that the pace of accumulation of on fiscal side during the last three years has domestic debt has been brought to a naught. it level of domestic debt during the next five years. declined to Rs 1757. domestic the other.6 1998-99 1452. and at the six years is summarized in Table-5.6 percent in 2000-01 to 48.4 2001-02 1757. succeeded in not only arresting the rising trend in Maintenance of fiscal discipline on the one hand domestic debt but it has actually declined in and declining cost of financing fiscal deficit on absolute term.Permanent @ 1199.6 2002-03 (End March) 1770.10 Table 5.
5) 49.6 (38.1 45.6 (28.8 (21.4 (39. (D. Current Exp.1) 48.2) 557.9 (39.M Section) Including FEBC.9 (39.Unfunded Total Debt as % of GDP @ Figures in parentheses ( ) are percent shares in total debt. The composition of domestic debt has floating and unfunded debt.7) 573.8 (31. Source: Finance Division. The unfunded nature of debt. There is a need to re24 percent while a shift has taken place between examine this issue.1 percent in 2001-02.6 (23. Table 5.9) 44.6) 848. The attractive real rates of 36. as been compensated by almost similar increase in its share in total domestic debt has increased from unfunded debt‘s share.9 (47.4 (23. Fiscal Development (23.5) 439.8) 561.7) 52. its share has further risen to 47.8) 647. The rapid increase in unfunded debt as compared with attractiveness of the returns on the NSS is mainly permanent debt which grew at a much slower pace responsible for tremendous increase in unfunded (4.1 .4) 737.4) 669. There is a rapid increase in unfunded debt.Chapter 5.9 Saving Schemes (NSS) were responsible for the percent of the domestic public debt. US dollar bearer certificates and Special US dollar bonds. the share of permanent has severely complicated the management of debt in total domestic debt remained stagnant at 23.4 (40.7) 792. FCBC.Pakistan‘s domestic debt.9) 473.7 percent per annum).bln) Interest Payment (Rs. this debt and its untapped manner of mobilization During the 1990s.bln) Tax Rev.2 (19. Interest Payment (As % of) Total Exp.11 Domestic Debt & Interest Payment Domestic Outstanding Debt (Rs.6) 44.5) 504.0) 712. Total Rev.5) 52.2 (36.0 (39. By return on the various instruments of the National end March 2003. A decline by 11 undergone considerable changes in the last five percentage points in the share of floating debt has years. GDP (mp) Year .6 percent in 1997-98 to 45.Floating .8 (41.4 (19.
Chapter 5.11. The growing burden of domestic debt is shown in Table 5.5 175.2 34.4 24.2 19.3 26.7 1995-96 920. As percentage of GDP.3 1993-94 711.1 32.2 44.5 22.4 percent of total revenue and accounting for 23.7 77.9 4.7 percent in 1999-2000.9 1999-00 1642.6 33.9 51.7 50.7 4.2 37.7 26.8 21.5 126. Fiscal Development 1990-91 448.4 13.1 30.6 2002-03** 1812.8 42.9 27.1 20.4 27.5 167.2 2001-02* 1757.3 Source: Finance Division (Budget wing) ** Budget Estimates.0 23.3 23.7 18. Interest payment on domestic debt continued to increase during the 1990s at an average rate of 20.2 5.7 21.5 1992-93 615.6 percent of current and 19.2 30.0 6.6 21.4 41.2 26.4 2000-01 1799.2 39.2 3.5 4.0 27.6 4.3 1996-97 1056.2 * Provisional Actual 35.3 percent of total expenditure during 2002-03.5 172.0 18.5 32. interest payment on domestic debt has increased from 3.7 1998-99 1452.3 per cent of GDP by the end of 2002-03.0 47.1 27.1 1997-98 1199.6 31.5 6.0 29. But interest payments ______________________ .5 77.0 34.0 28.3 27.7 39.4 24.2 188.3 5. It is now consuming 24.2 24.6 35.2 18.0 4.2 20.0 1994-95 807.3 62.9 104.0 percent per annum.2 1991-92 531.0 37. subsequently declined to 5.9 39.1 5.5 30.4 31.4 5.5 189.2 22.2 percent of GDP in 2001-02 and it is further projected to decline to 4.3 210.3 29.6 6.5 percent in 1990-91 to 6.7 26.9 23.5 15.
5 percent and now the rate is 3. This transformation is reflected in its expansionary and accommodative stance brought about by the continuous reduction in the interest rates and government securities. This strategy has worked well and therefore. moderate rupee appreciation and preserve export competitiveness. the weighted average lending rates of commercial banks have declined from 13.Chapter 6.5 percent per annum.8 percent during JulyMarch 2002-03. showed a subdued appreciation of 3. The SBP has also continued with its policy of sterilization to contain growth of reserve money. The underlying rational for this policy was to stimulate non-inflationary environment for investment. Credit Plan.26 percent in March 2003.0 percent. which had appreciated by 6. Money and Credit 6. and improve governance of the financial system. Net foreign assets (NFA) for the banking . ensure availability of adequate and timely credit to growers/farmers.7 percent during July-March 2001-02.5 percent and inflation target of 4. The SBP has continued with its flexible monetary policy stance during 2002-03. boost exports. the State Bank has reduced the discount rate five times since July 2001. Money and Credit A judicious use of monetary instruments such as discount rate. market driven exchange rate and interest rate policies.65%) T. monetary policy stance remained tight during the fiscal year 1999-2000 and 2000-01 to keep inflation under control. This may have a negative impact on the balance sheets of banks. rupee-dollar parity. the monetary policy stance has been flexible as per ground realities. the monetary policy pursued by the State Bank of Pakistan in recent years has undergone a major transformation. The Original Credit Plan was targeted the money supply (M2) to grow by 10. which.8 percent which was consistent with the projected economic growth target of 4. The State Bank has recently reduced interest rate under the export finance scheme by 0. This policy stance has been eased since 2001-02 to promote investment and growth and has continued during the current financial year as well. promote consumer financing. and bring stability in exchange rate. As a major step of easy monetary policy. leading to a cumulative cut of 650 basis points.12 percent in June 2002 to 8. As a result. Over the last three years. 2002-03 The emphasis of the monetary policy has been on avoiding any abrupt appreciation of Pak rupee. This has massively improved the net foreign assets of the entire banking system and foreign exchange reserves position. liquidity ratio. For example. The excess liquidity in the banking system resulted in all time low (1. Keeping these objectives in view. Bill rate -. open market operations and credit plan allocations can help achieve some of the basic macroeconomic objectives such as price and exchange rate stability and sustained growth of the real GDP.lower than inflation and deposit rates. The SBP also took a number of policy measures to fine tune monetary policy. The monetary policy has been more receptive with the acceleration of foreign exchange inflows of Overseas Pakistani Workers. in turn initiated the process of rupee appreciation for the first time in the economic history of Pakistan.
Unlike previous years trend.5 billion. Money and Credit system (which primarily capture the external sector developments). rice etc. which increased from the original target of Rs 91.2 billion and non-government was projected to receive a credit of Rs 70.8 percent to overall monetary expansion. Private sector credit was projected to expand by Rs 94.4 billion) and other items (Rs –64.5 billion to Rs 271. while all major and minor public sector enterprises (PSEs) were allocated Rs 20 billion. speedy repatriation of export proceeds.5 billion on account of budgetary support as against a Monetary and Credit Development Against the revised Credit Plan for the fiscal year 2002-03. government retired Rs 52.8 percent.g. 9.7 billion.0 billion.5 billion) in the same period last year. In the Revised Credit Plan.0 billion by 2. were projected to contribute Rs 91. monetary expansion target was increased from 10. This is mainly due to massive inflow of foreign exchange in the country. In view of the massive inflow of foreign exchange earnings and more than projected retirement by the government sector.).1 percent of the full year revised target. wherein credit to government sector was targeted to retire Rs 44.0 percent. Net government borrowing however.2 billion on account of budgetary support and Rs 3.7 billion during the first three quarter of the outgoing fiscal year. Monetary expansion during the first nine months of the fiscal year was 78. increased flow of FDI and financial assistance from the IFIs are responsible for the phenomenal growth of the NFA during the period under review. as it was to retire Rs 14. or to contribute 51. This massive decline was witnessed despite a significant flow of Rs 107.2 billion.7 billion by these two sectors in the same period last year. wheat. compared to a retirement of Rs 23.2 percent to overall monetary expansion by the end of the fiscal year in anticipation of massive foreign exchange inflows. The NFA has already surpassed the full year revised target of Rs 271.4 billion in the same period last year. Decline in NDA was mainly shared by a massive contraction of credit of Rs 154. the NDA of the banking system depicted an unusual decline of Rs 58.9 billion) during the first nine months of the current fiscal year as against .5 billion or 48. Government sector was anticipated to demonstrate improved fiscal discipline.7 billion) as against a very meager contraction of Rs 7.5 billion to only Rs 10.6 billion in the first nine months of the current fiscal year as against Rs 110.4 billion.3 percent (or Rs 142.0 billion in respect of commodity operations.5 billion. Of the total.8 percent to 16. mainly to accommodate the ever highest build up of NFA. Government borrows from the banking system to finance its budget deficit and commodity procurement operations (e. The net domestic assets (NDA) of the banking system were expected to increase by Rs 98. The NFA of the banking system amounted to Rs 278. money supply (M2) grew by 12. Domestic credit target on the other hand was slashed from Rs 98. remained on track mainly on account of improved performance of tax collection and maintenance of fiscal discipline.2 billion in the commercial bank‘s credit to the private sector.Chapter 6.7 billion in the same period last year.5 percent (or Rs 219. Original Credit Plan 2002-03 was revised in February 2003.0 billion both by government sector (Rs –89. Massive foreign exchange inflows in the shape of home remittances. During July-March 2002-03 total government borrowings showed a retirement of Rs 89.
State Bank‘s monetary management prompted government to take full advantage of low interest rates. which was more than 100 percent than the amount disbursed by commercial banks in the corresponding period last year. Commercial banks extended credit to the extent of Rs 98. Break-up of credit to PSEs shows that autonomous bodies availed Rs 5.0 billion). Rs 0.2 billion.e.1 billion). as against a larger retirement of Rs 14.3 billion during the same period last year. Punjab Provincial Cooperative Bank (PPCB) and commercial banks amounted to Rs 34. improved tax collection as a result of better tax administration and dwindling of debt servicing burden due to debt re-scheduling were some of the factors that caused improvement in budgetary borrowings.0 billion to schedule banks (borrowed to support commodity operations).0 billion during the comparable period last year. The larger retirement was made against wheat (Rs 37. Banks continued to finance important segments of the private sector. The easy monetary policy stance followed by cuts in discount rate and decline in the average lending rates along with improvements in the fundamentals of the economy resulted in the escalation of credit to private sector. Rs 4. on the other hand. Credit utilization by the private sector almost doubled during the period under review.6 billion respectively. As a result. Money and Credit marginal retirement of Rs 1. Bank credit to non-government sector comprises credit extended by commercial banks to PSEs (i.3 billion. The Cotton financing excluding Cotton Export Corporation (CEC) amounted to Rs 36.5 billion last year.5 billion to State Bank and borrowed Rs 70. In fact. seeds and edible oils also showed marginal retirement of Rs 0.8 billion from the commercial banks during the period under review as compared with Rs 3. Advances for sugar.2 billion disbursed last year.1 billion during July-February 2002-03. the KESC was the largest borrower (Rs 6. Smaller PSEs.2 billion by Pakistan Steels.8 billion during the first nine months of the current fiscal year compared with a nominal retirement of Rs 0. Pak Steel etc. the Government had retired only Rs 71.05 billion in the same period last year. compared to the corresponding period of last year. showed a retirement of Rs 8. on the other hand.7 billion) followed by the PIA (Rs 6.e.9 billion in the corresponding period last year. Despite significant reduction in .9 billion during the same period last year.4 billion up to March 22. Government also retired a larger amount of Rs 40. The retirement under Export Financed Scheme amounted to Rs 8. Other autonomous bodies retired in net terms with a heavy retirement of Rs 4. Total credit to PSEs showed a retirement of Rs 4. Credit for export finance declined although the magnitude of retirement was less than last year.4 billion in the same period last year.0 billion in the corresponding period last year. the government borrowing for budgetary support shifted from SBP to scheduled banks. OGDC. WAPDA.Chapter 6.0 billion in the same period last year.6 billion during JulyMarch 2002-03 compared with a retirement of Rs 1.9 billion) followed by rice (Rs 1. PIA. Specialized banks.0 billion from scheduled banks during July-March 2002-03. The government retired Rs 220.1 billion to SBP and borrowed Rs 175.0 billion.5 billion by WAPDA and Rs 1. compared with Rs 32. Within these autonomous bodies. There was also a marked shift in the composition of budgetary borrowing from the banking system. The SBP credit to other financial institutions also showed a retirement of Rs 5.) and private sector. KESC. Availability of more than budgeted external financing. compared with a retirement of Rs 22.5 billion from scheduled banks. compared with Rs 30. disbursed less credit i. In the corresponding period last year.9 billion compared with Rs 14.2 billion during July-March 2002-03 compared to an expansion of Rs 54.0 billion compared with Rs 6. Bank credit to private sector expanded by Rs 107. Disbursement of agricultural credit for production and development purposes by Zeri Taraqiati Bank (former ADBP).6 billion in the corresponding period last year. PTCL.3 billion and Rs 0. 2003.
2 -3.6 219. money supply is projected to increase by 16 percent during the current fiscal year Table 6.0 (10.4 -52.8 -89.Commodity Operations .2 0.0 1.5 3. compared to 15.5 190.Net Budgetary Support .Net credit to Private Sector & PSCEs a) Private Sector b) PSCEs c) PSEs SP.Chapter 6.Effect of Zakat Fund ii) Non-Government Sector .5 271.2 54.3 36.0) Actual 2002-03 2001-02 (July-March) (July-March) -58.(A+B) (Growth Rate %) Source: State Bank of Pakistan.3) Domestic Credit i) Government Sector Borrowing(Net) .0 -1.3 -64.2 -9.2 -29.5 (16. retirement of credit under (ending June 2003).9 -1.0 0.0 0.5) -23.8) Revised 10. A/C debt repayment with SBP d) Other financial institutions iii) Other Items (net) Foreign Assets (net) Total Monetary Expansion (M2) .2 -16.0 91. Impact of Sterilization on Money Supply & Prices In the post-September 11 scenario.4 15.5 -14.1.2 -5. The In view of rising inflows of foreign exchange.2 -14.4 5.8 89.4 percent in the scheme could be attributable to self-financing last year.7 278.5 -39.0 114.7 110.7 31.0 0.5 (9.7 0.0 -22.4 2.7 142.0 1.6 0.0 70.9 (12.0 -15.0 0. (Rs billion) Sector/Factor Credit Plan Target 2002-03 Original 98.0 percent because of strong rupee.2 50.4 -1.7 94.5 -44.Autonomous Bodies .2 39.6 107.0 70.1 Factors Causing Changes in Monetary Assets main factors causing changes in monetary assets are given in Table-6.2 20.0 0. Pakistan enjoyed a substantial improvement in foreign exchange inflows especially sharp rise in .5 95. However.1 -3. Money and Credit the export finance rate.5 -16.0 281.7 20.0 114. remain stable and not to deviate from the annual target of 4. the inflation is projected to by the exporters or other cheaper sources.
Resultantly. However. The SBP intervention to sterilize has also arrested the abrupt appreciation of Pak rupee from 6. the stock of reserve money (RM) with ongoing sterilization has grown only by 13.4 billion) into the banking system but 70. The developments in these components during the inflation by checking the unusual growth of money supply. Money and Credit remittances leading to appreciation of Pak rupee.0 percent.5 percent having sever implications for the economy in terms of higher inflation and erosion in Pakistan‘s export competitiveness. The SBP used the sterilization instrument for neutralizing the monetary impact of forex purchases on money supply. During the first nine months of the current fiscal year. it would have eroded the Pakistan‘s export competitiveness in the international markets and also have damaged the export – oriented industries. SBP has also to bear the loss due to increase in the revaluation cost resulting from appreciation of Pak rupee against US dollar. in order to avoid any abrupt appreciation of Pak rupee.5 percent during this period. it had reduced the profit of SBP. price expectations and exchange rate. Moreover. Other wise. consumer price inflation remained low at 3. the M2 would have grown by 43. which was to be borne by the SBP. counterpart). 2002-03. The liquidity injections due to forex purchases were however.0 percent.8 percent in July–March 2002-03. However. as it has caused reduction in NDA of the SBP through offloading government papers held by it to the scheduled banks. which otherwise would have risen by 44. Similarly the money supply (M2) expanded by 12. SBP had to intervene to mop up excess forex supply from the inter-bank forex market. (ii) demand deposits. low inflation.0 percent. and (v) The sterilization has helped in containing residents‘ foreign currency deposits.Chapter 6. appreciation of Pak rupee has also contributed towards lower inflation through cheaper imports. maintenance of export competitiveness and lower cost of bank borrowing by the government. The sterilization has a direct impact on Reserve Money (RM) and money supply. The sterilization also involved some cost. the SBP has injected Rs 257 billion (against net purchases of $4.9 billion during the period from September 2001 to March 2003 and as a result. However.4 percent of that injection (Rs 181 billion) has been sterilized primarily through auctioning of the government papers. as it is transferable to the government. During the first three-quarters of . Therefore. it injected Rs 474 billion into the banking system. If the reserve money had not been curtailed through sterilization. Components of Monetary Assets (M2) The components of monetary assets (M2) include: (i) currency in circulation. increase in NFA was offset by corresponding reduction in NDA so that reserve money remained on target. government will gain on account of lower borrowing cost and lower domestic debt servicing due to lower interest rates.7 percent in July–March 2001-02 to 3. The SBP made net purchases of $7. As a result. The principal benefits of the SBP purchases from the inter-bank foreign exchange market coupled with on-going sterilization include the containment of monetary expansion. (iv) other deposits (excluding IMF A/C. largely mopped up through Treasury Bills (TBs) auctions and retirement of SBP holdings of government papers. (iii) time deposits.4 percent against the annual target of 4. It is the difference between higher earnings foregone on offloaded T – bills and lower returns on SBP investment of foreign exchange. which is also a loss to the government.
2) 670.6 (9.8) 3. currency in circulation constituted 24.2) 1668. As on 31st March 2003.1 6.4 (15.3) 26.6 (15.1 491.1) 1761.8 (-21.8 27.7 (11.8 (22. Counterpart Funds and Deposit of foreign governments.1 45.2).9 12. .4) 24.2 (37.0) 24.4) 1981.1 (12. 1 & 2 and SAF Loan Account.2) 11.9 (Rs billion) End March 2002 2003 434.0) 890. It starts to grow with the seasonal disbursement of credit to private sector (from September) and peaks usually in November or during the month in which Eid falls.9 (7.6 billion) in the same period last year. The currency in circulation follows a seasonal pattern determined jointly with the interaction of calendar and Islamic Hijra months.1 0.2) 328.8 percent of money supply (M2).6 0. Excluding IMF A/C No.6) 727.6) 374.4) 401.1) 212.6) 813.1 (19.3 8.0 10.. compared to its share of 26.0 24.7 (9.1 45. Excluding inter-bank deposits.2 Source: State Bank of Pakistan.9) 123.2 48.7 (-0.1) 1526. central banks.3 (41.2) 154.2).3 2002 433.4 0.0 billion).8 (15. Table 6.5 (11.2 Stock of Components of Monetary Assets (M2) Items Currency in Circulation Demand Deposits with banks(a) Other Deposits(b) with SBP Time Deposits with banks(a) Residents Foreign Currency Deposit Money Supply (M2) As Percent of M2 Currency in Circulation Demand Deposits Other Deposits Time Deposits Residents Foreign Currency Accounts (RFCD) M2/GNP (MP) Note: a) b) Average (90s) 225.6) 119.9) 610.2 (14.3 (-0.5 (13.6 24. currency in circulation increased by 13.0 (9. Money and Credit first nine months of the current fiscal year are presented below (Table-6.Chapter 6.5 (-74.2 (12.4 43.7 40.5 (5.6 47.9 (15.3 24. Currency in Circulation: Currency in circulation.8 (15.3) 11.4 percent (Rs 58. is the most liquid form of money supply. as against 15.5) 13.6 24. Figures in parentheses represent growth in percent.7 40.6) (13. deposits of government and foreign constituents. In the first nine months of the current fiscal year. international organizations and deposits of money bank.7 0.6 percent (Rs 58.5) 429.5) 5.5) 24.2 (57.4 (2.7 (-2.2 41.7 36.7 0.2 9.9) 150.0 548.4 (27.1) 157.8 41.3) 26.0 percent in the comparable period of last year (Table-6.6 (18.9 End June 2001 375.
2 billion) during July-March 2002-03.A.7 37. CDR [CC/(DD+TD+RDFC)] has risen from 32.3 69.5 7.3 67.6 6.8 percent (Rs 119. Money and Credit Demand Deposits with Scheduled Banks: Scheduled banks‘ demand deposits increased by 27.2 percent in March 2003 (Table: 6. This indicates that despite negative real return the depositors still put their trust in the commercial banks for safety of their money.0 percent. time deposits increased by 11.1 percent of M2.7 percent of the M2 stock.7 72.0 41.10 percent in March 2003. Key Indicators of Pakistan’s Financial Development Years 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 M2/GDP 37.6 DD+TD/M2 66.1 percent in 2001-02 as against 11.0 2.6 4. as against 9.0 percent during the first three-quarters of the outgoing fiscal year. The LRM.9 36.96 percent in June 2001 to 33.2 68.5 66.7 63. as compared to 40.3 TD/M2 29.9 40.6 35. In the first nine months of 2002-03.4 67.3 29.0 (Percent) LRM 9. This ratio is a measure of monetary stability and is used to assess the vulnerability of domestic interest rates to fluctuations in the country‘s external account.9 39. Time Deposits: Time deposits of scheduled banks increased by 19.2 billion) in the comparable period of last year. representing 27.2 percent on the corresponding date of last year.3 36.1 33. This increase in reserve money is due to the extra-ordinary increase in the net foreign assets.2 percent in 2000-01.3 noted that despite continuous decline in the weighted average (W.9 percent (Rs 86.4 64.5 31. which may be an indication of stable financial sector in the country. Currency Deposits Ratio (CDR): The currency deposit ratio (CDR) has been rising steadily after reaching as low as 29 percent in fiscal year 199798 reflecting the dis-intermediary role of the freeze on foreign currency deposits.3). as compared to their growth of 7. The LRM has been increasing since June 2000. time deposits constituted 41.0 41. Had there been no sterilization through auctioning of the government papers. On the corresponding date of last year.6 68.9 69. which was only 5 percent in June 2000. The upward trends in CDR appear to support the view that the jump in remittances in the country in the recent months has captured at least part of the normal (informal or formal) forex flows in to Pakistan.9 percent (Rs 60.6 billion). RM would have risen by 44.6 35.1 percent of M2.2 67.2 billion) only in the comparable period last year.7 3.9 66. The outstanding stock of demand deposits was Rs 548. As on end March 2003.7 30.7 M1/M2 70. increased to 16.Chapter 6.6 5.1 38. Since June 2001.02 percent in June 2002 and further to 33. Another interesting observation stems from the liquid reserves to money supply (LRM) ratio.1 15. thus further increasing the level of CC and DD.4 billion as on end March 2003.9 33.5 33.1 63.3 percent (Rs 27. Main factor responsible for the sharp increase in demand deposits as well as currency in circulation is the rise in the reserve money during the first nine months of the current fiscal year. Reserve money (RM) increased by 13.6 . It may be Table 6.8 percent in June 2002 and further to an all time high of 28. the demand deposits constituted 24.5 68.) deposit rate time deposits have been increasing in the current fiscal year.1 12.0 65.7 68.
8 14.6 percent in 1980-81 to 39.4 423.5 44.8 703.3 5.1 43.3 43.3 14.8 15.6 448.2 Source: State Bank of Pakistan.4 Stocks of Monetary Aggregates (Rs billion) End Period Stock June 1991 June 1992 June 1993 June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 Money Supply & Monetary Assets (M1) (M2) (M3) 265.3 42. During the decade of 1990s.8 643. Money and Credit 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2001-02 2002-03 39.6 2137. As June 1991 to June 2002 and up to March 2003 are on 31st March 2003.9 10.4 17.4 77. 49.0 1400.Chapter 6.5 3.1 69.9 55.1 18.3 5.8 49.9 39.6 569.1 480.9 36.4 739. the M2/GDP ratio has increased significantly over the last ratio of total deposits to M2.3 70. This clearly indicates that of deepening.0 1280.2 (Percentage Change) (M1) (M2) (M3) 10.9 6.2 17.4 74.6 34.0 7. 23 years – rising from 37.1 28.7 1246.0 73.9 9.7 37.40 302.8 52.2 29.2 73.7 36.9 16.3 5.8 43.7 1083.0 70.2 14.5 46.7 .7 65. M2 and M3 since 44. the M2/GDP ratio was recorded at given in Table-6.2 59.6 31. average M2/GDP was 43.1 39.4. This ratio indicates how monetized an sector is more important today than two decades ago.3 76.3 443.6 35.0 49. While there is no standard method to measure financial the 1980s and the 1990s.6 48.8 8.4 75.3 1696.3 percent.0 -1.1 51.4 9.7 43.8 9.3 3.2 327.8 14.2 12.9 49.6 33. and 48.3 1206.8 50.5 74.2 19.3 74.5 percent in 2001-02.0 75.3 71.2 have also improved.1 40.3 3.3 6.6 679.1 824. which is the highest in the last two decades Table 6.2 40.3 358.0 12.4 777.5 31.0 938.4 18.4 percent.0 36.8 40. percent in 1990-91.4 12.2 26.2 52.2 1430.9 17.6 75. such as. which increased to The annual trends of M1. the ratio has been Measures of Money Supply and their Behaviour increasing every year.1 400.8 50.5 1913.0 1.6 percent in 2000-01.8 45. economy is and how important are its banks.6 44.9 13.4 11. With the introduction of financial sector reform since early 1990s.6 1053.0 41.4 66. and time deposits to M2. the most widely used indicator is the ratio of Pakistan‘s economy is more monetized and the banking M2 to GDP.6 65.9 505.2 17.4 44.3 8.2 7.8 77.5 18.6 41.8 595.2 41.2 14. The Other indicators of financial deepening.7 44.0 51.4 4.9 14.4 923.3 39.8 17.
II. the shares of M2. M2/M3 declined sharply to 65.9 2506. Higher growth in M3 is attributable both to higher growth of M2 and net accrual of National Saving Schemes (NSS).A.0 15.0 15. Higher growth in M2 in the first nine months of the year.3 19.1 percent during the first 3 quarters of 2002-03.6 percent. while M1 has increased by 19. Union Bank Limited.2 3. declined to 33.2 1043. American Express Bank. has increased by 11. and Standard Chartered Bank. The main fuelling M3 growth. Monetary aggregate of M1 consists of the outstanding stock of currency in circulation. Money compared to 9.8 847. Since outstanding stock of time deposits of scheduled 1994-95. M2/M3 increased to 66.3 percent in the comparable period last year.3 11.8 1526.3 14.5 15. NSS.4 876. M3. as compared to 8. BOX-1 Monetary Policy Monetary and Credit Control Measures. billion) in the comparable period last year.7 12.3 percent M2.7 percent while NSS/M3 Federal Banks for Cooperatives.Chapter 6.3 percent (Rs 85. The M3 supply of M2 definition consists of M1 plus is dominated primarily by M2 and NSS deposits. and two organizations (NDFC and Co-operative Bank) in components of M3 include: outstanding stock of M3 were 76. In June 2001.2 2313.0 percent (Rs 166.2 percent. Habib Bank Limited. On July 9.3 9. Citi Bank. banks and outstanding stock of RFCDs.0 15. . ABN-Amro Bank.9 current fiscal year was attributed mainly to the huge forex billion). and outstanding deposits of percent while NSS/M3 increased to 33. SBP appointed some banks as Primary Dealers for the financial year 2002-03 including.4 1668.6 1981.9 percent.8 inflows in the country. National Bank of Pakistan.2 11. demand deposits of scheduled banks and other deposits with the State Bank of Pakistan. Wing. 2002-03 I. In June 2002.9 2934. The broadest monetary aggregate.9 schemes (NSS). Finance Division.0 1761. the share of NSS in absolute term has been rising. In June 1995. M2/M3 again increased to 67. outstanding deposits of national saving respectively. as against an increase of 11.1 percent. In March 2003.5 percent while NSS/M3 came down to 32. Money and Credit Average 1990s 2000-01 2001-02 761.4 During the first nine months of the current fiscal percent.5 percent during the period under review.3 12.1 End March 2002 2003 Source: State Bank of Pakistan & E. 23.9 2640.1 8.4 9. M2 has recorded a growth of 12. In July 2002.6 8. and 0.3 percent in the same period last year. 2002 the State Bank amended Prudential Regulations XXVIII and made banks/NBFIs free to decide the rate of return on deposits mobilized under FE 25.
the State bank prescribed a procedure on 31 st August. IX. the State Bank sent the copy of Master Swap Agreement to all banks for signature and advised them to return the same to the SBP latest by end of September 2002. made certain relaxations in Export Finance Scheme. VI.000/-. the maximum profit to be earned by a financial institution on financial assistance to be extended under part-A (Local Sales) of the Scheme for financing Locally Manufactured Machinery was reduced from 11% to 10% p. V. 2002. To promote consumer financing in Pakistan. Having received representations regarding imposition of fines from exporters for nonfulfillment of their export orders as per respective schedules due to adverse global effects and other abnormal situations with specific reference to Pakistan. the State Bank. Effective from 16th September 2002. The State Bank.Chapter 6. To promote E-Commerce and to facilitate the consumers by providing them access to their funds through the existing two ATM Switch Networks operated and managed by Muslim Commercial Bank (M-Net) and ABN-AMRO Bank (Shared ATM Switch Network). IV. it was decided in August 2002. on 4th September 2002 set up a permanent desk for dollar/rupee swap to use as a new tool of monterey management. On September 9. 2002. X. In August 2002. banks were allowed in July 2002 to provide financing facilities to general public for purchase of consumer durable provided their consolidated borrowings for this purpose from the bank does not exceed Rs 100. However. In order to streamline processing of the cases involving refund of fines recovered under EFS and make the system more transparent. 6-months MTBs would be offered in One Auction and remaining Maturities MTBs in the Other Auction. Money and Credit III. In October 2002. 2002 and advised all banks to properly circulate the same amongst their branches dealing with the Export Finance Scheme/cases. that all scheduled banks.a. in September 2002. and SBP refinance rate from 9% to 8%. the State Bank advised banks to further enhance the scope of Agricultural Loan Scheme and ensure availability of adequate & timely credit to growers/farmers. the State Bank advised banks that the auction of Government of Pakistan Market Treasury Bills (MTBs) would continue to be conducted on alternative Wednesdays. VII. . which are not currently connected to either of the two Switches should join or come to an agreement with any of the two Switch system latest by December 31. VIII.
These Regulations would be applicable on operations of Micro-finance Banks/Institutions. Effective 14th October. the State Bank of Pakistan advised banks on October 15. the State Bank also allowed certain relaxations to the exporters of Hosiery/Knitwears. including Khushhali Bank. 2002. it was advised that banks might provide financing facility to the private sector on a marketbased rate of mark up linked with T. XII. In order to promote Islamic Banking in Pakistan. Money and Credit XI. on 1 st January. XVII. bill rate. 2003. the minimum rate of return to be paid by recipients of financing facilities from State Bank for meeting temporary liquidity shortages and SBP 3-day Repo facility against Government of Pakistan Market Treasury Bills and Federal/Pakistan Investment Bonds was reduced from 9 percent to 7.5% per annum. As regards the rate of mark up on wheat procurement by the private sector.5 percent on annual basis. On December 3. Effective from 1st February 2003. . State Bank advised banks which are interested in establishing scheduled Islamic Commercial Banks in the private sector subsidiaries or stand alone branches for Islamic banking to apply to Director. which were outstanding on the books of banks since long and for which the probability of recovery was almost negligible. 2000 with the objective to ensure that the MFIs/MFBs operate in a safe and prudent manner. XIV. State Bank of Pakistan issued a consolidated and updated version of the instructions to be followed by banks with regard to margin restrictions. 2002 a new set of guidelines developed in consultation with the banks and Federation of Pakistan Chambers of Commerce and Industry (FPCCI). XVI. Banking Policy Department within the policies prescribed by SBP. XIII. 2002. On 14th October 2002 the State Bank of Pakistan issued Prudential regulations for Microfinance Institutions/Banks replacing the existing Microfinance Bank Rules. the State Bank reduced the rate of mark up for commodity operations of the Government and other agencies from 12% to 9. XVIII. XV. Effective from 18th November 2002. the State Bank issued an updated Branch Licensing Policy to the banks for implementation and consolidating all the instructions previously issued relating to Branching Licensing Policy and Automated Teller Machines (ATM).Chapter 6. On 17th January 2003. To facilitate banks to deal with loans in loss category. Rice and Hand Knotted Carpets under Part-II of the Export Finance Scheme.
Bills) of 3 months. the State Bank on February 25. the State Bank formed a Committee on 10 th March 2003 to extend their fullest support to the said Committee to ensure early resolution of dispute. the Microfinance Banks/institutions can undertake mobile banking operations. In the wake of significant changes in the financial sector. the SBP introduced Market Treasury Bills (T. with prior permission from SBP. the . Under the legal framework for micro-finance institutions. State Bank of Pakistan informed banks of making Credit Information Bureau (CIB) facilities online in collaboration with Pakistan Banks Association (PBA). During the previous two fiscal years. Auction of Pakistan Investment Bonds (PIB) Since the introduction of market oriented monetary policy in the late 1980s. Bills are now the main instruments of OMOs. XX. clarified to banks that export refinance facility may be allowed against export of ‗Henna Powder‘ under the Export Finance Scheme.Chapter 6. 2003 advised all banks/DFIs for an updated list of financial institutions regulated by the State Bank. The T. The State Bank. In June 1998. on February 24. XXI. With the consolidation and strengthening of financial sector in the country. 2003. the State bank on March 12. The guidelines. XXIV. interalia. 2003. XXV. on February 25. The fixed schedule of fortnightly OMOs was dismantled in July 2001 to give the SBP more flexibility in managing market liquidity. the SBP has been pursuing open market operations (OMOs) in order to manage government debts and reserve money. In order to improve efficiency in the credit appraisal process of banks/DFIs. XXIII. 2003 issued minimum guidelines to be followed by banks/DFIs uniformly to structure and discipline the process of merger/amalgamation or local incorporation of banks. XXII. 6 months and 12 months maturity. In order to resolve the disputes that may arise between the borrowers and the banks/DFIs. The move underlined the OMOs primary role as a liquidity management tool rather than an indicator of the SBP‘s monetary stance. Effective from 15th March 2003 the maximum profit to be earned by a financial institution on financial assistance to be extended under part-A (Local Sales) of the Scheme for financing Locally Manufactured Machinery (LMM Scheme) was reduced from 10 percent to 7 percent and refinance rate from 8 percent to 5 percent. Money and Credit XIX. provided for opening of Service Centers within a specified radius of the licensed branch.
As a result.82 August 2002 6.41 percent and 16.78 percent on July 27. respectively on June 28.Chapter 6.00 30-06-1999 13. The weighted average (W. Bills witnessed a reduction of 645 basis points and 12 months. respectively on July 15. The rate of 6-months T. 2001.93 percent. Table 6. Money and Credit SBP often moved to inject liquidity into the market through OMOs in order to facilitate the commercial banks in their lending activities to the private sector.26 8.93 26-07-2001 11. This enabled the SBP to mobilize Rs 508.94 October 2002 6. The strong demand for T.5).40 6. They came down as low as 7. they witnessed further cut by 476 basis points and 436 basis points respectively.2 billion from the primary market of T.60 11. foreign exchange purchases by the SBP remained a major source of rupee injection (about Rs 76 billion after sterilization). as more than sufficient liquidity was available with the banking system even after credit to the private sector.58 11.47 10.99 28-06-2001 12.17 13.27 6.16 10. 2000 but again went up as high as 12. the usual pressures on the forex market were absent which provided sufficient space to the SBP to improve the conduct of OMOs.93 8.41 16. As a result of sharp decline in 6 months T. Accordingly. Bills during the first nine months of the current fiscal .49 22-03-2001 11. in net terms.64 6. Bills rates during 2001-02 alongwith rationalization of the rate of returns on the national savings schemes. the government decided to gradually and effectively reduce the T. Bills was seen in 2001-02.98 22-08-2001 10.65 2.87 December 2002 4.32 4.89 19-04-2000 7. Bills rates of 6 months and 12 months maturity started coming down sharply since the beginning of the 2001-02. To improve the investment environment in a tangible manner and attract foreign investors.74 27-12-2001 7. the export refinance rate has also declined by 950 basis points to 3.59 27-07-2000 7.13 7.47 10.23 percent and 7.43 6. Bills rate and discount rate are expected to spur investment activities in the economy.82 31-10-2001 8.55 11.09 2. these rates witnessed mixed trends of movement. Thereafter. Bills were as high as 15.34 6. During the first threequarters of the outgoing fiscal year.23 7.35 6. 1998 (Table-6.5 Auction of Market Treasury Bills (W. Yield) 1998-03 (Percent) Date 6 Months 12 Months 15-07-1998 15. picked-up from mid-November 2002.) rates of return on 6 months and 12 months T. strong demand for T. Sharp reductions in T. It may be noted that while the SBP was transacting forex swap.88 percent and 12. this support was not required during the outgoing fiscal year.5 percent since July 2001.78 05-10-2000 10. a reduction of 596 basis points respectively in 2001-02.38 30-05-2002 6. On the other hand.82 06-02-2002 5.00 percent.96 11.61 Source: State Bank of Pakistan During 2001-02.A.97 11-07-2002 6.95 30-05-2001 11. However.66 April 2003 1.00 28-11-2001 8.88 12.36 February 2003 3.08 01-12-1999 10.91 12-12-2000 10. Bills continued unabated during the current fiscal year also. Bill rate.40 23-01-2002 6. the T.60 March 2003 2.50 9. this transaction did not mop-up any rupee liquidity from the market during 2002-03.A.19 3.
7 percent in the first nine months of the current fiscal year as compared to the amount offered and accepted in the same period last year. an amount of Rs 551.9 billion was accepted including Rs 508.7 307.2 7. 6 months and 12 months maturity and Rs 122.1 percent and 94.A. Out of this.6 144. Market Treasury Bills (MTBs) a) 3 Months b) 6 Months c) 12 Months Total MTBs 2.4 446. 42.Bills (1998-03) 17 15 13 11 9 7 5 3 1 6 Months 12 Months Table 6. (Table-6.1 1204.4 billion was offered including Rs 1204. During July-March 2002-03.6 billion under PIBs.Bills (Rs billion) 2001-02 (July-March) 1.6 Purchase and Sale of T.Chapter 6.8 9.2 billion under T. as compared to 47. Rate 8.6 197.1 508. Fig 1: Rate of Return on T.5 98.5 Accepted 61.7 624. Money and Credit year as compared to Rs 211.1 billion) was accepted by the SBP.6 percent in the same period last year.1 Accepted 28.1 billion under T.2 4.7 5. Bills and Rs 43.8 16.1 9.5 172. A total of Rs 1326.2 52.A.2 10.6 36. Bills of 3 months. Pakistan Investment Bonds(PIBs) a) 3 Years Maturity Offered 104.8 billion in the same period last year.1 20.1 211.8 .3 510.3 billion under Pakistan Investment Bonds (PIBs).2 2002-03 (July-March) Offered 69.4 W. Rate 3.2 percent of the bid amount (Rs 1204. Both offered and accepted amounts were higher by 109.6).4 W.9 4.
the State Bank of Pakistan introduced a liberal monetary policy since the beginning of 2001-02 with a view to bolster investment activities in the country.38 6. from 8.96 5.22 13.2 12.14 6.64 7. 5. The weighted average lending rates of commercial banks have declined from 13.721 11.57 6. increased in Pakistan from 5.4 11.8 634.Chapter 6. despite reduction in the T.0 6.6 551.8 Source: State Bank of Pakistan Interest Rate Environment After pursuing a tight monetary policy in the previous years.0 percent to 2.7 71.19 percentage points by commercial banks.4 percent in 2001-02.7 64.3). Bills rates and rationalising the deposits rates of the National Savings Schemes (NSS). 2003) Lending Rate 13. The discount rate cuts to the extent of 650 basis points have yet to produce desirable result in bringing the spread (the difference between the average lending and deposit rates) down to an acceptable level of 3.92 6.7. The spread is expected to come down further in the remaining months of the current fiscal year.97 13.5 percent in 1994-95 to 8.9 (94. Bills 6.831 7.0 187.66 13.361 10. the weighted average deposit rate has also declined from 5. Money and Credit b) 5 Years Maturity c) 10 Years Maturity Total (PIBs) Grand Total (Growth) 37. 2002.50 6. However.6 283. This was done with the introduction of a two pronged strategy i.4 percent in June 2002 to 5.96 July 2000 August 2000 September 2000 October 2000 November 2000 December 2000 January 2001 .58 6. It is.761 8.03 6.2 24.81 percent during the same period (see Tables-6.40 7.8 & Fig:2).80 6.36 7.208 10.3 1326. At the same time.887 7.37 Spread 6.00 6. Bills rates and NSS rates credit flow to the private sector was not forthcoming till November 2002.30 12. nevertheless.4 15.5 percent.7 Interest Rate Structure in the Country (Percent) (July 2000 to March.63 6.1%) 11.3 114.678 10.45 percent by March 2003 (Table-6.95 13. 6.48 percentage point cut in lending rate was made possible by cutting down deposit rate by 2. in fact.86 (Weighted Average Rate) Libor T.7 and Fig.26 percent in March 2003 as a result of the successive cut in SBP discount rate of 650 basis points since 2001-02 to 7.6 122.7%) 6.7 39.e.7 43. This spread has. The spread between the lending rates and the deposit rates is one of the best yardsticks to measure the efficiency of the banking sector. encouraging to note that banking spread has considerably declined in the first nine months of 2002-03. Thus. The sharp increase in credit off-take actually started after 150 basis points reduction in the discount rate on November 18.65 6.23 Deposit Rate 6.0 percent.23 6.2 37.30 7. This duel approach also continued in the current fiscal year.4 (109.7 percent in June 2001 to 8.52 6. Table 6.88 14. gradually lowering down the T.
which reduced private banks from 12.83 1.96 11.948 6.01 percent to 9.19 6. In order to boost exports.30 4.02 4.79 percent.262 1. compared with at Among Pakistani banks.12 12.71 1.44 8.84 6.93 6.36 8.32 1. 2003) 13.15 1.54 percent.89 percent and pronounced in the case of foreign banks.40 8.863 6.48 10.270 2.60 3. 14. State Bank also reduced rates under Export Finance . the lending rate of specialized banks showed percent by end February 2003.Chapter 6.74 13. Pakistani banks reduced only marginal reduction during the period.56 11.383 3.95 9.67 percent to 9.86 However.67 2.02 percent at end February 2003.66 10. which stood their lending rate by 283 basis points to 9.97 3.93 3.97 13.97 percent. 2000 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Jun-01 Dec-01 Mar-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Spre ad Deposit Rate Lending Rate The reduction in lending rate was more privatized banks from 13.04 2.79 1.21 3.618 6.40 7.827 12.37 7.45 11.81 8.09 5.74 1.00 5.31 9. their rates by 290 basis points since July 2002 to 7.983 7.87 3. Figure-2 Weighted Average Monthly Lending and Deposit Rates (July 2000 to March.15 1.44 8.332 6.815 6. the NCBs reduced their 14. Money and Credit June 2001 December 2001 March 2002 June 2002 July 2002 August 2002 September 2002 October 2002 November 2002 December 2002 January 2003 February 2003 March 2003 * April 2003.73 4.03 1.74 3.31 3.14 percent in July 2002.26 5.39 1.88 7.51 1.34 6.41 percent to 9.45 1.65* Source: State Bank of Pakistan 14 12 10 8 6 4 2 July.17 11. the lending rate from 12.751 6.383 3.62 5.76 6.471 4.
2 6.6 1. overstaffing and increasing volume of nonperforming loans and defaults. Table 6.7 2. This indicates that depositors are not getting genuine returns on their savings with banks. to 75 in March 2003 (Table-6.6 8.6 14.8 8. However.4 14.4 9.8 Real -4.6 2.2 8.2 6.2 6. reflecting a reduction of 300 basis points Manufacture Machinery (LMM).9 and Fig: 3).6 14. The number of domestic banks branches which were 7280 in June 2002. the real deposit rate was negative in the current fiscal year.6 2. It has declined sharply to as low as 6. The SBP refinance rate.4 8.7 8. lending rate started coming down which stood at 13.6 15. which was percent in July 2000. The number of foreign bank branches also came down from 78 in June 2002.45 percent in March 2003.1 8. Performance of Banks As a corollary of reforms in the banking sector.8 7. the number of loss making domestic bank branches continued to decline in the current fiscal.9 Weighted average deposit rate Nominal 8.7 13.3 9.6 4.7 percent in 1994-95 to 14.2 percent in June 1995 to 8.0 13.0 5.7 14.8 percent in March 2003.3 0. These rates are linked since July 2002.1 7.8 -2. as real lending rates did not move with the movement in inflation rate.Chapter 6.1 8.3 percent in March 2003. since July 2001.5 June 2002 March 2003 The nominal deposit rates after increasing marginally from 8.2 6. The decline in overall interest rate with the yield on 6 months TBs and SBP fix refinance structure in Pakistan is consistent with the global rate on monthly basis. gradually declined to 4.9 5.887 significant reduction. After showing positive trend during 1998-2002.7 3.1 8.7 percent in June 2002 and further to 2. . These rates also showed decline in interest rate.4 5.3 2. although the spread between lending and deposit rate has come down from 8. reduced to 3.5 percent in June 1997.2 -0.7 8. The LIBOR was as high as 6.39 percent in June 2002 to 5.0 percent in 1999-00.5 6. reduced to 7150 in March 2003. Money and Credit Scheme and for export sales under scheme for Locally March 2003.3 Real 0.6 Difference between lending & deposit rate Nominal 5.5 percent in July 2002.8 Lending and Deposit Rates (Percentage) Weighted average lending rate Nominal June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 13.1 percent in June 2002 and 8.9 10.5 6.5 Real 5. The weighted average lending rate on the other hand increased from 13.3 0.4 5.1 7.5 8. The main factors responsible for stagnancy in deposit rates were: increased administrative cost of financial institutions.2 8. the W. Real deposit rates were negative during 1995-97.5 percent only in 1.26 percent in March 2003.6 -3.6 8.A.0 4.
