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ECONOMY OF PAKISTAN: 2012-13

Main Focus
1. 2. 3. 4. 5. Structure of Economy of Pakistan Federal Budget: 2012-2013 Economic Challenges: 2013 Fiscal Policy Monetary Policy

Presentation by
Sehrish Abro

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Economy of Pakistan
PRESENTATION FRAME
1. Basic concepts of Economics 2. Economy of Pakistan 3. Federal Budget: 2012-13 4. Pakistan: Economic Challenges: 2013 5. Fiscal Policy 6. Monetary Policy 7. Sector wise performance during 2012-2013
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DEFINITIONS OF ECONOMICS • “Economics is a science of Wealth” • Adam Smith 1776 • “Economics is the science which studies human behavior as a relationship between unlimited wants and scarce resources which have alternative uses” • Robbins 1931 .

1. No. 2.1: ECONOMY OF PAKISTAN Components S. Components Agriculture Manufacturing Services 4 . 3.

government outlays.GDP' • The monetary value of all the finished goods and services produced within a country's borders in a specific time period. investments and exports less imports that occur within a defined territory 5 . It includes all of private and public consumption.TERMS: 'GROSS DOMESTIC PRODUCT . though GDP is usually calculated on an annual basis.

• Hyperinflation is a period of very rapid increases in the overall price level. Hyperinflations are rare.INFLATION AND DEFLATION • Inflation is an increase in the overall price level. • Deflation is a decrease in the overall price level. but have been used to study the costs and consequences of even moderate inflation. Prolonged periods of deflation can be just as damaging for the economy as sustained inflation .

.UNEMPLOYMENT • The unemployment rate is the percentage of the labor force that is unemployed. • The unemployment rate is a key indicator of the economy’s health.

Income per capita can apply to the average per-person income for a city. • It can be calculated for a country by dividing the country's national income by its population.DEFINITION OF 'INCOME PER CAPITA' • A measure of the amount of money that is being earned per person in a certain area. region or country and is used as a means of evaluating the living conditions and quality of life in different areas. 8 .

BOP compares the dollar difference of the amount of exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in. and vice versa. including all financial exports and imports.BOP' • A record of all transactions made between one particular country and all other countries during a specified period of time.DEFINITION OF 'BALANCE OF PAYMENTS . 9 .

poverty line 10 .OTHERS: • • • • • • • • • FDI Public Debt-Domestic and foreign debt Remittances Fiscal deficit Trade deficit Capital Market Foreign Reserves Foreign Exchange Poverty.

No. Components Livestock Crops: 1. 1.1-1: AGRICULTURE Components S. 4. Major 2. 2. Fishing Forestry 11 . Minor 3.

1. No. Components Industry: High Tech LSM SME Cottage 2. 3. 4.1-2: MANUFACTURING Components S. Minerals Electricity Construction 12 .

retail. transport. Social (telecom. No. Components Physical (wholesale. housing. storage) 2. health. 3. defense) Financial (finance and insurance_ 13 .1-3: SERVICES Components S. 1.

428* 34 34 27 05 100 2. Current Expenditure 2.Estimated Provincial Surplus 484 478 386 80 1.External Receipts 4.775 1.Capital Receipts (Net) 2.203 1. ADP: 2012-2013 AVAILABLE Net Federal Revenue SHORTFALL FINANCING PATTERN 1.FEDERAL BUDGET: 2012-13 MASTER CHART (FEDERAL BUDGET 2012-2013) Particulars NEEDED 1.428* 3. Bank Borrowings 3. b % 14 .203 81 19 100 51 49 100 Rs.612 591 3.

b 1.572* % 49 Composition Sales Tax Custom Duties Federal Excise Others (Plus Petroleum Levy) Rs.077 248 125 122 1. Non-Tax Revenue % 69 15 08 08 100 932 2.572* 2.b 1. Indirect Taxes Rs.504 730 3.3-1: FEDERAL REVENUE BUDGET: 2012-13 FEDERAL REVENUE BUDGET 2012-13 Particulars CURRENT REVENUE 1. Direct Taxes 3.234 29 78 22 100 15 .

Debt Servicing 2.3-1: FEDERAL REVENUE BUDGET: 2012-13 Rs.775 100 16 . B 4. Subsidies Less: Deficit in Revenue Budget 1.612 837 1.775 % 1.142 545 404 312 209 44 21 15 12 08 2. Grants & Transfer to Provinces 5.459 1. Cost of Running Govt 4. Less: Transfer to Provinces Net Federal Revenue CURRENT EXPENDITURE 1. Defence Affairs & Services 3.

