Budget 2017-18: Where we were 4 years’ ago and where we are today?

Budget 2017-18: Where we were 4 years’ ago and where we are today? | pakistantribe.com

ISLAMABAD – The PML-N government is happy that a fifth consecutive budget has been presented by the same Prime Minister and Finance Minister First time in the history of Pakistan.

Below are the Comparative Economic Performance of Budget 2012-13 vs. Budget 2016-17 as per the speech of Pakistan Finance Minister, Ishaq Dar.

  1. Real GDP Growth at 5.28% this year is the highest in the past decade. Four years’ ago, the economic growth was 3.68%. Considering that the World economy is likely to grow by 3.5% this year, Pakistan’s economy is performing better than most countries in the World. There has an improvement in every aspect due in Pakistan due to economic growth. For the first time the size of the economy has surpassed $300 billion;
  2. Alhamdolilah, our agriculture sector has turned around. The sector has performed impressively this year. Compared to last year’s stagnation this sector has registered a robust 3.46% growth. All major crops including Wheat, Cotton, Sugarcane and Maize have registered healthy growth. This turnaround in agriculture from stagnant growth is a result of the Prime Minister’s Kisaan package announced in September 2015 and the extraordinary measures approved by this house as part of budget 2016-17;

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  1. Industrial production grew by 5.02% and businesses are now hiring additional workers.
  2. Services sector – which includes banks, retail, transportation, housing, etc. – grew by 5.98%;
  3. On average, income of each Pakistani has increased by 22% since fiscal year 2012-13. Per capita income today stands at $1,629 as compared to $1,334 four years ago;
  4. Inflation was on average 12% between 2008-13. In this current year inflation is expected to be around 4.3%;
  5. Fiscal deficit: The government followed a policy of fiscal consolidation because of which fiscal deficit reduced from 8.2% to the current year’s 4.2%. This was achieved through higher revenue collection through improved administration and broadening of the tax base, undoing decades-old concessionary SRO and curtailing non-development expenditure of the government;
  6. FBR Revenues: In fiscal year 2012-13 FBR collection was Rs.1,946 billion. For the current year the target is Rs.3,521 billion. This represents a historic increase of 81% in the last 4 years with average annual growth of 20%. Tax to GDP ratio which was 10.1% in fiscal year 2012-13 is likely to increase to 13.2% this year;
  7. Policy rate of State Bank of Pakistan has come down from 9.5% in June 2013 to the current 45-year low of 5.75%. Similarly, mark-up rates of Export Refinance Facility have been reduced from 9.5% in June 2013 to 3% in July 2016. In addition, the mark-up rate on Long Term Finance Facility has been gradually reduced from 11.4% in June 2013 to 6% for exporters and 5% for textile sector. This has led to a spurt in credit to the private sector;
  8. Resultantly Credit to private sector has grown to Rs.507 billion till May of this year, as compared to Rs.93 billion in fiscal year 2012-13, resulting in expansion of business activity in the country;