Net advances of the scheduled banks showed increase during the current fiscal year. Gross NPLs of the scheduled banks have increased from Rs 234..3 billion or by 53.from Rs 1848. which had been forced by the continuing decline in interest rates (particularly on government securities).e. except in the case of NCBs and specialized banks. from Rs 1412. private banks and specialized banks have increased. Higher deposits of the scheduled banks in the current fiscal year resulted partly due to extraordinary foreign Table 6. In the comparable period last year.949 June 2001 7272 80 7352 June 2002 7280 78 7358 (Numbers) March 2003 7150 75 7225 Source: State Bank of Pakistan.6 percent.2 billion. Gross NPLs of NCBs and foriegn banks have declined during the period under review.7 percent.1 billion).6 billion -.4 billion) followed by nationalized commercial banks (Rs 68. The SBP/Government have continued to encourage privatization of NCBs and merger of the weak financial institution with the large and sound financial institutions in the current fiscal year.7 billion in the net advances of the scheduled banks.Chapter 6. Low premium between the kerb and inter bank exchange market has induced the overseas Pakistanis to use the official means for remitting foreign exchange. net advances of the scheduled banks actually declined by Rs 15. The strong growth in net credit was a very welcome development for the banking industry.5 billion in March 2003 or by 11.1 billion in June 2002 to Rs 839.2 billion in March 2003. It is worth mentioning that UBL was privatized in December 2002. i. while gross NPLs of DNCBs. there was an increase of Rs 29.9 to Rs 1605.5 billion in March 2003.8 billion in June 2002 to Rs 2064.7 billion in the same period. showing an unprecedented increase of Rs 252. amidst increased market liquidity.7 percent. .3 billion in June 2002 to Rs 723. Total investment of all scheduled banks have also increased from Rs 471.130 June 99 7973 85 8.058 June 2000 7871 78 7. Money and Credit exchange inflows in the country. During the first nine months of the outgoing fiscal year. which increased from Rs 810.8 billion in March 2003 or by 3.5 percent. Scheduled bank‘s deposits have increased by Rs 192.7 billion in June 2002 to Rs 242.6 billion or by 13. total assets of all the scheduled banks have increased by Rs 215. During the first nine months of 2002-03. Highest increase in net investment was recorded in the case of denationalized commercial banks (Rs 127.9 Branches of Domestic & Foreign Banks June 98 i) Domestic Banks ii) Foreign Banks iii) Total 8049 81 8.1 billion) and Private banks (Rs 55.
14 private. from Rs 22. Its paid up capital of Rs 1. net NPLs of Nationalized Commercial Banks has markedly declined by 24 percent. Net NPLs of 29 Rs of country.Chapter 6. The KB is designed to bridge the significant demand and supply gap in the micro finance market and increase the presently negligible outreach (5%) to the potential client base comprising over 6 million poor households in Pakistan. Services are delivered at clients' ‘doorsteps.62 billion in December 2002. Women foreign banks which were very negligible. Among the domestic banks. It is a joint venture between public and private sector financial institutions. The Asian Development Bank is sponsoring the programme with soft lending of US $ 150 million.7 billion has been subscribed by 16 commercial banks. the NPLs .5 percent. Net NPLs of all commercial banks have declined by 9. During the first half of 2002-03. and DFIs have however. Similarly net NPLs of DFIs have also registered an increase of 9.5 percent. adversely affecting their growth and profitability.23 billion in June 2002 to Rs 33. declined marginally during the ongoing fiscal year and stood at Rs 106. Money and Credit Fig-3: Branches of domestic & foreign banks 81 85 78 of specialized banks have increased by Rs 6. including 2 foreign.2 billion across 75. The share capital of the bank is Rs 5 billion.54 billion in December 2002.1 billion or 24. the KB has established a network of 31 branches and 57 service centers in 35 districts across the country.86 billion in June 2002. specialized banks. and 2 public sector banks. from Rs 44. Within a period of just over 2 years of its commercial launch.4 percent during the same period.48 billion in June 2002 to December 2002.78 billion in June 2002 to Rs 69.7 percent during July-December 2002-03.13 billion in December 2002. Net non-performing loans (NPLs) of all commercial banks. The main objective of the programme is to provide a stable sectoral environment and creating institutional capacity to retail micro finance services to the poor.73 billion in privatized banks percent. as against Rs 106.000 loans and disbursed Rs 1. The KB lending is group/community-based through strengthening of the social collateral and peer pressure. The bank has serviced over 100. from Rs 76.47 billion in June 2002 to Rs 11. The bank‘s service delivery design combines global industry standards and indigenous practices. 75 80 Numbers 78 8049 7973 Micro Finance (MF) and Khushali Bank 7202 7871 7272 The Government of Pakistan has launched a Micro Finance Sector Development Programme (MSDP) to reduce poverty in the 7150 Domestic Banks Foreign Banks Recovery of Defaults and Non-Performing Loans Loan defaults continuous to be one of the major problems of our banking system in general and Nationalized Commercial Banks and DFIs in particular. Similarly net NPLs of private banks have come down from Rs 13. have declined by 2. Net NPLs have however.000 poor households.45 billion in December 2002. increased by 17. Khushhali Bank (KB) is the first micro finance bank established under the MSDP umbrella.
established at the State Bank of Pakistan. education. It has mobilized deposits/savings of more than Rs 112. The bank is actively engaged to serve the SME sector by providing credit facilities and business support services all over the country. Nearly 80 percent on the lending activity remains in the rural areas and 20 percent in the urban areas with loans for agricultural inputs and live stocks.000 for community level infrastructure development schemes. namely. net outstanding loans are projected at Rs 7. First Micro Finance Bank Limited The First Micro Finance Bank (MFB) Limited was granted license in January 2002 to operate as a country wide MFB in the private sector. The bank‘s social sector services package includes women development.707 Community Organizations (COs) of which 3. communication etc. droughts etc. In order to fund social sector interventions. The bank was created to address the needs of the niche market with specialized financial products and services that will help stimulate SME development in the country. A Risk Mitigation Fund of $ 5 million has been set up to provide support to borrowers for replacement of income generating assets lost due to natural calamities as floods.e.889 COs are female. By the year 2006. quality control. drinking water. leasing. Islamabad and Rawalpindi. The 70 percent of portfolio is spread against small sized farming and 30 percent against micro enterprise development. The bank provides financial assistance in the shape of working capital. product innovation and development. The KB has also mobilized nearly Rs 100 million in community savings. the KB generates savings at community level. Money and Credit constitute 35 percent of Bank‘s clientele.74 billion. capacity building services for skills development and provision of basic infrastructure services as health. Community based infrastructure development operations were recently launched across network. The bank has so far established a network of 10 branches. The Government of Pakistan is the major shareholder.430 billion and deposits at Rs 1. All COs were provided with basic training in various skills. sanitation. Microfinance Social Development Fund (MSDF) and Community Investment Fund (CIF).793 households into 10. medium long term financing. It also provides technical assistance and support in areas of management. product positioning and marketing and development of bankable business proposals.Chapter 6. under the MFIs Ordinance 2001. Under the social sector services package. Currently. projecting completion of over 1000 small development schemes in 2003. In terms of credit and saving operations. The CIF resources are used to provide grants up to Rs 150. a Deposit Protection Fund of $ 5 has also been established to provide insurance cover to small savers of Khushhali Bank. The bank has a paid-up capital of Rs 660 million. nearly 10 percent market by 2006. SME Bank SME Bank Ltd was established in January 2002 by the Government of Pakistan to exclusively cater to the needs of the SME sector. the bank has access to two endowment funds. the bank has so far mobilized 90. program lending etc. 7 in Northern Area and 1 each in Karachi. The bank has introduced specialized financial products and programme lending schemes under the brand name of ‗Hunarmand . As a part of safety net mechanism.95 million and extended loans of Rs 75 million to 2387 clients. acquisition of new technology.000 households i. forming the major part. the bank projects to access to over 560.
Another four Hunarmand Pakistani Schemes for motorcycle rickshaw fruits and vegetables fisheries (boats & processing) OEM (original equipment manufacturers) will be introduced shortly. auto looms (upgradation of power looms) and furniture manufacturing.00 billion during the year 2003. With the above stated initiatives.Chapter 6. It is expected that the business plan _____________________________ and lending activities initiated by the bank will go a long way in promoting the SME sector so as to enable it to significantly contribute toward achieving GDP growth target of 4. Money and Credit Pakistani‘ that cater to a variety of credit needs for the SMEs.5 percent and supplement the recent initiatives of the Government to reduce unemployment and level of poverty in the country. . the bank envisages financing of over 4000 SMEs involving financial assistance of Rs 2. A large number of SMEs will now be financed under programme lending approach including fan manufacturing cutlery manufacturing surgical instruments doctors & dentists clinics women entrepreneurs CNG stations.
KSE-100. In Pakistan. resources and in channeling them efficiently to the most Pakistan‘s stock markets have remained productive investments. Although equity of issues have not picked up. In terms of GDP (MP). and (ii) allocation of medium and long-term billion etc. and witnessed a phenomenal growth in the first ten and half months of the current fiscal year. the market reform program. rising ultimately of its rate of economic growth.1 points in June 2002 to 2902.Chapter 7. The Pakistan has now a capital market with high degree milestone was achieved because of the of integrity and transparency in terms of price discovery and trade settlement.63 stock market is no longer viewed as having any resemblance billion to $ 11. rising from $ 6. An efficient from 1770.4 points on May 16. The capital market increase in debt capital issues. It is a vehicle whereby capital is has risen from about 1 to 2 percent of trades in the early part deployed from sources where it is in excess to the year 2000 to around 10 to 15 percent now. Pakistan is today largely compliant The aggregate market capitalization of the KSE with International Organization of Securities Commission‘s has also surged 62. 2003.47 billion during the current fiscal with a casino. has country‘s level of savings.0 percent in the same period last year.6 (IOSCO) 30 principles of securities regulation.5 billion during this period. and the capacity building of the Securities and Exchange Commission confidence of both local and foreign investors‘ on of Pakistan (SEC) have been the hallmark of the capital country‘s economic policy and on the KSE. The market billion to Rs 662. (i) mobilization and intermediation of private capital listed in the last two years being as much as Rs 30 savings. standards. reliable audits. the market capitalization has years had a significant impact on investor confidence and the increased by 73. structural changes brought about by the government have the been quite successful in restoring investors‘ confidence in the aggregate market capitalization has jumped . development is thus an important determinant of a The Karachi Stock Exchange.5 percent. 2003. there has been a significant sources where it is in short supply. It plays a crucial role in mobilizing domestic both within the country and abroad. efficiency of investment. In friendly measures introduced during the last three and half terms of US dollar. attracting only die-hard speculators. the Karachi Stock Exchange is playing a central and critical role in shaping the savings and financial resources for investment through a variety of investment climate as it is the main window to ensure that the debt and equity instruments of both private and public market continues to grow and generate interest of investors sectors. registering an increase of 69. institutional strengthening and strengthened macroeconomic indicators. rising from Rs 407.4 points in capital market can also provide a wide range of April 2003 and thereafter to an all time magic high attractive opportunities for both the domestic and figure of 3003. The observance of enhanced accounting government‘s macroeconomic policies. Capital Market 7. The market has clearly attracted genuine Capital market is the heart and soul of the investment as is evidenced by the fact that actual settlement financial sector. the aggregate amount of new facilitates. The level of capital market buoyant during the outgoing fiscal year 2002-03. The year until May 16. Capital Market equity market.0 percent. foreign investors.7 percent during the period under review as compared to a rise of 33.
. 33. During April-May 16. PSO. that also pulled down interest rates. Currently. The upward movement has also been accelerated because of a democratically elected pro-reform government firmly in place since mid-December 2002. (iv) huge forex reserves. CDC has about 7. Shell Pakistan.8 percent or 683 points in the second quarter and by 0. the depository has been providing state-of-the-art settlement system. (vi) strong presence of energy stocks in the market as energy sector enjoys about 30 percent weight in the KSE100 share index and serves as one of the key drivers of the market. The CDC also has a comprehensive arrangement with NCSS. rescheduling/write-off of debts by some big donor countries. It may be noted that the average daily turnover of shares has increased from 74. Capital Market from 11. liberalization and deregulation have encouraged private investments having a profound effect on the activity of the stock market and (ix) the increased interest of foreign investors in the stock market. These are: Pakistan Stock Market Fund. having more than 1.6 percent or 288 points. The National Clearing and Settlement System (NCSS) was launched on December 24. Adamjee Insurance. After recording impressive performance in 2001-02 the KSE-100 index resumed its upward movement by second week of August 2002 amids rumors of strong corporate earnings by some index heavy weights (Lever Brothers. especially the USA.000 investor accounts.1 and Fig: 1 (a) and (b). KSE Index has further increased by 10.5 percent or 14 points in the third quarter of 200203. The monthly trends of the leading stock market indicators are given in Table 7.2 percent to 16. despite a 20 percent reduction in transaction fee effective from November 2001.3 million in 2001-02 to 104. HUBCO and PTCL).0 percent or 249 points in the first quarter..Chapter 7. The CDC continues to diversify its operations by adding more features and functionalities. Moreover an emerging stable and improved bilateral relations between Pakistan and India has created a renewed bullish fervour in the month of May 2003. (v) huge build-up of rupee liquidity driven in large by continuing forex inflows into Pakistan.2 billion securities. Yet another indicator of impressive performance of the Karachi Stock Exchange has been an extraordinary surge in monthly turnover of shares from 2. (vii) expectations of early privatization of some state enterprises and banks. 2003.7 million in the first two quarters of 2002-03 and further to 243.1 million shares in the third quarter of 2002-03.0 billion during July-April of 2002-03. This has tremendously helped in promoting efficiency and transparency in the capital market. Currently CDC is the trustee of three open-end mutual funds.4 billion in 2001-02 to 4. (ii) substantial improvements in economic fundamentals. 2001 and the number of securities trades at NCSS is being gradually increased. the CDC handled the first electronic de-merger of ICI Pakistan into two entities. The spectacular performance in the stock market during the outgoing year is attributable to a number of factors: (i) investment friendly policies being pursued by the government for revival of the national economy and restoring the confidence of the investors. (iii) relatively cheap market valuations and the declining returns on alternative investments. Pakistan Income Fund and United Money Market Fund. The implementation of T+3 settlement system has resulted in increased settlement volume. During the year 2001. which are synergetic to its core activity. Over the years. (viii) policies on privatization. The KSE index increased by 14.5 percent during the same period. The Central Depository Company of Pakistan (CDC) is now an integral part of the stock market in Pakistan and has completed five and half years of its operations.
1 Leading Stock Market Indicators on KSE (KSE Share Index: November 1991=1000) 2001-02 Months KSE Index (end month) Market Capitalization (Rs billion) (end month) 311.8 554.8 340.6 1.4 3003.7 4.4* - July 1228.8 3.4 2715.4 4.1 603.6 3.4 6.0 2.6 2018.5 2285.3 407.9 588.6 2.6 450.7 383.9 345.8 9.9 282.1 542.2 292.5 0. (a) Monthly KSE Share Index 3200 3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 1000 Jul(01-02) Stock Exchange Aug Sept Oct Nov Dec Jan KSE Share Index Feb Mar Apr May Jun Aug Sept Oct Nov Dec Jan Feb Mar Apr May 16.0 4. 03 Jul(02-03) .4 October 1406.9 2701.3 2. 2003 2002-03 (July-May) Market TurnCapitalization over of (Rs billion) Share (end month) (bn) 412.1 2509.9 3.9 3.6 353.1 November 1358.5 1.0 2.9 424.0 March 1868.9 Turnover of Shares (bn) 1.6 1974.4 KSE Index (end month) 1787.3 June 1770.7 3.1 Average 1520.7 637.2 1.3 314. Capital Market Table 7.7 2902.1 January 1620.4 662.0 2.8 0.1 3.3 513.4 * May 16.1 April 1899.2 December 1273.Chapter 7.0 427.1 458.5* 1.7 535.2 February 1766.9 August 1258.2 326.4 September 1133.2 2.8 2278.9* Source: Karachi Fig 1.0 390.0 May 1663.4 2545.
3 percent.31 1770.49 389.60 Sri Lanka 844.93 505.32 Malaysia 633.42 1552. Capital Market Fig 1.Chapter 7.55 Hong Kong 9155.40 1156.14 Sept Oct Nov Dec Jan Table 7. out of 13 leading stock markets in the world. 2002-03 the Karachi Stock Exchange has also remained the best performing market among the leading stock markets in the world. Billion It would not be out of place to mention that as a result of the unprecedented boom in Karachi Stock Exchange during the calendar year 2002.9 percent (Malaysia) to 20.35 -11.32 -1.78 3244.10 -3. The surge in Pakistan‘s equity markets during 2002 is undoubtedly the results of a significant turnaround in the economy in general and external accounts in particular. With profitability in US dollar.06 China 1531.2 Feb Mar Market Capitalization share index increased by 74. As documented in Table 7. The other 11 leading world stock markets recorded negative growth ranging from 1.61 Korea 631.36 17.87 1732.15 Taiwan 4261.59 Singapore 1327. 2002-03 (Index level in USD) Index Level in Respective Currencies % Change in USD 12 May 2003 30 June 2002 Pakistan 2973.70 -5.98 -12. Pakistan has been the most profitable market in the region followed by Sri Lanka (17.71 -20.7 percent (Japan).57 10598.96 Philippine 1061. the KSE Regional Markets Index Change in USD during July-May 12.12 74.04 742.55 -13. All other markets of Asia Pacific Region registered significant losses.6 percent.29 711.95 646.02 5153. During July-May 12. standing at 74. (b) Market Capitalization in KSE 700 650 600 550 500 450 400 350 300 250 Jul(01-02) Aug Rs.72 -14.6 percent in terms of US dollar during July-May 12.67 Thailand 383.2 and Fig:2.76 -11.33 India 2942. 03 Jul(02-03) . Apr May Jun Aug Sept Oct Nov Dec Jan Feb Mar Apr May 16.91 Indonesia 473. The stock market of Sri Lanka posted a gorwth of 17. 2002-03.01 -2.3%) during the period under review. it was declared as the best performing market in the world.
The SEC has been actively pursuing a reform agenda since 2001 for the capital market. Pakistan Srilanka Malaysia Indonesia Thailand Philippine China Singapore Hong Kong Korea Taiwan Japan India building of various segments of the capital market on the other. which was subsequently made part of the listing regulations of the three stock exchanges (Karachi. the Security and Exchange Commission of Pakistan (SEC) has introduced the first Code of Corporate Governance for Pakistan.72 Source: Elixir Securities Pakistan Fig-2: Regional Markets Index ( % Change) during Jul-May 12. Capital Market Japan 8221. The SEC carried out some amendments in the Article of Association of the stock exchanges to address sensitive issues. The SEC ensures that the market functions in a smooth and transparent manner and is also vigilantly observing the market. Its regulatory mechanisms aim to minimize elements of systemic risk and other possible defaults on the one hand and promotes institutional strengthening/capacity BOX Policy Measures and Progress a) Improvements in Governance In March 2002. conflict of interest in the management of bourses an ―Undisclosed Trading System‖ where the identity of the buyer and seller are not . the Securities & Exchange Commission of Pakistan (SEC) has been taking measures to restore confidence of the investors – both foreign and domestic in the capital market of Pakistan.12 10621. such as. several initiatives were taken to further enhance market efficiency and investors confidence. Lahore & Islamabad). 2002-03 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 % Change in US $ Over the past three and half years.84 -20. In this connection.Chapter 7.
000 to Rs 100. the SEC has directed the stock exchanges to reconstitute their Boards such that five directors are elected from amongst the members by the general body of the exchange. the Commission directed the stock exchanges to make some changes in the carry over transactions. the SEC has approved a two-tier arbitration procedure for the Karachi Stock Exchange (KSE). the penalty for the non-compliance of the provisions relating to auditing was increased from Rs 2. approved the Regulations for Short Selling under Ready Market. 2002. conflict of interest in the management of bourses. All Carry Over Transactions (COT) are to be for a period of 10 days in order to mitigate the potential risk of the sudden withdrawal of massive funds from badla operations.Chapter 7.5 million. In order to further strengthen risk management at the exchanges. b) Risk Management Measures In order to minimize market manipulation and ensuring a healthier and more transparent capital market. SEC ordered some amendments in the Article of Association of the stock exchanges to address the sensitive issues. 2002. which are not amicably settled otherwise. For the expeditious resolution of investor complaints. under which the companies are now required to present their quarterly accounts to shareholders within one month of the respective quarter-end. In order to further improve the governance of the stock exchanges. Another important development in the stock market is the implementation of ―Undisclosed Trading System‖.000. the KSE launched this trading system where the identity of the buyers and sellers is not disclosed. in February 2002. such as. four non-member directors to be appointed by the SEC and the Chairman to be elected by the Board from amongst the non-member directors. Some important policy initiatives introduced by the SEC during 2002-03 are given in the box below. Moreover. The SEC introduced an amendment in the Companies Ordinance 1984. This is aimed at discouraging a ―herd‖ culture where small investors try to mirror the activities of larger players in the hope of speculative gains rather than investing on the basis of stock fundamentals. Capital Market disclosed. . under which all claims and disputes exceeding Rs 0. On October 7. the SEC. should be referred to the Advisory and Arbitration Committee (AAC).
The NCEL is the first demutualized exchange and will be sponsored by the three stock exchanges of Pakistan. c) New Products/Developments In order to regulate futures trading in the provisionally listed securities. 348 complaints were received out of which 177 have been resolved. Another significant reform was introduced in the Badla market. Sectoral Performance During the first nine months of the outgoing fiscal year. the Commission approved. importance of financial planning. and the rights and responsibilities of investors. for trading in future contract in commodities. In May 2002. 2002. the KSE price index and aggregate market capitalization have increased by . procedures and relevant laws. as well as the recourse available to them. This is aimed at preventing an artificial liquidity crunch due to an abrupt withdrawal of financing from the market.monitoring the systematic risk at exchanges. The Commission has approved the establishment of National Commodities Exchange Limited (NCEL). The Commission has published a series of ―Investor Guides‖ to educate existing and potential investors about investment risks and rewards. The Commission has directed the stock exchanges to ensure that the Investor Protection Fund and the Clearing House Protection Fund are fully funded by June 30. in February 2002. the Commission approved the Regulations for Futures Trading in provisionally Listed Companies. The Market Monitoring & Surveillance Wing (MSW) has been set up within the Commission to facilitate initiatives in risk management. The Cell‘s priority is to eliminate basic anomalies in the stock exchanges‘ business systems. and surveillance to detect general or specific instances of market abuse.Chapter 7. for the KSE. During July-March 2002-03. 2002. the concept of an Over-theCounter (OTC) market and the stock exchanges are currently in the process of drafting necessary regulations. in principle. 2007. The MSW has two specific functions . The Commission has established a Vigilance Cell. Capital Market A ―take over law‖ proposed by the SEC was promulgated on November 1. Badla providers were required to commit their funds to the market for 10 days. which serves as a forum for protection of the small investors.
9 603.5).0 9. The share index of cotton and other textile recorded a growth of 5.2 47.5 11.7 74.0 45.9 percent respectively. Capital Market 53.7 30.6 32.1 8.2 -3.1 33. Engineering 4.6 40. 2002* 41.7 26.1 3.3 billion in the same period last year.5 23.5 25.2 16.0 0 0 0 Source: State Bank of Pakistan Cotton and Other Textiles: In this group.4 Market Capitalization July-March (Growth %) 2001-02 2002-03 8.3 Sectoral Performance on Karachi Stock Exchange (Percent) Sector General Index July-March (Growth%) 2001-02 2002-03 2.7 44.6 79. Funds mobilized by the KSE during this period amounted to Rs 23.1 5. total profit before taxation of the 12 trading groups amounted to Rs 90.0 73.9 billion as compared to their before taxation profit of Rs 62.6 22.Chapter 7. KSE Index * End March 2002 and 2003. cement.7 15.3 2003* 47.9 26.2 18.5 21. cables and electric goods. Table 7.0 15.2 32.1 12. paper and board. and miscellaneous) recorded positive growth in their share indices.7 5.7 15.0 14. Auto & Allied 5.7 28. sugar and allied. All the 12 major trading groups on the KSE (cotton and other textiles. engineering.8 2.3 32.0 57.4 2.3 to 7. Overall/Total 14.5 57. auto & allied. and (c) other textiles.7 percent (cement) to 79. pharmaceuticals & chemicals.4 44.3 87.8 12.9 54. Miscellaneous 13.8 19.1 billion as compared to Rs 13.1 15.1 3.2 18. 2.9 1.0 20. Paper & Board 8.1 percent in the same period last year.3 36.6 21.7 114.8 3. There were 231 companies listed with KSE under this group.3 32.7 2. banks and other financial institutions.1 34.7 percent and 26.7 percent in the same period .7 8.0 21.8 percent (auto & allied). Transport & Communication 11.3 161. Cement 9.0 53.7 26. there are three sub-groups: (a) textile spinning.6 122.2 19.9 427. Total turnover of shares on KSE was 36.8 54. ranging from 1.5 billion in the same period last year.0 21.4 5.9 107.2 billion in the first nine months of 2002-2003 as compared to 21.5 52. Performance of leading trading groups and companies for the first nine months of the outgoing fiscal year is discussed below (Tables 7.1 30. Fuel & Energy 10. 7. Cables and Electrical Goods 6 Sugar & Allied .1 AMC (Rs billion)* Cotton and other Textiles 1 . transport and communication. (b) textile weaving & composite. Chemicals & Pharmaceuticals 3. fuel and energy.2 24. as against their increase of 36.7 41. During the calendar year 2002.1 0 73.0 25.4 percent and 47.6 billion in 2001.2 4. Banks other Financial Institutions 12.8 53.0 percent during the first nine months of the current fiscal year as compared to a growth of 2.8 79.
The group ranked top both in the growth of share index and market capitalization on KSE. Its market capitalization stood at Rs 18. (agriculture. as against a growth of 53. Energy sector has been identified as the engine of growth along with 3 other sectors.9 percent. Sugar and allied group is a minor player in the stock market although it has a weight of 8. the share index of sugar and allied posted a growth of 24.1 billion) in the same period last year.0 percent over June 2002 and 53. showing a marked increase of 73. Unlike the previous year performance of this group remained sluggish in the current fiscal year.2 billion in June 2002 to Rs 21. increased by 12.8 billion on 31st March 2003. Its market capitalization stood at Rs 87. Transport & Communication: At the end of 2002.Chapter 7.0 percent over March 2002.0 percent and market capitalization increased by 54. its share index increased by 44.1 percent respectively.1 percent in the comparable period of last year. as compared to their growth of 20. small and medium enterprises. Capital Market last year. During the outgoing fiscal year.3 billion on March 31.4 percent in the same period last year.0 percent in the same period last year. its share index increased by 26. Its market capitalization increased by 15.6 percent as compared to an increase of 21.1 billion in March 2003. Hence its unprecedented growth is expected to promote more investment activities in the economy. During the first nine months of the current fiscal year.1 percent in the comparable period last year. Fuel & Energy: A total of 25 companies were listed with the KSE with a market capitalization of Rs 161. Sugar and Allied: Under this group. auto and allied group showed the best performance so far among the 12 leading groups listed with the KSE.6 percent in the production index of major industries. there were 22 cement companies listed with the KSE.2 percent or by Rs 6. During the first nine months of the current fiscal year.3 percent as compared to a rise of 3. Its share index increased by 79. Cement: At the end of 2002. while its market capitalization increased from Rs 10. The group is one of the major players on the KSE. recording a spectacular growth of 107. Chemicals & Pharmaceuticals: A total of 37 companies were listed with KSE under this group at end December 2002.0 billion .1 billion. 2003.6 billion as of 31 st March 2003 constituting 26.0 percent (Rs 3. a total of 38 companies were listed with the KSE with a market capitalization of Rs 5.7 percent. Its market capitalization. During the first three quarters of the current fiscal year.8 percent of aggregate market capitalization (AMC). and information technology) by the government. there were 9 companies of this group listed with the KSE.7 percent only as compared to a growth of 26.5 percent. Its share index has posted a growth of 1. Auto and Allied: A total of 25 companies were listed with the KSE under this group at the end of December 2002.1 percent. Its market capitalization has increased by 15.8 percent. Its market capitalization increased to Rs 122.6 percent and 44. in the same period last year. however.2 billion during July-March 2002-03 as compared to a rise of 8.
amounted to Rs 90. and others.4.6 percent and 33. 2003. sugar and allied.2 billion in March 2003.9 billion in 2002 compared to its pre-taxation profit of Rs 27.0 billion in 2001 to Rs 6. However.1 billion in 2001. and cement. Similarly pre-taxation profit of chemicals & pharmaceuticals witnessed an unprecedented increase of 268 percent.1 percent during the first three quarters of 2002-03. glass & ceramics. During the current fiscal year. Similarly pre-taxation profit of fuel and energy also come down from Rs 9. Infact. a total of 98 companies were listed with the KSE. three groups incurred pre-taxation losses including engineering.Chapter 7.2 percent and 22. However during 2002 only 187 companies were shown as loss-making as compared to 226 in 2001. Its share index increased by 57.7 billion in 2001 to Rs 7.5 billion in 2001 to Rs 9.4 billion in 2002. a total of 187 companies were listed with the KSE. during 2002 only one group (sugar & allied) incurred a pre-taxation losses of Rs 0. In December 2002. Banking and other financial institutions recorded a pre-taxation profit of Rs 20. In 2002. which incurred pre-taxation loss both in 2001 and 2002. including 231 companies in cotton and other textile. 2003.5 billion. Transport and communication earned a pre-taxation profit of Rs 33. 711 companies were listed on Karachi Stock Exchange. modarabas. Capital Market on March 31.1 percent respectively. In the calendar year 2002. the share index and market capitalization of this group has increased by 28. Its market capitalization constituted 20.6 billion in 2001. which constituted 47. food & allied. listed with the KSE in 2002 as compared to 423 in 2001.0 percent respectively in the same period last year.6 billion on March 31. 422 companies were making profit. thus showing a growth of 45 percent. In December 2002. Its market capitalization increased from Rs 55.6 percent respectively in the first nine months of the current fiscal year. .1 billion in June 2002.1 billion in 2002 as compared to Rs 7. as compared to 314 in 2001. 187 in banks and financial institutions.0 percent of AMC as compared to 45.7 percent in the period under review. and insurance. The combined market capitalization of fuel and energy.0 billion in 2001 recording a jump of 187 percent. number of dividend paying companies was 306. There are 4 sub groups in this group: banks & investment companies.9 billion as compared to a total pretaxation profit of Rs 62. Its share index and market capitalization posted growth of 22. The group-wise number of companies and their performance is given in Table-7. from Rs 70. the total before taxation profit of 12 trading groups. In December 2002. 98 in miscellaneous group etc.2 percent of the aggregate market capitalization (AMC) in March 2003 putting it as a major player on the KSE. as compared to their growth of 8. and transport & communication was Rs 283.5 percent on the corresponding date of last year.9 billion in 2002. In 2001. sugar and allied was the only group. Pre-taxation profit of cotton and other textiles slashed down from Rs 9. listed with KSE.2 percent and 16. Banks & Other Financial Institutions: This is the second largest group in respect of companies listed with the KSE.0 billion in June 2002 to Rs 73. recording a growth of 74.2 billion in 2002. leasing companies. vanaspati & allied. which rose from Rs 2. Miscellaneous: The miscellaneous group includes five sub-groups: jute.
35 Source: Karachi Stock Exchange . which constituted 18.0 6.6).77 3.7 1.6 0. Pakistan State Oil etc. the PTCL‘s share was Rs 19.98 5. Table 7.13 1.66 7.1 7.92 6. 2.7 9.33 0.46 -0.78 billion. and National Bank) was 6.14 0. These seven companies earned profit after taxation of Rs 34. During the first three quarters of the current fiscal year. 12. Out of Rs 34.06 9.81 0. This is indicative of the fact that business environment in the current fiscal year has improved over the last year. 3.67 7. 5.19 1.4 Companies Listed on KSE and their Before Taxation Profits S.35 percent in the current fiscal year. 9.9 39 16 25 14 38 14 21 26 08 195 101 747 37 13 25 12 38 14 22 25 09 187 98 711 2. The average price-earning ratio of the seven big companies has increased from 6.37 6.6 90.4 -0.46 P/E Ratio (July-March) 2001-02 2.9 20. 8.1 6. Capital Market Table 7.5 1.5 percent of the seven big companies.27 0.34 1. 10.5 billion after taxation 46 49 35 28 423 422 226 187 Source: Karachi Stock Exchange profit.4 33.0 5.29 18.46 29. No Name of Sector 1.7 0.15 billion) represented 61. (Details in Table 7. 7.89 -3.6 9.63 1.6 billion in the same period last year. 11.6 -0.5 while a profile of the KSE is given in Table 7.2 0.25 3. PSO. PTCL. In the first nine months of 2001-02.5 -0. the PTCL‘s after taxation profit (Rs 18.61 10.17 0.15 34.3 percent of the seven companies.16 3. Cotton & other Textile Chemical & Pharmaceutical Engineering Auto & Allied Cables & Electric Goods Sugar & Allied Paper & Board Cement Fuel & Energy Transport & Communication Bank & Financial Institutions Miscellaneous Total No.86 7. PTCL.66 4.4 7.8 billion representing 57.5 billion in the current fiscal year up to March 2003 as compared to their after taxation profit of Rs 29.05 2.67 percent in 200102 to 7.9 Dividend Paying Companies 2001 2002 97 22 04 10 04 13 07 05 17 04 95 36 314 82 23 05 13 04 14 07 09 16 03 93 37 306 Profit Making Companies 2001 2002 142 25 06 15 06 15 11 07 19 04 127 126 26 08 15 05 17 10 12 18 06 130 Loss making Companies 2001 2002 67 10 05 08 03 22 02 12 05 03 54 68 09 03 06 03 20 02 08 05 01 34 The business on KSE is primarily influenced by some selected big companies including. of Before TaxCompanies ation Profit 2001 (Rs billion) 2002 2001 2002 250 231 9.7 percent of the total turnover of shares on KSE.16 1.59 6. 4.77 0.23 2002-03 5.5 Performance of Some Selected Blue Chips on KSE Name of Company Hub Power PTCL PSO Sui Northern FFC Jordan National Bank Total/Average Billion of Shares (JulyMarch) 2001-02 2002-03 1.52 4.7 27. combined turnover of shares of seven big companies (Hub Power.Chapter 7.50 0.01 4.78 Profit after Tax (JulyMarch) Rs billion 2001-02 2002-03 10. 6.99 18.76 8.81 2.2 -1.5 62. Sui Northern.15 19. Hub Power.50 0.37 6. FFC Jordan.43 0.7 0.
7 29.7 Profile of Lahore Stock Exchange 1999-2000 a) New Companies Listed b) Fund Mobilized (Rs Billion) c) Listed Capital (Rs Billion) d) Turnover of Share (Billion Nos) e) LSE Index f) Market capitalization (Rs bln) 2 0.4 207.8 273.7 billion in March 2003.2 243.6 235.8 Source: Lahore Stock Exchange .0 365.2 4 15.3 595. The amount of fund mobilized at LSE by way of subscription was Rs 1.6 2002-03 (July-March) 1 23.1 299.5 325.9 236. Total paid up capital with the LSE increased from Rs 246.3* 36.6 Profile of Karachi Stock Exchange 1999-2000 2000-01 2001-02 a) ew Companies Listed b) Fund Mobilized (Rs Billion) c) Listed Capital (Rs Billion) 1 8. The LSE index.5 Source: Karachi Stock Exchange.3 18. The turnover of shares on Lahore Stock Exchange (LSE) during July-March 2002-03 was 19.3 billion in June 2002 to Rs 282. as compared to four in the same period last year. increased to 496.5 billion compared to 11.2 7.7 2001-02 3 14. Market capitalization in LSE has increased from Rs 393. Capital Market Table 7.5 226.6 407.4 48.6 points in March 2003.4 637.7 16.5 496.2 122.1 202.2 291.Chapter 7.1 392 4 3.7 282.9 2000-01 3 2. Two new companies were listed during July-March 2002-03.2 29. A profile of LSE is given in Table-7.7 million in the first nine months of the outgoing fiscal year.7 billion shares in the same period last year.5 339.3 2002-03 (July-March) 2 1. which was 297.5 297.7 19. the Lahore and Islamabad Stock Exchanges.2 246.0* d) Turnover of Share ( Billion Nos) e) Average daily Turnover of Share (in million) f) Aggregate Market Capitalisation (Rs Bilion) * April 2003. Table 7.4 372.3 billion in June 2002 to Rs 595.6 393. points in June 2002. Bullish business trends have also been witnessed during the outgoing fiscal year at the other two stock exchanges namely.8 billion in March 2003.7.1 158.
TFCs are gaining among investors due to a number of Total funds mobilized during July-March 2002-03 in the two stock exchanges (KSE & LSE) amounted to Rs 24.5 points in March 2003.8 Profile of Islamabad Stock Exchange 1999-2000 a) New Companies Listed b) Fund Mobilized (Rs billion) c) Listed Capital (Rs billion) d) Turnover of Share (In Billion Nos) e) ISE Index 0 0 3. and (iii) restrictions imposed on institutional investors for investing in NSS.0 5924.0 points in June 2002 to 5924.373 billion.8 billion and Rs 1.831 billion.2 2000-01 5 0. (ii) substantial fall in returns under various National Saving Schemes. . compared to 34.4 1. No new companies were listed and no fund was mobilized in ISE during the first nine months of the current fiscal year.100 billion were listed on the Karachi and Lahore Stock Exchanges.1 5327. A profile of ISE is given in Table 7. The factors viz.9 billion.5 billion in the same period last year.5 Source: Islamabad Stock Exchange number of TFC issues shows the the investors in debt instruments as to equity issues.6 billion against which they disbursed Rs 2. as compared to Rs 17. during the period under review. GOP disinvested additional shares of NBP amounting to Rs 0. (i) attractive and guaranteed return and safety of principal amount invested. it has developed Exchange (ISE) was 1.7 billion in the same period last year.8. the DFIs sanctioned total loans of Rs 4.32 billion during the same ISE is one of the premiers Stock Exchanges of the period last year. dynamic market technology and lowest overall costs of listing.5 percent.4 4374. whereas one company with paid-up capital of Rs 1. The ISE started functioning in transparency in its operations.7 183.377 billion and 2 companies with paid up capital of Rs 0.8 billion. recording a growth of 26. Furthermore.3 1.2 1. the 2002-03 as compared to 1. Capital Market The turnover of shares on the Islamabad Stock August 1992 and within ten years.3 4684. excellent risk management.70 2002-03 (July-March) 0 0 228. In the first nine months of the current fiscal year (2002-03). Development Finance Institutions (DFIs) During 2001-02. recording an increase of 64. sanctions and disbursements of loans by the DFIs for fixed investment finance to the private industrial sector were Rs 3.30 billion during July-March into a vibrant.9 percent.2 increasing interest of compared popularity 2001-02 1 3.8 183.9 billion respectively. respectively. Table 7. The ISE price index has increased country known for the highest standard for from 4684. Today.Chapter 7. 17 companies offered Term Finance Certificates (TFCs) to the public in aggregate amounting to Rs 9. efficient and stable market. Total turnover of shares in the three stock exchanges during the first three-quarters of the current fiscal year was 56.9 billion. During the period under review.
1 billion in 2000-01.8) July-March 2001-02 2002-03 13.2 (43. Out of Rs 91. during the first nine months of the current fiscal year.8%) were mobilized by Special Saving Certificates (Registered).0 billion.8 1.3) 2000-01 16. (12. From 1972 onward NSS is engaged in the operations of various savings schemes through its own branches network. respectively during JulyMarch 2002-03.0 billion and Rs 2. National Savings Schemes (NSS) The Central Directorate of National Savings (CDNS) is an attached department of the Finance Division and performs deposit bank functions by selling government securities through a network of 366 savings centers.94 billion and Rs 2.4) 41.7 (26.0) (19. Islamic banks sanctioned and disbursed Rs 4.1 billion.2 14. Regular Income Certificates.9 Net Accruals by National Savings Schemes 1999-00 41.9) 21.5) 9.8 billion and Rs 4.4 billion.5 billion during 2001-02 while these were Rs 0. and Rs 11.3 billion and Rs 3.1) 36. net deposits with National Saving Schemes increased to Rs 91. investment banks‘ total sanctions and disbursements were Rs 4.0 billion. During the fiscal year 2001-02.21 billion during the first nine months of 2002-03. National Deposit Certificates.2 billion and Rs 8.1) 19. During the first nine months of 2002-03. their sanctions and disbursements were recorded at Rs 4.10 billion respectively in 2001-02. Rs 11.6 (32. In 2001-02.2 billion and Rs 0.1%) by Defence Saving Certificates.3 million investors with National Saving Schemes (NSS).8 billion. (24. and Prize Bonds. there were about 4.3 (55.3 billion. Rs 36.1 19. Mahana Amdani Accounts.4) 2001-02 22.5 billion respectively.7%) by Prize Bonds (Table 7. (12.4 (39.5 (42. Till 1971. 2.9 billion.0 billion and disbursed Rs 4.9 & Fig:3). their sanctions and disbursements amounted to Rs 8.8 billion and Rs 0. Rs 22.4 (18. while. Special Savings Certificates/ Accounts. As of March 31.8) (Rs Billion) % Change 5.4 billion and Rs 11.0 (24.4 billion from Rs 51. Table 7.4 billion. In the first nine months of the current financial year. (39.0%) by Regular Income Certificates.6 billion. these were Rs 0. Savings Account.6 billion while modarabas sanctioned Rs 5. A new saving scheme entitled ―Pensioners‘ Benefit Account‖ was launched during the current fiscal year. Capital Market The loans sanctioned and disbursed by the special banks during 2001-02 amounted to Rs 11. spread all over the country. Total sanctions and disbursements of housing finance companies (HFCs) amounted to Rs 0.Chapter 7. the activities of National Savings Department were merely promotional in nature where. post offices and commercial banks‘ were operative agents for investment purposes. Defence Saving Certificates Special Saving Certificates Registered . 2003.4 billion. The leasing companies sanctioned an amount of Rs 13. respectively.4 (20. The on-going savings schemes currently in operation are Defence Savings Certificates.7 billion out of which they disbursed Rs 13.
Spl. gave the best performance during the first nine months of the current fiscal year.6 (12. there was an actual decline of 6.4 8. Huge withdrawal from the Regular Income Certificates may be due to some comparatively better package available with other schemes including the newly launched Pensioners Benefit Account.2 (-0. Capital Market 3.5 (4.3) 5.7 74.0 (24.3) 9.3) 2.9%). total net accruals under NSS amounted to Rs 74.3 percent (Rs 11.0 (12.2) -6.Sav.4 (20.4 22 14.8 percent share in the total net NSS accruals.6 18 11 11.9 (-16.4) -0. 4.5 51.9 (13.000 are taxable only.1 17.0 billion.0) 10. Special Savings Certificates (Registered) with Rs 41.0 (12.6 (16.3 6. 6.Cert.8 (15. .3 (4.9) 11. However.9 (3.6 9.5 (3.Chapter 7.7 95.6) 1.5 (5.4 (100) 7.3%) and Defence Saving Certificates (19. The decline in Regular Income Certificates was due to huge withdrawal from this scheme.1 (100) (100) Note: Figures within brackets represent share to total.9 2001-02 2002-03 July-March Def.6) 8.03 (-0.0 8.7) 11.0) 4.0) -11.4 (100) (100) Source: Directorate of National Savings.1) 2. followed by National Prize Bonds (24. It may be noted that deposits with Regular Income Certificates are taxable while in the case of some other schemes such as.4) 6.9 billion) in the case of Regular Income Certificates.6 (7. as against the net receipts of Rs 50.5 50.8) 3. 5. Regular Income Certificates Special Saving Accounts National Prize Bonds Others Grand Total 26. unlike previous year. Special Saving Certificates and Pensioners Benefit Account (which mobilized bulk of the net deposits in 2002-03) accruals exceeding Rs 150.Saving Certificates Regular Income Certificates National Prize Bonds During the first nine months of the current fiscal year.7) 6. Fig-3: Net Accruals of NSS 50 36.7 10.9) 18.7 billion in the same period last year.3 billion and 55. Defence Saving Certificates.8) -0.1 (27.03) 3.3 (Rs Billion) 30 20 10 0 -10 -20 2000-01 16.4 40 41.4 (3.6 -11.7) 91. 50.1 (6.
In the current year.a. Bills rate was as high as 12. the export refinance rate has also declined by 950 basis points from 13.a. which works to 11. which are presently in operation with NSS ranged between 5.a.65 percent in April 2003---a decline of 1123 basis points in just 21 months.10 Nominal and Real Deposit Rates on Savings Schemes During 1995-2003 Scheme (Maturity) 1995-2000 Nominal Real Rate(p. The newly launched Pensioners‘ Benefit Account specifically meant for the retired employees with ten years maturity.8 percent in 1995-2000 to 12.3 percent by end June 2002 and further to 8.88 percent in June 2001 but declined to as low as 1.) Rate 2001-02 Nominal Real Rate(p.0 percent in the first nine months of 2002-03.8 percent by end March 2003---a decline of 700 basis points in about three years (Table 7.6 percent (Saving Accounts) to 7. the real rates of return under the NSS were still attractive as compared to Table 7.0 percent (Savings Account) to 13.4 percent. For example. The nominal deposit rates for saving schemes.04 percent rate of return p.) Rate 2002-03 Nominal Real Rate Rate (p.0 percent in July 2001 to 3.000/-.) Rate 2000-01 Nominal Real Rate (p. yield on Defence Savings Certificates declined by 497 basis points to 10. As a result of sharp decline in months T. This is the main reason why net accruals under the NSS have increased by 46.64 percent (Pensioners Benefit Account) with a weighted average real rate of 5.03 percent per annum (on maturity).10). Since the weighted average real deposit rates of the schedule banks remained low (around 2. Bills rate. the NSS still offers the most attractive rate of returns to the depositors.8%).a. This rate is applicable on the accounts opened during the period from 1st January 2003 to 30th June 2003. With an inflation rate of only 3. The account can be opened with a minimum deposit of Rs 10. have declined significantly since July 2001. indicating the easing of monetary stance by the SBP. More importantly. Capital Market other deposit schemes.4 percent.4 percent (Khas Deposit Schemes) with a weighted average rate of 8. The 6-month Treasury Bills rate has also declined significantly since June 2001. which are linked with respective maturity yields on PIBs.67 percent. The 6 months T. the weighted average return on National Savings Schemes has declined from the average of 15. Returns on National Savings schemes.03 percent while return on 3 years Special Saving Certificates has shrunk by 403 basis points to 8. Monthly profit of Rs 920/.Chapter 7. over the same period of last year. The account can only be opened by a pensioner.a. the real deposit rates during July-March 2002-03 ranged between 1.8 percent. Profit on the scheme is payable on monthly basis reckoned from the date of deposit.5 percent in March 2003.is payable on a deposit of Rs 100.0 million. These accounts can be opened only at the National Savings Centres. The return on Defence Savings Certificates has been fixed at 10.) . The Government of Pakistan has reviewed the rate of return on National Savings Schemes in July 2002 and in January 2003.000/and maximum deposit of Rs 1. The investment is exempt from compulsory collection of Zakat at source.