Federal Govt: 2012-13 Departments (rs. (10b) 2. 36b) and ERRA* Rs. 27b) Special Areas (Rs. 207b). 80b) Special Programs (Rs.3-2: FEDERAL ANNUAL DEVELOPMENT PLAN 2012-2013 Particulars DEVELOPMENT EXPENDITURE ANNUAL DEVELOPMENT PLAN 2012-2013 Rs. b % 1. Corporations (Rs. Provincial Governments 360 61 154 77 591 26 13 100 *Earthquake Rehabilitation & Reconstruction Authority 17 . Other Developments Expenditure 3.

External Receipts 3.3-2: FEDERAL ANNUAL DEVELOPMENT PLAN 2012-2013 FINANCING PATTERN 1. Bank Borrowings 2. Net Internal Resources Rs. Estimated Provincial surplus 4.b 484 386 80 % 82 65 14 (359)* 591 (61) 100 18 .

Deficit in Revenue Budget for 2012-2013 2.3-2: FEDERAL ANNUAL DEVELOPMENT PLAN 2012-2013 BREAK UP OF INTERNAL RESOURCES 1. b 837 (478) (359)* 19 . Less: Net Capital Receipts Rs.

82 5.11 100 *Based on Population Census of 1997.36 23.71 13.3-3: PROVINCIAL ALLOCATION: 7TH NATIONAL FINANCIAL AWARD Province Punjab Sindh KPK Balochistan Allocated % 48 27 16 09 100 Population* % 57. 20 .

2. 10. Business Environment: Deteriorating Security Threats: Increasing Foreign Investment: Declining Exchange Rate: Depreciating Inflationary Pressure: Building Up Foreign Exchange Reserves: Depleting Industrialists relocating their Industries Abroad Electricity and Gas Shortages: Aggravating Exports Growth: Turning Negative Mysterious Growth in Remittances: Continuing 21 . 4. 5. 6.4: PAKISTAN: ECONOMIC CHALLENGES: 2013 A: Economy Challenges 2012 1. 9. 7. 8. 3.

Energy shortage (electricity and gas) to aggravate further. Politics is likely to dominate economics. 6. Expenditure is expected to rise further with budget deficit likely to be in the range of 6% 6. Economy will remain out of focus of the political leadership. 3. 1.4: PAKISTAN: ECONOMIC CHALLENGES 2013 C: 2013 Outlook Outlook for 2013 is Likely to Further Deteriorate. Political uncertainty with adverse consequences on the economy. 5. Reliance on Non-Tax Revenues would increase further. 2.5% of GDP. 4. Fiscal indiscipline hallmark of the Government during election year. 22 . 8. 7. Mobilization through taxation will take the back seat.

Domestic Investment : Not expected to Pick up 3. Unemployment and Poverty are likely to rise further 4. Public debt is likely to worsen on account of large fiscal deficit. Flat.4: PAKISTAN: ECONOMIC CHALLENGES: 2013 D: Expected Trends 2013 1. even negative export growth b. GDP Trend : 3-4% 2. Inflationary pressure to rise on account of senseless increase in government administered prices 5. External balance of payments to come under pressure due to following: a. 23 . FDI to witness a sharp decline d Sharp depreciation of exchange rate e. Search in payment to the IMF c.

In Search of a Direction 24 . National Security at Stake 2.4: PAKISTAN: ECONOMIC CHALLENGES: 2013 E: Consequences 1. Miss-Governance to Continue 3.

Income Re-Distribution 25 . Objectives a. Maintenance of Economic Stability e.6: FISCAL POLICY 1. Resource Allocation d. Resource Mobilization c. Full Employment b.

MONETARY POLICY Tools: • Discount rate • Reserve Ratio • OMO 26 .

6: FISCAL POLICY 4.Non-Salaried .5 brackets (10% -----25%) . Private& Banking Companies 35% .0% -----20%) . 150.Public. .000 exempt .Salaried – 5 brackets (5.Exempt upto Rs. Individuals . 4.Rs. 5.Rates 5% -----10% Capital gains With holding period less than six months 10% More than six month but less than 12 months 8% 27 2. Income Tax Rates 2013 1. 4 Lac Companies .Small companies 25% Dividend received by all tax payers 10% and 20% on banking company from its assets management company Property income . 3.