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  1. Agriculture credit was Rs.336 billion four year’s ago which at the end of 2016 was Rs.600 billion and is targeted to increase to Rs.700 billion during the current financial year;
  2. Imports: Imports have been recorded at $37.8 billion during July-April showing an upward trajectory compared to the same period last year. This vibrancy in imports is attributable to over 40% increase in capital machinery, industrial raw material and petroleum products and the increased investment under the CPEC projects focused on energy and infrastructure sectors. All of this augurs well for Pakistan’s economy in the near future;
  3. Exports during the first ten months of this year have shown an overall minor decrease of 1.28% compared to 7.8% decline during the same period last year. This reversal has been the result of timely support by the government to exporters in shape of a comprehensive package of Rs.180 billion in January 2017 and efforts of our exporters;
  4. Foreign Exchange Reserves: In June 2013 foreign exchange reserves held with the State Bank were $6.3 billion which included short-term swap of $2 billion for which payments were to be made within weeks. This means that the real reserves were $4.3 billion. Our foreign exchange reserves currently stand at a comfortable level of $16 billion despite a larger than expected trade deficit mainly due to increased import of capital goods. If we include foreign exchange deposits with commercial banks, the total foreign exchange reserves of the country have increased to around $21 billion;
  5. Exchange Rate: Inter bank rate of dollar on 30th June 2013 was Rs.99.66. Within a few months this rate increased to around Rs.111. After better economic management and increase in foreign reserves the exchange rate reverted to Rs.99. Due to political disturbances between August and December 2014 the rate again increased close to 104.80. Since then this rate is the same;
  6. Remittances: Over the past four years, Pakistani workers and professionals working abroad have contributed a substantial amount of remittances which increased from $13.9 billion to $19.9 billion. This 40% increase was made possible due to government’s revival and payment of outstanding dues of Pakistan Remittance Initiative. The remittances for the first ten months of the current FY stand at $15.6 billion and are expected to grow in the last two months due to Ramazan and Eid despite challenging economic situation in the gulf region. I thank the hard-working Pakistanis abroad who used banking channels to send money to their relatives and friends in Pakistan and I appeal them to use banking channels to send remittances so that they can be contribute to Pakistan’s economy;
  7. Pakistan Stock exchange: The merger of the three stock exchanges was completed in January 2016 after successful resolution of issues pending for over a decade. Since then, Pakistan Stock Exchange has graduated from frontier to emerging markets in the Morgan Stanley Capital International (MSCI) Index. It has been declared as Asia’s best performer and 5th best performing market in the World by Bloomberg. It is note worthy that the index has increased from 19,916 on 11 May 2013 to over 52,000 points currently. And during this period market capitalisation has increased from $51 billion to $97.3 billion depicting a 90% increase;
  8. Registration of New Companies: This year 5,855 new companies have been incorporated till March. Four years ago, in the entire financial year 3,960 companies were incorporated;
  9. Enactment of Economic Laws: For an economy to unleash its growth potential, there has to be in place an enabling legal and regulatory environment. Realising the constraints that a less than effective legal framework imposes on efficient governance and service delivery, the government has in its tenure completed 24 pieces of legislation in different sectors of the economy including; Benami Transactions Prohibition Act, Special Economic Zones Amendment Act, Deposit Protection Corporation Act, Credit Bureau Act, Corporate Restructuring Companies Act, National Energy Efficiency and Conservation Act, Anti-Money Laundering Act, Gas Theft Control and Recovery Ordinance, and Limited Liability Partnership Act. 10 new pieces of legislation are currently in the process which would lead to further augment the enabling legal environment required for a flourishing economy;
  10. Companies Law: The Parliament has approved the companies law 2017 only this week. I thank congratulate both the houses. This law has replaced the 33-year old Companies Ordinance of 1984. This is a major reform to consolidate the provisions / laws relating to companies so as to encourage and promote corporatisation in Pakistan based on the best international practices. This law will simplify procedures creating ease of starting and doing business and protect investors. It addresses issues related to rotection of minority shareholders and creditors, eases regulatory compliance requirements for smaller companies, and among others provides relaxation for registration of agricultural promotion companies for the development of agriculture sector. Keeping in view the importance of women, the new law will allow women membership in boards of directors of listed companies;
  11. Ease of Doing Business: Reforms have been undertaken to make it easy for firms to do business in the country. As a result, Pakistan’s ranking in the World Bank’s ease of Doing Business index improved from 148 to 144 in the report launched in 2016, based on performance in 2015. Pakistan was also recognised as one of the top ten reforming countries in the World. On the basis of additional reforms undertaken during the period 2016, Pakistan expects further improvement in the ranking of World Bank’s Doing Business report to be published in October 2017;
  12. To encourage documentation in the economy, for the first time registered prize bonds of Rs.40,000 have been introduced. Registered bonds of different denominations will be introduced in FY 2017-18;

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