4 8.0 12. Procedure of maintenance of record at National Savings Centres has been revised threadbare to ensure proper maintenance of record and to make it computer friendly.7 15.12 13.3 9. In this regard.7 10.3 2.36 8. Average inflation was 7.9 3.03 13.8 6. Prize Bonds (Running Account) Weighted Average Source: Directorate of National Savings.4 12.3 7.0 3.6 8.4 10. 2. Capital Market 1.4 10.0 12.9% during 1995-2000.4 8.9 12. National Savings Hand Book Vol-II has also been reviewed besides revision of national savings Hand Book Vol-I.Chapter 7.6 8.1 8.4% during July-March 2002-03.9 12. computerization process is underway.96 5.9 7.2 5. 3. Training Institute of National Savings has been reactivated by .5 7. 3.8 5.9 8.0 13.9 11.0 12.7 10.4 1.6 9. 7.0 12.60 7.63 9.04 6.0 12.4 12.4 14. 6.2 10.8 15.1 13.6 13.64 2.5% during 2001-02 and 3.27 4.6 8.8 4.02 7.0 7.00 8.72 10. 9.60 5. 16. The Special Savings Certificates and Defence Savings Certificates have been launched in the United Arab Emirates for the benefit of the Overseas Pakistanis and to strengthen the reserves position of the Government of Pakistan.1 13.7 5.8 9.1 9.5 9. 8.1 12.41 5.60 5.6 8. 4.5 13.67 6.5 13.2 12.3 14. Pensioners‘ Benefit Account has been introduced to facilitate the retired officials.0 9.00 8.6 8.8 6. Bearer (3 Years) Regular Income Certificates (5 Years) Khas Deposit Scheme (3 Years) Mahana Amdani Accounts (7 Years) Saving Accounts (Running Accounts) Pensioners‘ Benefit Account (10 Years) 16.5 8. Defence Saving Certificates(10 Years) National Deposit Scheme (7 Years) Special Savings Certificate.0 16.8 8. About 150 National Savings Centres have been shifted to new buildings in proper localities with commodious accommodation.01 1.42 10.5 2. Finance Division. 14. Reforms of the NSS In an attempt to restructure the National Savings Organization on modern lines.00 11. Registered (3 Years) Special Savings Certificate.4% during 2000-2001.0 6.3 7.
Capital Market establishing therein a computer lab and arranging computer-training courses for the officials of of National Savings accounts and the work is expected to be completed in line with the National Savings Organization.Chapter 7. Due attention and commitment of the Federal Government with the importance is being given to the job of automation International agencies. ______________________ .
In other words. Inflation rate rises and falls over the years but it rarely becomes negative. The threshold is lower for industrial than for developing countries. the sensitive price index (SPI) and the GDP deflator. Inflation Introduction policy should be to bring inflation down to single digit and keep it there. Maintaining low and stable inflation should be seen as a necessary part of the poverty alleviation strategy. it is essential for sustaining higher economic growth . Inflation is a process of rising prices. These costs typically arise from distortions in economic decision-making arising from high or variable inflation rates and result in lower levels of output than would otherwise be the case. Inflation rate is measured as the percentage change in the average level of prices.the single most important factor influencing poverty. there exists a threshold beyond which inflation exerts a negative effect on growth. the wholesale price index (WPI). . the burden of which is typically borne disproportionately by those in Prices on the average can be rising. High inflation is also a regressive and arbitrary tax. The key point is that price stability is not an end in itself.Chapter 8. It is. If the inflation rate is negative. It has often been suggested that a stable conducive macroeconomic environment environment for private Several costs of high and variable inflation have been identified. it means the average price level is falling which is not good for the economy. or stable. The CPI covers the retail prices of 375 items in 35 major cities and reflects Price Indices fixed income group and poor. Being the key component of a stable macroeconomic environment low and stable inflation assumes greater importance. falling. promotes growth by providing a more investment. therefore. Inflation 8. essential that inflation rate be kept stable even when it is low. A recent study suggests that some level of inflation is essential for promoting growth and investment. Notwithstanding the existence of a threshold the goal of the macroeconomic Four different price indices are published in Pakistan: the consumer price index (CPI).
500 Four All Categories combined Monthly SPI 17 51 53 10. Base Year 2000-01=100 Features CPI Cities covered Markets covered Items covered Number Groups of Commodity 35 71 375 10 106.12000 per month.1 Price Indices in Pakistan is placed on the CPI. Not .6 percent of the expenditure of those households whose monthly income ranges from Rs. The details are documented in Table-8. the main focus for assessing inflationary trends Table 8. the main focus is placed on CPI as a measure of inflation because it is more representative with wider coverage of 375 items in 71 markets of 35 cities of the country.404 Rs. In most countries.8 to 13.0 percent during the first seven years of the 1990s. it most closely represents the cost of living.3000/Mo nth 3(Urban) Base Year 1990-91= 100 WPI 16 16 97 5 1210 - Number of Quotations Income Groups Occupational Groups Reporting Frequency Monthly Weekly Source: Federal Bureau of Statistics Inflation During the 1990s.3000 to Rs. Pakistan has sustained a doubledigit inflation between 9. The SPI covers prices of 53 essential items accounting for 51.1. Inflation roughly the cost of living in the urban areas. In Pakistan. because as stated above.Chapter 8. The WPI covers the wholesale price of 97 major items prevailing in the city of origin of commodities.
Food and non-food inflation averaged 12.Chapter 8.7 percent in the remaining three double-digit inflation during most period of the 1990s.0% of GDP) has been the major source of macroeconomic imbalances in the 1990s. Non-food inflation was mainly driven by the prices of POL products and the associated rise in transport charges.2]. one of the critical years of the 1990s.7 percent as against Both food and non-food inflation contributed to the persistence of the doubledigit inflation.3 percent food inflation and 6. the imported inflation (pass through of exchange rate adjustment). Inflationary pressures have continued to diminish over the last three years mainly on account of tight monetary policy. the decline in overall inflation owe heavily to a low (3. The persistence of a double-digit inflation along with large fiscal deficit (7.2 percent and 10. mainly on account of 5. inflation.2 Inflationary Trends* (% Change) CPI . macroeconomic issues in Pakistan‘s policy arena during those periods has been as to how to put inflation under effective control.7 percent. There has been a general agreement that lax fiscal management resulting in the excessive growth in money supply. As stated earlier. and improved supply of food items in the country.1 percent nonfood inflation. prudent fiscal management. Inflation slowed to an average of 5. respectively during the seven years of the 1990s [Table 8.3 percent during the last three Table 8. Inflation surprisingly. as non-food inflation averaged 4. escalations in indirect taxes. the supply side bottlenecks. and inflationary expectations have the major factors responsible for the persistence of a doubledigit inflation during most period of the 1990s. the adjustment in government – administered prices. During the last three years (2000-01 – 2002/03) overall inflation averaged 3. Although the exchange rate adjustments and the rise in international price of POL products have put upward pressures on inflation but these pressures were countered by the tight monetary policy fully supported by fiscal stance and improvement in the supply situation in the country.1%) food years.
6 1 0 . 3 1 6 . 7 9 . 1 2 . 3 1 3 . 7 1 2 . 8 1 1 . . 6 1 1 . 1 1 1 . 4 1 6 . 1 1 3 . 6 5 . 7 3 . 7 1 0 . 9 7 . 7 8 . 9 2 NonFood Inflatio n 1 2 . 9 1 0 . 5 7 . 7 1 1 . 0 6 . 4 1 WPI SPI 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 (July-April) Average of 1990s Average of 1990-97 Average of 19982000 Average of 2000-01 – 2002/03 1 2 . 6 6 . 0 1 1 . 5 1 1 . 0 1 0 . 5 1 0 . 8 1 5 . 4 1 6 . 8 5 . 7 1 1 . 4 6 . 4 1 0 . Inflation Overall Year Inflation Food Inflatio n 1 2 . 0 5 . 7 5 . 6 9 . 8 1 1 . 1 1 . 8 7 . 2 9 . 5 7 . 0 1 0 . 4 1 . 7 1 0 . 8 1 1 . 8 7 .Chapter 8. 3 1 1 .
8 4 . 7 9 .Chapter 8. 3 4 . 2 4 . 7 3 . 3 9 . Inflation 6 4 . 5 3 . 3 1 0 . 2 5 . 2 4 . 7 1 1 . 7 6 . 3 3 . 0 5 . 1 4 . 4 9 . 5 3 . 8 3 . 5 3 . 0 1 2 . 1 6 . 0 * Inflation based on CPI and SPI are at Statistics 2000-01 base. 4 3 . 2 3 . 3 8 6 . 7 . 4 3 . 1 1 0 . 9 4 . 2 2 . 9 1 2 . 8 Source: Federal Bureau of . 6 2 . 4 5 . . 1 0 5 . 1 1 0 . 1 1 2 .
Chapter 8. Inflation Fig .1: 1nflationary Trend 18 16 14 12 10 8 6 4 2 0 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 1990-91 '01-02 02-03(Jul-Apr) CPI FOOD NON-FOOD .
out of 19 widely consumed daily items the prices of 9 items have declined in the range of 3.a decline of 14. Mash and Gram) have declined because of increase in their production. The higher increase in food inflation over the comparable period of last year is attributable to increase in prices of wheat.19.7 percent.88/Litre on May 16.93/Litre to Rs.5% as against 7. meat.8. Similarly.3 percent which is lower than last year (77.4 percent respectively in the corresponding period of last year [See Table-8. appreciation of exchange rate. 2003 declined to Rs.1 percent and 4. wheat flour. The prices of the various components of petroleum products generally witnessed a rising trend but reached at all time high on March 16.1 percent and 3.3 percent during JulyApril 2002-03. During the last four adjustments the prices of POL products declined sharply across the board. vegetable ghee and cooking oil. the contribution of food inflation in overall inflation is estimated at 38.5 and Fig-2]. On July 1. The increase in vegetable ghee and cooking oil is the result of increase in international price of palm oil and imposition of GST on the local manufacturing of ghee in the Federal Budget 2002-03. Most importantly.2 percent during the same period. It is .1 percent in 2002-03 as against 25.3].4. Inflation Inflation During 2002-03 important to note that during July 1-May 15.3 percent. Food and non-food inflation have been estimated at 3.7 percent (Fresh Milk) to 15. The prices of petroleum product and its various grades including kerosene oil fluctuated moderately during the fiscal year 2002-03. inflation as compared with last year resulted mainly on account of lesser increase in fuel and lighting group (8. 2002 the price of petrol was Rs. the price of petrol which stood at Rs. The low level of inflation in the midst of 12.24.09/Litre or 24. As shown in Table 8. tea. At the same time. Accordingly.02/Litre or 23.5%). the government has judiciously passed on the benefit of lower international prices of POL products to the people by lowering the Slower increase in non-food domestic price of these products [See Table8.Chapter 8. almost one-half contribution has come from fuel & lighting and transport and communication. 22 adjustments in prices of petrol Inflation averaged at 3. the price of diesel (HSD) declined from Rs.13 times the prices were raised and 8 times reduced while one time it remain unchanged.4 percent. respectively as against 2. 2003 it stood at Rs.5 percent increase in money supply is the result of better supply situation of essential commodities.8 percent (Chicken Farm) to 51.91/Litre – a decline of Rs.33.23/Litre or 22. 2003 as a result of the continuous escalation of POL prices in the international market.88/Litre .1 percent last year.22.214.171.124/Litre and on May 16. have taken place . the prices of 10 items have increased in the range of 2.25.1% last year).8 percent (tea).6. The price of Kerosene declined from Rs. 2002-03.2 percent.18.5% as against 9. The contribution of non-food inflation is estimated at 61.5 percent (potato).53 – a decline of Rs.6% of last year) and transport & communication group (5.62 to Rs. Moong. prudent fiscal management and continued sterilization of monetary impact of massive foreign exchange inflows. Within nonfood inflation. 2003 – a decline of Rs. rice basmati.11/Litre on March 16. It may be noted that prices of all the four types of pulses (Masur. Contrary to the general perception.6.
2 111.5 22.3 7.5 29.6 8.5 3.9 17.8 57.9 0.2 83.2 171.8 15.9 29.4 6.2 -51.4 3. Ghee Veg.7 15.3 23. Ghee (Loose) Cooking Oil Tea Chicken (Farm) Red Chilies Onion Potatoes Unit Kg Kg Kg Kg Kg Kg Kg Kg Kg Kg Ltr 2.5 53.1 77.9 -3.7 64.7 4.A 4.0 18.0 57.9 55.0 -15.5 N.4 .6 3.9 36.1 5.9 169.6 27.1 12.6 57.5Kg Kg 2.2 13.3 1.6 154.4 2.5Ltr 250Gm Kg Kg Kg Kg 2000-01 8.4 July 2002 8.1 3.2 17.9 44.0 60.8 -11.5 10.0 3.3 2.2 49.0 78.7 198.2 3.1 37.3 40.9 2.6 -40.8 7.6 18.1 183.8 71.2 0.9 -3.6 11.3 3.4 56.3 9.1 59.9 202.1 1.2 9.3 183.7 5.9 116.1 6.6 2.0 29.3 35.3 41.4 Prices of Essential Commodities (Rs.8 18.9 10.0 12.1 61.3 38.2 22.3 5.9 4.5 66.5 15.0 52.8 7.5 0.8 51.9 2. Inflation Table 8.3 6.7 16.2 9.9 8.5 Source: Federal Bureau of Statistics July-April (% Change) %age Point Contribution (July-April) 2001-02 2002-03 3.4 3.8 0.8 10.8 April % Change 2003 Apr 03/Jul 02 8.5 9.8 Source: Federal Bureau of Statistics Table 8.1 3.1 0.2 34.3 Changes in CPI According to Commodity Group Commodity Groups Weight 2001-02 CPI Food Non-Food Apparel.4 44.6 11.0 4.4 9.3 18.5 5.5 38.2 32.4 3.5 2001-02 8.3 9.6 66.7 3.7 132.4 27.2 20.8 1.3 54.3 9.3 34.8 19.0 15.1 7.8 106.3 53.9 156.0 3.1 4.7 7.8 -14.6 2.9 -7.7 13.) Items Wheat Wheat Flour Rice Basmati Masur Pulse Moong Pulse Mash Pulse Gram Pulse Beef Mutton Sugar Milk Fresh Veg.7 8.1 3.9 46.6 -19.0 4.7 20.7 3.4 25.Chapter 8.8 3.8 34.4 55.0 6.4 34. Textile House Rent Fuel & Lighting Household Transport Recreation Education Cleaning Medicare 2002-03 100.
23 21.02 36.69 19.60 20.27 20.79 39.95 21.11 39.95 21.02 32.24 20.65 18.09 Source: Oil Companies Advisory Committee * Hydrocarbon Development Institute of Pakistan Fig-2: Prices of Petroleum Products 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 Rs.83 38.64 32.01 16.93 18.06 24.61 19.88 HOBC 38.14 17.84 33.64 18.64 19.83 19./Litre) Kerosene HSD * LDO 17.66 34.53 19.11 37.51 35.53 21.76 16.95 20.18 17.25 17.41 39.64 19. Inflation Table 8 5 Prices of Various POL Products Effective from Fortnight 1-Jul-02 16-Jul-02 1-Aug-02 16-Aug-02 1-Sep-02 20-Sep-02 2-Oct-02 16-Oct-02 1-Nov-02 16-Nov-02 1-Dec-02 16-Dec-02 1-Jan-03 16-Jan-03 1-Feb-03 16-Feb-03 1-Mar-03 16-Mar-03 1-Apr-03 16-Apr-03 1-May-03 16-May-03 MS RON 87 33.58 30.18 30.96 34.08 19.11 33.60 19.81 25.65 41.97 18.98 17.70 36.13 28.72 17.13 39.55 36.98 17.27 30.60 34.25 31.74 37.91 16.08 16.40 38.21 32.40 (Rs.05 20.93 20.13 40./Litre MS Ron 87 HOBC Kerosene HSD LDO .41 16.07 38.59 33.28 16.02 21.41 19.66 35.38 16.62 25.22 16.93 19.64 35.33 38.48 16.50 32.76 16.72 18.61 19.94 34.58 23.41 36.70 21.30 22.71 33.26 20.16 19.35 16.35 35.32 21.32 34.88 18.17 32.90 22.22 19.19 38.47 24.38 18.16 17.65 34.Chapter 8.23 16.82 19.53 18.62 21.25 20.32 34.08 15.
6 3.6 3.Chapter 8.9 6.6 2.9 3.2 Source: Federal Bureau of Statistics Period Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun CPI 5.7 2.2 -0.6 4.6 suggests that overall inflation continued to exhibit a broadly declining trend since July 2002.2 4.3 3.3 4.1 4.4 1.0 4.6 3.9 4.4 5.8 4.6 4.5 5.5 2. Inflation Food Non-Food Inflation by Income Groups .7 3.1 3.3 3.2 6.5 4.0 4.1 2.5 4.1 2.4 Fig-3: Monthwise Inflation Rate (CPI) 7.4 4.3 4.3 2.2 5.2 1.0 5.1 4.6 3.6 4.2 4.6 2.8 1.5 3.2 0.6 3.8 3.2 3.2 4.2 0.6 5. Non-food inflation on the other hand continued to rise because of the rising trend in oil prices.0 3.7 4.5 3. On year-on-year basis the overall inflation stood at 4.3 4.6 2.1 4.9 4.5 3.0 CPI 3.7 2.2 4.3 2.2 percent in April 2003. Food inflation decelerated from 5.8 -0.1 4.7 4.2 3.1 4.0 1.2 1.1 3.2 5.4 2.2 4.9 5.8 .5 2. It has started declining since March 2003.7 4.4 5.0 2.8 4.9 3.5 2.8 4.9 4.7 3.5 1.9 3.6 5.2 4.4 3.6 3.0 5.2 5.8 percent to 0.6 4.5 2000-01 Food Non Food 4. Inflation The month-wise analysis of inflationary trend as documented in Table-8.5 3.2 2.8 5.2 3.9 5.2 4.0 percent in July 2002 but declined to 2. .5 percent by March 2003.3 3.4 5.9 3.8 2.3 4.6 2.6 Monthly Inflation Rate (% Change) 2001-02 2002-03 Food Non Food CPI Food Non Food 0.8 1. Table 8.2 3.
Chapter 8. Inflation It is always interesting to know the various inflation rates faced by different income groups. To assess the impact of inflation on consumers belonging to different income groups, the CPI is constructed for four income groups, namely Rs.3000, Rs.5000, Rs.12000 and above Rs.12000 per month. Data for the first ten months (July-April) of the current fiscal year show that as against overall inflation of 3.3 percent, the lowest income group experienced 3.1 percent inflation while all other groups faced more or less the same overall inflation (3.3%). The people in low-income groups spend a major portion of their incomes on food items. Since food inflation has remained low as compared with non-food inflation, therefore, the lowest income group faced relatively lower inflation as compared with those in higher income groups [See Table-8.7 and Fig 4].
Period 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 (Jul-Apr)
Overall CPI 10.8 11.8 7.8 5.7 3.6 4.4 3.5 3.3
Table 8.7 Inflation Rate by Income Groups Upto Upto Upto Rs.3000 Rs.3001-5000 Rs.5001-12000 10.6 10.7 10.8 11.7 11.9 11.8 7.9 7.8 7.9 5.6 5.6 5.9 3.2 3.4 3.8 4.5 4.3 4.5 3.0 4.9 3.4 3.1 3.4 3.3
Above 12000 11.3 11.6 8.0 6.2 4.5 4.7 3.6 3.3
Source: Federal Bureau of Statistics
Fig-4: Inflation by Income Groups
14 12 10 8 6 4 2 0 95-96 96-97 97-98 98-99 99-00 00-01 '01-02 02-03 (Jul-Apr)
Wholesale Price Index (WPI)
is significantly higher than the increase of 2.1 percent last year. To this increase, maximum contribution was The WPI, on average basis, increased by 6.1 made by the fuel & lighting group (15.7 percent), percent during July-April, 2002-03. This increase in WPI followed by raw material (9.4 percent), and
Chapter 8. Inflation manufacturing group (2.6 percent). The larger increase indices of certain important items like cotton, cotton in the index of fuel & lubricant at 15.7 percent against yarn, vegetable ghee etc. have increased at higher rate 3.5 percent last year is mainly attributable to increase in during the current fiscal year than last year[See Tableprices of POL products. The increase in the prices of raw 8.8]. material has mainly been due to the fact that price Table 8.8 Components of WPI Commodity Groups (% Change) %age Point Contribution (JulyWeight April) 2001-02 2002-03 2001-02 2002-03 100.0 2.1 6.1 2.1 6.1 45.8 1.8 3.0 39.9 22.7 54.2 2.3 8.7 60.9 77.3 8.8 0.5 9.4 2.2 13.5 15.3 3.5 15.7 25.8 39.6 25.5 2.2 2.6 27.6 11.0 4.6 0.5 1.2 1.1 0.9 Source: Federal Bureau of Statistics July-April
WPI Food Non-Food Raw Material Fuel & Lubricants Manufacturers Building Materials
Sensitive Price Indicator (SPI)
Price stabilization measures are important when there are unusual variations in the prices. Presently, the The SPI is used to capture the movement in government in commensurate with its policy of prices of 53 essential items, consumed by the urban decontrol, deregulation and liberalization, believes in households with income of Rs.3000-Rs.12000 per month. tackling the inflationary pressures through economic The increase in SPI during the first ten months of the measures rather than formal price control. However, current fiscal year (July-April) 2002-03 is estimated at 3.7 close vigilance is kept on unusual rise in prices through percent against 3.2 percent last year mainly due to the weekly meetings of the Kitchen Items Committee, now increase in prices of some basic food items such as called the Sensitive Items Price Committee (SIPC) and wheat (7.8%), wheat flour (5.8%), rice basmati (9.2%), through the weekly meetings of the ECC of the Cabinet. mutton (13.8%), beef (13.7%), vegetable ghee (8.4%), Other measures in the realm of supply augmentation, cooking oil (10.5%) and tea (15.8%). Much of the reduction in import duty to facilitate larger imports, increase in prices of wheat is attributable to its lower improved marketing practices, timely distribution, production (-4.2%) in 2001-02. The increase in Meat coordination with private sector and persuading prices is due to increasing demand and vegetable ghee traders/ manufacturers to refrain from unfair practices is due to imposition of GST on local manufacturing of undertaken to ensure price stability in the country. are ghee as well as substantial increase in the international The above analysis clearly suggests that the price of palm oil. However, prices of some basic food Government has succeeded in keeping inflation not items like sugar, pulses, red chillies, chicken (Farms), only low but it is much lower than the target (4.0%) for onion and potatoes have shown significant decline upto this fiscal year. The increase in prices of daily the range of 52% on account of improved supply consumable items have also remained low. In many position of these items [See Table-8.4 for details]. cases the prices of some essential items have fallen when compared with last year. In some cases the price Price Stabilization Measures have increased as well. This is the normal practice in any economy. The whole idea of the country‘s monetary and fiscal policy is not to maintain negative inflation
Chapter 8. Inflation (decline in general price level) but to keep inflation at in future, inflation rate should remain within the range low level. The government has succeeded in keeping of 3 to 4 percent. Keeping inflation at low level should inflation low (3.3%) during the current fiscal year. Even be regarded as protecting the poor from inflation tax. _____________
Chapter 9. Trade and Payments
9. Trade and Payments
Notwithstanding difficult external achieving 85.5 percent of export target for the year. In other words, the country was able to earn $ 1525.6 million more in exports, of which main share goes to textile manufactures ($ 983.0 million or 64.4%). Further analysis reveals that during this period (July-April) primary commodities exports grew by 26.0 percent. Within primary commodities, export of rice increased by 22.9 percent. Pakistan was also able to export raw cotton and wheat worth of $ 46.5 million and $ 106.1 million, respectively. Exports of textile manufactures stood at $ 5644.8 million (almost 64% of total exports), as compared with $ 4661.9 million in the same period last year, thereby registering an increase of 21.1 percent. Within textile manufactures, exports of cotton cloth, knitwear, bedwear, towels and readymade garments were up in the range of 16.3 percent (cotton cloth) to 37.2 percent (bedwear). More importantly, the exports of cotton cloth, knitwear, bedwear and towels also grew in quantity term in the range of 6.7 percent (cotton cloth) to 41.9 percent (knitwear) with bedwear and towels growing by 25.7 percent and 19.9 percent, respectively. Exports of other manufactures registered a growth of 10.4 percent with engineering goods, chemicals & pharmaceutical products, petroleum products and sports goods showing tremendous potential of exports. Exports of carpets & rugs and leather & leather manufactures continue to show a declining trend [See Table 9.1]. environment characterized by subdued global economic activity, sluggish world trade, rising international uncertainty, price of oil and geopolitical balance of Pakistan‘s external
payments improved significantly during the outgoing fiscal year 2002-03. Both exports and imports picked up, workers remittances touched new heights, surplus in current account further increased, rupee gained strength and appreciated by almost 4 percent, and foreign exchange reserves crossed $ 10 billion and provided much needed stability in the exchange rate. With the strengthening of external balance of payments, Pakistan‘s improved suggested macroeconomic considerably. that a It stable environment has often has been
environment promotes growth by providing a more conducive environment for private sector investment. There is no reason as to why an improved macroeconomic environment created by external balance of payments should not deliver strong growth this year and even more stronger over the medium-term. Trends in Exports Exports were targeted at $ 10.347 billion for the fiscal year 2002-03 – 13.3 percent higher than last year ($ 9.135 billion). Exports during July-April, 2002-03 grew by 20.8 percent and stood at $ 8849.7 million as against $ 7324.1 million of the same period last year, thereby
Chapter 9. Trade and Payments Table 9.1 Structure of Exports ($ Million) JULY-APRIL Particulars A. Primary Commodities Rice Raw Cotton Fish & Fish Preparation Fruits Wheat B. Textile Manufactures Cotton Yarn Cotton Cloth Knitwear Bedwear Towels Readymade Garments C. Other Manufactures Carpets, Rugs & Mats Petroleum Products Sports Goods Leather Tanned Leather Manufactures Surgical Goods & Medical Instruments Chemicals & Pharmaceutical Products Engineering Goods D. Others Total * Provisional A variety of reasons contributed towards healthy growth in exports, prominent among those are substantial expansion in volume terms resulting from increased textile quota/grater market access in the European Union, sharp reduction in the refinance rate under Export Finance Scheme and value addition in textile manufactures. Given the trends in exports during 2002-03* 825.1 450.7 46.5 110.6 69.0 106.1 5644.8 791.9 1057.0 875.3 1010.9 279.3 880.2 1667.4 183.5 153.3 254.5 189.0 309.7 116.8 208.3 54.0 712.4 8849.7 2001-02 654.6 366.7 16.1 106.8 70.5 48.3 4661.9 767.4 908.9 672.1 736.9 214.8 708.9 1509.7 192.1 93.5 234.4 189.4 318.2 118.9 114.7 38.6 497.9 7324.1 % Change 26.0 22.9 188.8 3.6 -2.1 119.7 21.1 3.2 16.3 30.2 37.2 30.0 24.2 10.4 -4.5 63.9 8.6 -0.2 -2.7 -1.8 81.6 39.9 43.1 20.8
Source: Federal Bureau of Statistics. July-April 2002-03, the current year‘s export target ($10.347 billion) is likely to be surpassed.
Exports during the first ten months (JulyApril) of the current fiscal year have increased by $ 1525.6 million in absolute term over the corresponding period of last year. The major
1% Other Manufactures 10.2 and fig.Textile Manufactures .5 % Contribution 100.0 11.3% Textile Manufactures 64.0 million or or 11.Chapter 9.4%). 2002-2003 *) Net Increase $ Million 1525. Table 9.0 157.4 10.4% .Wing. followed by other exports ($ 214.5 million or 10.1 Exports Additional Export Earnings -Primary Commodities .Other Manufactures .3 14.2 Major Contributors to Additional Export Earnings (July-April. Trade and Payments contributors to this additional export earnings have or 14.6 214.2 64.6 million 64.1].3%) [See Table 9.2% Others 14.Others * Provisional Source: FBS & E.5 million been textile manufactures ($ 983.5 983. Finance Division Fig-1: Major Contributors to Additional Export Earnings (July-April.1%).2%) and other manufactures ($ 157. primary commodities ($ 170.A.6 170. 2002-03) Primary commodities 11.
7 8.4 percentage points due to decline in its quantity and unit price.2 95-96 64.2 91-92 61.3 7.5 800.8%).9 9.2 5.4 million of the comparable period last year.5 3.1 7. exports have been higher by $ 152.8 786.6 million per month during this period [See Table 9. leather. as it has been observed several times in the past.2 946.7 5.6 6.3 8.6 6.1 3.9 01-02 59. These five categories of exports accounted for about 79 percent of total exports during 2001-02.9 93-94 57.0 6. These four items together accounted for 75.4 98-99 59. rice (4.2 699.0 92-93 59. In other words.2 2.3 and fig.9 6.0 Fig-2: Month Wise Exports 1100 1000 900 800 700 600 500 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2001-02 2002-03 * Provisional Concentration of Exports Pakistan's exports are highly concentrated in few items/groups namely.4 Pakistan's Major Exports (Percentage Share) Commodity Cotton Leather Rice Synthetic Textiles 90-91 61.8 9.3 3.2 4.6 993.3 4.9 711.7 854.Chapter 9. The degree of concentration of these items/groups during 2001-02 remained Source: Federal Bureau of Statistics close to the last year‘s level except that of synthetic textiles whose share declined by 1.0 Month-Wise Exports The month-wise exports during JulyApril. 2002-03 (first ten months) than the remained consistently higher corresponding million per month during this period as against $ 732. rice.1 722.7 7.9%).2 3. synthetic textiles and sports goods.4 2002-03 816.0 9.5 2.9 94-95 58.1 3.9 5.9 2.3 Month-Wise Exports Month July August September October November December January February March April * Monthly Average 2001-02 683.6 percent of total export earnings.0 891.1 3.9 725.1 6. Table 9.6 9. Trade and Payments months of last year.9 780.4 percent.5 5.8 4. Among these categories. almost all the export earnings of cotton group have originated from textile and clothing.1 5. The annual percentage shares of major export commodities are given in Table 9.3 6. Exports averaged $ 885.2].6 7.8 96-97 61.4.1 863.7 902.7 6. followed by leather (6.3 99-00 61. on average.1 2.4 6.7 885.7 2.7 5.6 5.0 732.7 6. A poor cotton crop seriously affects total export proceeds.0 6.5%).0 5.4 1.9 4. Furthermore.4 935.3 5.5 7.8 5.2 759. Such a high degree of concentration of exports in few items is a major source of instability in export earnings. ($ Million) Table 9.8 869. and synthetic textiles (4.7 97-98 58.5 776.6 654.3 Sports Goods . cotton group alone contributed 59.9 7. cotton.3 00-01 58.
346 44.0 100.0 16.889 64. the share of primary commodities increased by one percentage point to 12 percent.499 251.452 47.163 301.6 17.143 53.479 Primary Commodities Value 25.820 32.911 321.9 100.637 389.173 294.947 404.6 16.0 98-99 81.1 18.288 80.4 100. 2002-03 originated from manufactured exports and only 12 percent from primary commodities.0 93-94 83.0 100.388 135. Trade and Payments Commodity SubTotal Others Total 90-91 83.4 15.703 % Share 19 19 15 10 11 16 11 13 12 12 13 11 11 12 Semi-Manufactures Value 33.0 91-92 84.248 % Share 57 60 64 66 64 62 68 70 70 73 72 75 75 77 Source: Federal Burea u of Statistics primary commodities exports for foreign exchange earnings. the same trend and remained at 11 percent.120 274.313 373.087 221.7 17.802 66.833 67.624 63.282 171.0 100.683 70.0 Source: Ministry of Commerce.9 100. However.438 58.5].0 97-98 83. Pakistan still relies heavily on the labour intensive and low value added exports.741 325.1 16.436 183. respectively.999 420.9 100.357 45. The changing composition of exports suggests that Pakistan is no longer a country that relies heavily on the Total Exports 138.855 356.208 81.342 443. The share of primary commodities.1 16.028 205.288 68.783 60.6 100.160 390.702 52. semi-manufactures and manufactured goods in the year 2001-02 depicted 19. During July-March of the current fiscal year (2002-03).0 94-95 82.5 100.8 21. Table 9.4 100. Direction of Exports .430 160.113 47.0 92-93 83. semimanufactures slipped by three percentage points and settled at 11 percent and the share of manufactured goods moved upward from 75 percent to 77 percent over the same period last year [See Table 9.352 114.0 96-97 84.2 00-01 80.0 100.3 99-00 82.528 % Share 24 21 21 24 25 22 21 17 18 15 15 14 14 11 Manufactured Goods Value 78.5 16.645 26.5 Composition of Exports ( Rs. Million) Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 July-March 2001-02 2002-03 * * Provisional If semi-manufactures and manufactured goods are taken together.852 36.1 14.728 177.321 28.972 261.289 52.9 Composition of Exports The composition of Pakistan‘s exports has changed significantly over the years.133 21.9 01-02 78.731 36.663 102. The principal changes have been the steep fall in the shares of primary & semi-manufactured exports and equally sharp increase in the share of manufactured exports. 88 percent of export earnings during July-March.799 36.070 560.507 48.1 100.748 62.678 539. 14 percent and 75 percent.0 95-96 85.846 461.Chapter 9.
5 100. UK.9 7. The overall import bills of the country was .8 7.8 7. [See Table 9.6 54.3 3. The share of exports to Germany.1 percent.3 9495 16.5 percent and stood at $ 10099.8 6.4 9900 24.3 4.1 percent of total imports.7 4.0 49.2 100.8 9394 14.3 2. Trade and Payments Pakistan is trading with large number of countries but its exports are highly concentrated in few countries.2 percent increase in its import price) and soyabean oil to meet its domestic Trends in Imports Imports were targeted at $ 11.1 5.8 6.8 6.8 7.1 5.6 7.7 9798 20.4 2.8 0102 24.Chapter 9. Imports grew by 22. thereby achieving 91.0 0001 24.0 2.7 7.3 6.9 7.8 6.6 6.0 2.5 9899 21.0 47.0 45.4 4.1 4.3 100.0 7.4 5.0 2.0 percent of the target set for the year.6]. Germany.1 6.2 9.6 54. Hong Kong and Saudi Arabia remained almost stagnant with some fluctuations over the years.3 4. the share of Pakistan's exports to USA has been rising while that of Japan has exhibited a continuous decline.7 7.4 51.5 55.7 52. mainly on account of a protracted recession in the Japanese economy.2 6.5 6.0 8.5 9697 17.0 44.6 5.2 100.8 7.340 billion).5 6.0 48.3 50.4%) in imports of palm oil (mainly due to 39. the same trend continued during 2001-02 with the exception of export share to Dubai.4 8.0 9091 10. Dubai and Saudi Arabia.7 7.3 6.0 45.9 Source: Ministry of Commerce higher by $ 1854. primarily on account of substantial increase (48.6 4.3 6.4 9.5 million to meet the domestic requirements which were mainly the outcome of additional imports spending on machinery ($ 594. USA.6 7.0 100.3 7.7 2.3 9596 15.0 45.0 49.5 55.6 3. Hong Kong.9 million of the corresponding period last year. The share of exports to Dubai has increased by 2.3 2.0 48.1 6.6 47.7 100.7 100.3 100.7 million) and POL products ($ 457.9 51.6 2.1 8.4 4.9 1.2 7.8 6.6 100.1 6.5 5.0 46.2 100.3 5.6 Major Export Markets of Pakistan (Percentage Share) Country USA Germany Japan UK Hong Kong Dubai Saudi Arabia Sub-Total Other Countries Total 52.1 6.7 50.0 47.7 2.9 4.8 3.2 4. Japan.1 billion for the fiscal year 2002-03 – 7.5 6.5 5.7 million).0 6.8 8.7 9192 12. UK.5 100. Among these countries. grew by 21. Slightly above one-half of Pakistan's exports went to seven countries namely.4 53. By and large.8 9293 13.9 8.4 percent higher than last year ($ 10.6 percentage points because of higher exports of textile manufactures.5 52.8 7.0 3.1 100. Table 9.9 3. Further analysis reveals that food group accounting for only 8.5 million during July-April 2002-03 as against $ 8244.1 5.
6 20.9 1496.7 1222.8 215.0 22. Import of machinery was up by 35.7 405. Trade and Payments consumption requirement. All other groups of imports have also registered significant growth during July-April 2002-03 [See Table 9. Table 9.5 1744.0 285.3 8244.3 1658.0 28.5 7416.6 2683.7 154.2 325.6 percent – the rise was attributed to the higher import price of both the petroleum crude and petroleum products.3 2005.1 99.7 Structure of Imports ($ Million) JULY-APRIL Particulars A.2 1.5 76.7 35.6 2266. Agri/Other Chemicals Group Fertilizer F.3 323.6 25.1 43.6 -15.7].9 6019. Machinery Group Power Generating Machinery Textile Machinery Const.1 402.9 168. Metal Group Iron & Steel G.2 .0 9.7 60.6 35. Almost onefourth of imports are petroleum group which were up by 20.9 20.0 108.9 441.1 165.8 10099. Petroleum Group Petroleum Products Petroleum Crude D.3 1210.6 30.2 48.6 percent. This is yet another indicator of the pick up in domestic economic activity.1 91.9 297. & Apparatus Agricultural Machinery C.2 % Change 21.5 76.7 98.1 183.1 2001-2002 671.6 69.8 212.0 21.8 2225.6 18.6 -8.6 14. Food Group Wheat Unmilled Soyabean Oil Palm Oil Sugar Pulses B.6 11.6 20.5 23.4 27.7 9.2 336.1 -34.6 20.4 1473.Chapter 9.4 -92.3 23. showing the signs of pick up in domestic economic activity.1 367.0 1672.7 41.1 133. Non-oil imports as well as non-oil non-food imports were up by almost 23 percent. Textile Group Synthetic Fibre E.1 1003.6 16.0 157. Miscellaneous & Others Total Excluding Petroleum Group 2002-2003* 813. & Mining Machinery Electrical Mach.
Metal .4 1.7 32.Miscellaneous & Others * Provisional .Textile .7 1. 2002-2003 *) Net Increase $ Million 1854. The details are given in Table 9. agricultural/chemicals group ($ 248.4%) and food group ($ 141.1 Source: Federal Bureau of Statistics followed by petroleum group ($ 457.7%). Finance Division % Contribution 100.7 28.7 million or 24. The major contributors to this additional import bill have been machinery group ($ 594.5 13.Chapter 9.8 Major Contributors to Additional Import Bill (July-April.9 594.8 35.8 million or 13.Petroleum .7 248.1%) 2002-2003* 6603.7 Imports Additional Import Bill .7 457.9 18.7 million or 32.Agricultural/Chemicals .0 7.9 million or 7.1 347.1 24.Machinery .8 and fig-3.1 2001-2002 5348.6 Source: FBS & E.7%).5 141.5 Table 9. % Change 23.A. Trade and Payments JULY-APRIL Particulars Excluding Petroleum & Food Groups * Provisional Imports during the first ten months (JulyApril) of the current fiscal year increased in absolute terms by $ 1854.Food .5 million over the corresponding period last year.Wing.
Chapter 9.1 918.1 2002-03 927.6 890. The monthly imports are tabulated in Table 9.3 1018.7% Misc.5 million of the comparable period last year.3 707.1 886.7 854.9 774.6 Fig-4: Month Wise Imports 1350 1250 1150 ($ Million) 1050 950 850 750 650 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2001-02 2002-03 .9% Agri/Chemicals 13.3 825.2 1032. 200203 remained consistently higher than the corresponding months of last year.7% Month – Wise Imports The month-wise imports during July-April.5% Petroleum 24.9 and fig-4. Trade and Payments Fig-3: Major Contributors to Additional Import Bill (July-April.& Others 18.6 937.7 1270.0 960.3 880. imports have been higher by $ 185. Table 9.9 million per month during this period as against $ 824.2 969.9 Month-Wise Imports ($ Million) Month July August September October November December January February March April * 2001-02 791.4 million per month during this period. 2002-03) Food 7.5 838.1% Textile 1.6 1053.4% Machinery 32. In other words. on average.5 1069.8 738.7% Metal 1. Imports averaged $ 1009.
Finance Division imports during 2001-02.2 1473. and the import growth would have been 13. as against $ 10099.6 Additional Bill 15. iron & steel.5 percent as achieved during the first ten months of the current fiscal year.0 158. edible oil. The share of Concentration of Imports Pakistan's imports are highly concentrated in few items namely.Chapter 9. petroleum & petroleum products and chemicals accounted for almost 60.9 1350 1250 1150 Fig-4: Month Wise Imports Source: Federal Bureau of Statistics ($ Million) 1050 Pakistan had to spent $ 730.5 324.1 1009.2 200.9 441.2 58.10].A. Trade and Payments Month Monthly Average * Provisional 2001-02 824.5 317.0 170.2 258.1 212.6 18. transport equipments. chemicals.Wing. These eight categories of imports accounted for 75.9 million 950 more over last year on the import of major items during July-April.3 Imports at Last Year‘s Prices 26.6 Aug Sep 850 million.1 percent of total imports. machinery.6 266.5 2002-03 1009.2 percent of total . Oct Nov Dec Jan Feb Mar Apr 2001-02 2002-03 Table 9.4 124. fertilizer and tea. Considerable structural changes have taken place in some categories of imports over the years. the imports would have been lower at $ 9368.8 730.0 12.5 168. Had the unit values of these import 650 Jul items remained at the last year‘s level.3 1210.7 3485.10 Additional Import Bill as a Result of the Rise in Import Prices July-April 2002-03 * ($ Million) Commodity Soyabean Oil Palm Oil Petroleum Products Petroleum Crude Fertilizer Plastic Material Medicinal Products Iron & Steel Total * Provisional Actual Imports 41.6 43.6 percent instead of 22. machinery. Among these categories.0 1215.9 Source: FBS & E. The share of machinery has declined on account of sliding investment but during 2000-01 and 2001-02 its share has increased due to higher imports of power generating machinery.1 342.7 4216. 2002-03 due to higher import 750 prices prevailing in the international market [See Table 9.5 million.8 325. electrical & textile machinery and construction & mining machinery. petroleum & petroleum products.
0 13.0 15.3 3.5 21.7 4. During the current fiscal year (JulyMarch.7 5.7 5.9 9.9 27.0 3.7 5.2 2.6 5.0 75.1 9. 2002-03).0 25.0 23.6 16.9 4.8 6.0 94-95 22.0 100.2 1. the share of consumer goods declined by two percentage points and came to 10 percent while the share of raw material for consumer goods remained flat at 55 percent.3 3.9 3.6 1.6 3.9 83.5 4. The share of capital goods exhibited a declining trend — mainly because of slow down of investment in the country.5 100.8 74.9 1. On the other hand.4 9.1 73.7 7.0 92-93 24.5 23.5 5.4 74.1 15.7 3.0 Machinery * Petroleum & Products Chemicals @ Transport Equipments Edible Oil Iron & Steel Fertilizer Tea Sub-Total Others Total * excluding transport equipments @ Excluding fertilizer Source: Ministry of Commerce Composition of Imports The composition of Pakistan‘s imports has not witnessed any appreciable change over the years.1 2.5 75. The share of raw material for consumer goods in the total imports continued to be higher.2 25.8 3.0 00-01 19.0 95-96 21.1 2.7 23.2 76.8 15.3 14.11].5 12.8 100.0 4. 90-91 20.0 3.0 96-97 23.9 15.1 2.5 100.1 2.6 1.0 97-98 18.7 3.1 19.5 5.2 12. whereas the share of raw material for capital goods did not show any change during .2 24.0 93-94 22.0 4.4 72.3 100.6 3.0 100.0 1.8 1.0 30.3 15.5 22.1 3.6 1. while that of petroleum and petroleum products picked up – mainly on account of rising domestic Table 9.1 14.9 3.3 31.3 100.5 2.7 1.5 26.4 3.8 3.0 01-02 17. the share of capital goods increased from 27 percent to 29 percent.8 16.8 100.Chapter 9.9 15.2 17.5 2.8 3.2 77. However.1 78.0 98-99 17. Trade and Payments chemicals depicted a gradual rising trend.4 25.0 100.7 8.11 Pakistan's Major Imports (Percentage Share) Commodities demand and higher international prices [See Table 9. due to higher imports of machinery.4 4.8 2.5 15.5 100.2 100.3 1.0 13.0 91-92 27.8 15.2 70.0 5. the share of raw material for capital goods was minimum.1 2.0 99-00 13.0 16.3 4.6 100.5 16.2 2.1 27.5 2.2 1.6 4. The share of consumer goods over the time remained flat.9 76.3 20.9 2.5 12.7 27.8 7.
0 8.964 533. the shares of Pakistan‘s imports from Kuwait and Saudi Arabia have been rising with some fluctuations because of the growing share of POL products in total imports.038 28.768 72.993 97.3 0.A.539 202. Million) Total Imports 171.550 % Share 16 13 14 13 14 14 15 18 16 14 14 11 12 10 Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 Jul-Mar 2001-02 2002-03 * * Provisional Direction of Imports Pakistan‘s major imports are coming from few countries.12. Saudi Arabia.7 6. Japan.290 88.090 70.177 530.7 8.250 320. The details are given in Table 9.554 % Share 44 38 38 43 46 45 43 45 47 54 55 55 55 55 Consumer Goods Value 26.589 77.712 34. The share of Japan exhibited a declining trend because of the shift in the import of machinery/capital goods from other sources.304 15.5 14. the relative shares of imports originating from these countries have remained almost the Source: Federal Bureau of Statistics same during 2001-02.305 140.453 108.338 465.045 157.754 22.234 89.8 13. Japan Kuwait 9091 11.598 53.801 345.419 180.774 139.3 12.966 43.091 176.12 Composition of Imports (Rs.7 5.344 25. On the other hand.291 148.125 Capital Goods Value 56.9 3. Table 9. By and large.575 465. Trade and Payments this period and remained at 6 percent.478 36.303 96.056 34.9 10.692 16.414 54. Slightly below one-half of Pakistan‘s imports continue to originate from seven countries namely.371 39.9 9798 11.6 11.269 % Share 7 7 6 6 5 6 5 5 6 6 6 6 6 6 Consumer Goods Value 76.Chapter 9.630 455.259 23.865 249.0 0.8 5.301 112.3 6.379 195.376 290.6 6.13 Major Sources of Imports (Percentage Share) Country U.791 99.646 30.4 9697 12.770 346.114 229. Kuwait.3 5.405 169. UK and Malaysia.305 75.848 73. USA.9 0102 6.13].618 146.643 258.889 258.900 29.2 7.S. Import share of Malaysia has been fluctuating over the years mainly on account of fluctuations in palm oil prices [See Table 9.3 5.3 8.1 .0 7. Germany.8 5.6 5.3 9394 10.4 9.621 15.8 9596 8.290 110.000 634.450 140.424 155.0 0001 5.9 9293 9.702 123.541 22.7 9192 10.792 627.3 9495 9.9 9900 6.725 % Share 33 42 42 38 35 35 37 32 31 26 25 28 27 29 Raw Material For Capital Goods Value 11.001 436. Table 9.779 30.892 397.528 220.4 15.025 53.167 14.6 9899 7.563 287.
trade deficit stood at $ 1249.9 5 1250 3. trade deficit was targeted at $ 753 million.0 47.4 42.4 7.6 percent of GDP (200001) to $ 1205 million or 2.5 57. respectively due to build-up in oil reserves.5].Chapter 9.2 8.2 percent and 19.0 5.3 3. During the first ten months of 2002-03.4 2.3 100.1 .0 5. 3574 Fig-5: Trends in Trade Deficit 3128 3500 3000 2348 3098 8 7 6 5.8 100.0 4.9 5. for the current fiscal year 2002-03.6 100.9 5.5 51.1 52.6 4.5 100.9 6.6 51.4 7.2 4.7 48.7 100.6 percent in the previous year (2001-02).0 6.1 5.0 4. Trade and Payments Saudi Arabia Germany U.8 million.5 3.8 4. necessitated by the fear of Iraq war.1 51.9 percent.8 56.3 6.4 5.2 7.0 11.7 1653 1740 1488 1490 1527 2000 1500 1000 500 0 1761 4.7 43.1 percent – declining from $ 1527 million or 2.K. 2002-03 was mainly on account of sharp increase in the import price of petroleum products & crude which increased by 21.8 million.0 5.2 3.0 11.0 percent or $ 128.0 9.1 3.1 4.8 4.2 49.4 4. The improvement was attributed to lower imports of petroleum group ($ 554 million) and sugar ($ 228 million) which caused total imports to decline by Source: Ministry of Commerce 3.7 4.0 6.2 48.2 100.8 50.7 percent [See fig.4 1205 3. 02-03 (JulApr) 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 As % of GDP 2500 US $ Million 2257 6. showing a deterioration of 35.0 5.0 percent of GDP.1 47.2 100. However.3 3.7 4 3 2 1 0 2.4 7.1 100.8 58.3 45. Excluding petroleum group‘s increase.4 49.8 2. as against $ 920.9 100.0 01-02 01-02 (JulApr) 921 Trade Deficit As % of GDP The deterioration of $ 329 million during July-April.6 5.9 4.9 41.7 48.8 2.6 100.8 5.2 48.1 8.5 4.8 4.2 100.8 51. the trade deficit posted an improvement of 14.0 4.3 4. Given the buoyant nature of domestic economic activity.6 2.2 5.8 million in the comparable period last year. Malaysia Sub-Total Other Countries Total 6.4 100.0 6.0 5.4 54.0 5.3 50. higher than targeted increase in trade deficit is quite natural.7 3.9 52.0 Trade Balance The deficit in trade balance during 2001-02 narrowed significantly by 21.1 7.4 4.
5 141.7 Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 July-March 2001-02 2002-03 * * Provisional.0 298. Terms of Trade 90.2 102. Table 9.1 Imports 131. Trade and Payments Terms of Trade The terms of trade with base year 1990-91 (equal to 100) remained flat at 90.6 185.6 123.5 101.8 during 2001-02 as compared to 91.9 223.4 298.9 133. [See Table 9.0 308.0 90.0 91.8 245.6 297.14]. 2002-03 has worsened by 12.5 271.8 80. The export unit value index during this period reflected a decline of 8.7 99.9 percent. The deterioration in terms of trade is the obvious result of sharp increase in unit prices of petroleum products and crude in the international market.9 92.6 percent while import unit value index showed a buoyancy of 3.4 204.5 142.1 percent and stood at 80.7 98.9 123.9 168.8 271.2 185.7 198. the terms of trade during July-March.3 259.8 recorded in the same period last year.14 Unit Value Indices and Terms of Trade (Base year 1990-91 = 100) Unit Value Indices Exports 119.7 over the level of 91.5 115.7 249.5 201.6 258.Chapter 9.2 272. However.6.4 253. The trend depicted by the terms of trade is also shown in fig.8 91.9 101.7 Source: Federal Bureau of Statistics .2 164.0 of 2000-01.
To make export of gems and jewellery easier. . Import duty of 15 percent on import of finished leather has been abolished to facilitate leather exports. Its framework has ensured consistency of policies with minimum government intervention. as well as value addition requirement of export of bangles reduced to 5 percent.Chapter 9.000 and provision of encashment certificate has been removed. The focus has been placed on macro-economic stability. Export of petroleum products allowed to private sector. Export of wheat and its milling products has been allowed. especially in terms of inflation.000. the condition of purchase up to $ 10. Trade and Payments Fig-6: Terms of Trade (base year 90-91=100) 130 120 110 100 90 80 70 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 2001-02 (JulMar) 2002-03 (JulMar) Trade Policy The trade policy for the current fiscal year (2002-03) was premised on the principle of maximum participation of all the stakeholders for the promotion of trade and industrial growth. Registration requirement for exporters and importers has been waived and monetary limits on exports of samples enhanced from $ 5. The salient features of the policy.000 to $ 10. The trade policy is guided by market driven forces and also aimed at to further liberalize & deregulate the economy and provide incentives for reducing the cost of doing business in Pakistan. interest rates and exchange rate. with a view to expand and diversify the country‘s export base – both market-wise and product-wise. 2002-03 are summarized below: Freight subsidy up to 25 percent for new products and new markets.
with official transfers. Industrial consumers have been allowed to import machinery and parts up to value of $ 30.Chapter 9.3 percent of GDP (excluding official transfers) . Balance of Payments A sustained improvement was witnessed in the balance of payments position of Pakistan during 2001-02 when the deficit in current account amounting to $ 513 million (2000-01) turned into surplus by $ 1338 million or 2. Import of gold and silver in bulk has been allowed to all subject to importer‘s own foreign exchange. Condition of continuous stay abroad of last six months for importing vehicle by overseas Pakistanis under Transfer of Residence Scheme has been relaxed by allowing 30 days break in Pakistan. Ban on the import of machinery more than five years old has been lifted. The maximum tariff rate has been brought down to 25 percent and the number of tariff slabs have been reduced from 5 to 4. Export of carpets in baggage allowed without production of foreign exchange encashment certificate. The substantial improvement. the surplus was much higher at $ 2744 million. Trade and Payments Export of old machinery allowed subject to no refund of import levies or duty drawback. Import of second-hand or used surgical equipments like dialysis machines. that is. Agricultural Produce Cess at the rate of 0. Duty draw back made permissible on all exports made in foreign exchange to Afghanistan via land route except items on negative list. A motor cycle or scooter has been allowed to be imported upon transfer of residence provided that there shall be no entitlement to import a vehicle. Amount of security deposit with Export Promotion Bureau for export of cotton reduced from 3 percent to 2 percent. Import of mobile phones has been allowed. The condition of registration in the name of the importer to import vehicle under Transfer of Residence Scheme has been reduced from two years to one year prior to his/her departure to Pakistan. reverse osmosis equipments and other electro-medical equipments not more than five years old has been allowed.000 against bank draft without opening of letter of credit.5 percent on agricultural exports withdrawn. Pakistan Export Finance Guarantee Agency has been set up in the private sector to facilitate SMEs to access financing for working capital. .
1 percent to $ 4215 million – resulting from impressive increase of improved markedly by $ 1109 million. the improvement in Table 9. The trade balance deteriorated because of higher Moreover. the current account balance percent in trade deficit (f. 119. the deterioration in trade balance. the surplus in current private transfers which depicted an increase of 9.7 percent. With official transfers. the first three quarters (July-March) of the current fiscal year 2002-03 ended with a strong build up of $ 4038 million in foreign The current account balance during July-March. 2002-03 continues to remain in surplus.8 services account on the one hand and significant improvement in private transfers including workers remittances on the other.4 percent.7 Buoyancy was observed in the inflow under percent. The flow under long Consequently the year ended with a sound build term capital (net) increased significantly by 73. Trade and Payments reversal from deficit to surplus was attributed to a combination of factors.15].ob. Buoyant 96.6 percent in workers remittances. deficit on account of services (net) imports of machinery and rise in unit prices of POL & narrowed by 16. exchange reserves [See Table 9. . The private aggregate receipts. (without official transfers) registered a surplus of $ 2562 which was attributed to negative growth in million (or 3. Notwithstanding.0 account jumps to $ 4375 million as against a surplus of $ 2227 million in the same period last year – an increase of percent and aggregated at $ 4249 million.7 percent or $ 525 million – due edible oil.) was witnessed. A marked reduction of 76. The long term capital (net) transfers in this period were significantly up by 40.15 Balance of Payments ($ Million) Components Trade balance Exports (fob) Imports(fob) Services (net) Private transfers (net) Workers remittances Current account balance Excluding official transfers Including official transfers Long term capital (net) Changes in reserves (. million in the same period last year – an increase of 152.0 percent up of $ 2792 million in foreign exchange reserves. The higher imports of machinery were essential mainly on account of 38. exclusively on account of 52. Thus.5 percent increase in for pick up in domestic economic activity.= Increase) P: Provisional 2000-01 -1269 8933 -10202 -3142 3898 1087 -513 326 171 -1001 2001-02 -294 9140 -9434 -2617 4249 2389 1338 2744 1280 -2792 July-March 2001-02 2002-03 (P) -206 -610 6658 7761 -6864 -8371 -1788 -1043 3008 4215 1627 3230 1014 2227 434 -1749 2562 4375 751 -4038 Source: State Bank of Pakistan. The deficit under services account posted a trend in private transfers was largely attributed to significant contraction of $ 745 million or 41.Chapter 9. 98. and aggregated at $ 751 million.7 percent rise in aggregate receipts.7% of projected GDP) in the first nine months of the current fiscal year as against a surplus of $ 1014 imports caused by lower POL and sugar imports.8 percent increase in workers remittances.
16].46 103.19 383.91 91. the workers remittances were targeted at $ 2.873 billion – 20.2003) 450 400 350 ($ Million) 300 250 200 150 100 50 0 2000-Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2001-Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2002-Jul Aug Sep Oct Nov Dec Jan Feb 2003-Mar Table-9.35 259. as against $ 1.77 2001-02 84. the target for the whole year was already achieved. Fig-7: Month-Wise Workers Remittances (July. total remittances for the fiscal year 2002-03 are likely to be $ 4.6 percent.41 267.18 351.22 342.29 46. Remittances have averaged $ 358.09 377.67 112.58 .44 225. Remittances during this period amounted to $ 3.85 % Change 260.74 87.087 billion recorded during 2000-01. Trade and Payments Workers Remittances Workers remittances during 2001-02 ended up with impressive growth of 119.2000 to March.230 billion.19 185. Monthly remittances which used to hover in the range of $ 75 – 85 million during 2000-01 now averaging $ 359 million in the current fiscal year.49 180.52 233. For the current fiscal year (2002-03).44 286. as against $ 1. never experienced before [See fig7].74 363.07 335.8 percent and aggregated at $ 2. showing a quantum jump.Chapter 9.3 billion—highest ever in the country‘s history [See Table 9.627 billion in the same period last year – thus registering an increase of 98.50 35.389 billion.16 Workers Remittances ($ million) Months July August September October November December January February 2002-03 305.3 percent higher than last year. During the first nine months (July-March).9 million during the first nine months and if this trend continues.35 91.87 189.
79 422.54 66.45 943.37 15.36 98.2 percent [See Table 9.S.62 % Share 1.09 2.41 3101.20 5.E.30 258.30 1. Main factors contributed to the sharp increase in the inflow of remittances include. Rs.61 6.0 percent over the corresponding period of last year. better exchange rate offered in the inter- .89 101.65 0.30 11.K.14 20.37 17.17 Country-Wise Workers Remittances ($ Million) July-March Country I.35 184.20 2. Trade and Payments March July-March Total Remittances including Hajj and War Compensation (July-March) With 29. Remittances from the US amount to $ 943.69 347.2 million or up by 95.43 6.62 56. Table 9.83 22.A. Others) U.68 27.07 13.2 percent share in total or 356.45 100.17].1 percent of the total and are higher by 63. Remittances from the UAE are next in line with $ 665.45 3230.17 17. Dubai. Remittances from Saudi Arabia are at $ 422.91 100.31 4.4 percent against the corresponding period of last year.70 60.39 6.51 483.54 2. U.21 665. the United States has emerged as the single largest source of cash remittances.50 0. (Abu Dhabi.96 44.08 % Share 1. Cash Bahrain Canada Germany Japan Kuwait Norway Qatar Saudi Arabia Sultanat-e-Oman U. confidence of the expatriate Pakistanis on the economic management of the country.21 555.Chapter 9. remittances.11 3230.75 69.06 0.87 103.23 3.15 3.20 0. of Foreign Exchange Bearer Certificates & Foreign Currency Bearer Certificates.20 17.93 39.92 2.17 1540.68 1.88 197.58 29.63 53.71 0.00 2001-02 1586.58 Source: State Bank of Pakistan percent of the total remittances.36 29.08 20. Other Countries II. Encashment and Profit * Total (I + II) 2002-03 3200.75 21.56 0. Sharjah.6 227.80 203.71 0.97 6.74 12. significant improvements in economic Source: State Bank of Pakistan fundamentals.94 1626.8 million or 13.09 1626.00 * Encashment and Profit in Pak.26 8.11 29.9 million Remittances from the UAE are also up by 91.A.35 0.
109 billion (till end April. With the impressive build up in reserves.3 5111.1 5292.9 5235. for the first time in the history of Pakistan on 7th March. By the end of the fiscal year 2002-03. 2003.End Period 12000 10000 8000 ($ Million) 6000 4000 2000 0 Oct Jul Nov Dec Jun Oct Nov Jan. 2001 [See Table 9.2 Fig-8: Reserves .2 3594. 01 May Mar Apr Source: State Bank of Pakistan . The rising trend continued and foreign exchange reserves stood at $ 10. Since July 31. 02 February March April May June July August September October November December January. Pakistan has added $ 3. 02 Dec Aug Sep Aug Sep Jan.6 8200. Trade and Payments bank market as against the open market.4 10307.3 3373. 03 February March April Reserves 3268. Pakistan is in a position to meet any abnormal shock on external front. The government‘s macroeconomic policies that have been pursued over the last three years have paid Table 9. Pakistan‘s gross reserves are likely to be around $ 11 billion.3 5566.2 4907. 01 August September October November December January.6 9335.18 Foreign Exchange Reserves – End Period ($ Million) Month July.5 7025.8 8547. and crackdown on hundi/hawala system in the Middle East and other parts of the world.4 9503.352 billion in its foreign exchange reserves.0 10377.8].3 7543. 2002 and until April 30.0 6259. Foreign Exchange Reserves The foreign exchange reserves have dividend. aggressive marketing of Pakistani banks in foreign countries and motivating the people to send their remittances through banking channel.9 9625.18 and fig.4 3304. 2003) in its reserves since July 31. 2003.Chapter 9.377 billion on end April.9 4814. Pakistan has added $ 7. 03 Apr Feb Feb Mar Jul.7 4399.2 9016. crossed the $ 10 billion mark. 2003 – sufficient to finance around 11 months of imports.
5102 59.1253 60. Pak-rupee exchange rate in terms of one unit of Euro during January.0811 57.1611 60.7757 Euro/Rs 53. 57.49 percent. Trade and Payments Exchange Rate The exchange rate of Euro against Rupee The free-floating exchange rate system.7277. Euro since the beginning of the current fiscal year and untill April.1020 60.7907 59. The inter-bank exchange rate per US dollar averaged Rs.1828 58.19 & fig.3240 52. the average parity rate of Euro was further up at Rs.1051 57.4554 62.2444 52. 2002.40 percent – mainly because the Euro zone currency (Euro) has emerged as a single preferred currency for the local as well as for the global investors. 03 May Feb Feb Mar Apr Aug Dollar Sep Euro Source: State Bank of Pakistan ______________________ Apr .6465 59. remained operative during the current fiscal year 2002-03. 2003 by 5.1232 60. surplus in current account balance and increased inflow of remittances through banking channel has strengthened Pakistani rupee viz.7907 averaged during July 2002 [See Table 9.9203 58. thereby showing an appreciation of 3. The continued build up in foreign exchange reserves.9]. The movement of Pakrupee exchange rate versus one unit of US dollar and Euro is given in Table 9.8154 62. In the open market.6908 61.5852 58.9.3807 59.4162 58. Thus. 2003.8675 57. 02 Jan. 2000.2444 which picked to an average of Rs. Table 9.19 and fig.1108 57.2157 55.3382 58. which was adopted from July 21. In the month of April.2578 59.5791 62. Pak-rupee depreciated viz.3382 in July.6262 53. has gradually gained strength.1246 59.7757 during April 2003. US dollar both in inter-bank foreign exchange market and in open market.19 Average Exchange Rate ($/Rs and Euro/Rs) Month January. as against Rs. 59. 59.Chapter 9.7277 65 64 63 62 61 60 59 58 57 56 55 54 53 52 51 50 Fig-9: Average Exchange Rate ($/Rs and Euro/Rs) (Rupees) Oct Jul Nov Dec Mar Jun Jan.0530 58. 62.2011 60.25 percent. Pak rupee also gained strength during this period and appreciated by 3. 2002 averaged at Rs.1881 58. 02 February March April May June July August September October November December January. 53. 03 February March April $/Rs 60.
During the first nine months (July-March) of the . Pakistan has not debt rescheduling. The debt crisis was essentially triggered The Paris Club debt rescheduling has provided by the unsustainability of the level of current substantial debt relief to Pakistan and also opened account deficits and pattern of their financing in the an avenue to achieve debt sustainability. has reached alarming proportions and the 1990s. Current account balance has turned surplus in 2001-02 and is also projected to remain in surplus in 2002-03. If accruals to RFCDs are three years in general and during the current treated as borrowing rather than earnings. against below: borrowing from external sources have declined.5 percent possible without exceptional assistance from the per annum. Considerable progress has been made towards addressing Pakistan‘s debt problem during the last three years.2 billion or over 6 percent of GDP.Chapter 10. thus registering a growth of 6. the debt service payments were not June 1999.4 billion or at an average rate stabilizing the country‘s debt situation for the last of 4.9 billion not sustainable even with a rapid expansion in the in 1990 and reached almost $ 38 billion by endexports. Pakistan ran current government has also set up a Debt Office in the account deficits [despite accruals of Resident Ministry of Finance to institutionalize its debt Foreign Currency Deposits (RFCDs) of $ 6. The level of current Pakistan‘s total stock of external debt and account deficit that Pakistan ran in the 1990s was foreign exchange liabilities stood at $ 21. Thus. During 1990-99. Foreign Economic Assistance Pakistan‘s external debt. The progress towards billion] totaling $ 24. The 1990s.8 percent of GDP.386 billion in two years. by the end of the an average deficit of almost 5 percent of GDP in 1990s. This Total Stock of External Debt means that about one-third of total investment was And Foreign Exchange Liabilities financed from external borrowing as against a little over 20 percent in the 1980s. Foreign Economic Assistance 10. is presented cumulative current account deficit during 1990-99 was $ 31.8 management capability. Following a credible strategy of debt International Financial Institutions (IFIs) as well as reduction over the last three years. As a result of the overall decline in the posted great danger to the economic future of the term structure of interest rates. ending June 2002. the fiscal year (2002-03) in particular. only succeeded in arresting the rising trend in external debt and foreign exchange liabilities but also succeeded in reducing them. External debt and foreign exchange liabilities have been reduced by $ 1. the cost of country.
015 3.8 1.4) (1.6 37.2 14.0) 5.6 End June 2000 2001 27.2 33.7) (1.276 1.Public & Publicly Guaranteed Debt A. External Debt and Foreign Exchange Liabilities ($ Billion) Item 1. total external debt and foreign exchange liabilities when adjusted for SBP liquid reserves stood at $ 36. Net Debt and Liabilities 36.991 C.1 5.7 2.664 5.3 0.842 2.586 2.Foreign Currency Accounts (2.183 0.302 End March 2002 29.1 and succeeded in reducing another $ 0.226 2.3 25.7 1.4) (0.918 37.862 28.550 1. Medium & long term (Paris Club. Short term (IDB) 0.104 .929 .7 1999 28.3 3.583 Official Liquid Reserves 0.479 4.132 2.1) (1.532 35.989 1. Other medium & long term (Bonds. Military & Commercial) Table 10.257 2.1 1990 18. Foreign Exchange Liabilities * 2.373 25. In other words.381 28.450 2. Private Non-guaranteed Debt 0.5 32.4 1.329 9.203 26.4 2.529 1.776 2003 ** 29. Multilateral & other Bilateral) B.1) (0.949 billion fig-1].7 4.939 2.400 33.254 32.Chapter 10.130 0.Total Debt and Liabilities (1 through 4) 21.139 36.460 32.124 33.359 2.029 3.929 35.9 37.133 0.679 4.235 27. Pakistan has also worth of debt and liabilities [See Table-10.085 6.498 Source: Debt Management Committee Report (1990 and 1999) & State Bank of Pakistan (from 2000 onward) * Foreign Exchange Liabilities from 2000 onward are inclusive of National Debt Retirement Program & SWAP ** Provisional Fig-1: External Debt and Foreign Exchange Liabilities (End-June) 40 35 30 25 20 15 10 5 0 2000 2001 Total Debt and Liabilities ($ billion) 2002 2003 (Jul-Mar) Net Debt and Liabilities It is important to note that Pakistan has not only succeeded in reducing external debt but at the same time built-up substantial foreign exchange reserves. IMF 0. Foreign Economic Assistance current fiscal year 2002-03.257 0.145 25.069 Total External Debt (1 through 3) 19.8 1.
0 30. 2002-03). The payments. declined to 60. external debt and liabilities stood at 64 percent in end June 1999. Beginning from the next fiscal year. remained flat at around $ 25 billion per annum during 1998-99 to 2000-01 – it did not show any appreciable increase due to reliance on short term borrowings.Chapter 10. It.3 percent of 2000-01. For the current fiscal year (July-March.0 35.4 percent during Medium and long term debt as percent of GDP In order to achieve sustainability of external standing external debt (medium & long term) has debt. however. and projected to decline to 50. Medium and Long Term Stock of External Debt The medium and long term external debt has accumulated annually by almost one billion US dollar in the 1990s – because of large current account deficits and heavy external borrowing. as compared to $ 27. the Ministry of Finance is currently engaged in during 2001-02 was 46.0 45. which is significantly higher than the sustainable limit of 225 – 250 percent. The debt as government would like to start pre-paying the expensive debts.4 percent by end June 2003.1 percent in end June 2002 and is projected to decline to 37.498 billion by end March 2003—a reduction of $ 10.0 Debt Outstanding As % of GDP (As % of GDP) ($ Million) 19044 . as against 43. The net debt and liabilities have further been reduced to $ 26.1 percent. the government is contemplating to pre-pay some of the expensive debts. The debt as 28365 percent of the preceding year (2000-01). More importantly.0 55.4 billion.9 percent as compared to 278.2 percent in end June 2002.8 percent of GDP in end June 2000 to 53. the disbursed and out provisionally been estimated at $ 28. As percentage of GDP.0 50. thereby showing a growth of 4.9 percent by end June 2003. Foreign Economic Assistance billion by end June 2000.431 billion in less than three years [See Table10.0 40.1 and fig-1]. the concluded with the donors [See fig-2].0 22117 22292 25000 20322 22509 22844 15000 10000 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-2000 2000-01 2001-02 2002-03 (Jul-Mar) 15471 17361 20000 25.2 billion of last year (2001-02).7 identifying expensive debts and examining their increase in debt to GDP ratio is attributed to terms and conditions associated with pre-mature addition of capitalized interest in debt stock as a result of first two debt rescheduling agreements percentage of export earnings during 2001-02 was 297. the net external debt and liabilities have declined from 60. The Debt Office of the first three quarters of the current fiscal year. 30000 25423 25359 25608 27215 Fig-2: Debt Outstanding (Medium & Long Term) 60.
which is within the servicing (principal plus interest) falling due sustainable limit of 20 – 25 percent. The first debt rescheduling payment of $ 1200 million of last year (2001-02) agreement was reached in January. 2000 to September 30. respectively. The debt within a specified period (consolidation period) servicing as percentage of GDP and export which usually coincides with a country‘s earnings during 2002-03 is expected to be about programme with the IMF.agreement was signed in January. debt amount of debt relief under this agreement was $ 1. the magnitude of debt Fig-3: Debt Service Payments ($ Million) 3000 2500 1746 2136 2265 2353 billion. [See fig. 2002-03 are projected to increase by 18. The issue of debt overhang is only deferred and not resolved. covering debt service maturities due servicing reverts to the former high level. The stock treatment is rare as it is restricted by the Paris Club to only Highly Indebted Poor Countries (HIPC). These two reschedulings were ‗flow‘ servicing also declined from 21.7 billion. 2042 1961 1648 1530 2000 1513 1316 1512 The third rescheduling agreement was 1416 1200 1500 1000 500 0 negotiated with the Paris Club in December.1 percent in 2001-02.1 percent and 13. as against the seeking debt relief/debt rescheduling on its external bilateral debt. provides temporary relief. 1998).3 percent in 2000-01 to 2.3 percent in 2000rescheduling which limit rescheduling to the debt 01 to 13. due to the debt relief during January 1. Unlike the previous two reschedulings.4 due to higher cost and lower maturity of the previous loans. 2000 (resulting from rescheduling of debt) from the Paris (including debt service payments arrears from Club and Non-Paris Club donors/countries. 1999 for $ 2.0 percent to $ 1416 million. 2001. The flow rescheduling 2. The debt service payments in the current Pakistan approached Paris Club thrice for fiscal year. As percentage of export earnings. the July.7 percent. The second debt rescheduling debt servicing has significantly dropped. respectively. Foreign Economic Assistance percentage of GDP and export earnings during 2002-03 is expected to be about 42 percent and 274 percent.Chapter 10.0 percent during from March 1. Debt servicing as a percent of GDP has declined service payments falling due during the period from 3. 2001 for debt 3]. However. the third one received ‗stock‘ treatment which takes into account the entire outstanding stock (principal plus accumulated arrears) and reprofiles it to over an extended period of time. Pakistan 99-2000 2000-01 2001-02 Debt Service Payments Rescheduling of Debt 2002-03 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 . as after the consolidation period. 1999 to 29th February. 2001. The 2001-02.
ADB and World Bank) and bilateral creditors (USA. The Paris Club also agreed to defer 100 percent of the amount of principal and interest due and not paid as on November 30. an estimated relief of $ 1. while Netherlands has given remission in debt service . not only the balance of payments but also the reserve position and credit rating of the country has improved. The total stock of bilateral debt.5 billion will accrue annually in payments of debt servicing on external debt in the medium term during the years 2001-02 to 2004-05.K. It is also important to note that multilateral debts are not reschedulable and that only the bilateral Paris Club debt received stock treatment during the third rescheduling.5 billion (68%) and Non-Official Development Assistance (non-ODA) debt of $ 4. Denmark and Commonwealth Development Corporation of U.0 billion or 32 percent (approximately). U. provides rescheduling of Pakistan‘s total bilateral public and publicly guaranteed debt of over one year maturity. The deferred debt in respect of post cut off date loans will be repaid in 4 consecutive equal semi-annual instalments starting from May 31. Naples or Cologne. was estimated at $ 12. Foreign Economic Assistance has been the fourth Non-HIPC country to get stock treatment of its debt beside Egypt.2 billion to $ 1. 2001.4 million and $ 29. Japan & Saudi Arabia. The ODA rescheduled debt will be repayable over a period of 38 years including 15 years of grace period and carries an interest rate as favourable as per under the original contracts whereas Non-ODA rescheduled debt is to be repaid over a period of 23 years including 5 years of grace period at an appropriate market rate. 2003 to June 30. outstanding as on November 30. It is important to note that Pakistan did not seek standard Paris Club terms such as Houston. suppliers/exporters and the private sector and is guaranteed either directly by their governments or their appropriate institutions. 2002 in respect of loans. 2005 and ending on November 30. 2001 to June 30. etc) .K.5 billion. 2003 and July 1. Poland and Yugoslavia. The ODA The Paris Club creditors. 2001 (including the debt service payments in arrears and the amount of previously rescheduled debt). 2004. This coupled with fresh disbursements from multilateral (IMF. 2006. eligible for debt rescheduling. 2002 as well as 20 percent of the amount of moratorium interest due during July 1. 1997 (post cut-off date loans) including deferment of 100 percent of the amount of moratorium interest on rescheduled debt due during November 30.Chapter 10. outstanding as on November 30. The third rescheduling agreement debt is owed directly by the governments or their public sector agencies while the Non-ODA debt is advanced by financial institutions. Out of the total debt of $ 12.5 million respectively. 2001 to June 30. As a result of the third debt rescheduling. 2002 to June 30. the Official Development Assistance (ODA) debt consists of $ 8. rather it negotiated special terms which were Pakistan specific.5 billion. signed after September 30. have waived off their entire outstanding debt of $ 18. This would have favourable effect on the balance of payments as well as on external/financial position of the economy. 2001 and those falling due during December 1.
.0 billion of finalization) and $ 0. Total amount of $ 11.3 million and and Russian Federation which are under USA has cancelled an amount of $ 1. These amounts $ 1.062 billion.Chapter 10. Foreign Economic Assistance payments falling due during October 2001 to have been signed except that of Republic of Korea December 2002.2. equivalent to $ 14.071 billion have been deferred their debt. total cancellation of debt comes to in respect of post cut-off date loans. Thus.550 billion also include Non-Paris Club creditors. The has been rescheduled (all the bilateral agreements country-wise detail is given in table 10.
621 19.926 12413.438 6.627 143.336 12413.141 1171.525 143.018 217.273 1062.009 41.207 180.119 81. 16 U.745 3.634 392.397 7648.602 2.510 Total A.S.018 51.999 124.126 96.649 4561. Total ODA Non-ODA Total: ODA + Non-ODA ODA (A + B) Non-ODA (A + B) G.019 53.350 12682.556 1062.974 80.273 1062.159 Amount Cancelled 18.122 1544.952 180. 17 Russian Federation 18 Republic of Korea A.336 11332.000 19.481 1062.067 3.2 Country-Wise Rescheduling / Restructuring of External Debt ($ Million) S. Total 35.602 51. Total ODA Non-ODA Total: ODA + Non-ODA B.122 1544.602 71.A.Chapter 10.254 812.061 72.575 144.591 3969.942 8589.205 1173.354 1000.006 160.510 17.602 51.686 10.649 4564.547 80.019 53.634 392.822 217. Foreign Economic Assistance Table 10.999 8713.273 51.000 29.346 119.839 3000.748 11549.009 41.579 3.510 68. Paris Club 1 Austria 2 Belgium 3 Canada 4 Denmark 5 Finland 6 France 7 Germany 8 Italy 9 Japan 10 Netherlands 11 Norway 12 Spain 13 Sweden 14 Switzerland 15 U.273 1062.061 72.913 6.159 7524. Non-Paris Club 1 Saudi Fund 2 China 3 Kuwait 4 CZECH 5 Turkish Eximbank B.016 3824.No Country Amount Rescheduled 35.602 51.424 268.941 Source: Economic Affairs Division .006 160.K.254 812.024 4.346 119.575 92.602 268.753 43.273 Amount deferred for 5 years 0.064 2.007 0.427 6.233 3807.101 32.839 1994.034 35.926 11332.397 124.808 3900.510 2.438 14.913 18.112 53.942 53.024 4.
Economic sanctions further clouded the aid commitments which declined to as low as $ 665 million in 1999-2000. a sum of $ 1851 million is expected to be disbursed. Non-Project Aid a) Non-Food 2151 414 21 1996-97 1821 412 1 1997-98 1552 1249 626 1998-99 1620 822 550 99-2000 1110 318 125 2000-01 919 680 678 2001-02 640 1676 1624 2002-03 (E) 807 1044 1027 .4. Foreign Aid-Commitments The commitments of foreign aid has exhibited a declining trend over time. Project Aid II. However. Foreign Economic Assistance Note: All the bilateral agreements have been signed except that of Republic of Korea and Russian Federation which are under finalization.4 Disbursements of Aid by Use ($ million) 1995-96 I. During the current fiscal year (2002-03). declining from $ 3025 million in 1994-95 to $ 1759 million in 1996-97 because of decline in the global saving and subsequent poor international aid environment.3].Non-Project Aid a) Non-Food b) Food Aid c) Relief Assistance for Afghan Refugees Total (I + II) E: Estimated 2 2 2 21 7 2219 665 1109 3488 2299 Source: Economic Affairs Division 1999-2000. especially in the second half of the 1990s. The position of disbursements by type and use is summarized in table 10. Foreign Aid-Disbursements Like commitments. The disbursements have declined from $ 2565 million in 1995-96 to $ 1428 million in Table 10. with the restoration of relationships with the International Financial Institutions. the restoration of relationships with the International Financial Institutions (IFIs) improved the environment for the aid commitments. the disbursements of foreign aid with some fluctuations have also continued to decline over the years as a result of poor international aid environment. Project Aid II. Table 10. these are expected to be $ 2299 million [See Table 10. Nevertheless.Chapter 10. During the current fiscal year (2002-03).3 Commitments of Aid by Use ($ Million) 199495 2714 311 3 279 29 3025 199596 2219 462 57 395 10 2681 199697 1351 408 1 405 2 1759 199798 776 1330 751 578 1 2106 199899 1382 837 650 185 199900 260 405 0 403 200001 193 916 914 0 200102 1138 2350 2288 41 200203 (E) 1202 1097 1090 0 I. the aid disbursements (programme loans) have improved.
the net transfers once again improved substantially to $ 1095 million (48% of gross disbursements) in 2001-02 due to exceptional support from USA and G-8 countries after 11 September. Foreign Economic Assistance 1995-96 b) Food Aid c) Relief Assistance For Afghan Refugees Total (I+II) E: Estimated 383 1996-97 409 1997-98 622 1998-99 270 99-2000 191 2000-01 0 2001-02 31 2002-03 (E) 10 10 2565 2 2233 1 2801 2 2442 2 2 21 7 1428 1599 2316 1851 Source: Economic Affairs Division Debt Service Payments and Net Transfers The increased liability of debt service payments has squeezed the net inflow of foreign resources. The annual details are given in table 10. Debt Servicing and Net Transfers Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 2002-03 (E) Gross Disbursements* 2045 2366 2436 2530 2571 2555 2231 2800 2440 1426 1597 2295 1844 Debt Servicing ** 1316 1513 1648 1746 2042 2136 2265 2353 1530 1512 1961 1200 1416 Net Transfers (N. The projection of net transfers for current fiscal year 2002-03 is $ 428 million or 23 percent of gross disbursements. They were as high as $ 853 million or 36 percent of gross disbursements in 1991-92 but turned negative by $ 34 million in 1996-97 due to lesser disbursements and relatively more growth in debt service payments. Estimated. .5 and fig-4. However. ** Excluding interest on short-term borrowings.T) 729 853 788 784 529 419 (-) 34 447 910 (-) 86 (-)364 1095 428 ($ million) NT as % of Gross Disbursements 36 36 32 31 21 16 (-) 1 16 37 (-) 6 (-)23 48 23 Table 10.5 * Excluding relief assistance for Afghan refugees Source: Economic Affairs Division. However. the net transfers improved to $ 910 million (37% of gross disbursements) during 1998-99 due to lower debt servicing. E. The net transfers of aid in the 1990s averaged at $ 534 million per annum. resulting from debt rescheduling but turned negative again to the extent of $ 364 million in 2000-01 due to economic sanctions and lower disbursements. Data since 1999-2000 onward is inclusive of IMF & bonds.Chapter 10. IMF charges and Euro Bonds.
Among these. which declined to 27.7 and fig-5].5 99.9 199 2. 'Pakistan Development Forum' (including assistance from Consortium sources under outside Consortium arrangements) is the largest source of economic assistance to Pakistan.4 2293 0. Sources of Foreign Aid * Commitments % 2002-03 Share (E) 78.9 157 99.0 Source: Economic Affairs Division * Excluding short-term credits of one and less than one year maturity.6 percent in respectively [See Table 10.1 1844 ($ million) % Share 80. The share of non-project aid on The share of project aid in the 1990s the other hand increased from 42.5 (43.6 210 9. The (2002-03) has been estimated at $ 808 million share of project aid during 2000-01 was 57.9 7 0.3%) percent.6 2001-02 Consortium Non-Consortium Islamic Countries Sub Total Relief Assistance For Afghan Refugees Total 2751 369 347 3467 21 3488 2001-02 2184 43 68 2295 21 0. that is. Likewise the share of Consortium sources in the total disbursements during the current fiscal year (2002-03) is expected to be 80.5 99. The source-wise commitments and disbursements are summarized in table 10. the Aid-to-Pakistan Consortium.1 percent.6 Table 10. Table 10. NonConsortium and Islamic Countries. E: Estimated 2001-02 due to difficulties in counterpart Project Vs Non-Project Aid financing.9 126 99.1 5.5 percent averaged 73 percent per annum or $ 1736 in 2000-01 to 72.6.7%) and $ 1043 million (56.7 0.7 8. The share of Consortium sources in total commitments during 2002-03 is likely to be 85.4 2316 100.0 Disbursements % 2002-03 Share (E) 94.4 10.0 6 2299 % Share 85.1 9.Chapter 10. The share of non-project aid programme loans of World Bank and Asian during the same period fluctuated even Development Bank.7 Disbursement of Project and Non-Project Aid ($ Million) Year Project Aid % Share Non-Project Aid % Share Total . Foreign Economic Assistance Fig-4 : Net Transfers as Percent of Gross Disbursements 60 50 40 30 20 10 0 -10 -20 -30 99-2000 2000-01 2001-02 2002-03 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 NT as % of Gross Disbursements Sources of Aid The major sources of foreign economic assistance to Pakistan have been the Consortium.3 100.3 1488 1. The project aid and nonmore widely (16-45 percent) and averaged at project aid during the current fiscal year 27 percent per annum ($ 637 million).6 100.0 1851 100.4 percent.4 percent during 2001-02 million with annual fluctuation in the range due mainly to higher disbursements of the of 55-84 percent.9 1957 10.
However.156 705 28.471 598 24.4 2.5 2.079 2.600 414 16.3 1. Foreign Economic Assistance Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 99-2000 2000-01 2001-02 2002-03 * * Estimated Project Aid 1.565 412 18. averaging 32 percent during the Third Plan (1965-70) and 10 percent during the Fourth Plan (1970-75).5 2. It however. its share increased to about 22 percent during the Fifth Plan (1978- 83) and remained almost the same during the Sixth Plan (1983-88).549 521 20.552 1.7 2.233 1249 44.5 76.9 81.493 588 23. due to the relief assistance for Afghan Refugees.5 1.620 1.3 1.9 80.821 1. The share of grants and grant type assistance continued to exhibit a declining trend thereafter and averaged at 16 percent during the Seventh Plan (1988-93).0 83.1 2.316 1043 56.895 1. .4 66. However in 2001-02.151 1.3 77.7 57.Chapter 10.442 318 22.599 1676 72.851 Source: Economic Affairs Division Fig-5: Disbursements of Project & Non-Project Aid 3000 2500 ($ Million) 2000 1500 1000 500 0 99-2000 2000-01 2001-02 2002-03 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 Total Project Aid Non-Project Aid Composition of Aid The composition of aid over the years has considerably changed from grants and grant type assistance to hard term loans.428 680 42.3 71.5 27. increased to 13 percent in 1998-99 and further to 18 percent during 1999-2000 but declined again to 4 percent during 2000-01 due to economic sanctions and poor aid environment.766 1. it again increased to 31 percent of total commitments due to higher inflow of assistance from donor agencies and during the current fiscal year (2002-03).7 2.408 1.7 Non-Project % Total Aid Share 748 34.6 2.961 2.0 2.6 43.110 919 640 808 % Share 65.5 55.0 2. It was only 9 percent during Eighth Plan (1993-98).801 822 33. it is expected to be only 15 percent.1 2.0 76. The share of grant and grant type foreign assistance in total commitments was 80 percent during the First Five Year Plan (1955-60) but dropped to 46 percent during the Second Plan (1960-65) and continued to decline thereafter.
the repayment period was 24 years including a grace period of 6 years. During the 1980s and 1990s. the hardening of terms identified by higher average interest rates and lower average maturity periods of the loans have adversely affected Pakistan's external debt servicing. however. improved to 28 years including a grace period of 7 years in the 1980s but declined to 21 years including a grace period of 6 years during the 1990s. By and large.6 percent during the 1950s. but increased to 4. respectively.e. During 2000-01.3 percent during the 1960s and 3.Chapter 10. which improved to 30 years with a grace period of 7 years during the 1960s.6 percent during the 1970s. ________________________ .8 percent and 4. but reduced to around 25 years with a grace period of 6 years during the 1970s. Foreign Economic Assistance Terms of Loans and Credits credits have significantly become harder over the The terms of bilateral foreign loans and years. The rate of interest. Repayment period. which averaged at about 4. on the pre-specified terms and conditions of the donors.4 percent during the 1980s and 1990s. The payment period of the loans/credits during the 1950s was 21 years with a grace period of 2 years. declined to 3. as compared to the terms of the 1950s. Furthermore. these terms have been made somewhat more harder. The terms of loans and credits became harder as not only the grant element has become quite insignificant but the aid also became donors driven i. The terms and conditions of the loans and credits were soft during the 1960s and 1970s. the commercial loans were available only on higher interest rates.
More generally. Education. Literacy rate. to improve quality. there is still a lot to be done in order to make Pakistan a prosperous country.6% in 2003. Pakistan started with a very low education profile but today a lot has been achieved. Delays in reforming the education system to keep pace with economic structure will most likely hinder Pakistan's economic prosperity.Chapter 11. Ten Year Perspective Development Plan 2001-11 and Three Year Development Programme 2001-04 have been prepared in this context. to improve equity. higher enrollment and achievement rates of children and less gender differences in enrollment of children. Gross enrolment at this level increased from 0. Pakistan is facing the challenges of coverage and quality in education. as is evident from the experience of East Asian countries who have generally invested heavily in basic human capital. by reducing fertility and improving health. The gender-gap has narrowed slightly due partly to decline in male enrollment at secondary level in public sector schools who have shifted into private options. and by equipping people with the skills they need to participate fully in the society. Education 11. Education Introduction Education is an essential tool for Human Resource Development and a necessary ingredient for sustainable socio-economic growth. it is readily conceded that investment in education contributes to the accumulation of human capital. especially basic (primary and lower-secondary) education helps reduce poverty by increasing the productivity of the poor. Conversely. There are also significant differences across provinces with decline in enrollment in Sindh and Baluchistan in public sector education. which is essential for higher incomes and sustained economic growth. Education has a positive impact on individual earnings and also yields substantial externalities: parents education and mother's literacy and education are associated with low infant mortality rates. education helps strengthen civil institutions and build national capacity and good governance in the implementation of sound economic and social policies.77 million to about 20 million. The challenges of the 21st Century could be faced through identifying issues. major challenges remain to increase access to education. and to commit resources for educational reform. developing strategies and operational programmes in Education sector. adverse macroeconomic conditions and keen inter-sectoral competition for public funds seriously impaired the government's ability to continue expanding education. Despite this awareness. colleges and universities has correspondingly increased. However. At the highest policy level within the government. The number of primary schools increased from about 8000 in 1947 to around 170000 in 2003. counted by number of people 'who could read only' in 1951. During the last decade of the outgoing millennium however. timely reforms can pay off in terms of economic growth and poverty reduction. . The number of elementary/secondary schools. was 16% has now been calculated on the basis of those 'who are able to read with understanding and can write a short statement' is 51. Expansion of education is dependent on fiscal resources. both male and female.
6% in 2002-03.9 2. change by percentage point.6 2.2 1. The table and figures showing literacy rate.6 2.1 1.1 Literacy Rate .6 45. Literacy Rate. These are acknowledged at all levels and encompass teacher shortage and absenteeism. inadequate attention was given to quality education including teacher's availability and teacher's accountability.5 2.6 2. Around 270. This rendered many schools non-functional.1 and figure-I).9 1. minimal supervision.Population and GDP Growth Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Literacy Rate 34. Under the Education Sector Reforms.4 2.5 1.51 4.43 6.5 51. Education Problems to ensure quality education are widespread. Literacy rate is estimated to be 51.1 Source: Federal Bureau of Statistics Ministry of Education.0 37.10 5.6 40. Population and GDP Growth National Literacy Campaign (Integrated approach to comprehensive Literacy and Poverty Reduction) has been launched through out the country.5 million people literate to enhance the literacy rate to 60% by 2005.1 2.4 2. While Social Action Programme (SAP) succeeded in increasing the number of schools.1 49.2 1.56 2.6 Change by Percentage Point 1. suggests that there is considerable demand for quality education.2 1.4 39. The campaign envisages making 13.7 2.4 2. poor infrastructure and shortage of teaching materials.1 Population Growth GDP growth 2.0 47.2 38.1 2.4 1. .38 1.24 3.60 7.3 1.3 1.22 2.9 36. The growth in private schooling estimated at 30% of total provision. especially in rural areas.0 50.34 3.Chapter 11.63 5.16 3.9 42.29 4.4 2. population growth and GDP growth from 1991 to 2003 are given below Table-11.47 5.000 adult literacy centers would be open for this purpose. Table 11.1 1.2 2.2 43.
framework in place to advance gender equality in implementing. Initiatives in and non-government stakeholders in Public Private Partnerships such as school upeducation. of the total 93 upgraded institutions. Eliminating gender gaps Development of research. Education Sector Reforms(ESR) and Education For All (EFA) Programs. stood at 11 percentage Gender in the Education For All (EFA) Wing for points at the primary level and 19 percentage points facilitating: for at the secondary level. survey and in basic education/literacy is the cornerstone of data tools/systems to analyze gender Government of Pakistan Policy for social issues and ensure the application of development in general and in education in pertinent sex-disaggregated data. Ministry of Education has a policy Gender-responsiveness in planning. Middle Eastern countries. compensatory programs such as stipends at middle and secondary levels.Chapter 11. secondary and National Education Policy 1998-2010. education. 3787 or 60. higher secondary levels. particular. This be program is an outstanding example of addressing increased to 105% by year 2020 and gender equity in Pakistan for non-elite groups. In Compulsory Primary Education Act will be 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 . The schools. 80% are girls and mixed schools. monitoring & evaluating.76% Gross enrolment ratio at primary level will are girls schools. ranging from and problem-solving on gender and education issues. Diverse programs and Communication. on average. Each target is gender disaggregated in and gathering of lessons learned. Furthermore all 50% Gender disparity in primary and secondary development allocations are being provided to girls education exists in low income countries. Ministry of Education has a special desk gender gap. information -sharing strategies have been developed. gradation program in the afternoons has resulted in a higher coverage for girls at middle. free textbooks and school Experience sharing between government nutrition support to girls schools. and 18% are mixed schools. Of the 6240 schools upgraded in Punjab and NWFP. The gap is widest in several Asian countries as well as in several Africa and the Gender sensitization and training. Education Fig-1: Literacy Rate 55 50 45 40 35 30 25 20 15 10 5 0 1991 Gender Education NWFP.
books. The Plan proposes new initiatives for achieving accelerated literacy rate. The formal and non-formal means shall be used to Federal Government will provide financial provide increased opportunities for in-service assistance to these Madaris for salaries of teachers. Total size of the Plan is estimated at Rs. In order to improve access and quality of Higher Education. . It would be ensured literacy rate to 59% (69% for male & 47% for that all the boys and girls. Model university ordinance has been approved. It is estimated that during 200203.192 double shift in existing school of basics education. One model secondary school will be set up at each Ten Year Perspective Plan 2001-11 and Three The district level.Chapter 11. Information Technology (IT) facilities have been provided to universities. are enrolled in secondary about 3.2 million additional population of age 10+ will become literate through primary schools. At Secondary level the participation rate is estimated to increase from Holy Qur'an will be offered. guiding principles and priorities for higher education institutions for promotion of socio-economic development of the country. billion including federal provision of Rs. limited options for technical/vocational education and low participation of private sector. establishing technical utilization of existing capacity at the basic level has institutions. Education Assessment System. At Middle level gross Qur'an will be introduced as a compulsory participation rate is estimated to increase from component from grade I-VIII while at secondary to 59% (Male from 57% to 60% and Female 57% level translation of the selected verses from the from 46% to 49%). opening/upgrading of primary/secondary schools. Technical stream at Secondary level is also under implementation. computers and teachers training etc. revamping of Science promulgated and enforced in a phased manner. secondary education. quality of education. A definite vocation or a career will be Year Programme 2002-05 propose to increase the introduced at secondary level. it is intended to increased from 31% to 48% by 2002-03. To equip the teachers and students of secondary will be revised and multiple textbooks Madaris with latest knowledge of Science and will be introduced. Full Education facilities. Establishment of National Education 38% to 40% (Male from 45% to 47% and Female from 31% to 34%). desirous of entering female) by 2005. improving quality of education at all been ensured by providing for introduction of levels. The participation rate will be Information Technology.54 billion. training to the working teachers. To evolve an integrated system It is estimated that during 2002-03 gross of national education by bringing Deeni Madaris participation rate at Primary level will increase and modern schools closer to each stream in from 85% to 88% (Male from 97% to 99% and curriculum and the contents of education Nazira Female from 72% to 76%). Teachers training projects. Both introduce formal subjects in willing Madaris. Ten Year Development Plan Ten Year Perspective Plan 2001-11 and Three Year Development Programme 2002-05 have been prepared on the basis of National Education Policy 1998-2010 to address the issues of low literacy and participation rates at various levels of education. A virtual university has been established. Technical Education is being introduced at district level. Curriculum for secondary and higher education. Higher Education Commission has been set up to formulate policies. preferably at least once in five years.
and introducing IT education in all public universities. Educational institutions to be set up in the private sector shall be provided (a) plots in residential schemes on reserve prices. Merit shall be the criterion for entry into higher education.6 percent to 5 percent with substantial contribution from the private sector. A reasonable tax rebate shall be granted on the expenditure incurred on the setting-up of educational facilities by the private sector. Schools running on non-profit basis shall be exempted from all taxes. and (b) rebate on income tax. 1976. The Government has begun additional funding and performancebased incentives to universities to implement their modernization program. Textbooks and Maintenance of Standards of Education Act. To bring institutional improvement. Priority will be given to investments in the areas of (a) institutional capacity building to strengthen administration and management capacity at the national. shall be based on entrance tests. Split Ph. a model University Ordinance is under consideration that regulates university structures. therefore. ineffective governance and institutional weaknesses. Existing institutions of higher learning shall be allowed to negotiate for financial assistance with donor agencies in collaboration with the Ministry of Education. provincial and university levels. who clear entry tests. The government has also established a Virtual University with affiliate campuses.D programs shall be launched in collaboration with reputed foreign universities and at the minimum. shifting emphasis from humanities to science and technology. Pakistan's public and private universities except a few are confronted with lack of resources. There shall be regulatory bodies at the national and provincial levels to regulate activities and smooth functioning of privately-managed schools and institutions of higher education through proper rules and regulations. Access to higher education shall be expanded to at least 5% of the age group 17-23 by the year 2010.Chapter 11. The plan aims at increasing access to higher education from 2. Matching grants shall be provided for establishing educational institutions by the private sector in the rural areas or poor urban areas through Education Foundations. Higher Education The development of strong institutions of higher education and quality research are crucial for sustained education and economic development. The fee structure of the privately managed educational institutions shall be developed in consultation with the government. establishing Endowment Funds in engineering universities in the public sector. All quota/reserve seats shall be eliminated. Education Private Sector Educational Institutions higher education with a focus on science and technology and research in Pakistan. 100 scholars shall be annually trained under this arrangement. Access to higher education. There are 96 universities/degree awarding institutions in the country as against 48 in 1999. and developing linkages with industry in Pakistan. would compete amongst themselves. The Government has dissolved university grants commission and has established a Higher Education Commission (HEC) under an Ordinance in 2002 to strengthen . like industry. Students from backward areas. reputed degree colleges shall be given autonomy and degree awarding status. (c) quality inputs to make the teaching and learning environment more effective. Curricula of private institutions must conform to the principles laid down in the Federal Supervision of curricula. (b) upgrading of professional and academic skills of faculty relevant to teaching and learning.
Virtual University established. Shift from Humanities to Science & Technology from current 70:30 ratio to 50:50 by 2005. An Ordinance on Higher Education Commission (HEC) has been promulgated and HEC established. includes 35 public sector universities.6% to 5% by 2005. - - - - Information Technology - - Information technology has been extended to over 4000 educational institutions including schools in collaboration with private sector and programs in large-scale teacher training. Up gradation of social sciences programs and staff development accordingly.Chapter 11. Provincial Skill Development Centers and |Institutes of Technical Education are providing training to students and youth in different computer courses to meet the market demand. School curriculum shall be revised to include recent developments in information technology. A program is underway to train federal ad provincial government employees in IT skills. IT Education facilities provided to 27 universities. The Commission has replaced the University Grants Commission which will pursue the following broad objectives: increasing access to higher education from 2.000 to 200. ESR is strategically positioned in the objective conditions prevailing in the country. Rs. Education planning and management has been devolved from the Federal and Provincial Governments to the District Governments. - - . Education A major development in higher education is the establishment of the Higher Education Commission which was established on 14th August.39% to 1% of GDP by 2005. Education Sector Reforms (ESR) program is designed in the long term perspective of National Education Policy (1998-2010) and Ten Year Perspective Development Plan (2001-2011). for Engineering Universities.1 billion Endowment Fund for promotion of research. Rs. Introducing IT Education in all public universities. Model University Ordinance approved for better governance and management of Public Sector Universities. Private sector to raise its share of enrolment to 40% of the total by 2005. Increasing allocation for research through an Endowment Fund. Education Sector Reforms (ESR). Introducing a one year honors course after Bachelor's Degree and/or a three years Master's Program. Increasing allocation to higher education from 0. Much of the action Achievements - Expansion from 48 Universities in 1999 to 77 in 2002.000 students by 2005. Increasing enrolment from 100. 2002. Computers shall be introduced in - - - - secondary schools in a phased manner.1 billion spent on shift from Humanities to S&T in higher education.
Teacher Education and Training Examination Reform and Assessment. A National Education Assessment System within the school system is being established to carry out assessment of students' achievement to be used as a basis for improvement of policy and planning. ESR has linked with four concurrent macro level initiatives. The major thrust areas of ESR are: i) National Literacy Campaign-Integrated approach to Poverty Reduction. Higher Education Sector. Education concerning education lies in the communities. The quality aspects of education are addressed through modernization of curricula. SAP II restructuring and the National Commission on Human Development (NCHD). tehsils and districts.Chapter 11. the Interim Poverty Reduction Strategy Paper. ii) iii) iv) . Centralized systems and distanced planning will be replaced by governance which is people and learner-centered. Educational planning and decision-making will now take place where the action is. which include Devolution. Mainstreaming Madrassahas. ESR is a comprehensive sector-wide program for increased access. v) Technical Stream at level/Technical Education. Improving the quality of Education: Curriculum Reforms. Universal Primary/Elementary Education (EFA). up gradation of teacher training and reforms of examinations. and teacher training. Secondary vi) vii) The six thrust areas have been enhanced to seven including mainstreaming of Madaris. Not only will this make the system more objective and rational but also more efficient. A comprehensive package of education sector reforms (ESR) with medium term targets (2001-05) has been finalized through a consultative process with over six hundred partners. and Public Private Partnership. enhanced equity and improved quality at all levels of education.
it must meet the country's growing demand for adaptable workers who can readily acquire new skills. The Education Sector Reforms (ESR) Action Plan (2001-2005) is a blend of home grown initiative.0 1.0 3. Table 11.0 2002-03 2. In Billion) Total % 8. A vocational technical education stream is being introduced at secondary education level.5 billion for the years 2001-04.0 7.5% Secondary School Enrollment (Percentage) 29.Chapter 11. Therefore.0 3.3 Financial Requirements for Education Sector Reforms Action Plan 2001-05* Programs Literacy Campaign Elementary Education Secondary Education Technical education College/Higher education 2001-02 0.0 (Rs.0 10 15. The rapid increase in knowledge and the pace of changing technology raise the possibility of sustained economic growth with prospects of increased human resource demand.0 9.0 3.0 3.3 8.0 34 10.6% Technical Stream Schools (Nos) 100 77 Polytechnics/Mono-technics (Nos) 148 Madaris Mainstreaming (Nos) 200 Public-Private Partnerships (Nos) ESR Programmes have been launched in all Provinces and Federal Areas under Devolution Plan. The Reforms seek to Mainstreaming Madaris and setting up Monoenhance education entitlement for poverty technics/Polytechnics at Tehsil level. Target 2005 60% 100% 76% 55% 40% 05% 1100 160 8000 26000 alleviation and promote public private partnerships.8 4. the cost estimates have increased to Rs.0 0 1.0 2004-05 3.0 3.0 11.2 Education Sector Reform Targets (2001-2005) Sub-Sector 2001 Literacy(Percentage) 49% Gross Primary Enrolment (percentage) 83% Net Primary Enrolment (Percentage) 66% Middle School Enrolment (percentage) 47. The Reforms focus on improvement of planning procedure. Changing technology and economic reforms are creating dramatic shifts in the structure of the country's economy. The duration of this package has been extended to 2001-05 to The ESR is linked to Education For All accommodate President's Programs viz (EFA) goals up to 2001-15.0 5. resource mobilization and utilization through a sector wide approach to develop all subsectors within the macro level framework including institutional reforms at all levels of governments engaged in planning and service delivery for quality education. These developments have created two key priorities for education. Education The ESR targets for each Sub-Sector are given in Table-11.0 15 10.0 3. and it must support the continued expansion of knowledge.100 billion (Table 11. ESR Financial Requirements for 2001-05 The original ESR package was of Rs.0 2003-04 2.5% Higher Education Enrolment (percentage) 2.3).2.0 3.3 34.0 10 .5 10.55. Table-11.
The Government of Pakistan is attaching top priority of EFA.9 5. Education For All (EFA) - Education For All refers to the global commitment to ensure that by 2015 all children would complete primary education of good quality (Universal Primary Completion). Primary schools upgraded to elementary level especially for girls in far-flung areas and under-developed districts. reverine communities and women and children in prison and darul amans. - Each sub sector of EFA targets the socially excluded groups through. and early childhood education.7 4. Senegal in April 2000 and reaffirmed in the Millennium Declaration in New York in September 2000.0 14. These groups are highly vulnerable. . reducing illiteracy by 50 percent with a focus on reducing the gender gap by 2015.2 100 100 Source: Ministry of Education *: Education Sector Reforms. Poverty Reduction and Human Development is the priority area of the Plan. Incentives to be provided such as free textbooks.0 0. and that gender disparity would be eliminated in primary and secondary education preferably by 2005 and no later than 2015.0 7. Non-formal programs to target nomads.2 2.1 1. Education Mainstreaming Madaris Public-private partnership Quality Assurance Total 0 0. Action Plan 2001-05.0 8 34.0 0.0 8. This commitment was made at the World Education Forum in Dakar.0 30.2 2.0 27. Linkages of technical stream and model technical high schools to micro-credit and poverty alleviation programs.2 0. without access to learning facilities. which are functioning at sub-optimal levels. Sector-wide development approach covering all the sectors of education has been adopted under the Perspective Plan. Nearly 80% of the ESR covers different goals of Education for All by 2015.0 14 0. In order to address the EFA implications linkage plan focusing on development of other sectors of Education has also been prepared. life skills and learning opportunities for youth and adults.7 0. Shelterless schools given buildings at elementary level. school nutrition. - Integrated non-formal education provision to different age groups where there is no education provision: sensitive to gender and development approaches for disadvantaged girls and boys. or public sector facilities.Chapter 11.7 3. The country has ten year Perspective Development Plan (2001-11) to visualize the long term macroeconomic and sectoral growth strategies. women and men (including child labour). - Skill training of out of school youth in the evening. The targeted groups for EFA goals belong to disadvantaged communities with minimal opportunities.2 5. scholarships and loans to students in both government and NGO institutions. Early childhood provision in targeted schools for improved "Katchi" programs.
075 10.705 68.640 59.795 10. Ministry of Education. Islamabad.811 50. Education Linkages of women's literacy programs and technical high schools to micro-credit and poverty alleviation programs.500 13.504 % of GDP 2. In million) EFA Sectors a) Primary Education 37.775 41.857 53.5 National Education Budget During (1995-96 to 2002-03) (Rs.510 16.4 (Rs.202 52.195 42.966 64.810 79.021 3.582 36.870 21.575 14.690 62.2604 million for 2002-03). Given the existing level of financing through the PSDP (Rs.450 4.968 Total Education Budget 42.516 6.585 1.892 16.246 58. Table 11.000 27.439 2.345 6.00 2.4. Grant of charter to private universities to incorporate provision for scholarship to meritorious needy students. The pattern of national education budget for the years 1995-96 to 2002-03 is given in the Table-11.375 Phase-1 (2001-02 to 2005-06) Phase-II (2006-07 to 2010-11) Phase-III (2011-12 to 2015-16) Development Recurring Total b) Adult Literacy Development Recurring Total c) Early Childhood Education Development Recurring Total Source: National Plan of Action. Funds required for the EFA Sectors under primary education.610 40.776 17. Public sector higher institutions to become equitable in their fee schedules.536 Development Budget 2. adult literacy and early childhood education are given in the table-11. In billion) Year 1995-96 1996-97 Recurring Budget 39. Free meal and nutrition to girls under Tawana Pakistan Program. Table 11.375 21.5.Chapter 11.62 . it is unlikely that the resources required for achieving the above targets would become available.
979 51.7 Source: Ministry of Education __________________________ .874 2.40 1.6 1.270 2.Chapter 12.975 67. Health and Nutrition 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 46.572 54.427 2.604 49.100 46.362 67.475 69.9 1.34 2.500 2.430 1.7 1.966 2.002 56.396 64.984 2.084 49.406 54.
0 73.0 83.3 110.Chapter 12.0 83.0 15.1) on in Pakistan is not up to the mark in relation to other life the quality of life in Pakistan reflects that the quality of regional countries and emphasize to the need of taking . health care and preventive services. A number of inadequacies such as out prioritized programmes with special focus on unhygienic living conditions.3 Bangladesh 61. paucity of capital resources to Table 12. the improvement so far made is far planning by increasing the health allocation and trying from impressive.9 51. Health & Nutrition Heath is a priority area of Government meet the recurring expenditure.5* India 63.0 30.8 Nepal 59.9 11.9 33. The high correlation between the particularly among the children and women of expenditures on health and productivity in developing reproductive age and suffering from the worse effects of countries like Pakistan is enough to emphasize the Malaria.0 7. However.0 32.0 57.0 1.9 Thailand 69.6 Source: World Development Report 2003 *: Population growth rate for 2002-03 is estimated at 2.1 Malaysia 73.1%.1 of better health facilities to improve the standard of percent provides the basis for rethinking of our national living of the people in the country has been the health priorities and points out to the need for better paramount aim of the efforts in this sector.8 Sri Lanka 73. In Pakistan. The low level of life growth. particular diseases. poverty and ill expectancy (63 years).6 105.0 60.4 China 70.0 2. AIDS and Drug Abuse are the importance of increasing health services as an aid to major areas of serious concern. The government in health infrastructure has developed significantly over recent years has started giving due priority to health the years. Hence in the health sector.0 1. Provision (110/1000) and high population growth rate at 2.0 27.0 18.0 Bhutan 62.0 40. Annual (%) Year 2000 Growth 1990-2001 Pakistan 63. Health and Nutrition 12.0 1.6 2. malnutrition activities.0 69. high child mortality rate health needed to be brought into sharp focus.0 2.1 Social Indicators Country Life Expectancy Infant Mortality Mortality Rate Population Year 2000 Rate per 1000 under 5 per 1000 Avg.4 Indonesia 66. spread of health facilities.0 2.7 39.0 1.0 1.0 2. Comparative selected indicators (Table 12.9 Philippines 69. Tuberculoses.0 39. scarcity of potable water.2 88.0 0.
175 37. Physical targets and achievements in the health (BHUs) and addition of 1600 hospital beds. The present national infrastructure of health and improvement in quality of life by spending more on facilities with 906 hospitals.405 3. 30 Basic Health Units targets.347 Source: Ministry of Health Physical Targets and Achievements During 2002-03 manpower development targets covers the output of 3700 Doctors. 8 million physical infrastructure i.248 4.2 Health Facilities Health Manpower Registered doctors Registered dentists Registered nurses Population per Doctor Population per Dentist Population per Nurse Upto 2000-01 91. the availability of one Doctor for 1466 persons. rural health centres.3. Oral Rehydration Salt (ORS) were to be distributed of The targets for health sector during 2002-03 include the during 2002-03.The health programmes Health Centres (RHCs). The sector during 2002-03 are given in Table 12.520 1.529 33. 2300 Nurses.e. The benchmarks of various physical facilities and health manpower are as under: Table 12.635 5. Health facilities Health Centres.823 4. Under the preventive programme. 250 Dentists.Chapter 12.629 3.2) compare well with other developing countries. 5308 Basic Health Units and 98264 hospital beds (see Table 12. one Dentist for 29405 people.622 40.019 1516 31579 3639 Upto 2002-03 101. Upgradation of 20 existing during the year has realized 63-96 percent of its physical Rural Health Centres (RHCs). 550 Rural health. 4590 dispensaries. Health and Nutrition all necessary measures to ensure better health services country.732 Upto 2001-02 96.466 29. The achievements have been largely in establishment of 40 Basic Health Units (BHUs). basic children were to be immunized and 19 million packets health units and hospital beds has been encouraging. Both the pubic and private sectors are providing one Nurse for 3347 and one Hospital bed for 1517 medical facilities in the country.528 1. However. 8 Rural the vicinity of the targets . Medical facilities are persons reflect poorly on the health status of the constantly increasing in the country. .068 44. 5000 Paramedics and 500 Traditional Birth Attendants The health sector performances in term of (TBAs).
Upgradation of existing BHUs B. Beds in Hospitals/RHCs/BHUs C.00 3500 200 2000 4500 480 17000 7. Doctors ii. Oral Rehyderation Salt (ORS) (Million Packets) 40 8 20 30 1600 25 5 15 25 1400 63 63 75 83 88 3700 250 2300 5000 500 17000 8. Health Manpower Development i. over the years they have steadily been increased. Upgradation of existing RHCs iv. Paramedics v. Preventive Programme i. Health and Nutrition Table 12.00 95 80 89 90 96 100 93 95 Source: Planning & Development Division Health Expenditure In Pakistan both the public and private spending on health is very low.5 18. However. During the years . New Basic Health Units (BHUs) ii. Immunization (Million Nos) ii.Chapter 12.3 Physical Targets and Achievements During 2002-03 Targets Sub-Sector (Nos) Estimated Achievem ents (Nos) Achieveme nts (%) A. Rural Health Programme i. Dentists iii. Nurses iv. Training of TBAs vi.0 19. New Rural Health Centres (RHCs) iii. Training of LHWs D.
Chapter 12. Health and Nutrition under review (2002-03), the total expenditure on health showing an increase of 13.4 percent over last year and is estimated at Rs.28.814 billion (Rs.6.609 billion works out to be 0.7 percent of GNP [See Table 12.4]. development and Rs.22.205 billion as recurring)
Table 12.4 Health and Nutrition Expenditure (Million Rs.) Fiscal Year Development Expenditure 5741 6485 6077 5492 5887 5944 6688 6609 Public Sector Expenditure Change (%) As % of GNP
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(Federal Plus Provincial) Current Total Expenditure Expenditure 10614 16355 35.3 0.8 11857 18342 12.2 0.8 13587 19664 7.2 0.7 15316 20808 5.8 0.7 16190 22077 6.1 0.7 18337 24281 9.9 0.7 18717 25405 4.7 0.7 22205 28814 13.4 0.7 Source: Planning & Development Division (LHWs) living in their own localities. The programme is currently being implemented with strength of 70,000 LHWs and 3,000 Lady supervisors nationwide mainly in rural areas and urban slums of the country. These workers are providing services to their communities in the field of child health, nutrition, family planning and treatment of minor ailments. The scope of LHWs has been enlarged to include the wider concept of Reproductive Health. LHWs will be involved in vaccination of women and children under the EPI. This will augment the activities of the Expanded Programme of Immunization. In view of effectiveness of the LHWs at the grass root level, the government has decided to utilize their services in many other public health programmes. At present, the
Health Programme To maintain the expansion of health facilities, a number of health programmes have been undertaken. These programmes address to the various health problems such as Malaria, Tuberculoses (T.B), AIDS, Drug Abuse and Malnutrition and have made good progress. Work for expanded programme of immunization is in progress. The number of reported polio cases have been reduced. The TB DOTS programme has been expanded to 46 Districts and the annual parasite incidence (API) of Malaria has been reduced to 0.69/1000 population in 2002. 1. National Programme for Family Planning & Primary Health Care The programme aims at delivering basic health services at the door steps of the unprivileged segment of the society through deployment of Lady Health Workers
Chapter 12. Health and Nutrition National Programme is covering 50% population. This programme is expanding in a phased manner and by the year 2005, the target of 100,000 LHWs in the field will be achieved. With this strength, LHWs will be covering 90% of the target population. 2. Expanded Programme of Immunization The programme with total cost of Rs.5,367 million for the period 1999-04 mainly aims at reducing mortality by immunizing children of 0-11 months and women of child bearing age and with this end in view providing vaccination against six vaccine preventable diseases to 5 million children annually with immunization coverage at 77% for children and 50% for expected mothers. Almost all the Lady Health Workers (LHWs) in 57 districts have been trained as vaccinators. The polio eradication efforts have been intensified through the surveillance for disease detection and improved quality campaigns, and as a result, there has been a significant progress. During the current year upto April 2003, the number of reported cases throughout the country has been reduced to only 18 against 76 in 1999, and 32 in 2002. Hepatitis B has been introduced in the EPI regime with the help of grant assistance from Global Alliance for Vaccination and Immunization (GAVI). Apart from Hepatitis B, the GAVI is also providing grant assistance of US$ 33 million for the improvement of EPI infrastructure in the provinces and another US$ 11 million for injection safety.
National AIDS Control Programme HIV/AIDS as epidemic has now been understood not as a health issue but as a major threat to human security. The disease continues to spread everywhere including Pakistan. The objectives of the AIDS/HIV prevention programme are to prevent HIV transmission, reduce morbidity associated HIV/AIDS, promote safe blood transfusion and establish surveillance system. The programme strategies include creating awareness among the public through information, education and ensuring safe blood transfusion. The Government has prepared an enhanced National AIDS Control Programme costing Rs.2.8 billion, including assistance from the World Bank. A provision of Rs.250.0 million (Rs.100.0 million for ongoing National AIDS Prevention Programme and Rs.150.0 million for the Enhanced Programme) has been made during the current financial year 2002-03. This constitutes a 100% increase in the budget for combating HIV/AIDS in the country. 47 Surveillance Centres have been established where 3.3 million test for HIV/AIDS have been performed. During the year, 1741 infected and 231 AIDS cases reported to National AIDS Control Programme against 3.526 million tests carried out uptill 30th September, 2002 and more than 5722 spots (TV & Radio) have been shown till February 2003. Posters, leaflets, guidelines and brochures have been printed and distributed.
Malaria Control Programme
Chapter 12. Health and Nutrition The efforts aimed at preventing and treating malaria by the Government has resulted in low level of malaria. A project, costing Rs.253.0 million, based on roll back malaria strategy is in progress. The Annual Parasite Incidence (API) has been reduced to 0.69/1000 in 2002 as against 0.74/1000 in the year 2001. Districts implementation plans for roll back malaria have been finalized in 19 high risk districts. 5. T.B. Control Programme Pakistan has the 8th highest T.B. burden globally. The government has included T.B. Control Programme in the priority list of the health programmes and has reaffirmed its pledge to reduce the burden of tuberculoses in the country. The estimated prevalence is around 1.5 million patients and every year 250,000 new persons are infected with T.B. The incidence of sputum positive Tuberculoses in the country is 81/100,000. The programme aims to control T.B. through DOTS strategy with the objectives of achieving 85% cure rate, and 70% detection rate, and reducing T.B. cases by providing technical assistance, and development of health education. The programme was approved at Rs.66.733 million for 2000-01 to 2003-04. However, it was revised at Rs.159 million after receiving an additional allocation of Rs.121 million. During the year 2002-03 a total allocation of Rs.63.000 million has been made for T.B. Control Programme. Main achievements of the programme includes coverage of 47 districts under DOTS strategy, DOTS coverage is being expanded and has increased to 50% and iii) under the Global Drug Facility (GDF) the first tranche of drugs for 150,000 T.B patients has been received. 6. Women Health Project The project aims at improving the health, nutrition and social status of women and girls by developing Women-Friendly Health Systems in 20 districts of Pakistan. The project has been launched throughout the country with total outlay of Rs.3750 million and support from the Asian Development Bank. Its specific objectives are to: i) Expand basic women‘s health interventions to under-served population. Develop women friendly district health systems providing quality women‘s health care from the community to first referral level including care. emergency obstetric
Strengthen the capacity of health institutions and develop human resources to improve women‘s health in the long-term.
Cancer Treatment Programme At present 13 nuclear medical centres are providing diagnosis and treatment facilities to the 80% population of the cancer patients with most modern facilities available at these centres. The major disciplines available in these nuclear medical centres are (a) nuclear medicines and radioimmunoassay and (b) oncology and radiotherapy. The nuclear medicine deal with the diagnosis and treatment of various diseases while
Chapter 12. Health and Nutrition oncology and radiotherapy deals with the treatment of reduction has also been initiated. Cooperation between cancer. More than 320,000 patients were attended Pakistan and Iran on the prevention of drug trafficking during the year 2002-03 and about 133,592 patient were drug abuse has helped in reducing drug trafficking and provided proper treatment as well as follow-up. across borders. A similar understanding has also been reached between Pakistan, Saudi Arabia, Egypt, China, Poland, Russian Federation and the Central Asian States. A strict ban on poppy cultivation has maintained during the year and the poppy crop wherever cultivated The drug abuse addiction has emerged as is being destroyed with the help of Law Enforcement a major health hazard, affecting the socio-economic life of Agencies. the nation. Thousands of productive youth have been rendered un-functional by narcotic drug abuse. In view Area development projects in Bajaur, Mohmand Drug Abuse of the sharply upward trend in prevalence of drug and Khyber Agencies are under implementation. These abuse, it is considered a matter of high priority to projects aim at eradication of poppy cultivation by educate the nation on the adverse effects of drug abuse.providing alternative means of income to the poppy growers in those agencies. Besides, under the Border Effective steps have been initiated by the Security Project, an amount of US$ 4.5 million was government for prevention of drug trafficking and drug allocated to enhance mobility, surveillance and abuse. A five years Drug Abuse Control Master Plan is communication capacities of the Anti Narcotics Force. under implementation. A mass awareness programme has been launched through the use of radio, newspapers The statistics regarding seizure of narcotics by and pamphlets to inform and alert the general public of Law Enforcement Agencies during the period from the the necessity for community awareness and action. A July 2002 to March 2003 are given as follows:community participation project for drug demand Table 12.5 Cases of Narcotics Opium 540 551 1644
Items 1. No. of Cases 2. No. of Defendants 3. Drug Seized (Kgs.)
Heroin 5167 5210 11608
Charas 26536 26647 4784
Source: Narcotics Control Division Food and Nutrition Pakistan encompasses a spectrum of deficiencies for which the most devastating are the deficiencies of iron,
iodine and vitamin A. Together they contribute to a Nutritional adequacy is one of the key great deal of morbidity and ill health and as such leads determinants of the quality of human resources. Despite health consequences, adding burden to an to the rapid progress made in food production [See Table individual‘s resource in capabilities and lack of one‘s 12.6] and processing, mal-nutrition continues to be full participation in the social and economic activities. a major area of concern for public health. The problem of Programme aims at reduction of infant mortality and mal-nutrition in developing countries including low birth weight babies; better child and maternal
Chapter 12. Health and Nutrition health care; promotion of breast feeding; and prevention of night blindness, and iodine deficiency diseases. Micronutrient Deficiency Control Programmes The major component of nutrition is The objective of improvement of nutrition through Primary Health Care is to improve in qualitative terms the nutritional status of women, girls and infants by providing and expanding more PHC nutritional services. More than 70,000 Lady health Workers working at village level provided services for micronutrient supplementation and counseling on growth promotion, maternal and child nutrition, breast feeding and complementary feeding on regular basis. As part of the PHC component of nutrition, nutrition information, education and communication activities have been started. Training of health professionals regarding health/nutrition education focussing on nutrition problems of women and children and their remedies has started.
Nutrition in Primary Health Care (PHC)
micronutrients deficiencies e.g. Iodine, Iron, Vitamin A. Various programmes remained under implementation during the year are summarised as under:a. Control of Iodine Deficiency Disorder The project aims to eliminate Iodine Deficiency Disorders (IDD) through universalising Iodized Salt by promoting its use among population and households. b. Control of Iron Deficiency through Flour Fortification To overcome the iron deficiency anemia, a feasibility study for wheat flour fortification with iron for the roller mills is under way. The study has four trials viz. production, stability and acceptability, bio-availability and community-based efficacy trials. Vitamin A
Community Nutrition Programme i. Fortification of edible oil/ghee The quality aspects for Vitamin A fortification of ghee/oil are going to be adopted to ensure a. necessary vitaminisation in ghee/oil by the producers. ii. Vitamin A Supplementation Vitamin A supplementation of children from 6 months to five years of age is being implemented as regular part of National Immunization Days (NIDS and Sub-NIDS) to protect them from infections. Breast Feeding Promotion and Protection The aim of this programme is to create awareness among the masses, particularly mothers, about the importance of exclusive breast feeding of infant for first six months and appropriate supplementary feeding along with breast feeding subsequently upto 2 years to reduce malnutrition in infants and children. As part of the early child hood protection, breast-feeding, promotion and
9 32.8 31.8 2301 61.1 150.9 6.00 2706 71.6 171.4 2.8 18.47 Year/ Units Kg Kg Kg Ltr Kg Dozen Ltr 49-50 79-80 99-2000 163.7 5.3 6.0 30.0 Milk 107.9 7.3 5.0 6.9 5.2 2001-02 (T) 149.2 5.74 2306 67.1 164.3 10.2 11.2 11.3 Oil Caloric & Protein Availability (Per Capita) Calories per day (Number) Protein per day (Gms) E.9 6.8 18.5 2534 65.3 147.8 107.4 121.00 Source: Planning & Development Division . 26 poor districts in 4 provinces have been selected with 5000 girls‘ schools to cover 500000 school girls (5-12 programme has been initiated. years).6 18.8 147.5 7. Awareness would be created within communities about the need for balanced nutrition at critical periods of life such as pregnancy and early child hood.3 Eggs 0.37 2728 71. Lactation Management Curriculum was revised/upgraded incorporating recent advances in the technical knowledge and needs of the target groups which would be used in future training programmes.Chapter 12.2 148. More hospitals have been declared Baby Friendly Hospitals.2 1.4 Sugar 17. This programme addresses widespread malnutrition in girls co-instituting almost 45% of population which will pay dividends in short and long term.2 11.7 27.4 148.6 Meat 9.1 12.3 Items Cereals 139.2 26.1 21.2 11.3 6.1 26. Estimated 2078 62.0 18.38 2655 68. The b) Tawana Pakistan Project.7 17.8 5.8 13.1 2000-01 (E) 164.1 Edible 2.2 26. 6 Food Availability Per Capita 89-90 95-96 97-98 98-99 156.85 2625 70. School Nutrition Package for Girls Table 12.0 94.8 149.3 17.1 11.9 2.3 2522 67.7 5.4 159. Health and Nutrition protection remained in progress.7 Pulses 13.2 2.1 28.
further adding to the spiral of poverty and deterioration in the status of women. This adds to malnutrition in poorer families and contributes to high levels of child and maternal morbidity and mortality. more savings and more investments. (decline in fertility is a very recent phenomenon). Investments in population welfare programme. Labour Force. Based on present growth patterns and trends. a matter of national concern. high pushed population the growth has significantly population below implications for provision of schooling. Hence. the income poverty leads to pressure on food consumption and adversely affects caloric intakes. Therefore. Population. since poorer families.1percent per annum and addition of 3. . In the past.Chapter 13. the rapid population growth also contributes to environmental degradation and depletion of natural resources. the thrust for improvement in quality of life. data shows that during last three decades. the economy would not be able to sustain the growing pressure of population and resultant deterioration in quality of life will foil government's recent efforts for social uplift. especially women and marginalized groups bear the burden of a large number of children with relatively fewer resources. large part of the population is constrained to live in poor housing and sanitation conditions. Almost one third of Pakistanis are living below poverty line. In particular. Pakistan ranks at 7th position in terms of World's addressing to high fertility declines. and Employment With population growing at 2. The impact of population growth on poverty is obvious. with lack of access to safe drinking water. This also imposes restraints on efforts for improving the living conditions of the population. as it enters into its reproductive phase embodies potential population growth for several decades. Such sizeable addition to the population. should population growth poverty line. The high population growth is. not only dilutes the results of the development efforts but also creates unsustainable level of demand on already scarce resources to cater for the needs of the population. and Employment 13.Population. developing countries with lower fertility and slower population growth have seen higher productivity. education and health sectors have contributed substantially Pakistan has been facing the ever-largest adolescent population.1 million persons every year. healthcare and other basic amenities of life for the coming decades. Furthermore. therefore. because of its high level of fertility over the last few decades. undoubtedly be magna cartae of the overall planning perspective. social uplift and economic development can be augmented by improving the effectiveness of population welfare program. If current trend persists. The adolescent population. It constitutes population momentum with serious With population of 149 million (2003). Pakistan faces a formidable challenge of tackling the issue of economic development and poverty reduction. in the age group of 15-24. The need to pursue an effective population program at all levels can neither be ignored nor exaggerated. Thus. Labour Force. Pakistan's population will reach 217 million by the year 2020.
Pakistan may see its shares of working-age population to rise while that of young age population decline. the adult literacy has increased from 26. The frequent changes in program strategies and inconsistent political support remained main impediments in the way of its successful implementation. The population is increasing but at a sliding scales i.8 percent by 200304 as per country's Interim Poverty Reduction Strategy Paper (IPRSP). which has increased to 85. low labour force participation rate and low per capita income.8 percent by mid 2004. Realizing the importance of improving the country's social indicators in general and education in particular the government has prepared a medium-to-long run program with a view to educating its citizen under the Education for All Program. If government's macroeconomic policies are such that lead to job creation. Demographic transition provides an opportunity for raising economic growth and increasing prosperity. Population. cloth and provide various services to population The population of the country has marked with considerably high proportion of young age. If the workforce is better educated. The country has to amass additional resources to feed. The increasing number of population has resulted in low level of human development. The various population planning programmes launched by the Government have effectively contributed in slowing the population growth rate.e. Due to demographic transition. Pakistan has experienced an accelerated population growth rate.2 percent in 1981 to 51. the country will more likely to realize the potential benefits of demographic transition in terms of higher economic growth. It is encouraging to note that the demographic transition has started and the growth rate is estimated to decline to 1. high dependency ratio and big size. With further slow down in population growth. from 3.1percent) and the government is making every effort to reduce it to 1.1. Family planning programs have been pursued in the country since 1950s. It's population has increased from 32.6 percent in 2003.1 percent per annum. Ministry of Population Welfare have formulated an Interim Population Sector Perspective Plan 2012. This change in demographic structure owes heavily to a steady decline in population growth since 1981.06 percent to 2.5 percentage points. the share of old age population has declined by 1. . However during the last 25 years. it has quardruppled in the last 52 years. Population Size and Literacy Rate socio-economic policies.5 million (1947) to an estimated 149 million in 2003. Pakistan may succeed in mobilizing sufficient capital (investment) and use it efficiently with the rising working-age population but this will depend largely on government's The current population growth is still high (2. In 1951 the population of the country was 33. In other words. and Employment population size. it will be better placed to contribute to economic growth.Chapter 13. low savings & investment ratios.7 million. Labour Force.1 million by 1981 and further to about 149 million by 2003. Hence. The population growth and literacy rates since 1981 to 2003 are comparatively given in Table 13. Pakistan is classified among the lowincome countries.
50 2.38 42.2 0 % Growth 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Fertility.Chapter 13.49 2.2 1995 124.4 1.34 43.96 2.67 3.8 3.4 3.0 4.2 0 1983 90. and Employment Table 13. Division .76 2.9 3.18 2.8 1.2 1990 109.8 3.56 37.96 2.1 Population Growth and Literacy Rates (1981 to 2003) Mid Year Total Population (Million) Growth Rate (%) Literacy Rate (%) Rate % Change 1981 85.95 27.2 1 0.86 29.6 0.9 3.8 3.77 31.1 1996 127.3 1994 121.84 2.30 2.06 26.60 36. Fig-1: Trends in Population Growth 4 3.6 1.2 1982 87.4 2.56 2.0 1988 103.64 2.7 3.86 2.4 3.2 3.48 2.41 2.61 2.2 E: Estimated Source: Population Census Organization & Ministry of Planning & Dev.71 2.0 3.8 0.9 3.2 1998 133.3 1989 106.5 3.0 2002 145. rates.03(E) 2.67 2.73 32.47 39.54 2. Labour Force.10 51.1 2003 149.6 2.8 2.7 3.99 2.82 30.43 40.63 34.51 38.4 1991 112.6 3.7 2001 142.3 1997 130.61 2.3 1992 115.6 3.29 45.6 3.4 1984 92.8 3.1 3. Mortality and Infant Mortality .1 4.6 2.4 0.2 3.69 33.2 2 1.0 1985 95.99 27.90 28.22 49.3 1999 136.7 3.63 26.2 2000 139.10 3.2 3 2.2 1986 98.5 1987 101.51 2. Population.2 1993 118.16 50.0 3.24 47.
170(E) (9. cardiovascular diseases and cancer in the elders. Division.e.991 34. indicators i. The crude death rate (CDR) of Pakistan is estimated at 8 (per hundred thousand live births).240(E) (17. NWFP AND Baluchistan) and Federally Administered Tribal Areas (FATA) and Federal Capital Islamabad.2 reflects the demographic The population of Pakistan is unevenly distributed over it's four provinces (Punjab.1) (13. Crude Birth Rate (CBR).59) (55.585 82.3 Province-wise Population. Indicators Total Fertility Rate (TFR) Crude Birth Rate (CBR) Crude Death Rate Infant Mortality Rate (IMR) Maternal Mortality Rate (MMR) (per 100 thousand live birth) Life Expectancy Male} Female} Year (2003) 4. owing to elimination of epidemic diseases.13. the infant mortality has Ministry of Planning & Dev.97) iii) NWFP 74521 4587 11061 17. It is estimated at 83 per thousand live births in 2003. Sindh.1) (13. The life expectancy in Pakistan is 63 years.6) (22. The major reasons for the slow decline of mortality rate in Pakistan include complications of pregnancies.577 20. Table No13.9) (22. Table -13.2 Selected Demographic Indicators. The major reasons for high rate of infant and child mortality are diarrhea and Population Distribution: neumonia. Labour Force.97) (22. 1981.Chapter 13.5) ii) SINDH 140914 6054 19229 29. The decline in mortality rates can also be attributed to improved water supply.3 reflects province and area wise population.3 8 83 350-435 63 Source: Population Census Organization & Despite considerable decline in total mortality in Pakistan. The other major killers are accidents in adults.7) (17.8) (60.3 27. Crude Death Rate (CDR).8) (56. been quite high. Table-13. repeated pregnancies and births. consequently every year about seventeen thousand of new born babies become motherless. Table No. Total Fertility Rate (TFR). However the fertility has shown a modest decline over the recent years.3) (13. 1998 and 2003 (Population in Thousand) Province Area Sq. Population.6) (13.54) . and Employment The high rate of population is also due to decline in mortality rate.600 149. drainage and other social services. Infant Mortality Rate (IMR) and Maternal Mortality Rate (MMR) and life expectancy in the country.710(E) (25. Land Area and Percent Distribution 1951.030(E) (100) (100) (100) (100) (100) i) PUNJAB 205344 20557 47292 72.1) (55. Year Year Year Year Kms 1951 1981 1998 (2003) A PAKISTAN 796096 33816 84453 130.
According to the 1998 Population Census. The most populous province is Punjab having a population density of 398 persons per sq.420(E) (3. During the year 2003.3) (0.P Baluchistan FATA Islamabad 1951 (Density) 1981 (Density) 1999 (Density) 2003 (Density) (43) (106) (164) (185) (100) (230) (353) (398) (43) (135) (213) (240) (62) (148) (235) (267) (3) (12) (19) (21) (81) (115) (125) (125) (104) (376) (881) (1137) Source: Population Census Reports and Planning Commission estimates. the population density ranges between 1137 persons per sq.km in Table No13.4 Province Wise Population Density Province (Area Kms) A i) ii) iii) iv) v) vi) Pakistan Punjab Sindh N.84 million (28%) in 1981 and further to 42.510 7.3) 94 340 799 1.5) (5.02 percent over the last 17 years i.4) (2.e. Out of these.6) 27220 (3.01.138 3.Chapter 13.450(E) (3.1) 1187 4332 6.61) (0.1) (4.7) Source: Population Census Reports & Planning Commission.km. However during 2003. During 1981 to 1998. The urban population at the time of independence (1947) was 5 million (15. the urban and rural population distribution is estimated to be 89.4%) which had increased to 23. E: Estimated Population Density Table 13.9) (2. . the total population increased by 55 percent whereas the urban and rural population increased by 60 percent and 40 percent. Population. and Employment iv) v) vi) BALUCHISTAN FATA Islamabad 347190 (43.445 million (32.5 percent.4 reflects that population density has increased from 43 (1951) to 185 (2003) persons per sq.5%) in 1998. the intercensal increase was 29.52. 1981-98.8 percent are below 5 years of age including 2. Islamabad (capital) to 21 persons in Baluchistan province.09 percent during 1972-81. Labour Force. Sindh (240).31 and 27.km followed by NWFP (267).040(E) (0. 14. If we go back further. the population below 15 years is 43.3 million (39%) respectively.4) (0.4) 906 (0.W. respectively. The population of Pakistan recorded an increase of 57. FATA (125) and Baluchistan (21).7 million (61 %) and 53. respectively. 1961-72 and 1951-61.6) (2. a little less than in 1981 when it was 44. Population Size and Growth Urban-Rural Distribution: The migration from Rural areas to Urban cities in the country is on rise.99) (5) 1337 2199 3. Overall the population of Pakistan has increased four times since the first population census of Pakistan in 1951.F.3 percent infants.4 percent of the total population.
8 persons in 1998.9 in Punjab province. human rights and the long-term prosperity of Pakistan.99. Labour Force. Unit Pakistan NWFP FATA PUNJAB SINDH BALOCHISTAN ISLAMABAD Area(Sq. will be focused.e.99 4. Household Size household size of rural and urban areas in Pakistan is 6. Density and Household Size By Administrative Units.61 Population Density 166 238 117 358 216 19 889 Household Size 6.0 6. Population.9 6.5). i.5 percent. under 15 years of age.41 and 4.2 Source: Ministry of Population Census Organization Population Welfare Programme Pakistan still has an unacceptably high rate of growth compared to other developing countries. The average household size for Pakistan as a whole is 6. a little higher than half of the total population. The youth will be informed about the consequences of rapid growth of population.62 percent while Islamabad Capital Territory has the smallest population share.8 8.0 respectively.The Population Policy is specifically designed to achieve social and economic revival by curbing rapid population growth and thereby reducing its adverse consequences for development.41 2. The population of working age group.e. The household size of Balochistan and Sindh provinces is 6. 1998. The highest household size in 9.3 6.7 and 6.5 Area. The Population Policy has several wide-ranging consequences for the economy. 13. 0.96 0.1%) to 1. The Table 13. Population Distribution by Administrative Unit The population of Pakistan is unevenly distributed among its administrative units.Chapter 13. 15 to 64 years thus comes to 53.0 9.) 796096 47521 27220 205345 140914 374190 906 Population (Percent) 100 13. NWFP and Balochistan is 22.3 in FATA followed by 8. attaching the highest priority to lower the population growth rate (PGR) from its current level (2. It is intended to achieve a reduction in dependency ratios. Concerted efforts would be made . The young population. The Government of Pakistan is therefore. The population share of Sindh.96 percent respectively (Table-13.Km.1 percent.61 percent. i. The Punjab province has the largest population share of 55. and Employment The population of persons of 65 years and above is 3. The household size varies among all administrative units of Pakistan.8 percent per annum by the year 2004.4 respectively .0 in NWFP and 6.5 and 7.40 55. Admn.7 6.62 22. to alleviate pressures on dwindling resources and help in poverty reduction.
Private Sector and Civil Society. 7584 outlets of Provincial Line Departments (PLDs) including those Provincial Health Departments. and Employment for behavioural change of the males and to put more responsibility on this segment of the society. envisaged in Interim . a package of reproductive health has already been introduced to target population. full choice of contraceptives and contraceptives surgery. fertility decline and changes in birth spacing patterns which should reduce proportion of under 15 population from 40% to 30%. Decrease the population growth rate to 1. Increase contraceptive prevalence rate (CPR) to 43% in 2004 and to 57% in 2012. Population. Labour Force.82% in 2004 and 1. 106 Reproductive Health Services (RHS) 'A' Centres. A holistic approach for population welfare program will be focused to ensure community participation. A comprehensive reproductive health (including family planning) approach has been adopted.6% by the 2012.1) by the year 2020. 500 outlets of Target Group Institutions (TGIs). As a follow up of International Conference on Population and Development (ICPD) decisions.Chapter 13. voluntary and coordinated manner by Government. The overall vision of the Plan/ Population Policy is to address various dimensions of population issues in an informed. population welfare program offers wide range of family planning services including motivation. To augment the family Major Objectives of Population Welfare Programme The main objectives of the Population Welfare Program. Sustain increase in "age at marriage" of girls and ensure a reduction in population momentum through delay in marriage. counseling. In nutshell. The Plan focuses its attention on leading a nation-wide effort to contain population growth through a comprehensive multi-sectoral program with the requisite political commitment and administrative priority. private sector undertaking civil society initiative. Increase Program coverage to 76% in 2004 and 100% by the 2010. 2012 is the seriousness of government to ensure responsibility for family planning services delivery through all infrastructure outlets of the health departments and other provincial line departments. Through these service delivery outlets. target group institutions.911 family welfare centers (FWCs). ii) iii) iv) v) Major Activities Pursued During 2002-03 (a) Service Delivery Infrastructure: The envisaged service delivery during 2002-03 comprises programme outlets and service units of Provincial Line Department (PLDs). The entire network consists of 1. 151 Mobile Service Units (MSUs). NGOs. the Population Policy sets out a broad framework and provides futuristic vision to achieve the ultimate aim of reducing poverty and raising the quality of life of the common man and woman. Achieve a replacement level of fertility (2. Population Sector Perspective Plan (2012) are the following:i) An important hallmark of an Interim Population Sector Perspective Plan.
3-month training of 75 Field Officers. National standards . The challenge is to reach couples with unmet need and convert them into service users. awareness about Family Planning is almost universal (around 97%)but the contraceptives use rate is only 33%. 65 faculty members of Training Institutes will also be imparted training by June. At the same time. social mobilization is undertaken through orientation workshops. The emphasis of the programme is to reach the desirous couples for meeting their service needs. Similarly NonClinical training activities are geared to update knowledge. (e) (c) Advocacy and Information Education and Communication. and Employment planning component of National Project for Primary Health Care & Family Planning 11000 Village Based Family Planning Workers (Female) working under Ministry of Population Welfare have been transferred to Ministry of Health to form a unified cadre of Family Health Workers. These include 18 month basic training of 700 Family Welfare Workers/ Counsellors. With the existing work of about 1343 male workers.Chapter 13. There is still a wide gap between knowledge and practice and the unmet need for family planning is 33%. advance-on-the job training of around 1200 Paramedics of the programme and 265 paramedics of NGOs. understanding and skills of the programme personnel working in the field. Capacity building activities cover clinical and non-clinical training at various levels. for elected representatives. In this context. In addition. Monitoring and Evaluation According to various surveys. The responsibility to involve males in family planning at the grass root level is being envisaged to be handled by male workers. Labour Force. Messages and media are being developed for specific groups and potential new users. 2003. (d) Capacity Building Monitoring of the programme activities being a regular process is undertaken under management information system (MIS) through field monitoring and by holding review sessions. This has further been intensified through surprise visits by Officers from the Ministry of Population Welfare and by team of provincial monitoring and evaluation cells to various categories of service delivery outlets. there is need to expand the male village based family planning workers to 7000 covering every union council. (b) Social Marketing of Contraceptives. Focus is on regional and local programs for presenting messages in local context. Short-term training of 700 Medical Personnel of Provincial Line Departments and Target Group Institutions and others. A cadre of male mobilizers is being introduced at union councils involvement. functionaries of other departments and community based groups. Population. The interim results are encouraging and continued donor support for the program is expected. level to enhance male Social marketing activities are complementing the efforts of Population Welfare Program in providing conventional and hormonal contraceptives at subsidized rates to the low and middle income groups of population in the urban and peri-urban areas of the country. improve access in order to avoid duplication and fill the gaps. a mapping exercise has been completed to systematically extend coverage.
2200.21 10.95 70. Of this 29.24 11.56 69.1 percent in urban areas).45 23.77 27.69 million or 69.45 13. impact studies of the population welfare programme.4 percent in 1997-98 but has slightly declined to 29 percent in 1999-2000. training special surveys and action oriented research focus is on population and development.0 million against which an expenditure of Rs.0 1998 38.06 million or 30.2 percent in 1994-95 and increased to 43 In Pakistan.60 30.75 2.25 30. Similarly RAR was 41. It increased to 28.6 Rural-Urban Labour Force Year Labour Force Million Annual Growth 1995 33.0 million has been incurred up to December 2002 and fund utilization shall gear up in the 3rd and 4th quarter as per past trend.23 30. Table13.88 69.62 27.84 7.80 2.0 2003(E) 42.52 30. based at Islamabad. LABOUR FORCE AND EMPLOYMENT On the basis of estimated population of 149 million for mid-year 2003 and the participation rate of 28.38 11.69 69.8 2001(E) 41.516.7 percent in 1996-97 and to 29. dissemination of information.47 12.43 2.76 27.2 2002(E) 41. the total labour force comes to 42.2 E:Estimated. the labour force participation rate (CAR) is almost .28 30. Labour Force. reproductive health and family planning.13 0.5 1999 39. Labour Force Participation Rate Million Rural % Share Million Urban % Share 23. (g) Financial Utilization The ADP allocation in respect of Population Welfare Program during 2002-2003 is Rs.50 12.00 2. According to the Labour Force Survey. (f) Research Programme Research Programme is executed by National Institute of Population Studies (NIPS). 30 percent (29.88 5.53 28.55 Source: Labour Force Surveys of respective years. CAR was 27.8) percent in rural areas and 27.83 69.46 12.37 69.45 percent is in the rural areas and 13.4 2000 40. Trainings/orientations have been accelerated to ensure application of the prescribed standard for improving quality of services.75 million. Distribution of labour force from 1995 to 2003 is given in Table-13.60 1996 34.48 69.31 70.77 30.23 11.07 69.57 29.97 percent.85 29. 1999-2000.5 percent in 1994-95. and Employment for family planning have been formulated and disseminated to service providers to improve quality of care. is an autonomous body assigned the responsibility of undertaking interdisciplinary research.55 percent in the urban areas.84 2.50 29.Chapter 13.5 1997 36.55 10. Population.54 29.6.79 25.06 30. The CAR is percentage of labour force in total population and the PAR is the percentage of labor force in population of persons 10 years of age and above. labour force participation is estimated on the basis of Crude Activity Rate (CAR) and Refined Activity Rate (RAR).
The total number of employed persons in urban areas has increased from 11.4 37.3 8.1 38.8 Employed Labour Force by Area Year Employed Labour Force Annual Growth (%) Rural Urban .6 48. Similarly rural employment increased from 27.1 70.0 Male 45.4 73.0 45.1 8.5 70.1 percent in at least one hour during the reference period and 2002.4 30.5 73. The crude and refined labuor force participation rates by area and sex for 1994-95.7 16. It slightly increased to 43.6 16.1 37.5 5.8 66. 1996-97.4 1996-97 Both Sexes 28.41 million compared to 38.3 13.5 70. The female labuor force participation rate is far less as compared to male participation rate and as such their participation in economic activities is also low. and Employment percent in 1996-97. table-13.7 29.Chapter 13.1 71.7 Labour Force Participation Rates By Area and Sex (percent) Year Crude Activity Rate(CAR) Refined Activity Rate(RAR) Pakistan Rural Urban Pakistan Rural Urban 1999-2000 Both Sexes 29.3 Female 7.5 Female 9.9 17.4 13.9 13.4 11.2 Female 9.3 percent in 1997-98 but has declined to 42. 1997-98 and 1999-2000 are given in Table13.8.4 27.8 1997-98 Both Sexes 29.05 million in 2002 to 27.6 8.1 65. Employment increased at a rate of persons of ten years of age and more who worked 2.7 Male 48.0 43.7 4.4 65.78 million in 2003.8 percent in 1999-2000. Population.5 5.2 46.1 42.4 1994-95 Both Sexes 27.6 27.57 million in 2002.0 47.4 7. the total number of Distribution of employed labour force by employed labour force in 2003 is estimated at urban/rural areas from 1995 to 2003 is given in 39.2 46.1 38.2 43.3 10.2 percent in 2003 compared to 2.9 11.0 10. Based on this definition.7 69.8 27. agriculture is a family profession in rural areas.7 6.0 29. Labour Force. were either "paid employees" or "self employed".7.1 Male 47.0 71.9 Male 47.2 7.4 47.1 43. Employment Situation 11.0 48.8 54.5 28.3 46. Inter-comparison of rural and urban participation rates reveal that labour force participation rates are higher in rural areas as compared to urban areas because Pakistan's economy is mainly agrarian and that the Table 13.0 45.9 46.3 13.0 26.0 Source: Labour Force Surveys of respective years.0 Female 9.3 64.1 41.52 million in 2002 to Table 13.63 Employed labour force is defined as all million in 2003.
59 37. Labour Force.26 percent and 5.15 70.89 Source: Calculations of Employed Labor Force and its Rural Urban break-up is based on the Labour Force Surveys of the respective years.97 69.42 11. The relative share of employed labour force in the finance.87 5.27 29.(M) 9.92 0.29 3. Community & Social Services Others Total 17.90 11.89 10.98 5.36 30.73 70.69 24.57 39. 19.9 Employed Labour Force By Sectors (No.Chapter 13.99 37. However the share of manufacturing sector has increased from 10.80 32. their relative share in 2003 declined to 5.29 11.08 2.28 39. Similarly the relative share of manufacturing & Mining had increased from 10.05 27.55 2.08 million or 48.78 13.47 10. respectively.55 9.55 percent in 2003.03 percent. the share of agriculture has increased by 1.94 0.2 5.29 5. Employed Labour Force by Sectors.46 36.01 5.48 16.29 million persons in 1998 and its relative share was 47.76 100.12 25.92 70.85 29.55 5.50 5.15 percent in 1998 to 11.15 6.48 percent.59 1998 % Share 47.3 2.03 30.4 -1. Population.58 34.28 5.(M) 1995 1996 1997 1998 1999 2000 2001 2002 2003 31.9.42 percent of total employed in 2003.00 .23 0.55 percent 2003.15 70.04 11. and transport sector absorbed 6.71 2.15 percent in 1998 to 11.13 70.1 2.2 22. Compared to it. The construction sector.63 % Share 69.03 15. Table 13.17percentage point in the last 5 years. Insurance.87 29. insurance and social services sector which was 16.26 13. Agriculture Manufacturing & Mining Construction Wholesale & Retail Trade Transport Finance.95 26.56 25.5 6. In contrast i.79 38.23 in 1998 has declined to 15.95 26.70 100.02 0. Employed labour Force by sectors for 1998 and 2003 along with its sectoral share is presented in Table-13.25 percent.11 No.78 percent and 5.02 percent in 2003. in million) Sector No.41 2003 % Share 48.87 percent in 1998 to 13. Agriculture Sector is the largest employer and employs 19.50 percent in 2003.8 2.88 70.27 36.50 27.12 29.52 11.64 69.25 10.e.08 4.32 1. respectively in 1998.64 10. The share of trade sector has also decreased from 13.00 No.41 2.08 29.25 22.59 36. and Employment No. This sector employed 17.85 29.78 % Share 30.2 2.
76 percent in 1998 to 11 percent in 2003. The next occupational group consists of elementary unskilled occupations. Employment by occupation Looking at employment by major occupational groups.13 Total: 36. According to this definition.58 workers.58 percent in 2003 and from 3.00 Professional.13 percent in 2003. The plant and machine operators group comprised 3.92 percent in 1998 to 4.10 for 1998 and 2003 reveals that major portion of the employed persons consists of skilled agricultural and fisheries workers. senior officers & managers 3. Skilled agricultural and fishery workers. 1.00 39.03 percent in 1998 to 2.07 2.21 percent in 2003.11 Unemployed Labour Force by Rural/Urban Area .91 15.67 1. were estimated as unemployed in 2003 compared to not in paid employment or self-employed. 14.00 Source: Labour Force Surveys 1997-98 & 2003 on Labour Force Survey.65 12.03 Craft and related trades workers 4.17 Clerks 0.35 3. However.68 percent of employment in 1998 but its share in total employed persons have gone down to 3. % Share No.28 Elementary (unskilled occupations) 7. respectively.e.29 percent in 2003.13 percent in 1998 but has declined to 18.76 4.21 Technicians & associate professionals 1.11 3. about ten years of age and above who during the period 3.33 11.68 1. The share of this occupational group was about 40 percent in 1998 and has slightly increased to 40. The share of craft and related trades workers group was 12.57 9.29 3.71 percent in 1998 but has increased to 15.03 percent in 2003.e.84 0.65 4. The data given in Table-13.87 2.80 4.Chapter 13.02 1.03 0.93 15. and professionals group have gone down from 6. (b) 3. agriculture sector's role is again conspicuous.55 Service workers and shop & market sales 2. Table 13.60 39.71 5.15 18. 1999-2000 Unemployment seeking work i. Similarly the share of technicians group has also increased from 2. were available by urban/rural areas from 1995 to 2003 is given for paid employment or self-employment and (c) in Table 13.10 Employed Persons by Major Occupational Groups Major Occupational Groups 1998 2003 No. had taken specific steps in a specified period to seek paid employment or selfUnemployment is defined as all persons employment. 1.02 percent in 1998 to 4.61 1. Unemployed labour force currently available for work i. Table 13. The shares of service and sales workers group.37 20.78 40.17 percent in 2003.92 1.11. Its share was 20.59 100.41 100.13 7. the share of legislators and managers group has increased from 9.e.20 6. and Employment Source: Labor Force Survey 1999-2000.05 percent in 2003. % Share Legislators.34 million persons in the labour force are under reference were (a) without work i.27 million in 2002. Labour Force.05 Plant & machine operators & assemblers. Population.
size.29 1.90 1.37 4.92 3. It is hoped that this will have a positive impact on the job creation capacity of the SME sector. the Government has taken various steps for reviving the economy and accelerating the pace of economic growth.34 2.28 7.14 0.80 6.94 9.06 1. The focus of these initiatives is on four areas namely availability of credit reduction in the cost of doing business.39 0.93 5. As a result of implementation of the annual development programme/schemes.98 1.68 5.25 7. SME Bank was established on 1st January 2002 with a mission to support and develop SME Sector in Pakistan by providing financial assistance and business support. EMPLOYMENT PROMOTION POLICES The government has fully acknowledged prospective repercussions of growing unemployment in the country and has taken several steps to create job opportunities. These include. Revitalization of Agriculture Sector. Some of the important employment promotion measures are given below: Realizing that a sound base of economic development and its faster growth has a direct bearing on the growth of employment.89 4.71 5.92 percent in 2003. productivity and input use.94 percent in 2003 and urban unemployment has enhanced from 7.82 6. The SME development is a critical target of the Government for generating jobs on a large scale.21 7.80 6. Development of Small and Medium Enterprises Sector.94 9.89 percent in 1998 to 7.7 billion or 5.98 7.82 6.85 1.90 2.80 1.2 percent.92 Source: Labour Force Surveys of the respective years. Population.36 0.34 1. product innovation and unemployment has increased from 5. structure.82 6.12 5.94 9.94 9. up-gradation of technology and marketing of products in the international markets.98 7.95 percent in 1999 to 9. compared to Rs127 billion in the previous . The SMEs are labour intensive and encompass a wide range of activities.25 1.21 1. Oil and Gas. Similarly unemployment in rural areas which was 4. the Government has established a Small and Medium Enterprise Development Authority (SMEDA) in 1999 to meet the needs of SMEs and work for the growth of this sector.12 0.Chapter 13.37 4. and Employment Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 Unemployed Labour Force Unemployment Rate(%) Total Rural Urban Total Rural Urban 1.134 billion has been made for the year 2002-03 in the Public Sector Development Programme which is higher by Rs.17 2. Labour Force.95 3.27 2.23 7. The above table reveals that year.81 6. 2001-2002.02 1.89 4.14 1.65 7.82 6.82 percent in 2003.95 5.92 3.98 percent in 1998 has risen to 6.93 1. An allocation of Rs. and Information Technology and Construction Sector.44 0. a large number of job opportunities would be created in the country.95 2. It also provides financial assistance to women for selfemployment and also extends its cooperation in the areas of management. In order to promote SME sector.92 3.
During the period 2000-02. the target for the year 2003-04 has been fixed at 1. quality control.Chapter 13. as many as 1. Technical/vocational training enhances employability of the work force. Labour Force.766 cases. 2002. the Bank had its branches in 26 districts and had disbursed loans amounting to Rs.067. By the end of December. acquisition of new technology and product positioning and marketing. Khushhali Bank has been established to provide loans up to Rs. As a result 316. The operation of the Bank would be spread in every district and loans given by it will generate employment for the unemployed. It is expected that with the implementation .50.to poor people to set up their own business.418 persons have proceeded abroad for employment through the Bureau of Emigration & Overseas Employment and Overseas Employment Corporation. During the current financial year 2002-03 (up to February. Keeping in view the increasing trend in manpower export. women are being encouraged to participate in the training programme of the country to bring them in the mainstream through the formal and informal apprenticeship training. OEC has appointed a consultancy firm for promotion of manpower export in the public sector.000 workers.30. and Employment development. Khushhall Pakistan Programme is the Government's principal social intervention aimed at generating employment through undertaking public works in the country. Based on the changing trends in the labour market domestically and internationally and the demand for industry-wise and sectorwise skilled labour. Emphasis is being placed on income generation activities for promotion of self-employment at the grass root level. Population. temporary jobs were provided to about 6. Self-employment is an important vehicle for arresting the rising trend in unemployment. The Overseas Employment Corporation (OEC) will explore new opportunities and avenues for employment of Pakistani manpower in South Korea for employment of general workers. Under the new training policy. 2003). As a result of its activities.000/. around 2000 job opportunities were created in the SME Sector. (b)undertaking water supply schemes (c) lining of water channels and de-silting of canals (d) provision and renovation of civic amenities in rural and urban areas and village electrification etc. The schemes under the programme are identified and selected at the district level through active community participation. the existing technical training curricula are being revised. Further initiatives are being undertaken to involve the private sector more actively in expanding technical/vocational training in line with labour market needs.000 individuals.16. During the fiscal years 2003-04.883. the persons who went abroad for employment were 1. USA for employment of nurses and Europe for employment of doctors and nurses. provided there is no big setback in the geopolitical situation in the region.70.77 million in 52. the Bureau of Emigration & Overseas Employment plans to open two new offices of Protectorates of Emigrants in Multan and Malakand Divisions to facilitate intending emigrants of these less developed areas in seeking employment abroad.26. At present training capacity of 68024 trainee places for men and 54638 places for women are available in the country. The programme includes (a) building farm to market roads.596 persons had benefited. Compared to the financial year 200102.
___________________ . Pakistan Poverty Alleviation Fund (PPAF) was set-up in April. Labour Force. community physical infrastructure and human/institutional development. the PPAF has made disbursement of Rs. Up to 31st December. legal framework for IT Sector and marketing support for IT sector. the Overseas Employment Corporation has established a data bank for the interested emigrants and has launched the "CV-on-Line Scheme for Overseas Employment Promotion".000 professionals in Technology has been launched. The Ministry of Science and Technology has prepared a programme to meet high level manpower needs in science and technology. In this connection. locally managed and locally run. So far 2735 such projects have been initiated which were community identified. An IT policy has been announced under which four areas have been identified which include human resource development. 2000.2590 million to 739. Population. With a view to facilitate Pakistanis in seeking employment abroad in professional/highly skilled areas. telecommunication. vocational training programme to produce over100.Chapter 13. and Employment of the consultants report the export of manpower from OEC would increase to between 4000-6000 workers in the years ahead. Information With a view to lessening the suffering of poorest segments of the population.416 beneficiaries in 75 districts through 34 partner organizations in the country. Disbursement has been made towards credit and enterprise development. Implementation of these programmes and projects helped in reducing poverty and creating job opportunities in the country. Information Technology (IT) has been included as one of the four priority sectors selected for unleashing the growth process in the country.2002.
839 83.307 7.845 kilometers including 151.845 0.661 in 2001-02 and further to 251.817 4.3 189.0 1992-93 99.9 196. the length of high typed roads have increased by 1.0 96. highways.117 6.845 KM in 2002-03 or by 47.1 Length of Roads (Kilometers) Fiscal High Type Low Type Total Year Length %Change Length %Change Length % Change 1990-91 86.9 90.3 2000-01 144.9 110.7 2001-02* 148.817 low types of roads. Secondly.784 -2. In other words. The annual growth of roads in Pakistan of road transport has increased very rapidly in since 1990-91 to 2002-03 is given in Table 14.484 2. Transport and Communications 14.5 103.8 240. This has developed towards road transport for at least been made possible under the Khushal Pakistan three reasons.9 1998-99 137.8 207.877 2.1 and Fig-1. as the pace of economic development quickens.823 1991-92 95.5 percent over the last year but the length of low type roads has declined by 1.335 4. It has been widely recognized that economies with better road and communications network are positioned more advantageously in terms of overall competitiveness.0 1994-95 111.001 5.340 0. the economy and reliability Program.028 high types and 100. this is the only feasible method of mechanized transport. compared to economies having poor network.374 9.4 249.8 107.4 percent. ports and shipping have been identified for analysis.885 4. Because performance indicators vary significantly by transport mode. ROAD NETWORK A marked and nearly universal trend has been converted into high type roads.7 218.652 4. increased to 251.0 92.9 102.5 100.6 229.428 6. Finally. recent years as better roads and improved vehicles performance have revolutionized overland transport.1 * Estimated Source: Ministry of Communications .661 0.352 2. Table 14. An efficient transport and communications network contributes to productivity improvement and reduction in production costs. on many routes with high traffic.984 170. Pakistan has a road network covering 251. whereas inefficient network hinders economic growth and social development.200 0.816 2.423 3. railways. the low type roads have A. the importance of transport costs declines.9 251.2 1996-97 126.5 1995-96 118.4 99.478 3.9 percent.817 -1.645 5.2 1997-98 133. roads.462 5.338 3. Firstly.345 5.8 87.083 3.028 1.6 110.132 2.140 0 248.238 3.709 7.320 -4.7 105.6 1993-94 104.7 1999-00 138. The total roads which were 170.5 247. During the out going fiscal year. airlines.4 251.Chapter 14. and there is greater concern for improved services.0 182. Transport and Communications Transport and communications and the services that flow from it are prerequisite to attaining economic growth and improving country‘s productive capacity.917 3.321 3.972 0.7 2002-03* 151.823 KM in 1990-91.595 5.
N-25 Karachi-Khuzdar-Quetta-Chaman Highway (816 Km). The National Highways Network consisting of 8. The period of construction is reduced to synchronized with deep-sea port.Chapter 14.3 km/sq. The large segment of the society prefer to take journey through road networks. The highway is being widened and improved to international standards. Wad-KhuzdarSorab (160 Km). Uthal-Bela (69 Km). Motorways and Strategic Roads. N-10 Makran Coastal Road (653 Km). It is Box-1 the Road Projects A) National Highway Projects N-5 Karachi-Lahore-Peshawar-Torkhum Highway The whole N-5 has been dualized except Hala-Moro (114 Km) and Rahim Yar Khan Trinda Muhammad Pinnah (80 Km). N-15 Kaghan Valley Road (175 Km) The construction work on 175-Km is in progress and near to completion. The government has decided to increase the present National Average Road Density from 0. The project is 653 km in length is to be completed within a period of 3 years instead of 6 years originally planned. Transport and Communications Fig-1: Length of Roads 2001-02 2002-03 custodian of 17 National Highways. Hala-Moro section has almost been completed whereas progress on Rahim Yar Khan-Trinda Muhammad Pinnah section is 85 percent.845 Km is 3. The present status of the main road projects is given in the Box-1 Kilometers 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 Hight Type Road Low Type Road National Highway Authority (NHA) The NHA is Pakistan‘s premier road management and regulatory agency. Sorab-Kalat (74 Km) sections have been completed. km areas to 0. Road transport is the dominant mode of transport for the people and for the goods in Pakistan. 00-01 . km areas.5 percent of the total road length in Pakistan. N-35 Hassanabdal-Gilgit-Khunjrab (803 Km) The Work on Thakot-Chillas-Khunjrab has been completed.23 km/sq.
88 Km tunnel and 28 Km access roads) is in advance stage of completion and 92 percent progress is achieved. Retra Jn. Expected completion date is July 2003. Karappa Chowk-Badabher (51 Km). (113 Km). Ratodero-Ghauspur (98 Km).Khan Mughal Kot section has been completed. N-50 Quetta (Kuchlac)-Muslim Bagh-Zhob-D. The project is expected to be completed by July 2003.I. Construction work on 30 Km Kohat Tunnel Project (1. Miscellaneous Projects Karachi Northern Bypass (56. The project more than half is completed. Layri Express way (16. Serai Gambila-Karak (60 Km) and Karak-Karapa Chowk (36 Km) have been completed. Work on up gradation of Phase-I & II from Kotri-Manjhad (58 Km). 8+8 flyovers and four interchanges. construction of three flyovers.8 Km) The project includes widening & improvement of 18-Km existing road.Chapter 14. Manjhad Sehwan (70 Km). . construction of 90m bridge over Lyari River and construction of two interchanges. Project will be completed by April 2004. Expected completion date is December 2003. Ghauspur-Shorinullah (76 Km).5 Km) The project includes construction of 2-lane 16. M-3 Pindi Bhattian-Faisalabad Motorway (52 Km) The construction work on Pindi Bhattian-Faisalabad Motorway (M-3) is in full swing. B) Motorway Projects M-I Islamabad-Peshawar Motorway (154 Km) Civil work about 27 percent has been completed. M-2 Lahore-Islamabad Motorway (367 Km) M-2 is operational since 1997. The construction/replacement of existing steel bridges of N-65 have been completed N-75 Islamabad-Muzaffarabad Road (90 Km) Additional Carriageway from Barakahu to Satra Mile (5 Km) completed Work on Satra Mile to Lower Topa dual carriageway (43 Km) is in progress. Construction work is in full swing. N-55 Indus Highway (1265 Km).Khan-Retra Jn.8 Km new 2-lane bypass road. The project will be completed by October 2004.I. N-65 Sukkur-Sibi-Quetta Highway (385 Km) The civil work is in progress.Khan Highway (528 Km) About 67 percent civil work of D. C. Expected completion date is March 2004.. construction of 38.Malana Jn. (85 Km). 42 percent work completed. D. Transport and Communications N-40 Lakpass-Dalbandin-Nokundi-Taftan (610 Km) The improvements work on Dalbadin-Nokundi (200 Km) section have been completed N-45 Nowshera-Dir-Chitral Highway (309 Km) Improvements have been planned and rehabilitation will be taken up soon.G.5 Km long carriageway. Shorinullah-Rajanpur (96 Km).
6 Km long bridge on River Indus (11. Karachi Express and Shalimar Express Rails are operating between Lahore-Karachi sections as non stop trains. Transport and Communications Bund Road Lahore The project is substantially complete. an investment of Rs.Golra More. communication system as well as modernization of three main constituents of Railways Operation viz infrastructure. rolling stock and communication.00 billion was visualized. 1. The Perspective Plan includes rehabilitation of infrastructure. Khuzdar to Khori Completed.901 passenger coaches and 23. The Pakistan railways have introduced non stop express trains in different routes including comfortable passenger coaches. Tall-Parachinar (75 Km) Completed. Work has been started. Rawalpindi Urban Area Project The Work completed on Qasim Market. Kohat Tunnal Link Road The project includes construction of 2-lane 7. kilometers. However this was included in an over-all plan for 10 years for which Rs. Abbottabad-Nathiagali-Barian-Murree Road Completed. rolling stock. 44 billion for five years (2000-05) was approved for Railway Sector. PAKISTAN RAILWAYS The comprises network 7.Chapter 14. Installation of Tool Plaza A fee-for-use culture in the country has been introduced.5 Km) Completed Chiniot Bridge Project Completed.M-2 interchange and Pir Wadhai Round about. It is also planned to increase the speed of passenger & freight trains. while another new train namely Jaffar-Jamali (Rawalpindi-Quetta) Express has also been started. Golra More. B. The Karakoram Express.5 Km link road between Kohat Tunnel Road & Kohat Dara Adam Khail Road. Ratodero-Shahdadkot-Quba Saeed Khan Completed. The project is being financed by NHA from its own resources through toll revenue. locomotives. once infrastructure over the system is improved. Ghazi Ghat Bridge Rehabilitation work on Ghazi Ghat Bridge has been completed Sukkar Bypass including 1. In addition to structural and management changes introduced .791 of route Pakistan Railways 577 by the Government. 109. through transfer of technology from China.939 freight wagons up to end of March 2003. Toll Plazas at 47 points all over the country have been established.
9 5.6 6.14.755 25.340 freight wagons. During July.Khanewal via Multan.6 5.3 7.851 30.275 24.775 8. procurement of material for fitment of roller bearings to 1.8 5.938 13.711 73.369 29.775 8.791 7.9 7.180 61.Chapter 14.March 2002-03.939 Source: Ministry of Railways The Pakistan Railways have improved its services both for passengers and luggage handling. procurement of 40 of 15 locomotives.117 26. The major activities include: rail renewal of 128 Kms and sleeper renewal of 217 Kms.709 73.9 4.8 6. the gross earnings increased by 12.791 7.2 Performance of Pakistan Railways Number of Freight Freight passengers carried Tones Km carried (Million (Million) (Million) tones) 84. The details of earnings are given in Table.607 64.7 percent over the same period last year.451 29. Million) Year Earnings % change 1998-99 1999-00 2000-01 2001-02 July9. 3 Earnings of Pakistan Railways. The performance of Pakistan Railways can be seen from Table.1 6.520 69.893 753 752 703 676 678 622 633 611 596 597 610 577 610 22.791 7.938 67.775 8.456 23.8 6.7 8. coaches.077 68.0 4.340 6. rehabilitation of 38 passenger Fiscal Year Route Kilometers 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2001-02 2002-03* *Provisional 8.4 4.612 68.0 5.4 4.775 8.14.7 8.688 49.9 4.) Freight wagons (No) 34.775 8.971 7.310 9. Table-14.0 5.447 64.0 4.330 68.0 7.0 4.0 4.6.213 24.775 8. Transport and Communications An amount of Rs.8 3.906 23.228 30.922 million has been provided for development programme for the year 2002-03. (Rs.775 7. A sign of improvement is visible from the continuous increase in the earnings which have increased by 43.775 8.7 5.893 23.2 rehabilitation of 22 locomotives.397 Locomotives (No.8 5. procurement passenger coaches under the scheme of rehabilitation of 240 passenger coaches (scheme completed) and rehabilitation of 100 passenger coaches under another project of rehabilitation of 450 passenger coaches. rehabilitation of 40 bridges on main and branch lines and doubling of 16 Kms of track from Lodhran.791 7.9 6.962 59.3 percent during 1998-99 and 2001-02.791 Table 14.192 577 23.1 11.2 20.3 and Fig-2.4 3.341 3.889 11.7 .2 52.
However. Billion 9.783 12.572 10. both in respect of passenger traffic and freight traffic has declined from 13.1 percent. the Pakistan Railways has registered an impressive recovery in 2000-01 when its freight 1998-99 1999-2000 2000-01 2001-02 2002-03 (JulMar) . During the last 12 years (1990-2002).Chapter 14. respectively. the share of Railways.5 percent to 9 percent and from 14 percent to 4.7 16 14 12 10 8 6 4 2 0 Fig-2: Earning of Pakistan Railway Source: Ministry of Railways. Transport and Communications March 2001-02 2002-03 Rs.
1 7.3 1.5 5.661 5.3 -9.843 % Change 18.613 81.7 Fiscal Year Source: Ministry of Railways & Ministry of Communications .037 146.7 0.964 18.4 Road 35.751 173.818 81.7 percent.770 79.967 3.6 5. the passenger traffic of Pakistan Railways has increased by 5.962 6.037 161.7 percent per annum during the 1990s.5 6.1 -1. timeliness.867 15.345 89. as against an average decline of 4.4 6.5 6.8 5.719 71.000 131.0 29. as against an average decline in passenger traffic by 0.180 5.545 18.774 18.158 17.4 3.8 1.1 -2. A positive growth of 3.688 3.536 53.341 3.612 4.8 5. Furthermore.000 137. This trend is reported in Table 14.9 percent in 2000-01 and further by 6.3 5.607 4.3 5.385 17.7 -10.8 1.566 163.2 0.352 135.9 -4.1 6.857 185.9 6.2 5.9 6.370 209.4 and Fig-3 & Fig-4. respectively over the same period of last year.085 108.590 20.1 Rail 19.447 3.5 -10.4 Trend of Passengers Traffic and Freight Traffic (Road vs Rail) Passenger Traffic(Million passenger Km) Freight(Million Ton KM) Road 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 (Jul-Mar) 2001-02* 2002-03* *Provisional 128.6 2.3 -3.520 4.8 1.3 33.6 6.9 0.Chapter 14.246 101.980 18.9 25.8 percent per annum in the 1990s.495 19.596 75.397 %Change 4.3 Rail 5.0 -5.919 %Change 2.9 -4.527 95.4 percent and 1.7 -3.211 41. Table 14. Maintaining a positive growth for three successive years can be attributed to the wide range of improvements made by the Pakistan Railways in the quality of services.082 16. A positive trend has also been recorded during July-March 2002-03 in both the passenger traffic and freight traffic by registering an increase of 1.692 208.261 107.077 4.0 3.900 84.820 14.938 5.3 percent in 2001-02.7 percent has also been maintained in 2001-02.132 154.5 3.905 19.6 5.709 5.071 %Change -9.114 18. Transport and Communications traffic has grown by 25 percent.7 1.236 196. and cleaniless.1 7.381 157.2 6.8 -8.
respectively. The construction of a New Terminal Complex. 2001 events on the global and national air traffic and the attendant decline in revenues.5 million passengers per annum. Rahim Yar Khan and Bahawalpur airports have been upgraded for operation of B-747 and B-737 aircrafts.Chapter 14.3 billion. A new Automatic Flight 2002-03 (July-Mar)_ . The up-gradation of Gwadar and Turbat airports is in progress. Operate and Transfer (BOT) basis is being processed. Transport and Communications Fig-3: Trend of Passenger Traffic 250 40 35 200 30 25 (Billion Passenger Km) 150 Road 20 100 Rail 15 10 5 50 0 0 1990-91 2001-02 01-02(Jul-Mar) 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 Fig-4: Trend of Freight 120 100 10 9 8 7 6 60 40 20 0 5 4 3 2 1 0 (Billion Ton Km) 80 02-03(July-Mar) Road Rail 1990-91 2001-02 00-01 01-02(Jul-Mar) 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 C. Construction of New Islamabad International Airport on Build. CIVIL AVIATION AUTHORITY (CAA) In spite of the adverse effects of September 11. 10. Lahore has been completed at the cost of Rs. the CAA has continued to undertake developmental work and also completed a number of projects. The construction of Sialkot International Airport in the private sector is also in progress. This terminal can handle 6.
1 percent in the previous year. Million) Year Items 2002 2001 . despite the fact that the global economy in general and the Airline industry in particular. The improvement is significantly evidenced on the domestic routes where freight traffic has increased by 17 percent over the same period of last year.5 Financial Performance of PIA ( Rs. This improvement has been achieved as a result of various measures initiated after June2001. Closure of Indian airspace since January 1.111 million. There is a pre-tax profit of Rs. Khatmandu. Manila and Tokyo have also become highly uneconomical. 7 Boeing 737-300s. During July. Syndicated Murabaha financing of US was arranged $ 70 million through Pakistani Bankers Consortium for the purchase of six Boeing 747—300 aircraft. 8. Dhaka and Colombo. The financial result for the year 2002 (January-December) presents a significant turn around in the airlines fortune.5 percent. as compared to 57. The financial performance of the PIA is reported in Table 14.5 and Fig-5. The capacity of both the passenger and traffic has increased by 1. 1. Overall traffic is up by 1. While flights to Bangkok.882 million in the 2001. 6 Airbus A 310s. Singapore.385 million passengers in the preceding year. Pakistan International Airline (PIA) During the first nine months (July. as against a loss of Rs. 8. A total of 3. The airline has earned Rs. Mumbai. Transport and Communications Inspection System is in the final stage of completion. has been passing through a turmoil period.March 2002-03.5 percent over the same period of last year. respectively as compared to the same period of last year. the airline has exercised its purchase option on five Boeing 747—300 aircrafts already on lease from Cathay Pacific Airways. The PIA‘s aircraft fleet as on 31st March. against Rs.2 percent over last year.5 percent. Freight load factor is up by 59. the number of aircrafts movements and passenger traffic from all the country‘s airports were 0.633 million/ RPKs in the corresponding period of last year. 2003 consisted of 4 Boeing 747-200s. Hong Kong. 2.8 percent and 1. During the first three quarters of the current financial year.Chapter 14. respectively. 8 Airbus A300B4s. According to the CAA. particularly the Ticketing & Reservation System in order to restrict the possible misuse/malpractices by the agents. freight traffic has improved by 6. 11 Fokker F-27s and 1 Twin Otter.387 million passengers have been carried as compared to 3.091 and 5. 6 Boeing 747-300s. A sixth Boeing 747—300 aircraft from Cathay Pacific Airways was also inducted in 2002. the PIA‘s network covered 23 domestic and 28 international stations. Domestic traffic in terms of RPKs has increased by 3. The airline is pursing a long term fleet modernization plan which envisages induction of eight Boeing 777 family aircraft over the next 5 years. Table 14. PIA continues to focus on technological innovation to improve its operation and customer service.March 2002-03) of the current fiscal year.2 million. 2002 has resulted in suspension of PIA flights to Delhi.764 million per kilometers (RPKs).0 percent.
3 8. The traffic handled at Karachi Port during last twelve years is as under:- (a) Karachi Port Trust Karachi Port has made a steady and continuous progress in its various sectors to boost the national economy.000 32.170 22.995 5.714 15. It has Table 14.PORTS & SHIPPING established an annual cargo handling record of over 26.266 17.4 Total 18.4 1.6 Cargo Handled at Karachi Port Year 1990-91 1991-92 1992-93 1993-94 1994-95 Imports 14.098 (000 Tonnes) % Change 9.000 37.111 43.000 (Rs Million) Revenue 2002 Cost & Expenditure 2001 Profit/Loss Before Tax D.Chapter 14.256 17.959 5.709 20. Transport and Communications Revenue Cost & Expenditure Profit/Loss Before Tax 43. During the first nine months of current financial year (JulyMarch 2002-03).572 %Change 29.000 42.2 percent against the corresponding period of last year (20.8 2.000 2.000 12.490 (1.2 0.8 -5.186 4.9 12.563 2.1 -0.674 41. port has handled 20.526 %Change 3.000 7.453 22.610 17.608 45.000 17.000 -3.914 4.0 2.057 million tons).566 23.3 .000 22.000 27.692 million with zero waiting time of vessels in 2001-02.011 million tons of cargo which is slightly less by 0.5 Exports 3.8 13.882) Source: PIA Fig-5: Financial Performance of PIA 47.
financed through its own resources. Consequently. With has been impressive during July.5 1.2 8.0 -0.113 5.057 20.064 20.862 5. These projects include deepening of channel.149 20.684 24. refurbishment of oil Pier-II.1 5.362 17.0 -1. against 9.735 5. as increased from 24 to 28 million tonnes. A congenial atmosphere private sector.318 18.8 -1. The terminal will have a Fig-6: Cargo Handled at Karachi Port 000 Tonnes 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2001-02(Jul-Mar) 2000-01 Import Export capacity to handle 8 to 12 million tons per The performance of Port Qasim Authority annum of POL and non POL products. The ground breaking ceremony for refurbishment of oil Pier-II has been held on b) Port Qasim 29th April 2003.265 15.053 23. The ship callings have also registered an increase of 25 percent and '2002-03(Jul-Mar) '2001-02 .7 -0.581 23.2 9. procurement of new floating crafts.7 5.3 2.1 -0.613 5.380 6. corresponding period of last year.114 18.4 23. for which a number of projects have been formulated for phased implementation.719 18.330 15.918 6. has been developed to boost box trade at the port. box trade surpassed all the pervious handling targets and registered an increase of more than 75 percent during the first nine months of the current financial year 2002-03 over the same period last year.475 22.44 million tones during the Apart from the above development schemes. Transport and Communications 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2001-02 2002-03 18.4 -3. and expansion of Keamari Groyne Complex. The execution of the projects together with improvement in cargo and ship handling operations would enable the port to effectively meet the future requirement of shipping and cargo handling traffic.32 million tones was handling capacity of Karachi Port has handled during the period under review. the reconstruction of Oil Pier-II.631 -12. the annual A cargo volume of 12.9 10.March 2002-03.981 26.0 -2.5 -3.9 -6.3 0.8 4.692 20.2 Source: Karachi Port Trust The KPT is committed to provide facilities at par with the modern age requirement.011 2.362 4.5 percent.8 7.4 7.762 25.Chapter 14.792 4. showing an the KPT has offered a number of projects to increase of 30.9 3.4 6.570 5.
000 DWT. The PNSC is actively in the market for purchase of 2/3 Aframax tankers which will boost the gross tonnage under Pakistan flag. During the first nine months of the current fiscal year.62 million in the corresponding period last year. c) Gwadar Port The port is geographically located at Gwadar East Bay. e) Dryports Beside the seaports and airports. 356. showing an increase of around 133 percent when compared with Rs. about 460 k. 830. as compared to 415 during corresponding period of last year. It also places much emphasis on supply chain management. The Authority has earned a net profit of Rs. The corporation has handled all kinds of cargoes including Rice.000 DWT Bulk carriers and 25. The basic idea behind dryports proceeds from the premise that trade and industry located far away from sea ports/border posts.74 million is 149 percent higher than the target set for the current financial year 2002-03. Iron Ore. It will be developed in two phases. The port would be capable of handling ships of 30. The port will play a vital role in making Pakistan economically sound. generate employment. It will comprise 10 additional berths. 2005.74 million during July. Evenly important is the fact that the net surplus of Rs. Its main objective is to maintain a commercially viable sea link between Pakistan and its major trading partners.6 million tons of Crude Oil and 0.-March 2002-03. Fertilizer. ending March. The project would give a welcome fillip to economic activity and help to improve the quality of the local people. The port is being built with Chinese assistance and will be completed in three years. Dryports infrastructure also makes it possible to organize an uninterrupted flow of imports and exports from the door of the consignor to the door of the consignee which is very essential for facilitation of the country‘s international trade in the globalized world. should be provided import and export facilities at the doorsteps of the business community in order to enable it to participate in the country‘s international trade more actively and conveniently.m. the PNSC has transported a total of 5.6 million tons of cargo including 4.00 million. d) Pakistan National Shipping Corporation (PNSC) The PNSC is the National Flag Carrier of Pakistan. 830. it would serve as a link between the East and the West.000 DWT container vessels.Chapter 14.579 tons. . It also helps in maintaining and stabilizing freight rates charged by the other carriers and provides a strategic link in the case of emergencies. eight dryports have been established all over Pakistan.826. Transport and Communications stood at 520 during July-March-2002-03. 3. including 3 dedicated container terminals that includes one bulk grain terminals with capacity handling vessel upto 100. The fleet strength of the PNSC during July-March 2002-03 was 13 vessels with a deadweight capacity of 229. Besides. The long term prospects for the company appear to be reasonably good. The port would step up trade and development activities. Estimated revenue was approximately Rs.000 DWT and two oil berths for vessels upto 200. and help attract investment.23 tons of Rock Phosphate. operation of inland container depots (ICDs) also gets facilitated in the vicinity of dryports which makes it possible to reduce the cost of import and exports. the accomplishments are equally parallel. The Phase-II will be implemented under BOT basis. On financial account. from Karachi and has immense strategic and political significance. Coal and Wheat.
Pakistan Railways established dryports at Multan and Peshawar in 1986. The decade of the Seventies was spent in watching the progress of Lahore dryport project which left much to be desired in its operational success.7 15.1 -11.483 % change 6.562 65.917 78.6 6.551 13. the National Logistic Cell (NLC) established the second dryport of the country at Hyderabad in 1984. The basic problem was inefficient transport of dryport cargo from Karachi to Lahore. and operational guidelines.a region which is also known as the Export Triangle of Pakistan. Transport and Communications The proposal for dryports in Pakistan was first mooted by the Federal Ministry of Industries in 1967. Table 14. Table – 14.975 100. enabler. which can provide a stable umbrella for growth.8 12.Chapter 14. and promoter of the IT . As a result.8 -8.603 130. the enlightened exporters of Sialkot established the first-ever dryport facility at Sambrial in the private sector on self help basis. Government is according a high priority to this sector. Million) Exports Total value 99.809 Source: Central Board of Revenue E) INFORMATION TECHNOLOGY (IT) Information technology (IT) has assumed unprecedented importance in the global economic arena.3 Custom duty collected value 16. The Lahore dryport was accordingly established in 1973. Afterwards. This dryport was established at the central city of Sambrial to effectively serve the entire triangular region comprising Gujranwala. In 1968. the total value of imports has registered a mix trend.315 71.868 9.785 146. financial.344 73. the Lahore dryport started functioning well. The performance of dry ports shows that the custom duty collected at the dry ports has increased by 6 percent and 5 percent during 199899 and 1999-2000.2 3.781 113. Thus the demand for dryport facilities increased exponentially from almost all the potential cities which had a sizable workload of import and export business. One of the prerequisites for ensuring sustained growth of the industry is the provision of a definite framework consisting of policy.7 indicates the performance of dry ports. Faisalabad dryport was established in the private sector in 1994.574 80.8 -16.115 % change -6.7 Performance of Dryports Fiscal Year Imports Total value 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2002-03 85.343 17.1 11. In 1985. The Ministry had proposed to establish inland dryports at a number of upcountry destinations. the Lahore Chamber of Commerce and Industry demanded assignment of priority to Lahore for establishment of the first dryport in the country.323 18. legislative. the collection of custom duty has declined by 9 percent and 16 percent during the 2000-01 and 2001-02 respectively. Gujrat and Sialkot . In Pakistan. the government is the main facilitator. at Quetta in 1987 and at Chaklala (Rawalpindi) in 1990. respectively.257 % change 0. With the introduction of National Logistic Cell (NLC) in the transport sector in the early Eighties.0 4. Thus. On the other side.147 16. However.8 115.2 (Rs.
Projects like computerization of arms licenses. Multimedia Platform: The project will set up a Multimedia Asset Management system capable of storing. PSEB has implemented a pilot project for industrial automation. crime several focused areas: (i) E-Government. 4 IT parks have been established in the public sector. Pakistan Computer Bureau is being strengthened to provide technical assistance and bring uniformity in the architecture of nation wide applications. In these IT Parks. A broadbased involvement of the key stakeholders is a must for its sustainable development. The new developments in the IT sector are given in Box-2 control and FIR online are under implementation. better productivity tools for conventional industry and employment opportunities for IT professionals. (ii) IT Industry Development. internet and cable television channels. Human Resource Development: Infrastructure Support for Degree and Post Degree Level IT Education Educational Intranet: Developed to provide high speed connectivity to 56 UGC recognized universities. An internship project has been implemented to enhance the skill of young graduates and establish a better linkage between IT Industry and Educational Sector. A project has been initiated by E-Government Directorate to train probationary officers in the field of IT. high-speed bandwidth is brought to the premises. This would enable officers to make use of the tools of IT to increase efficiency. Transport and Communications sector. (iii) IT Education at Schools/College Level and (iv) Targeted IT HRD Development as per Market Request. compiling and content over digital satellite broadcast television. computerization of registration. data network within the building is set up and managed and space is rented out at affordable rates. ATM network has been provided to facilitate low income federal government employees. The vision of the Policy is to harness the potential of Information technology as a key contributor to development of Pakistan.Chapter 14. PSEB has implemented ISO 9001 certification project to improve the product quality of IT Industry. Web sites of 34 Ministries/Divisions and 3 special purpose web sites have been developed and connected with the portal. IT Industry Development Program: Pakistan Softwear Export Board (PSEB) has organized exhibitions in collaboration with ITCN to promote software industry of Pakistan. Core IT Policy strategies have been proposed under BOX-2 E-Governance: The first ever Citizens Portal of the Government of Pakistan has been launched on test/trail basis. IT Education at School & College Level . Seven Ministries are to be connected on Local Area Network (LAN). The main outcomes of the project are demand for IT Industry.
The IT action plan is an integral part of the IT Policy. By the end of February 2003. 23 F. Cadet College Sanghar and Military College Jhelum have been facilitated with the computer labs and other resources. Financial year 2002-03 is a milestone in the history of E-government in Pakistan.G Colleges and 20 Cantt Garrison Schools through a project. Employees at Islamabad/ Rawalpindi and 6800 Provincial Govt.pakistan. necessary law to encourage and protect electronic transaction. prepare standards for IT sector activities and provide technical support to different provincial and federal organizations. 536 students trained in Quality Control. c) Improve quality and quantity of IT students at university level. 25 PAF Schools and Colleges. b) Provision of legal infrastructure viz. It aims at promotion of information and communications technologies (ICT) through development in the following areas: (i) Provision of ICT infrastructure in the country. 760 students trained in Legal Transcription. i) Electronic Government Directorate: The government has set up an Electronic Government Directorate (EGD) under the Ministry of IT & Telecommunications. more than 1. ii) Pakistan Computer Bureau: (ii) (iii) Pakistan Computer Bureau completed the training of 6000 Federal Govt.3 million viewers had visited the portal. EGD will prepare and implement all e-government projects at federal level. 1104 students trained in Medical Transcription. Encouraging e-Commerce.gov. employees at their . PGD program will be arranged for students from Baluchistan.Chapter 14. The first ever Information and Services web portal called ―PAKISTAN GOV‖ (www. Transport and Communications Computer laboratories have been set up in 25 Federal Government Schools and Collages.pk) was launched in October 2002. d) Encouraging local IT Industry by providing incentives and job opportunities. a) Provision of sound physical infrastructure like telephone and internet system. Targeted IT HRD Training Professional training will be provided to 1400 Inter-Networking (Cisco) engineers. Computer labs have also been established in two colleges for men and two colleges for women in Northern Areas. Introducing ICT in government organizations so that quality of public services is enhanced through efficiency and speed of delivery of services and bringing in transparency in government operations. Computers labs and other resources have been provided to Government college Lahore and Lahore College for Women.
350 cities/towns/ villages have been provided Internet facility. The International Software . The Project ―Standardization of Pakistani Software Industry-ISO‖ has been launched for the certification of 80 software companies.Chapter 14. The PTCL is provider of infrastructure for connectivity for internet system providers (ISPs). For promotion of Information Technology. long distance media. software exporters. 10 to 68 percent on Lower than one MB.T. and 70 percent on domestic lease circuits. the PSEB has launched a program. It is a one stop information source to the foreign and local investors in the IT sector. In addition to this. digital radio systems. New areas of Information technology are being discovered and software companies are diversifying their businesses. It has international Gateway exchanges at Karachi and Islamabad. Higher Secondary Schools and Intermediate Colleges in all the Provinces including AJ & K‖. in district administration which will initially include the computerization of Land Records and Vehicle Registration etc. the export of software has reached $ 14. The company can have the facility within 48 hours. A few selected Districts will be taken up as pilot project. upto March. Optical Fiber Cable Backbone. Transport and Communications Provincial Headquarters. The PSEB is managing Software Technology Parks (STPs) in major cities of Pakistan.1 million in 2001-02. the talent in Pakistan is looking for assistance. 1. Market is continuously expanding and taking on new dimensions. the export of Software stood at $ 18. compared to 850 cities/towns/villages in June 2002 showing an Pakistan Software Export Board (PSEB) is undertaking various initiatives for the development of IT industry capability in Pakistan. 24 hours technical support is also available for the smooth execution of the IT business. According to IT Division. Training of Govt. namely ―Automation of Domestic Manufacturing Industy‖ to automate 100 manufacturing units from various industries sectors. subsidiaries routes. satellite communications and alternate arrangements.6 million. officials is a regular activity of Pakistan Computer Bureau which also extends advisory services to government department for selection of hardware/software and related matters.T. Its tariffs have been reduced by 25 percent on international calls during 2001-02 and are expected to be reduced further in 2002-03. 2003. The PSEB has also set up a one-window operation ―Business Response Unit (BRU)‖. It is working on the standardization and quality improvement programs. In the domestic market. educational institutions. data network operators. International communication revenue is an appreciable source of PTCL earnings. During JulyFebruary of the current financial year 200203. (ii) The introduction of I. support and resources to implement their ideas in the IT field. Teachers in computer science and establishment of 1500 Computer Laboratories in High Schools. Tariff has been reduced by 60 percent on international IP bandwidth. universities. showing an increase of 10 percent. On the other hand. Pakistan Computer Bureau is undertaking a number of projects: (i) ―Provision of 2000 I.2 million in fiscal year 1999-2000 has reached $ 20. The STPs are equipped with the top class Internet bandwidth facilities. iii) Pakistan Software Export Board (PSEB): iv) Pakistan Telecommunication Company Limited (PTCL) The PTCL network consists of 99 percent digital switching system exchanges. corporate customers and other users.
7 percent maintenance of telecommunication system of the gross revenue. multi-services switches. The Mobile Phone Service (Ufone) has been launched in 60 cities/ towns and highways. So far 9. The Authority is responsible for regard.e Faisalabad. for card payphone and It service and cellular mobile service it was promotes and protects the interest of users of from 4 to 2 percent and 4 to 1. Transport and Communications increase of 58. Islamabad.978 which is expected to increase further even in future. Multan. Pakistan Telecommunication network is expending each year. comprising of high-end routers.6 million as against 3. . Pakistan under respectively. Lahore and Karachi.8: Mail Boxes has been installed at 10 major Table 14.73 million cards have been floated in the market.5 percent telecommunication services. Quetta and Sialkot. the intelligent network system at Islamabad. The PTCL has installed Internet Exchanges (PIE) at Rawalpindi. thus providing telephone access to rural and urban communities in record time. the PTA has Telecommunication moved forward to encourage the telecom Authority is promoting the telecom sector operators and transfer of technology. since its commissioning. Total telephone lines installed by March 2003 were 4.8 percent. The details of bandwidth with capacity and total A system with a capacity of 110. Hyderabad.29 228.000 numbers of ISPs are given in Table 14.62 63. Lahore and Karachi has met tremendous success.8 Bandwidth Capacity Bandwidth capacity Mega Byte 94. showing an increase of one million telephone connections or 27. Software exporters and educational institution/universities working in the country.65 70. In this since 1996.In the Year 2002-03. the mobile commitment is now ready to deregulate the phones have reached 2 million by end of Trade Organization provision of telecom services. Promotional traffic has been introduced for ISPs. reduction in royalty of Internet regulating the establishment. an Internet Service provider (ISP). firewalls and proxy services etc. The PTCL has launched its domestic and International Pre-Paid Calling Card Service (Intelligent Network) in the country during 2000-01. Lahore. Similarly with the launching of World (WTO) prepaid connection of U-Fone. is a subsidiary of the PTCL.8 percent. cities i.56 Name of station Karachi Lahore Rawalpindi Total Total number of ISPs 81 60 66 207 Source: PTCL v)Pakistan Telecommunication Authority (PTA) Pakistan whole of Telecom sector. Deregulation policy is in final stages and to be announced shortly . operation and services provider (ISP) from 4 to 0.Chapter 14. Paknet. Gujranwala. Peshawar.6 million up to June 2002 last year. Karachi. Its customer base is 425.
It provides exchanges are digital. Makran Coast to bring the people of the area 2002.861 licenses for telecom services phones at the premises of its designated up till March 2003. electronic information service slot of 380. which are linked to an efficient and reliable solution for the each other through Optical fiber (OFC) management of EWSD nodes.000 installed lines during effectives of over load & faults in the 2003-04 which will provide a total number of network. showing a growth of 66.2 million upto June.000 working connections. introduction of new services technology advancement in in terms of The Corporation will set in own gateway the sector exchanges to provide international including the broadband Internet services connectivity to its designated customers and General Packet Radio Services (GPRS) during 2003-04 and will introduce/provide facility. video offices. The PTA customers. media and digital radio system (DRS). 125 for Internet services Communication Network has started infrastructure communication network services 20 and 25 governance initiatives of the Government licenses were issued respectively. which also include Internet calling cards for exclusive use by its connectivity on the mobile phone . The Corporation plans to expand the Network manager reduces the negative network to 100. as against 1. vi) National Telecommunication Corporation (NTC) National satellite.7 percent. The Corporation is also in process for establishment of Optical Fiber back bone on F) ELECTRONIC MEDIA . allocated spatial conference 1.000 working connections. All NTC network resources and capacity. Transport and Communications March 2003. During the year 2003-04. 153 licenses for card customer. The to the National mainstream of development. an estimated 1000 designated subscribers of NTC have also been planned to be covered through wireless Local loop. the PAKSAT has been placed at 125 and 25 data communication network the telecom services of the country through services. The PTA during 2002-03 which is in the process of has also issued 8 Audio tax licenses. of the 78. on real time basis. It will also set up pay card has issued 2. 6 expansion and provision of Internet facilities satellite license.Chapter 14. provider. for non-voice and vice data provide NTC’s state-of-the-art support Data to efor payphone service. 12 trunk radio licenses and 9 to federal ministers and their regional store & forward fax service license. Network Telecommunication management system is responsible for the Corporation has an installed capacity of management. through efficient utilization of 80. exchanges and the surrounding network. In December 2002.000 lines with 60.
The PBC has a total 25 broadcasting stations in all parts of Pakistan. ________________________ . The PTV has started 24 hours transmission on PTV-1 with effect from 11th February 2003. in Sindh at Umerkot and in AJ&K. education & entertainment to the people. regional and other languages of Pakistan as well as 15 foreign languages in its Home. b)Pakistan Broadcasting Corporation (PBC) Pakistan Broadcasting Corporation (PBC) has been playing a very important role in promoting national integration. The Central News Organization (CNO) puts 142 News Bulletins of the different durations in 33 languages daily keeping the listeners informed for latest happenings in the country and around the world. current problems and development as well as knowledge of the world at large. 267 post offices across the country.Chapter 14. projecting Government policies at home & abroad. To meet the modern requirements of rapid communication the Pakistan Post Office has Planned to modernize all services functions by providing integrated computing facilities at all GPO‘s/ HO‘s. listeners at home and abroad round the clock in national. The Government has desired to extend the TV signal by setting up Re-broadcast Centers in Baluchistan at Noushki (Chaghai). Neela Butt and Mirpur. providing information. Bagh. World and External Services with the availability of its programmes in 56 countries of Asia. Radio Pakistan has launched an exclusive entertainment channel FM-101 since 1998. FM services are also available on Motorway. Qilla Saifullah and Ziarat. This is in addition to news on the hour every hour and views and current affairs available round the clock on PTV-World. Transport and Communications Radio Pakistan broadcasts programmes for its a) Pakistan Television Corporation Limited (PTV) PTV is providing quality entertainment. heritage. G. The department is providing various traditional postal services to the consumers at a reasonable price. every day and every where. Wadh. PAKISTAN POST OFFICE Pakistan Post Office is a state enterprise dedicated to providing wide range of postal products and public services. Bhimber. A TV Station at Muzaffarabad and 7 RBC‘s at Kotli. Plandri. Its vast network of post offices in every nook and corner of the country is of crucial importance. The PTV is operating with three Channels in the country. It is the premier national postal communication service holding together a vast country with a large population. As a true emblem of federation. All big cities of the country are linked in the network. it is committed to serving every one. education and information to inform and educate the people through wholesome entertainment and to inculcate in them a greater awareness of their own history. The Re-broadcast Centers are extending TV Signal to remote areas of the country. It provides postal facilities through a net work of 12. Rawala-Kot. Africa and Europe.
0 percent respectively. Total primary energy supplies measured in terms of tones of oil equivalent (TOE) in 2001-02 were 45. over a billion people in the industrialized countries use some 60 percent of the world‘s commercial energy supply. average consumption of the petroleum products showed upward trends. However. respectively over the corresponding period of last year.1. In fact.9 to be provided with a minimum amount of goal. which wide fluctuation in its annual consumption. The consumption of gas and coal during the first nine months (July-March) of the current fiscal year have increased by 7.2 percent. Energy At present. agriculture. Similarly.8 percent and 43.8 percent and 5. gas. has recorded an annual growth of energy at an affordable price. It contributes. Sector showed declines in the use of petroleum products to the extent of 12. Energy 15. To achieve this showed supplied at least cost.6 percent.5 percent per annum. the household. it developing countries and a large number of increased by 3.Chapter 15. PETROLEUM PRODUCTS During the first three quarters of the current fiscal year. in particular. 11. efficient energy 1. . On average. The power and gas sector accounts for 3. 16. for example. while 5 billion people living in the developing countries consume the remaining. The poor.3 percent. A. However the consumption of coal. and declined in demand of aviation fuels (JP-4 & JP-1) as airline industry faced decline in traffic. electricity and coal provide 41.9 percent.6 percent of GDP in 2001-02. the energy consumption has increased by 4. the energy needs to be produced and percent. respectively of the total primary energy supplies. petroleum and coal. Many of these people live in the During the last twelve years (1990-91 to 2001-02).2 million. and reduce pollution and environmental pressures. need consumption of electricity increased by 4.3 percent. the Energy Consumption industry and power sectors have recorded Energy sector in Pakistan comprises power. for a variety of reasons including the availability of alternative and relatively cheaper fuels in the form of natural gas and LPG. Table 15. the them are poor. to slow down population growth.2 percent and 4. natural gas.6 percent per annum. 42. and other Govt.2 percent only. As regards the consumption of gas. The oil. The annual trend of energy use plays an important role in the social and consumption since 1990-91 to 2001-02 is given in economic development.
265 281 287 308 269 250 269 245 249 293 % Change -7.6 -8.2 5.7 -3.9 1.6 2.107 6.648 16.328 % Change 1.624 16.T) 3.960 15.647 17.983 12.158 3.2 and Table 15.1 11.0 2.3 9.369 1.1 Annual Energy Consumption Petroleum Products Fiscal Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Avg.526 6.7 -7.2 14.6 2.4 -2.584 50.0 3.0 13.Chapter 15.2 -13.328 2.6 1.416 2.619 6.159 3.1 5.5 5.461 3.0 . Energy substantial increase in the consumption of diesel.225 13.168 3.148 1.3 6.619 41.841 5.601 15.4 6.7 12.4 7.308 % Change 3.631 511.799 607.9 -11.338 486.890 635.775 3.228 % Change 11.2 Consumption of Petroleum Products Year 9091 9192 9293 9394 9495 House holds 944 614 622 590 585 596 510 499 493 477 % Change -15.1 6.141 2.2 -3.081 2.4 16.7 2.8 2.2 Coal (000 M.8 1.1 10.768 17.5 -8.2 12. 4.534 3.6 4.381 39.1 -0.8 -1.6 417 17.434 2.0 7.5 404 -3.7 (000 tones) Other % Govt.034 40.7 14.606 16.2 381 -5.3 -11.058 673.3 -12.9 19.450 Source: Hydrocarbon Development Institute of Pakistan.136 7.6 11. Table 15.786 5.604 % Change -17.3 7.8 6.586 48. LDO and fuel oil.7 376 -1.924 42.744 777.638 3.3 8.364 7.665 624.140 2. Change 328 -17.6 -2.0 1.769 546.9 4.3 27.054 3.864 8.5 2.6 7.7 323 -1.1 9.0 3.0 5.6 8.4 -35.267 3.414 6.493 37.6 12.4 8.8 Electricity (Gwh) 31.054 5.534 33.868 597.5 19.8 0.095 3.5 1.4 8.8 Trans.961 10.(12 years) Jul-Mar 2001-02 2002-03 (000 tones) 9.6 6.215 4.1 8.010 40.8 18.5 357 10.0 13.9 1.5 7.1 7.3.4 0.116 % Change -11.5 6.172 7.7 4.296 45.902 4.9 -2.8 5.2 4.043 3. respectively.960 % Change -0.333 12.9 -14.5 0.1 7.012 13.832 714.788 582.6 -8.7 -0.622 % Change 9. The annual growth in the consumption of petroleum products by major sectors and their relative shares since 1990-91 to 2002-03 are given in Table 15.878 36.480 1.7 5.7 -0.5 357 0 355 -0.099 3.3 346 -8.914 44.4 -2.610 824.572 43.472 2.2 -1.7 6.7 6.0 6.1 Agri.6 5.6 7.653 1.8 3.6 4.4 10.7 Gas (mmcft) 465.9 5.6 Power 2.6 17. Table 15.4 3.889 2.553 3.646 7.5 -2.2 Industry 1.526 550.110 6.8 23.3 -5.
1 percent).2 17.5 -25.924 1. (2.7 -12. Table 15.3 Consumption of Petroleum Products (Percentage Share) Year House holds Industry Agriculture Transport Power Other Govt.8 6.4 transport sector was the largest consumer of the percent). .0 -11. followed by power sector (31.906 -1. Energy 9596 9697 9798 9899 9900 200001 200102 JulMar 200102 200203 451 335 260 228 -5.9 petroleum products and accounted for 47.6 percent).8 -1. industry (12.4 255 226 173 144 -13.3 1.488 6.443 4.442 -9.5 percent).(Table 15.7 0.8 8. percent) and others Govt.305 4.7 -43.228 1.732 4.8 6.0 Source: Hydrocarbon Development Institute of Pakistan.2 -2. agriculture (1.5 percent.158 8.5 372 464 372 212 7. As regards the average sectoral shares.1 -16.019 5.857 5.Chapter 15.612 1. household (4.5 24.4 -16.3).
9 9.7 45.5 46.3 1.3 47. The consumption of gas by power sector increased by 14 percent while industry‘s consumption grew by 10.8 48.5 13.2 47.1 48.0 2. Power sector has emerged as the largest consumer of gas (34.4 gives the annual change in the consumption of gas by various users since 1990-91 to 2002-03.6 5.2 30.9 2.9 2.5 12.0 1. The sectoral consumption of gas in 2001-02 exhibits a mix trend.0 4.8 3.7 1.8 11.3 12.7 32.5 12.7 percent) (Table 15.7 Source: Hydrocarbon Development Institute of Pakistan.2 percent).Chapter 15.6 2.8 46. Table 15.9 44.5 13.9 percent). The power sector is gradually reducing its dependency on imported fuel oil because of its escalating prices.3 3.6 45.3 24.9 10.4 25. industrial (18.4 1.8 percent).8 11.5 12.3 26.9 11.3 1.5 12.5 47.4 2.7 2.2 35. followed by fertilizer (24.1 1.5 15.5 30.5 2.2 31.(12 years) Jul-Mar 2001-02 2002-03 9. commercial (2.3 1.9 2. It may be noted that the share of power sector in consuming gas is rising continuously since 1998-99.6 2.8 37.4 Consumption of Gas (Billion cft) Year House Hold % Change Comm Ercial % Chang e Cement % Change Fertili Zer % Chang e Power % Chang e Indus trial % Chang e .3 2.9 1.9 2.4 1.6 3.5 5.7 36.2 46.2 3.4).6 2.6 1.2 50. B.4 33.6 51. The relative shares of gas consumption by various users during the last twelve years are documented in Table 15.7 percent followed by household (6.5 47.1 2.3 29.5 1.4 3.7 2.3 2. Energy 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Avg.2 4.5 percent).0 37.1 2. CONSUMPTION OF GAS Table 15.7 2.7 2.3 47.9 1. households (17.5 36.5 4.5 1.0 36. The consumption of gas during the first nine months of 2002-03 also exhibits a rising trend.7 2.4 2.7 12.5.9 percent) and cement (1.4 9.6 1.7 percent).
ELECTRICITY CONSUMPTION * 21.2 25.7 7.0 8.3 1.8 21.4 2.8 Commercial 2.6 10.7 2.6 2.0 32.6 and 15.5 4.5 Source:Hydrocarbon Development Institute of Pakistan Consumption of Gas (Percentage Share) Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Average (12 years) July-March 2001-02 2002-03 Households 14.9 17.3 1.6 18.8 1.0 7.3 -33.3 12.4 28.3 -1.5 33.9 25.3 24.4 26.9 1.9 3.3 14.9 2.6 -4.6 00-01 01-02 Jul-Mar 01-02 02-03 6.6 -6.0 -1.3 1.6 17.7 show the position of electricity consumption since 1990-91 to 2002-03.7 0.9 7.8 6.3 13.2 38.9 10.0 1.2 18.0 20.1 18.9 19.5 34.4 8.8 21. On average.4 89 96 103 101 104 111 110 115 121 135 139 151 122 135 2.3 22.7 19.5 17.9 19.5 108 101 119 144 142 150 150 148 167 177 175 178 131 131 -0.2 0.1 6.0 -1.9 39.9 -8.7 0.8 4.1 3.3 12.7 24.7 -0.1 -12.7 2.0 7.2 24.3 12.7 6.9 Cement 2.2 11.3 -7.9 5.5 18.2 37.8 13 12 12 10 7 8 9 12 8 9 8 7 * * 62.7 * 19.8 2.9 32.2 1.8 2.4 18.0 6.2 17.8 23.1 19.Chapter 15.6 0.5 2.1 12 13 14 15 16 17 18 19 21 22 21 22 17 17 10. 2.0 -16.1 Source: Hydrocarbon Development Institute of Pakistan.7 2.5 Industrial 19.2 19.0 -1.6 C.1 18.1 1.2 6.8 36.2 1.1 32.1 18.5 4.9 3. Tables 15.3 26.7 20.0 9.9 17.5 14.5 35.6 5.8 * Included in Industrial Sector.4 4.0 37.1 1. Energy 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 67 71 76 82 97 110 115 134 131 139 141 144 119 127 11.9 7.2 -3.1 3.3 10.9 4.0 2.5 16.0 0.2 20.7 2.3 19.8 18.6 3.4 5.9 19.9 18.0 13. the household sector has been the largest .7 *included in Industrial Sector Table 15.8 25.1 20.8 14.9 33.5 5.8 2.7 -30.1 176 194 187 198 181 186 194 179 184 230 288 315 231 263 4.4 3.3 5.2 Power 37.8 25.4 39.4 2.9 18.5 -2.6 2.0 14.0 19.7 Fertilizer 23.1 6.0 25.8 -11.9 -7.4 29.8 22.3 7.7 2.
1 2.3 5.9 7.0 8.5 12.3 40.2 14.7 7.3 8.6 4.9 0.6 5.9 29.1 4. accounting for 40.7 (Percentage Share) Consumption of Electricity(Sectoral Shares) Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 Average (12 Years) Households 33.1 11.2 14.5 - Other Govt.5 Industrial Gwh 11.6 4.8 -42.3 12.3 3.1 14.3 35.6 3.3 2.2 6.9 6.2 16.1 27.6 Consumption of Electricity By Sectors (000 GWH) House hold Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 JulyMar Gwh 10.8 4.9 45.9 3.: not available Source:Hydrocarbon Development Institute of Pakistan.0 5.1 44.1 10.5 percent) and accurate meter reading.5 3.5 4.1 6.9 16.4 11.5 Industrial 35.5 5. commercial incentive package offered to industrial consumers and (5.6 * % Chang e 11.3 % Change 11.4 2.7 -10.1 37.6 3.5 12.7 percent).8 23.9 0.7 Commercial 6.6 6.5 0.5 percent).3 15.9 10.3 5.6 2.5 2.2 00 23.8 15.4 -18.7 7.1 -0.5 29.4 10.4 -2.0 70.1 2.8 6.8 19.8 0.9 7.8 5.2 7.9 9.3 % Change 5.1 11.9 5.8 9.4 21. 6.4 7.7 5.2 5.5 0.1 12.1 11.8 0.8 1.4 9.7 3.7 4.2 12.8 0.5 0 -19.0 14.6).9 5.1 1.8 18.7 3.4 0.8 19.1 Agriculture Gwh 5.7 1.6 8.1 46.5 7.2 7.0 6.8 -19.8 17.6 8.9 41.9 8.8 17.3 4. (31.6 15.5 2.6 6.9 28.1 percent).0 3.4 13.1 4.6 3.6 27. During the first 9 months of Table 15.2 9.3 6.8 7.5 1.1 2.2 -1.9 5.6 -3.8 3.3 4.1 5.2 2.7 4.6 5.9 12.7 16.2 5.7 0 -2.3 15.4 42. followed by industrial increased due to installation of new connections.1 2.3 13.8 -3.3 6.1 Agriculture 17.0 2.2 -0.9 -0.0 7.5 percent).7 -7.9 31.0 12.7 -3.5 -1.4 2001-02E 2002-03E E-Estimated *Included traction .8 3.4 0. street light (0.2 10.8 1.6 12.6 5.9 8.4 15.8 31.4 15.2 5.6 15.9 8.4 3.0 8.5 Street Light 0.1 9.9 5.7 Other Govt.5 4.9 0.6 29. the overall consumption of electricity has the total electricity consumption.0 13.9 27.4 22.6 36.1 % Change 8.4 3.9 40. other government sector (7.9 14. Energy consumer of electricity.6 17.7 39.9 2.7 33.0 33.8 0 4.8 5. (Table-15. agriculture (14.1 11.1 17.6 4.8 3.0 % Chang e Commercial Gwh 2.1 7.2 12.0 3.8 36.2 2.5 .8 0.9 Street Light (Total) Gwh % Change 297 298 324 378 390 387 224 239 213 212 0.8 47.8 6.0 15.7 percent of 2002-03.5 15.8 5.Chapter 15. Gwh 2. Table 15.
953 34.310 0.9 (3.469 30.2 0. availability.412 7.Tons of oil equivalent E:Estimated Million TOE 28.515 40.0 0.8 30.475 32.0 8.305 0.0 11.290 0.2 4.2 29.2 E-Estimated *Including traction Energy Supply The annual trends of primary energy supplies and their per capita 5.7 5.4* Source: Hydrocarbon Development Institute of Pakistan.309 0.1 5.286 0.4) 0 Per Capita Availability (TOE) % Change Source: Hydrocarbon Development Institute of Pakistan.721 43.264 0.231 0.9 1.3 11.062 38.751 34.223 44.6 (0.746 38.0 %Change 0.311 0.4 10.7 7.278 0.4 2.9 3.6 2.302 0.3 3.5 1.456 45.6 4.Chapter 15.0) 2.4 2002-03 E 42.295 0. measured in tons of oil equivalent (TOE) since 1990-91 to 2002-03 are given in Table 15.5 3.237 33.231 4.0 1.7 7. .304 0.8 and Fig-1& Fig-2 Table 15.4 5.9 1.8 Primary Energy Supply and Per Capita Availability Energy Supply Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2001-02 2002-03 E TOE.403 41. Energy July-March 2001-02 45.8 0.778 36.4 -0.253 0.8 2.
Chapter 15.29 0.27 Fig-2: Per Capita Availability (TOE) .28 0.26 25 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 0.25 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 0. Energy Fig-1: Energy Supply (Million TOE) 0.3 0.32 50 0.31 45 40 35 30 0.
22.3 1.4 48.8 11.9 14.6 53.5 3.5 550.9.9 18.3 -0.3 0.3 1. its per capita capita availability.T) % Change 10.7 4.1 4.0 -1.7 6.0 Petroleum Products (Mln.9 4.1 4.8 7.5 3.4 4.1 3.6 4.8 50.6 Source: Hydrocarbon Development Institute of Pakistan.469 million TOE in 1990-91 to 45.6 6.4 9.1 2.3 01-02 58.3 38.2 8. as against 21.9 16.0 15.5 percent.1 62.0 -10. 2003 were estimated at 302 million barrels in the country. The supply of primary energy by availability recorded a rising trend over the decade of various sources of energy as well as their rates of the 1990s.4 923.7 -0.4 1.3 4.0 2.0 4.7 7.2 12.4 % Change 9. showing an increase of 0. The average crude oil production during July-March 2002-03 was 64.0 744.2 6.7 68.3 13.3 857.1 724.4 52.9 5.5 7.3 51.4 1.7 0.8 690.1 4.T) % Change 8.466 (65%) barrels per day in southern region.9 Composition of Energy Supplies Crude Oil Year Mln.225 (67%) barrels per day respectively.5 -1.9 Electricity (000Gwh) (a) 41.1 0.8 Coal (Mln.8 7.0 0.0 13.3 -9.7 583.1 % Change 13.5 56.1 *: Billion cubic feet a: Gega Walt hour (P)Provisional a) Crude Oil : 13.2 -6.4 4.4 4. The energy 28.4 3.7 5.2 666. which greatly helped consumers meet their increase are given in Table 15.9 59. as against 64.1 -4.6 75.1 10.0 7. but no change in the per the increase of primary energy supplies.1 65.1 72. barrels per day during same period last year.2 3.6 6.5 4.8 700.9 17.5 4.1 5.361 .7 (bcf)* Gas % Change 4.310 TOE or by 22.1 49.6 3.1 02-03P 57.3 3.3 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 Jul-Mar 518.9 4.4 65.7 18.3 11.5 624.907 barrels per day.2 16.6 4.1 4.4 -2.9 16. During the period under review.6 -6.8 percent.4 51.2 52.3 8.2 628.6 697. Because of (July-March) or by 2 percent.1 52.2 4.2 54.4 -6.1 6.7 9.9 -6.6 6.136 (33%) barrels and 43.237 million TOE in supplies have also increased from 33.3 73.7 52.6 53.439 (35%) barrels per day were produced in northern region and 42.Chapter 15. during the same The remaining recoverable reserves of crude oil as of 1st April.8 17. Table 15.9 818.4 3. Energy The supply of primary energy increased from ever-growing annual demand for energy.412 million TOE in 2002-03 0.7 14.4 6.7 50.6 12.751 million TOE in 2001-02 or by 59 percent and per capita availability from 2001-02 (July –March) to 34.9 5.4 48. Barrel s 51.0 45.3 6.253 TOE to 0.7 6.
The average production of natural gas during July-March 2002-03 was 2. and July-March 200203 and corresponding period of last year.11 shows the natural gas production during 2001-02.466 (2) 11311 13341 18 31172 28407 (9) 116 90 (22. PPL. OMV and TULLOW. LASMO.OPI .526 mmcfd during the same period last year. POL.11 Average Production of Natural Gas (mmcft) Company LASMO MGCL OGDCL OPI POL PPL 2001-02 65 410 733 06 46 905 July-March 2001-02 64 411 744 5 46 915 July-March 2002-03 76 427 731 7 40 888 % Change 18.9 (1. Main companies B) Natural Gas As of April 1st 2003.0) .136 8823 1113 8788 2412 July-March 2002-03 22.4) 626 554 (12) 74 64.439 8281 1621 9323 3214 (Barrels per day) % Change 6 (6. Average Production of Crude Oil Region Northern Region .298 July-March 2001-02 21.OMV/LASMO Total: 2001-02 21.648 million cubic feet per day.10. OPI.March 2002-03 and corresponding period of Table 15. MGCL.7) 40.0) (3.10 the last year is given in Table 15. increase of almost 5 percent.8 3. as against 2. Table 15. BHP.500 8976 1299 8915 2310 41798 11451 29639 100 566 42 63.PPL Southern Region . the recoverable reserves of natural gas have been estimated at 28. Production of crude oil during July.3 trillion cubic feet.1) 45 6 33.BHP . showing an currently engaged in oil and gas production activities are OGDCL.84 Source: Ministry of Petroleum and Natural Resources.225 42.BP(Pakistan) .OGDCL .POL . BP (PAKISTAN). Table 15.0 (13.907 0.361 64.Chapter 15.OGDCL .PPL .2 43. Energy period last year.
20.561 209 226 8.6 32 52 62. The government has deregulated the allocation and d) Gas Infrastructure Development Plan. SNGPL and SSGCL have embarked upon gas infrastructure development projects to enhance their gas handling capacity for the transportation of 928 MMCFD gas expected to be available from the new fields. On completion of the infrastructure development project. These infrastructure augmentation plans of SNGPL/SSGCL are being completed in two phases.7 11 136 1136.5 Source: Ministry of Petroleum and Natural Resources transmission capacity of SNGPL will increase from 1050 MMCFD to about 1500 MMCFD or by 42. drilling activities of the public and private sector companies. There are 29 LPG companies.526 2. namely.1 94 89 (5. Energy BP (Pakistan) BHP TULLOW OMV Total: 213 92 30 61 2.4 2.8 Source: Ministry of Petroleum and Natural Resources. including 13 wells of the OGDCL in the public sector.Chapter 15. altogether 52 wells have been drilled.648 4. at an estimated cost of Rs. the . Table 15.3) 27 28 3. also by 42. c) Drilling Activities During July-March 2002-03. As per present Government‘s direction.12 gives the Table 15. engaged in the exploration and development of wells. with achievements for the corresponding period of last year. marketing the indigenous and imported LPG.e.9 percent.7) 26 39 50 5 12 140 21 27 28. This additional available gas would be used mainly for replacement of furnace oil in power plants to save foreign exchange. entailing huge capital outlay i.e. The government is making efforts to ensure availability of domestic and imported LPG at competitive and viable prices in far flung rural areas where supply of natural gas through pipelines is not economically feasible.9 percent and of SSGCL from 700 MMCFD to 1000 MMCFD i. the two gas utility companies.243 million. e) Liquefied Petroleum Gas (LPG) Presently about 1000 tons/day LPG is being produced locally.12 Sector Public Sector (OGDCL) Exploratory Appraisal/Dev Private Sector Exploratory Appraisal/Dev Total: Drilling Activities (Achievement) 2001-02 July-March July-March 2001-02 2002-03 10 6 13 7 3 34 7 27 44 3 3 12 01 % Change 117 300 (66.
The use of this indigenous fuel will help in saving foreign exchange and make positive effects on environment by reducing pollution level. The company‘s remaining recoverable reserves as of December. The government intended to promote CNG in the transport sector as an alternate fuel. g) Performance of Major Oil and Gas Companies: (i) OGDCL Oil and Gas Development Company Limited (OGDCL) is the largest oil exploration and production (E&P) company in the Pakistan. the OGDCL has made eight oil and gas discoveries in Sindh province. 186 metric Table 15.872 barrels of oil/condensate per day and 48.000 vehicles have been converted on CNG as compared to 240. 2002 comprised 10. Energy price of LPG with effect from 15th September 2000 with a view to keep the price at a reasonable level. 731 million cubic feet per day of gas. Incentives for investment in CNG business are being offered to private sector.000 vehicles last year.3 million cubic feet per day of gas. showing an increase of 25 percent. Nandpur and Panjpir gas fields. Qadirpur gas field.613 barrels of oil per day. During the period July-March 2002-03. Initial production testing results gave a combined flow of 2.052 licenses for installation of CNG stations have been issued. The OGDCL‘s average oil production including non-operated JV‘s was 29. These include 358 in private and 4 in public sector. over 300. Since inception to March 2003. The OGDCL has implemented a number of major projects for the developments of oil and gas field including Dhodak gas field. Up to March 2003.13 OGDCL’s Physical Performance tons per day of LPG and 44 metric tons per day of sulphur. More than 300 stations are under construction in the private sector. Pirkoh and Uch gas fields. the OGDCL has drilled 176 exploratory wells and 229 development wells. The physical performance of the OGDCL is given in Table-15.318 barrels of oil per day and 882 MMCFD gas.05 trillion cubic feet of gas and 145 million barrels of oil. As of March 2003. over 150 provisional permissions/licenses for setting up CNG stations have been issued. f) Compressed Natural Gas (CNG) The use of CNG in automotive vehicles is being encouraged to reduce pressure on petroleum imports and improve environment.Chapter 15. So far 362 stations have been established in different parts of the country.13: . More than 1. the OGDCL is producing 21. These discoveries are being appraised to determine their full potential and will help country to save millions of dollar in foreign exchange. Since March 2002.
533 12. the . (iii) Sui Southern Gas Company Limited (SSGCL) Sui Southern Gas Company Limited (SSGCL) covers the natural gas supply to the provinces of Sindh & Balochistan. 13.059 (21. NWFP.4 iv) Sulphur (Tonnes) *Figures in brackets show daily average production. AJK and the Federal Capital.922.780 commercial and 75.944 (186) 300 (67) 160 7 2.906 (20. 1. 1.1 million domestic.897 (755) 50. NWFP. To fill the upcoming shortfall. During the period July-March 2002-03. respectively.054 commercial and 2. The SNGPL has so far supplied gas to 141 towns in Punjab.493 and domestic 1.533.217 (731) 50. Power Sector With the normal demand-growth rate.6 million respectively.No. 2002-03 % Change 3 3 16.083 (11) (49) (44) Source: Oil and Gas Development Company Ltd. Its core activities comprise of transmission & distribution of natural gas. (ii) Sui Northern Gas Pipelines Limited (SNGPL) The principal task of the Company is transmission and distribution of natural gas in Punjab.299 domestic consumers.197) 206.613) 200. Energy July-March 2001-02 S. and 40. During July-March 2002-03. the SNGPL has given connection to 108 industrial. ii) Gas MMcft (3) iii) LPG (Tonnes) 0.984 domestic consumers. WAPDA will face shortages of 500 MW in the year 2005-06 and further to 5.529 MW by the year 2010.621 industrial. bringing the total number of industrial 2. 625 commercial. 38. the company has connected 130 industrial. commercial 17.741 (185) 12 01 43.Chapter 15. Name of Activity No. bringing the progressive total number of customers to 2.315 5. The SSGCL has so far supplied gas to 735 towns/villages of Sindh and Baluchistan.360.654 5. designing and implementing gas transmission & distribution projects and supporting cross boarder pipelines through Interstate Gas Systems Limited while the none core business activities cover manufacturing of domestic gas meters and gas training institute. AJK and the Federal Capital. of Wells spudded i) Exploratory ii) Development iii) Drilling Meterage (Meter) Production* i) Oil (US Barrels) July-March.
One Window facility to be provided at federal level by Private Power and Infrastructure Board (PPIB) for all projects above 50 MW Capacity. Permission for foreign banks to underwrite the issue of shares and bonds by the private . Implementation of projects through solicited and unsolicited proposals. For competitive bidding selection process will involve prequalification. Twelve companies have already shown interest in setting up power plants. For indigenous coal and gas based projects. tariff will be determined through negotiations. having cumulative generating capacity of 1. GOP will guarantee the terms of executed agreements including payment terms. Provinces to manage the investment for projects upto 50 MW capacity. Energy Government of Pakistan (GOP) has announced a Policy for Power Generation Projects 2002 for attracting private investors. The ―Policy‖ has been announced with a view to meet the energy demand of the country through exploitation of indigenous resources. Availability of standardized security agreements. Investor‘s response to the policy is encouraging. For solicited proposals. Permission to issue shares at discounted prices to enable venture capitalists to be provided higher rates of return proportionate to the risk. the provinces would be the main drivers and catalysts for marketing and coordinating projects with PPIB. The main thrust of the policy is on the exploitation of indigenous resources. For projects above 50 MW. unsolicited proposals to be permitted from sponsors in the absence of feasibility studies for the projects. The salient features of the policy are presented in Box-1: Box-1 General/Administrative: Applicable for projects in private sector. For hydel and indigenous fuels and renewable projects.Chapter 15.915 MW promising investment in the country for more then US$ 2 billion. integrated power generation proposals can be furnished. Financial Regime: Permission for power generation companies to issue corporate registered bonds. Hydel projects to be implemented on Build-Own-Operate-Transfer (BOOT) and thermal projects on Build-Own-Operate (BOO) or BOOT basis. public sector and through private-public partnership. issuance of Request of Proposals (RFP) bidding evaluation and award. tariff will be determined through International competition Bidding (ICB) and for proposals on raw sites.
Chapter 15. Energy power companies to the extent allowed under the laws of Pakistan. Non-Residents are allowed to purchase securities issued by Pakistani companies without the State Bank of Pakistan‘s permission and subject to the prescribed rules and regulations. Abolition of 5 percent limit on investment of equity in associated undertakings. Independent rating agencies are operating in Pakistan to facilitate investors in making informed decisions about the risk and profitability of the project company‘s Bonds/ Term Finance Certificate (TFCs). Fiscal Regime: Customs duty at the rate of 5 percent on the import of plants and equipment not manufactured locally. No levy of sale tax on such plants, machinery and equipment, as the same will be used in production of taxable electricity. Exemption from income tax including turnover tax and withholding tax on imports; provided that no exemption from these taxes will be available in the case of oil-fired power projects. Exemption from Provincial and local taxes and duties. Repatriation of equity along with dividends is freely allowed subject to the prescribed rules and regulation. Parties may raise local and foreign finance in accordance with regulations applicable to industry in general. GOP approval may be required in accordance with such regulations. Maximum indigenization shall be promoted in accordance with GOP policy. Non-Muslims and Non-Residents shall be exempted form payment of Zakat on dividends paid by the Company.
Transfer of Complex: The ownership of hydel projects would be transferred to the GOP at his end of concession period. Hydrological Risk: For projects with a capacity above 50 MW, power purchaser will bear the risk of availability of water. Environmental Consideration: The environmental guidelines have to be met as per Pakistan Environmental Protection Act (PEPA).
i) Electricity Generation i) Installed Capacity
The Water and Power Development Authority (WAPDA), Karachi Electric Supply Corporation (KESC), Karachi Nuclear Power Plant
Chapter 15. Energy (KANUPP) and Chashma Nuclear Power Plant are the four main public sector organizations, involved in power generation, transmission and distribution of electricity in the country. The Independent power projects (IPPs)__ the private sector entities are also involved in power generation. The bulk of the installed capacity of WAPDA‘s power system comprising of Northern, Upper, Lower Sindh and Quetta power markets stood at 9,694 MW, hydel 5,009 MW (51.7 percent) and thermal 4,685 MW (48.3 percent) during July-March, 200203, followed by the IPPs (5,816 MW) or 32.8 percent and KESC‘s (1756 MW) or 9.9 percent and Karachi and Chashma Nuclear Power Plants (462 MW). The total installed capacity stood at 17728 MW during JulyMarch 2002-03, there by registering an increase of 0.2 percent. In the total installed capacity, the share of WAPDA system has been 54.7 percent followed by the IPPs at 32.8 percent, KESC at 9.9 percent, and nuclear at 2.6 percent during the fiscal year 2002-03. Within the WAPDA system, the shares of thermal and hydel were 48.3 percent and 51.7 percent respectively. The details are given in Table 15.14:
Table 15.14 Total Installed Generation Capacity
Name of Power Company WAPDA Hydel Thermal IPPs Nuclear KESC Installed Capacity 2001-02 9930 5009 4921 5549 462 1756 % Share 56.1 50.4* 49.6* 31.4 2.6 9.9 100 Installed Capacity 2002-03 9694 5009 4685 5816 462 1756 % Share 54.7 51.7* 48.3* 32.8 2.6 9.9 (MW) % Change (2.4) 0.0 (4.8) 4.8 0 0
Total 17697 * Share in WAPDA system
17728 100 0.2 Source: Hydrocarbon Development Institute of Pakistan hand, the share of thermal has increased from 48.2 percent to 68.7 percent during the same period but it has declined to 65.3 percent in the first nine months of current fiscal year. It may be noted that in 1960 the share of hydel was 70 percent while that of thermal was only 30 percent. The ratio has changed to 58 percent (hydel) and 42 percent (thermal) in 1980. By 2001-02 the ratio has changed to 31.3 percent and 68.7 percent respectively. Since electricity generated through
ii) Electricity Generation The trend in the composition of electricity generation between hydel and thermal since 1992-93 is given in Table-15.15. It can be seen that the share of hydel has continuously declined while that of thermal has been rising constantly. The share of hydel was almost 52 percent in 199293 and declined to 31.3 percent in 2001-02. It has slightly increased to 34.7 percent in the first nine months of the current fiscal year. On the other
Chapter 15. Energy thermal is much more expensive than hydel, therefore, the massive shift to thermal has made electricity expensive in Pakistan. For reducing the cost of electricity, it is essential that we make effort to reverse the contribution of hydel and thermal in medium-to-long-run.
Electricity Generation (Million kWh) Year Hydel Percentage share 51.8 45.8 49.6 47.5 41.1 41.4 41.8 34.3 29.5 31.3 Thermal 19,680 22,960 23,268 25,653 29,924 31,199 31,235 36,972 41,196 41,804 Percentage share 48.2 54.2 50.4 52.8 58.9 58.6 58.2 65.7 70.5 68.7 Total 40,791 42,396 46,126 48,859 50,782 53,259 53,683 56,259 58.455 60,863
1992-93 21,111 1993-94 19,436 1994-95 22,858 1995-96 23,206 1996-97 20,858 1997-98 22,060 1998-99 22,448 1999-2000 19,287 2000-01 17,259 2001-02 19,059 (July-March) 2002-03 15,999 Includes purchase from IPPs.
34.7 30,110 65.3 46,109 Source: Water and Power Development Authority iii) Growth in Electricity Consumers
Fig-3: Electricity Generation by WAPDA
70 60 50
The number of consumers has
23.3 25.7 29.9 31.2 31.2 37 41 41.8
40 30 19.7 23 20
increased due to rapid urbanization, extension of electricity grid supply to unelectrified areas and rural/village electrification. The number of consumers has increased to 13.0 million by March, 2003, as compared to 12.7 million in 2001-02 or by 2.4 percent. Table-15.16 indicates the annual trend since 1992-93 to 2002-03.
23.2 20.9 22.1 22.5 19.3 10 21.1 19.4 22.9 17.2 19
92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02
Consumers by Economic Groups Year 1992-93 1993-94 1994-95 General 7.9 8.3 8.7 Industrial 0.2 0.2 0.2 Agriculture 0.1 0.1 0.2 (Million) Total 8.2 8.6 9.1
Chapter 15. Energy 1995-96 1996-67 1997-98 1998-99 1999-00 2000-01 2001-02 July-March 2002-03 9.1 9.5 9.9 10.4 11.2 11.8 12.3 12.6 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 9.5 9.9 10.2 10.8 11.6 12.2 12.7
0.2 0.2 13.0 Source: Water and Power Development Authority iv) Village Electrification The rural/village electrification programme is an integral part of the total power sector development in order to increase the productive capacity and socio-economic standard of 70 percent of population living in the rural areas. The number of villages electrified has increased to 73,063 by March 2003, as per growth given in Table-15.17 and Fig.5.
Fig-4: Total Electricity Consumers (Nos. Million) 14 13 12 11 10 9 8 7 6 5
92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02
Year 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Target 2,070 4,500 2,000 5,000 4,000 4,000 4,000 1,852 -
Table 15.17 (Number) % Growth 11.6 12.3 8.7 3.9 2.1 1.9 1.6 2.3 2.4 2.1
Realization * 4,824 5,283 6,243 4,957 2,441 1,383 1,232 1,109 1,595 1,674 1502
Progressive Total 45,644 50,927 57,170 62,127 64,568 65,951 67,183 68,292 69,887 71,561 73,063
2002-03 *Including FATA
Source: Water and Power Development Authority
Chapter 15. Energy
Fig.5 Village Electrification (000 Nos).
80 70 60 50 40 30 20 10 0 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02
62.1 57.2 50.9 45.6
69.9 71.6 67.2 68.3
v) Electricity consumption by Economic Groups The sectoral consumption of electricity by economic groups identifies the domestic group as the largest consumer of electricity during JulyMarch 2002-03 by accounting 44 percent, followed by industrial (28.8 percent), agriculture (12.7 percent ), bulk supply (9.2 percent), commercial (5.3 percent) and traction (0.02 percent). Table 15.18 and Fig-6 shows electricity consumption by economic groups since 1992-93 to 2002-03.
Electricity Consumption by Economic Groups Year 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July- March 2002-03 Domestic 35.9 37.2 38.4 40.8 40.5 41.5 43.6 46.4 46.1 45.5 44.0 Commercial 4.2 4.1 4.3 4.6 4.6 4.5 4.7 4.9 4.9 5.1 5.3 Industrial 34.9 32.8 30.3 28.7 26.3 26.0 25.6 26.3 27.1 28.0 28.8 Agriculture 17.9 17.9 17.8 18.4 18.2 17.5 14.3 11.0 11.3 12.3 Bulk Supply & Public Lighting 7.1 7.9 9.3 7.4 10.4 10.5 11.8 11.3 11.3 9.2 (% Share) Traction 0.1 0.1 0.1 0.1 0.1 0.04 0.04 0.04 0.04 0.03
12.7 9.2 0.02 Source: Water and Power Development Authority.
Fig-6 Electricity Consumption by Economic Groups (% Share)
Bulk Supply & Public Lighting 7.1% Agriculture 17.9% Domestic 35.9%
Bulk-Sup.& Pub. Lighting 9.2% Agriculture 12.3% Domestic 45.5% Industrial 28.0%
Industrial 34.9% Commercial 4.2%
2 2.8 25.4 21.8 25. respectively. so that the increasing gap between demand and supply could be minimized. the WAPDA has proposed to install two high efficiency combined cycle power plants on natural gas of 450 MW each at Faisalabad h) Karachi Electric Supply Corporation Ltd.9 25.9 2. Allai Khwar (121 MW). These projects are planned to be completed by 2008.19 WAPDA Power Losses (Percent) Year Auxiliary Consumption 2. Table 15. Energy vi) Power Losses Despite considerable efforts. The policy for power projects 2002-03 has recently been announced by the Government. vii) Power Development Programme The optimal utilization of hydroelectric potential is accorded priority in the overall power development programme.1 21.6 percent during the first nine months of current financial year . planned to be completed in 2006 and 2007.1 23.6 21.7 23.7 2. The projects which will be constructed under the Vision-2025 Programme are Golan Gol (106MW). the KESC generated 6.756 MW during July-March of the current financial year.0 1.1 T&D Losses* 21.1 25. Khan Khwar (72 MW).8 percent during 2001-02 but slightly declined to 25. The transmission and distribution (T & D) losses were 25.8 23.March 2002-03 * T&D = Transmission and Distribution 23.4 24.6 2.0 24. During first nine months of current financial year 2002-03.5 21.5 27. Table 15.4 24.4 2. The KESC is pursuing to seek permission to undertake power projects.2 25.6 Source: Water and Power Development Authority and Balloki. In order to meet the power demand in the coming years. The WAPDA has invoked vigorous technical and administrative measures to improve operational and management efficiency to reduce power losses and thefts.19 shows the annual trend of power losses since 1992-93 to 2002-03.Chapter 15.2 24.381 million kWh from its . 2002-03.6 2.6 Total 23.0 2. the power losses have not been reduced appreciably.3 2.1 2. (KESC) The installed capacity of KESC's various generating stations remained at 1.5 25.9 27.8 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 July. Duber Khwar (130 MW) and Jinnah (96 MW).
D. NATIONAL ELECTRIC POWER REGULATORY AUTHORITY (NEPRA) generated 235. as compared 6. Nuclear Power Energy Pakistan Atomic Energy Commission (PAEC) made a beginning in the field of nuclear power production in 1971 by establishing a 137 MW Karachi Nuclear Power Plant (KANUPP). The KESC‘s T&D losses increased marginally to 39. A second nuclear power plant has been built at Chashma (CHASNUPP) having a gross capacity of 325 MW. Currently. the share of coal in the overall energy mix is less than 5 percent.760 million kWh were generated on gas at the Bin Qasim Power Station. Energy own sources. imports from The total energy made available various agencies. the cement industry is in the process of switching over the indigenous coal from furnace oil that would save 50 percent foreign exchange being spent on import of coal.7 billion kWh. generated 885 million kWh of electricity during July-March 2002-03. i).8 percent from 39.448 million kWh in the same period last year. 28.664 million kWh in the same period last year.6 percent but its expenditure has also recorded an increase of 7. 1. The Bin Qasim Power Station. During July-March 2002-03. the largest power plant of KESC.9 million kWh of electricity. showing an increase of 38 percent. including to KESC system. during the period under review. It would also generate demand of about 2. 30. COAL . compared to 1. with an aggregate capacity of 262.7 billion in 2001-02.Chapter 15. representing more than 14 percent of the total energy supplied to the KESC system. increased from Rs. raising the life time generation to 10.6 percent in the same period.275 million kWh in the same period last year. E.5 million tons coal/annum in the country by 2005. registering an increase of 6. Both the power plants are working according to safety standards set by the Pakistan Nuclear Regulatory Authority.9 billion in 2000-01 to Rs. The KESC‘s income has. has been converted to gas. the KANUPP has The share of coal in the overall commercial energy requirements of the country at the time of Pakistan‘s independence was about 60 percent but with the advent of natural gas in 1952. As a result of this conversion. was 1.005 million kWh during July-March 2002-03. With the pragmatic government policies. the government has decided to enhance the share of coal in the overall energy mix from 5 percent to 20 percent by the end of decade. stood at 9. The successful functioning of KANUPP and CHASNUPP has given the country great confidence and a sense of direction to plan more nuclear units in future in a manner that would progressively lead to a high degree of selfreliance. as against 8. Almost all the energy consumed in the cement industry is now being generated by a mix of imported and indigenous coal. Owing to discovery of large coal field having 175 billion tons resource potential at Thar. showing a decline of 1 percent due to carrying out of major overhauling/rehabilitation works on some of the KESC's units. The energy contributed by these two IPPs.5 percent in the same period last year.232 million kWh.17 MW. the utilization had gradually reduced. after taking into account the auxiliary consumption. The Tapal Energy Limited and Gul Ahmed Energy limited are the two independent power projects (IPPs) which are hooked to the KESC System. however. thus registering a growth of 4 percent.
The Transmission License to National Transmission and Dispatch Company (NTDC) was granted on December 31. Thus the objective is to induce the KESC to achieve efficiencies in delivery and production of electric power. lodged forward looking rate adjustment mechanism. reliable. This licence also provides a road map for the transitional phases of the competitive market structure. In addition the NEPRA has also determined three WAPDA related and one KESC related rate of adjustments under Automatic Tariff Adjustment formula (ATA). The NEPRA has established a Consumer Affairs Division to address the complaints. During July-March 2002-03. designed to provide reasonable return to the ____________________________ . by the consumers against utility companies. 2002. The NEPRA has also determined a Multi Year Tariff formula for the KESC which is a investors in privatized KESC while the excessive returns to be adjusted in tariff reductions in favour of consumers. the NEPRA has determined one WAPDA related and one KESC related tariff petition. The KESC was also granted a generation licence. the NEPRA granted generation licence to three WAPDA successor generation companies.March 2002-03. Moreover during July . efficient and affordable electric power to the country. Energy NEPRA regulates in conformance with the objectives of providing safe.Chapter 15.
ii. v. and the promulgation of environmental legislation. To implement NEAP. institutional arrangements to implement NEAPSP were carried out. The PEPC has approved the National Environment Action Plan (NEAP) for improving the state of environment in Pakistan. iv. civil society organizations. all refineries in the country are supplying lead-free petrol and promoting clean fuels including CNG. the Ministry of Environment. However. In this regard. and the establishment of environmental tribunals. 2002).Chapter 16. Grassroots initiatives. and environmental advocacy groups are included in SPICs. Dry land management conservation. environmental awareness. and water During the fiscal year 2002-03. the representatives of non-governmental sector. called Pakistan Environment Protection Council (PEPC) under the chairpersonship of the President of Pakistan in 1993. legislation been made mandatory for public sector development projects. planning. Ecosystems management and natural resources conservation. Initial Environmental Examination (IEE) and Environment Impact Assessment (EIA) have also . National Environment Quality Standards (NEQS). vi. and development level which gained momentum with the establishment of a high level inter-ministerial and multi-stakeholder committee. remained active during the fiscal year 200203. iii. Energy conservation and renewables. Policy coordination and environmental governance. Pakistan has also revived its environmental commitments during the World Summit on Sustainable Development (WSSD: August 26 to September 4. as well as constitution of various Sub-Programme Implementation Committees (SPICs) etc. Environment and Housing I. During the last decade. and sustainable livelihood by improving the quality of air. water and land with civil society cooperation. Local Government and Rural Development is planning to undertake projects in the following six sub-programs over the next five years: i. Environment The efforts to address the environmental concerns at policy. including the constitution of the Programme Steering Committee (PSC). Pakistan has made diligent progress in institutional strengthening and capacity building of policy and planning institutions. Environment and Housing 16. The major objectives of NEAP are to achieve a healthy environment. Pollution control. To achieve the objectives of the NEAP. the Government of Pakistan signed a NEAP Support Program (NEAP-SP) with the UNDP in October 2001. Under NEAP-SP. rehabilitation and improvement of biophysical environment and enforcement of environmental remained rather slow. The energy sector introduced lead-free petrol and since July 2002. establishment of the Programme Management and Implementation Unit (PMIU).
NEAP can be one of the means to implement Year Cycles/ Rickshaws Total the WSSD commitments. sustainable mountain agriculture. due to their scooters. Motorcycles and rickshaws.1 Index of Motor Vehicles on the Road (1980=100) conservation of biological diversity. To be consistent with National Scooters Environmental Action Plan (NEAP). and 682.8 million to 4. However. but motorcycles and scooters have gone sound management of biotechnology and protection of up more than seven fold in the last two decades (Table 16. causing serious health 1990 311 129 292 impacts. numbers. 32. the total number of motor vehicles 2002 (E) 755 299 644 on the road has jumped from 0. are the most inefficient in the road in thousands were 287. and drought. which is a healthy sign. MOE Note: Base year numbers of motorcycles. environmentally Vehicle Type Motor the oceans. With improved design of new car engines and conversion of The combustion of coal is another main contributor of air pollution. The average compound growth of vehicles in 1999 691 284 581 2000 735 292 627 Pakistan is about 12% per annum.7% of the total vehicles on the road are running on CNG. brick-kilns and domestic. 2001). rickshaws and total vehicles on two-stroke engines. Auto and 1997 598 195 513 industrial emissions are the main source of dirty 1998 641 259 544 air. Since 1998-99.2 Fortunately. Air 1986 228 120 211 Air pollution levels in Pakistan‘s most 1987 243 121 227 populated cities are among the highest in the 1988 261 123 245 1989 284 126 270 world and climbing. Environment and Housing The country assessment report for WSSD focused on the 300. pollution load in many protection of atmosphere. 500 % (WSSD Country Assessment Report. integrated approach to the urban centers has started declining. Over the last 2001 744 295 635 two decades. . The three main uses of coal are power. 1982 131 108 124 1983 147 113 138 1984 180 116 167 Impact of Pollution 1985 202 118 189 a. 1981 113 105 111 water and land are discussed in the ensuing pages. 28.0 burning fuel and contribute most emissions. which cause respiratory 1992 397 145 361 disease – are generally twice the world average 1993 434 158 389 and more than five times as high as in industrial 1994 467 167 414 1995 506 176 445 countries and in Latin America (See Asian 1996 549 185 477 Environmental Outlook. However. planning and management of land resources. combating deforestation development.1). pollution in air. 2002). The levels of ambient particulates – 1991 335 132 310 smoke particles and dust.000 vehicles to CNG.Chapter 16. coal use has decreased gradually for all the three abovementioned purposes.6.0 Source: Sustainable Development Policy Institute million showing an overall increase of more than (SDPI). the rickshaws have only tripled in (E) Estimated. promoting sustainable Table 16.
05%. However. Environment and Housing coal is being replaced by natural gas that should be used Source: Sustainable Development Policy Institute in a sustainable manner and the focus should be to explore renewable energy sources.2 Index of Consumption of indigenous coal by sector (1990-91=100) Year Power 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 (E) 160 190 177 165 1. Table– 16.520. In Pakistan.920 tonnes of waste are generated daily and only 53. and 3785 tonnes for power brick- almost ten fold in 1995-96 due to the ten-fold increase in kilns & domestic respectively.025. b. The average increase in sulphur dioxide (SO2) across all the sectors was twenty-three fold over these two decades. the amount of sulphur dioxide (SO2). Likewise. Moreover. 3.430 1.3 shows the rapid pace of increase in air emissions over two decades between 1977-78 and 1997-98 across the major commodity producing sectors. fertilizers and solid wastes generated in urban and rural areas are other important source of environmental pollution.621 1. which occur when the ratio of use to availability exceeds 40 percent (AEO. Estimated.415 837 773 Sector Brick kilns 101 106 115 99 107 105 93 101 93 95 70 Domestic 180 85 87 85 82 255 53 34 26 26 26 the region. the use of coal in Association indicates that the growth in traffic power sector is gradually decreasing.688 1. Base Year Consumption value was 24. respectively. the use of coal for thermal electricity generation. Similarly. nitrogen oxides (NOx) increased twenty-five fold in the power sector and carbon dioxide (CO2) increased an average of four fold across all the sectors. Even the waste collection system and dumping sites are inadequate.05 a considerable reduction (almost eight time reduction) in 0.408 1. 2001). Water Safe fresh water supplies are at risk in many areas of Pakistan.5 and 0. it increased by 211 percent in impact. over the last four years. the coal consumption in the power sector Note: was steady from 1991-92 to 1994-95 but it increased by (SDPI). Various .5 — 1. the particulate matter in the atmosphere is well above safety levels across all the major industrial cities in the Punjab.2. A study of the Ministry of Environment estimated that 47. Pakistan exceeds the threshold of ―high water-stress‖ conditions. According to WHO guidelines. sulphur in diesel and furnace 1996-97 over 1995-96 and since then there is oil is 1 percent and 3 percent as compared to 0. As indicated in E: Table-16. Table 16.603.6 percent are collected while the rest lies around.5% to 0. for and dirty fuels have already had an adverse domestic consumption. The ministry of Petroleum and Natural Resources has planned to phase out sulphur from diesel by first introducing the sulphur content from 0.Chapter 16. carbon monoxide (CO) and Ozone (O3) in the atmosphere are well below danger levels. A study by the Pakistan Medical However.0 percent for other countries of — its usage for domestic purposes. run-offs from chemical insecticides.
Chemical Oxygen Demand (COD). with excessive amounts of salt in the water rendering it impotable. the water is safe. tanneries. sugar. the actual presence is millions of times greater than acceptable levels. Environment and Housing estimates have been made over the years in connection with water quality.) 1400-9800 800-1680 800-8500 100-1100 Table 16. organic. A study conducted by the Sindh Environmental Protection Agency (EPA) indicates that the industrial pollution levels are higher for major industries in Pakistan.4. The effluents are way above than NEQS on all account including Biological Oxygen Demand (BOD). The irrigation run-off feeds into surface water and also seeps into sub-soil waters. Total Suspended Solids (TSS) and Total Dissolved Solids (TDS).A 53429 982 N. toxic metals. and agro-chemical pollution in the form of fertilizers and pesticides run-off from agricultural lands. Untreated industrial effluents and untreated disposal of solid wastes intensify the problem.A N.) 38000 9104 9680 17300 .A 39098 40 N. the counts are much above the NEQS across the board and for chemical oxygen demand (COD). textile. Industrial pollution levels and National Environmental Quality Standards are detailed in Table.16.A Power 3640 4 3 53062 996 76 Domestic 16601 5 N. including chemical.A Commercial 1726 11 N. The National Environmental Quality Standards (NEQS) are used as a reference point to compare how the average quality of water fares on various parameters. they are above the NEQS for Ravi and the Hadyara Drain.) 2300-18640 1020-2367 1610-16500 200-1896 TSS (mg/Tj) 950 298 1900 2850 TDS (mg/I. As crops do not utilize all the chemicals. fertilizer and oil and ghee. for which traces should be zero in drinking water.A 4261 25 N.A 6368 40 N. On most counts (including temperature.Chapter 16. and other polluting industrial discharges. Table 16. The growing incidence of salinity also contributes to the deteriorating quality of ground water.4 Industrial Pollution level COD (mg/I. Chemical Tanneries Textile Sugar BOD (mg/I.A Agriculture 845 5 N. total dissolved solids and biological Oxygen demand). pH content. Water pollution has three main sources: bacterial and organic liquids and solids from domestic sewage.3 Estimated Air Pollutants from various economic sectors Sector 1977-78 1997-98 CO2 SO2 NOx CO2 SO2 NOx Industry 12308 19 N.A Not applicable Source: Sustainable Development Policy Institute CO2 Carbon dioxide SO2 Sulphur dioxide NOx Nitrogen Oxides However.A 18987 105 N. In terms of fecal coliform. tubewells and pumps draw this up in turn as source of drinking water.A Transport 7068 52 N. acidic. in terms of total suspended solids (TSS).
Although Pakistan has limited area under forest cover. Pakistan comprises 79. Deserts have acute problem of shifting sand dunes and salinity. It has been pointed out in the report of Sustainable Development Policy Institute that Baluchistan and NWFP. The cropped area registered about 19 percent increase from 1980-81 to 1997-98. 24. while 9.04 million hectares in 1997-98 to 22. Of the total reported area. The recent trends indicate that Pakistan is approaching its physical limits. however the overall increase in the forests area in 2001-02 is higher by 10. The trend to sow the cultivatable area more than once is increasing. reduction of sedimentation in water channels and reservoirs and maintenance of ecological balance. and illegal removal of vegetation cover. i. of which 59. The area under forests has increased steadily since 1990-91 with little fluctuations.Chapter 16.71 million hectares in 2001-02 indicating an increase of 17.71 million hectare in 1990-91 to 6. Barani lands are subject to heavy soil erosion.5). due to heavy soil erosion. The arid coastal strips and mangrove areas are under increased environmental stress from reduced fresh water flows. loss of soil fertility. approximately 22.1 percent over 1990-91 (Table-16. regulated flow of water for irrigation and power generation. However. Underground water resources in western dry mountains of Baluchistan are shrinking due to overexploitation of the meager quantity of water for horticulture and crop cultivation. The impact of land degradation varies among different geographical regions of Pakistan. which is resulting in environmental degradation. about one percent each year..15 million (ha) is total cropped area. have only 6 percent of their land protected while Punjab has 16 . which require more protection. sewage and industrial pollution and over exploitation of other natural resources. biodiversity and reduction in land productivity. Environment and Housing Fertilizer Oil and ghee NEQS BOD COD TSS TDS 400-610 460-1470 80 860-1650 9720 1260-3280 576 15462 150 150 3500 Source: Sustainable Development Policy Institute c. =Biological Oxygen Demand = Chemical Oxygen Demand = Total Suspended Solids = Total Dissolved Solids Land Pakistan is one of more than 100 countries of the world affected by desertification. wild life sanctuaries or game reserves while a rough percentage recommended by the experts is 12 percent. while it decreased from 23.15 million (ha) is culturable waste. and area sown more than once increased from 5.45 million has been surveyed. primarily due to improper land use by crop cultivation.61 million hectare (ha) of land. livestock grazing. thus reducing the capacity of power generation and availability of irrigation water.e.5 percent. these reservoirs are silting up. yet 11.36 million (ha) is not available for cultivation. Forests play an important role in land conservation.25 percent of the total land area is protected as national parks. Forests are the lungs of any country. The irrigated areas are infected with twin menace of water logging and salinity. resulting in the indiscriminate use of chemical fertilizers and pesticides to grow more out of already degrading land.15 million ha in 2001-2002. North mountains are the major source of water for country‘s two major reservoirs: Tarbela and Mangla Dams.
61 3.3 0.1 Government has imposed a ban on the import of used ODS-based equipment.8 0. Agriculture and Livestock. Pakistan as signatory to these international protocols and conventions. % Increase in 2001-02 over 1990-91 Source:Ministry of Food. Under the Montreal Protocol. currently the real issue is not the amount of land demarcated as a protected area but the poor management of the areas already protected.6 5. Institutional Strengthening.60 3. which will be implemented with the technical and financial assistance of developed country parties to the Convention. % Increase/ Decrease 0. major projects are under implementation in the following programs areas. the Ozone Depleting Substances (ODS) based industry such as Chloro Floro Carbons (CFC)) under renovation and consumption of ODS will be eventually phased out by the year 2005.3 -0. Table 16. which is largely due to lack of in-country capacity and partial fulfillment of commitments by the developed countries. Status of Pakistan in global and regional partnership on environment To become join signatory international to many efforts for conservation of natural resources.5 Forest Area (Ml. Capacity building of the project implementing agencies and other .3 -0.60 3.0 -0.45 3.77 3. Several projects aiming at ―mitigation of climate change‖ and ―adaptation to changing climate‖ are in the pipeline. Some initiatives have been launched under the UN Convention on Biological Diversity and UN Convention on Desertification such as preparation of Biodiversity Action Plan (BAP) and Desertification Combat Action Plan. Hectares) 3. Building.Chapter 16.46 3. Mass Awareness Capacity Institutional strengthening is an on-going process and has been made an important component of all development projects in environment sector. However.48 3. Pakistan is also responding to UN Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Framework Convention on Climate Change by preparing national Green Houses Gases (GHG) inventories. For Pakistan.81 10. Pakistan has international Conventions/Protocols/Agreements. is meeting various obligations with the technical and financial assistance of developed i.58 3.1 countries.47 3.78 3.9 4. Environment and Housing percent protection. and maximum duties are levied on import of new CFC based equipment.3 1.60 3. Environment Sector Programs/Projects During the fiscal year 2002-03.3 0. the pace of implementing international obligations is not up to the mark.
Environment and Housing functionaries involved in policymaking.4 million. The Revolving Loan Fund worth US$ 3.12.4 million. The project has not yet started because ADB has not released the funds. 14 acres of nurseries have been raised. improvement of environment and uplift of socioeconomic conditions of people i.4126.96.36.199 million.11 million have been utilized against PSDP 2002-03.220. During the current fiscal year. ii.30. appropriate land use. However.15. soil and water conservation. iv.81 million were allocated to the Fuel Efficiency in Road Transport.168..9 million till March.32. During the fiscal year 2002-03.18.0 million were allocated to conclude the ongoing activities towards achievements of afforestation targets. Rs. Tarbella Watershed Management Project sponsored by Ministry of Environment is an on-going project at a total cost of Rs. Fuel Efficiency in Road Transport The Ministry of Environment/ENERCON is implementing ―Fuel Efficiency in Road Transport Sector (FERTS) Project at a total cost Rs. 2003. Ministry of Water & Power is implementing another watershed project named ―Mangla Watershed Management Project‖ at a total cost of Rs. A total of 15 digital tune-up stations have been established in four provinces. . extension of forests. to which Rs.2 million until March. Industrial Efficiency and Environmental Management Sector Development Program The project is designed to undertake a comprehensive study and analysis of environmental impact and issues in the industrial sector including status of National Environment Quality Standards (NEQS) implementation. Rs.230.11. Forestry and Watershed Management A mega project in forestry sector.689.e. The main objectives of the project include. named ―Rachna Doab Afforestation Project‖ started in July 1995 at a cost of Rs. Until March 2003.5 million to this project. During 2002-03. poverty alleviation. an amount of Rs. The project was approved by the CDWP in September 2000 at a capital cost of Rs.Chapter 16.60. Rs.05 million.00 million to be financed by the Technical Assistance of the Asian Development Bank (ADB). The NGOs and other environmental pressure groups have largely undertaken mass awareness campaigns. The project aims at improving fuel efficiency and curtailing noxious emissions from Transport Sector through digital tuning of gasoline and diesel vehicles. During 2002-03. iii.0 million were allocated to this project and about 3640 acres/avenue miles of planting/afforestation have been completed with the total expenditure of Rs.00 million in foreign exchange has been allocated in the PSDP 2002-03.2 million were allocated. The UNDP is providing grant assistance worth Rs. 2576 acres planted.0 million was allocated during 2002-03. 7086 acres afforestation maintained and 189 training/exchange visits have been conducted with the total expenditure of Rs. Specific PSDP project include ―Strengthening of Forestry Wing at the Federal Level for sustained monitoring of the implementation of Forestry Sector Master Plan‖. Rs. 2003. and monitoring of environmental activities has been an important area of investment by different donors. for which an amount of Rs.34.0 million has been established for financing purchase of tuneup equipment. law enforcement. planning.
3 million housing units in the country as compared to 12.2 (87.3 percent in the rural areas.6) 0. According to the 1998 census. The percentage of owned housing units were higher in the rural areas compared to the urban areas.4% for 2010.6) (9.0 million or 10.6. as reflected in Table 16.2) Note: The figures in parenthesis are percent shares 13.2) 1. Environment and Housing II. 1.6 (80. The projected rate is 45.3 percent in urban areas.7 million or 9. The current trend suggests that Table 16.6 million or 80. which means that every third Pakistani is living in a city or town.Chapter 16.0 percent rented.2 percent rent free.2 (100) (100) 11.2) Source: Population & Housing Census 1998 On the basis of the World Bank‘s recommended occupancy rates of 6 persons per house.8) iii) Rented 1.1 6.4 0.3 million) housing units.3 (100) ii) Owned 15.0) iv) Rent Free 2.7 (9. Housing is one of the fundamental human needs as every family requires a roof. attesting to the high rate of urbanization. 67. However. Towns and cites with a population above 100. nearly 15. about 32.2 in urban as compared to only 2. the total number of required housing units in the country would be roughly 24. Of the total (19.4 4. based on the population of 149 million at .3) (23. showing an increase of 53.6 (10. the percentage of rented houses was significantly higher at 23.7 percent were in rural and 32.6 million enumerated in 1980.8 percent were owned.2 percent. and 2.3 1.000 increased from 29 in 1981 to 50 in 1998. The number of cities with a population over a million people increased from three in 1981 to seven in 1998.1) (67.5% of Pakistan‘s population lives in metropolitan or urban areas. Provision of house to every family has become a major issue as a result of rapid population growth and massive rural to urban migration. Housing Units by Tenure (In million) Census 1998 Tenure i) All types All Areas Rural Urban 19.0 (10. there were over 19. Housing Sector urban population is increasing at a faster pace than the total population which is likely to continue in the future as well.6 According to 1998 Population and Housing Census of Pakistan.4 (2.8 million by the end of June 2003.
There are also other land availability. 4-5 percent for Brazil and employment.000. Environment and Housing present. taking In contrast. in the financial sector. However. incentives to developers and increase the cost of transaction or increase risks constructors and promotion of research and for the lender to unmanageable levels (poor development activities to make construction record/retrieval of property rights. 3 percent for Srilanka and Iran and 2. cross-subsidy and To facilitate this sector. instruments like free land. been taken which include: . 16 percent for Thailand. 5. 12 percent for Chile. the government has assigned a high priority to promoting the housing finance sector. Instead it is finance. policy is to create affordability. percent for Bangladesh. hitherto rather high zoning regulations. high stamp cost effective.). for the middle and low income groups. 53%. According to one estimate (National Housing Policy). 36%). lack of housing represent any lack of demand. disorganized state of the real estate market. especially. one major area that has lagged behind is the housing finance. dwellings needed to meet the growing on an average. the country Fortunately.2 vehicle for economic revival. outdated building and approach to housing finance. growth in the medium – term. a critical input required for the promotion The rate of construction of new of construction industry. non-existence of foreclosure laws. 7 percent for Morocco. Thus there is a net shortfall growth in the construction industry. One Therefore. In developed countries.000 units per annum while the actual supply does not country are quite conducive to achieving a rapid exceed 300. requirement. and somewhat lack of competition of the policy is on resource mobilization. In the developing countries the corresponding numbers are 21 percent for Malaysia. etc. incentives for home significant constraints in housing sector that either ownership.000 units per annum and the backlog is witnessing stable macroeconomic environment and a foundation has been laid for sustained high is increasing every year. housing finance (outstanding demand has been falling far short of stock) represents over 25% of GDP (US. Accordingly. a number of steps have concessionary finance etc. Therefore. decided to revitalize it as a Mexico.5 industry and its potential to generate percent for Tunisia. corruption. realizing the slump in the housing of the cornerstones of the policy is to ensure construction of housing for the poor and needy and housing for the majority of rural population through the use of different market and feeling the need to revive the economy of this important sector and narrow the backlog. The major emphasis interest rates. This low number does not including housing shortage. Ministry of Housing and Works formulated a new National Housing Policy –2001. etc. bureaucratic delays. function of absence of a properly organized lack of planning. the number is hardly 1% of into consideration the multifarious problems GDP in Pakistan. The main objective of the duties. the general conditions in the needs an additional supply of 570. The country of 270. the present government appreciating the gravity of situation and realizing the linkage of this important sector with the construction European Union.Chapter 16.
Lahore.Chapter 16. in reducing the general interest rates in the quality construction and timely completion.000--10.the country‘s largest specialized were housing finance provider has been put under a new and professional Board of Directors and management with a mandate to restructure the institution in to a commercially viable and self-sustaining entity with reliance on subsidized official sources of funding. ii) iii) iv) provide more affordable mortgage loans. Leading construction managers are carrying out construction Through a more effective macroeconomic management. vi) par with private sector For the financial year 2002-03.535. of housing loans. and responsibility rests with leading designers.5. country. banks and other financial institutions to Due to this initiative of the Government.55 million allocated in the Housing Sector HBFC Act was amended to enable it to provide sharia-complaint housing finance product. which has now been introduced. electrical industries. Islamabad and Peshawar at an estimated cost of Rs. to Rs. Environment and Housing The i) present program involves Tax incentives were provided to home owners construction of approximately 4564 housing in the form of tax deductibility of mark ups (up units/apartments in 4 major urban centers of Karachi. The execution of this program has been The legal framework for the loan recovery of entrusted to the Pakistan Housing Authority. financial institutions has been further streamlined and strengthened through The work has been awarded to leading promulgation of Financial Institutions construction companies of Pakistan and the design (Recovery of Finances) Ordinance.000 per annum) on home loans. This combination ensures proper management the government has succeeded designing. This will provide an opportunity for over 78 percent of work has been completed. In such loans to Rs. Rs. provision of proper facilities and. Generally.100.5 million and allowed banks addition.000 labourers and skilled workers are working on various projects including more than 500 Professional Engineers and Architects. above all. It is estimated that approximately 8. piping etc. State Bank of Pakistan has issued guidelines for banking companies to undertake asset securitization. HBFC will have to compete in the market for business and resources at institutions. . steel. v) The House Building Finance Corporation (HBFC) . Eventually.0 billion. this has also provided an incentive to the 40 to issue long-term debts to facilitate financing downstream industries including cement. 2001. increased the lending limit for substantial employment has been created.
e. Land acquisition process has been initiated in these sub-sectors. employees. Ministry of Housing and Works gave approval to Federal Government Employees Housing ________________________ . (G480 housing units 450 units are expected to be 14/2-3-4) for housing scheme for government completed by June. 2003. Environment and Housing under PSDP of Ministry of Housing and Works.Chapter 16. Out of Foundation to acquire three sub-sectors of G-14 i.
Thus analysis of country‘s fiscal position is incomplete if it skips over obligations made by the government outside the budget. the government faces significant fiscal costs at the expense of other outlays. the lender can invoke the guarantee and the government will be obliged to repay the amount of the loan still outstanding. and a payment must be made. the probability of a contingency occurring and the magnitude of the required public outlays are exogenous (such as natural disasters) or endogenous (such as implications of market institutions and government programs for moral hazard in markets). the contingent liability will become an actual liability of government. A common example of a contingent liability is a governmentguaranteed loan. Contingent liabilities grow with weaknesses in the financial sector.Chapter 16. At that point. in the event of default. These are obligations triggered by a discrete but uncertain event. Relative to government policies. However. Guarantees for borrowing and obligations of provincial governments and public or private entities. regulatory and supervisory system. macroeconomic policies. However. The following framework highlights the two types of contingent liabilities. contingent government liabilities are associated with major hidden fiscal risks. since this is contingent on the borrower failing to repay the loan as contracted. Environment and Housing Annexure 1 CONTINGENT LIABILITIES Contingent liabilities are costs which the government will have to pay if a particular event occurs. Contingent liabilities therefore not yet recognized as direct liabilities. without an immediate financial outlay. However. These liabilities support specific policy objectives by creating financial incentives. Umbrella guarantees for various loans (SME loans. agriculture loans) Guarantees for trade & exchange rate risks Guarantees for private investments State insurance schemes. and information disclosure. when these contractual guarantees or non-contractual commitments are realized. . The government is legally mandated to settle such an obligation when it becomes due. At the time a guarantee is entered into there is no liability for the government. Explicit Contingent Liabilities: These are specific government obligations defined by a contract or a law.
GOP has guaranteed interest payments (restructured loans and TFCs) for five years starting FY 2001-02. Failure on other non-guaranteed funds. These comprise payments made on account of contractual guarantees issued on Ghee Corporation of Pakistan (GCP). Defaults of provincial governments and public or private entities on non-guaranteed debt and other obligations. Because their fiscal cost is invisible until they are triggered. Nevertheless. 26.12 billion on account of other operational shortfalls. 15.54 billion during FY 2003-04. KESC: GOP has injected fresh equity amounting to Rs. Rs. The budgetary cost of these legal obligations during FY 2001-02 amounted Rs.4 billion through subsidy. blur fiscal analysis.1 billion and loans/subsidy payments of Rs. and can drain future government finances. government guarantees and financing through government guaranteed institutions are more politically attractive than budget support even if they are more expensive later. an amount of Rs 1.98 billion has been paid on account of debt servicing liability (Government guaranteed loans) and Rs. PIA: During FY 2002-03. Cotton Export Corporation (CEC) and Saindak bonds. totaling to Rs. but based on public expectations and political pressures. Pakistan Steel Mills Corporation‘s liability payments contractually assumed by Government.7 billion has been given for fleet renewal and Rs. Liability clean-up in entities being privatized Bank failures Disaster and relief financing.18 billion and projected at Rs. 2. 16. 16. Railways: During FY 2002-03. An anticipated amount for FY 2003-04 comes out to be Rs. Budget estimates for FY 2003-04 amount to Rs. Explicit Liabilities (Cash outflow streams from federal budget) . an amount of Rs. 23. in FY 2002-03 Rs. 20. Trading Corporation of Pakistan (TCP).9 billion subsidy.7 billion have been paid out as interest (equity) to the restructured loans and Term Finance Certificates to PIA. payments to oil refineries on account of guaranteed rates of return. 6. 3. 1.7 billion as fresh loans. and payments to FFC Jordan on account of 1989 Investment Policy pertaining to fertilizer industry.3 billion during FY 2002-03. 35 billion. Environment and Housing Implicit Contingent Liabilities: These represent a moral obligation or expected burden for the government not in the legal sense. WAPDA: GOP is injecting into WAPDA Rs. 50.1 billion during FY 2002-03. The following table analyses the trend. Explicit Contingent Liabilities: Explicit contingent liabilities legally oblige government to make a payment if a specific event occurs.Chapter 16. contingent explicit liabilities represent a hidden subsidy. Key organizations with explicit and implicit guarantee structure have been discussed below.60 billion. 4. Rice Export Corporation of Pakistan (RECP). 21 billion on account of non-recovery of loans and Rs.
00 FFC Jordan (GOP guaranteed) 1.4 21.90 TOTAL (Rs in billion) 24. 2002 and Rs. 30.00 4.05 Utility Stores Corporation (GOP guaranteed) 0. prudent monetary 31. the Government and containing risk exposure.66 Oil Refineries (GOP guaranteed) 9. 258 billion binding guarantees (i.70 1.75 0.0 - .30 1. 2001 respectively. Additionally. Figures for FY 2004 are budget estimates.7 6.1 2003-04 15. important State Owned Enterprises and the nonDuring FY 2002-03.20 4. Through guarantees equivalent to Rs. most countries the financial system is the most serious contingent implicit government liability.70 1. pending Pakistan‘s regulatory role.35 16. Karachi Electric Supply Corporation (KESC).e.70 5.30 Pakistan Engineering Company (GOP guaranteed) 0. bonds. Environment and Housing Enterprise 2001-02 2002-03 2003-04 GCP. explicit contingent as on June 30.00 3. Financial Improvement Plans of the two power utilities are Implicit contingent liabilities are not currently under implementation to curtail these officially recognized until a failure occurs. In consonance with the Macroeconomic and the Markets expect government support far beyond Medium Term Budgetary Framework adopted by its legal obligation if financial stability is at risk.54 Source: Ministry of Finance. the non–performing Cabinet‘s approval and to be enacted before June loans of the banking sector stand at Rs.Chapter 16. the amount at risk. The outflows.00 0.18 15.75 PIA (Interest on GOP guaranteed TFCs and loans) 1. and Pakistan Railways have been the Implicit Contingent Liabilities: largest drain on the budget. (WAPDA). rates of return. a These include government‘s quasi-fiscal activities policy of limiting guarantees and risk analysis of including mainly the bail-outs of strategically contingent liabilities has been institutionalized.20 4. RECP.5% lower than FY 2001-02.98 4.16.80 0.31 Pakistan Railways (GOP guaranteed debt servicing) 6. output purchase It can be inferred from the above table agreements and other claims that may threat that Water and Power Development Authority future fiscal stance of the Government.266 billion 30.00 2002-03 26. Privatization of KESC and successful triggering event.3 83.19 0.5 22.0 2. In would eventually plug these financial leakages.90 Saindak Metal Limited (GOP guaranteed) 2. TCP & CEC (GOP guaranteed) 4.90 0.00 2. Impact of implicit contingent liabilities on the federal budget Enterprise WAPDA subsidy WAPDA non recovery of loans WAPDA new loans KESC Equity (injection of fresh equity) KESC shortfall in debt servicing 2001-02 13. proposes specific limits on contractually as on December 2002.0 20. management and strengthening of State Bank of Government‘s Fiscal Responsibility Law. 279 billion as on June liabilities) including those in rupee lending. the Government has issued performing loans of banking sector. These were Rs.18 Peoples Steel Mill (GOP guaranteed) 0. and the corporatization of WAPDA in the years ahead required government outlay are uncertain.18 billion that is robust financial sector reforms. 2003.80 Pakistan Steel Mills (GOP guaranteed) 0.
34% Fiscal Year 2001-02 2002-03 2003-04 (Budget Estimates) . Figures for FY 2004 are budget estimates.2 Utility Stores Corporation 0.01 Equity in Government Holdings Private Ltd 3.15 0.12 3.65 75.04% 2.10 4.5 TOTAL (Rs in billion) 126.80 100.0 PIA (Fleet Renewal) 1.47 59.56 Source: Ministry of Finance.47% 1.45 84.2 3.15 Karachi Shipyard (GOP investment) 0.Chapter 16.7 3.7 KESC Subsidy (Cash shortfall) 11.15 0. Environment and Housing KESC Loans 9.0 1.1 13. Guarantees Issued (Explicit and Implicit liabilities) As % of GDP Rs in billion 150.30 Pakistan Railways (Other operational shortfalls) 3.
The figure signifies vast improvement over the previous years when the total tax expenditures stood at Rs. or a particular class of transactions. the manner in which they are imposed varies widely from country to country. a rate. tax rate reductions. a definition of the geographic limits of the state's exercise of its tax jurisdiction. deductions. a taxable unit. and provisions for the administration of the tax. Tax expenditures are provisions in the tax code. others cause a deferral of revenue to the future. credits. most taxes have a series of features that define their basic structure. or person. 17. tax credits deducted from tax liability.5 billion. Some tax expenditures involve a permanent loss of revenue. Details for the FY 2002-03 are discussed below: Income Tax: Section 53 of the Income Tax Ordinance 2002 empowers the Federal Government to exempt from tax any income or classes of income. When such provisions are enacted into the tax code. However. to be applied to the base. Tax expenditures include exemptions from the tax base. The estimates of total tax expenditures in Pakistan for FY 2002-03 come around Rs. these powers were sparingly exercised by the Government as it is following a conscious policy of not only phasing out the existing exemptions gradually but also not to allow fresh ones. it seems reasonable to apply to tax expenditures the same kind of analysis and review that the budget appropriation receives. In this sense. Categories of exemptions listed in Part-I of the Second Schedule to the Income Tax Ordinance 2001 are broadly as under: a) Exemption related to pensions. such as a person or a corporation. fifty-one exemptions form the Part-I of the Second Schedule and four rebates available under the First Schedule were withdrawn through Budget 2002. 31 billion during FY 2000-01 and Rs. Environment and Housing Annexure-II TAX EXPENDITURES While taxes are an essential source of revenue for all state economies. It is essential to distinguish between those provisions of the tax code that represent tax expenditures and those that are part of the "basic structure" of a given tax. they reduce the amount of tax revenues that may be collected. and thus are comparable to an interest-free loan to the taxpayer. such as net income. and tax deferrals (such as accelerated depreciation). Since tax expenditures are designed to accomplish certain public goals that otherwise might be met through direct expenditures. religious and welfare activities d) Exemption to non-profit educational institutions . the fiscal effects of a tax expenditure are just like those of a direct government expenditure. As a result thereof. allowances deducted from gross income.Chapter 16. such as exclusions. 25 billion during FY 2001-02. In general. These features are a base on which the tax is levied. and thus are comparable to a payment by the government. a tax expenditure is an exception to those rules. The basic structure is the set of rules that defines the tax. and deferrals that are designed to encourage certain kinds of activities or to aid taxpayers in special circumstances. provident funds and superannuation funds b) Exemption of interest on borrowings from external sources c) Exemption to non-profit charitable.
exemption related to charitable activities and non-profit educational institutes are common in both developed and developing countries. merely relates to National Savings Schemes interest income in respect of investment which has been made up to the year ending June 30.Chapter 16. Cost of Sales Tax exemption is estimated to be around Rs. No Major Income Tax Expenditure Items Sales Tax: Key exemptions on Sales Tax are food items (wheat. In addition to food items. Similar is the position with regards to basic threshold of income for charging tax. Table 2 Sales Tax Expenditure (Rs. Accordingly. Environment and Housing e) Exemption relating to electric It may be noted that exemption expenditure power generation f) Unexpired period to tax holidays for industrial undertaking.6 0.1 0. Total number of exemptions under the aforesaid categories contained in Part-I of Second Schedule to the Ordinance 2001 is 114.0 1. 2001.1 6 Capital gains 0. The cost of these exemptions (excluding agricultural income that is liable to tax under the relevant Provincial Agricultural Income Tax Laws) is Rs. As per international practices. 6. pensions.2 6.6 4 NSS interest income 3. 10. exemptions also include phosphatic fertilizer.8 billion.37 billion for FY 2002-03.2 10. information technology equipment and pharmaceutical products.2 2. Furthermore. pulses and edible oils excluding palm oil and soybean oil). billions) Estimated Revenue Loss FY 2000-01 FY 2001-02 FY 2002-03 1 Pensions 0.1 0. for example food grains etc.9 7 Sector & enterprise specific exemptions 0.7 2 Allowances 1.2 * TOTAL 11.7 0. the bulk of such items cannot be taxed. provident fund and superannuation fund. the cost of the exemptions has not been included in FY 2002-03.1 1.8 * Income tax on agricultural income is now a provincial subject. Following is the estimated cost of exemptions if FY 2002-03 compared to FY 2001-02 and FY 2000-01 respectively.0 3.6 0.7 0.9 0.9 0.7 0.7 0. grain.7 5 Other interest income 0.1 3 Income from funds (eg NIT Units) 0. Income tax thereon is being levied by the concerned Provincial Governments.9 2.7 8 Agricultural Income 4. billions) No Major Sales Tax Expenditure Items Estimated Revenue Loss . Table 1 Income Tax Expenditure (Rs.
327 1 369(I)/2000 17-06-00 400(I)/97 31-05-97 2 Conditional exemption of customs duty on import of plant.00 1.30 4. Customs: raw material and components i.00 8. equipment. if imported by exploration and production companies including OGDC 0.10 4. machinery and equipment imported by high tech industry.00 2.05 10.00 0. Some of these exemptions are on account of international commitments and contractual obligations. agri-seeds. spares and chemicals as are not manufactured locally. materials specialized vehicles.30 1.00 0.Chapter 16. and imports by CNG companies.00 0. Environment and Housing FY 2000-01 1. Table 3 provides the break-up of key Customs exemptions are mainly given on exemptions in customs duties over the years: Table 3 Exemption in Customs Duties No Old SRO No & Date Existing SRO No & Date 439(I)/2001 18-06-01 361(I)/2002 18-06-01 Description of SRO (Rs. machinery and equipment not manufactured locally Exemption of customs duty on import of machinery.30 4. accessories.50 0. Billion) Estimated Revenue Loss FY FY 2001-02 2002-03 0.10 0.60 FY 2002-03 0.e plant.00 4.80 0. cattle feed) Exemption on supply of locally manufactures machinery to petroleum sector TOTAL Central Excise: Tax expenditures involved on account of Central Excise is relatively minimal vis-à-vis other taxes.60 0. 8.10 0. imports for energy sector projects.0 million.637 0.75 0.00 13.10 0.00 2. exemption to exploration and production companies including OGDC exemption for WAPDA.00 0.60 1. Cost of Central Excise exemptions for the FY 2002-03 is around Rs. This exemption was granted to Aga Khan Development Network on the purchase of cement for its on going projects of human development work in Northern Areas and Sindh province.0 . priority and value added industries.37 1 2 3 4 5 6 7 8 9 Retailers (includes those in turnover scheme) Turnover manufacturers Domestically produced edible oils Pharma (excluding life saving drugs) Tractors and other agri machinery Fertilizers Pesticides Others (eg.00 0.35 2.55 0.627 0.69 0.20 FY 2001-02 0.
71 -13.60 2.20 -8.6% Customs Duties 6. Billion) Cost of Exemptions FY FY % FY FY % Change 2000-01 2001-02 Change 2001-02 2002-03 Income Tax 11. equipment on conversion kits and cylinders.60 10.50 0.263 0.37 20.41 4.42 -12.80 -33.71 21.70 2.74% 5.3% Sales Tax 13. therefore there is slight variance in the provisional tax expenditure numbers reported in Economic Survey 2001 and 2002. if imported by CNG companies during the period commencing from November 01.709 Following is the consolidated summary of tax expenditures showing percentage increase/decrease for the FY 2002-03 compared to previous years.50 0.20 8.84% 8. 2002.037 3 555(I)/98 12-06-98 4 5 6 7 504(I)/94 09-06-94 24(I)/96 08-01-96 557(I)/97 28-07-97 38(I)/98 21-01-98 444(I)/2001 18-06-01 358(I)/2002 15-06-2002 357(I)/2002 15-06-2002 2. Environment and Housing 367(I)/94 09-05-94 367(I)/94 09-05-94 Exemption of customs duty as is in excess of 10% ad val.20 5. Billion) Estimated Revenue Loss FY 2003 4.438 Partial exemption of customs duty on raw materials sub-components as are not manufactured locally of specified goods Exemption of customs duty on machinery and equipment and construction materials Exemption of whole of customs duty and sales tax on import of machinery.438 438(I)/2001 18-06-2001 38(I)/98 21-01-98 0.54% 24.0% TOTAL 31.215 2.4% Note: Since quantification of Tax Expenditures is subjective and estimated.92% 10.30 .20 10. Type of Tax Table 5 Summary of Major Tax Expenditures for FY 2002-03 (Item Wise) No 1 2 3 Major Tax Expenditure Items Pharmaceutical (excluding life savings drugs) NSS interest income Domestically produced edible oils (Rs. 1997 to October 31.50 0.10 24.20 6.025 0.Chapter 16.0% Central Excise 0.194 TOTAL 5.048 1.60 -34.422 4. Table 4 Summary of Tax Expenditures (Tax Wise) (Rs.214 0.00% 0.01 -98.89 -11. On machinery equipment materials etc imports for petroleum sector projects General conditional exemption 1.393 0.275 0. 0.72 -20.
75 1.44 1.53 . Environment and Housing 4 5 6 7 8 9 Import of machinery.70 17. equipment materials etc Tractors and other agriculture machinery General conditional exemption Allowances Capital gains Pensions TOTAL ___________________________ 2.04 1.90 0.10 0.Chapter 16.
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