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    Economic performance in Pak

    What Pak needs is someone who can really, truly build the nation. Some people here seem to believe (for whatever reason) five more years of Mush rule will turn Pak into a paradise. Lets look at some comments from those who can objectively analyse: Apr.11

    The dangers of miscalculation?

    News Analysis

    By Farhan Bokhari

    "As long as Musharraf remains a pro-west ally, he's an asset. Its not in the western interest to try stepping up the pressure over the democracy issue" said a former western ambassador to Islamabad. "Musharraf emerging as the president for five years is a foregone conclusion", he said.

    But others agreed, General Musharraf's decision to extend his rule may well undermine Pakistan's political, foreign policy and economic interests, rather than sustaining a turn around for the country.

    General Musharraf's recent claims of economic success in areas such as the buildup of foreign exchange reserves to $5 billion is also taken with a pinch of salt by western economists. The spectacular rise in reserves which is unprecedented in Pakistan's history, was triggered in the wake of last September's terrorist attacks in the US. Consequently, Pakistanis with millions of dollars stashed away in offshore accounts, chose to repatriate their savings back home for fear of being investigated on charges of financing terrorist organizations.

    "It was the fear of FBI types of agencies that compelled many Pakistanis to return funds home," said a senior banker in Karachi. If so, there are compelling questions over how far a surge in legitimate remittances seen this year, in sharp contrast to the 'hundi' system, would be sustainable in the long run. With new foreign investments remaining at an appalling couple of hundred million dollars annually, senior western economists remain sceptical over the extent to which General Musharraf would preside over a country where investors begin lining up in search of opportunities.

    Perhaps, columnists forgot to read this news:

    Pakistani Cotton Production Surpasses Target

    ISLAMABAD, April 12 (Xinhuanet) -- Pakistan's cotton crop registered a record production of 10.24 million bales, surpassing the target of 8.66 million bales by 18 percent set for the year 2001-02.

    The local press on Friday quoted official sources as reporting that the crop was sown over an area of 3.123 million hectares. The
    targets of cultivation and production were set at 2.56 million hectares and 8.66 million bales.

    To increase the production, in addition to Punjab and Sindh provinces, cotton cultivation was also introduced for the first time in Balochistan province under a promotional program to encourage and facilitate the growers. Enditem

    Live & Let Live


      Once again, as with the Forex, you do not acknowledge the full story, note the part about agriculture., Apr.5

      ADB to extend $1 bn to Pakistan this year: Chino

      President Asian Development Bank (ADB), Tadao Chino has said that the bank would extend $1 billion to Pakistan in 2002.

      Tadao Chino called on Finance Minister Shaukat Aziz here on Thursday during his trip to Pakistan after visiting Afghanistan. During discussions, Chino appreciated the economic reforms of the government and expressed the need to ensure continuation of reforms so as to transform the economy and to reduce poverty. The two sides discussed the assistance the ADB is offering with special emphasis on the bank's plan for new assistance of about $1 billion in 2002 for financing the development of agriculture and local government under the devolution plan, and improvement of governance and the financial position of the provinces.

      Shaukat Aziz appreciated the ADB's support particularly in improving agricultural output, especially so when agriculture constitutes over 25 per cent of the GDP, underlining that growth in the agricultural sector is a very effective way to fight rural poverty.

      The finance minister thanked Chino for approving access to justice loan of $350 million which would help improve the legal structure thus allowing the common man to get better and quick justice Shaukat also appreciated the ADB's catalytic role in initiating micro-finance in Pakistan by setting up the Khushhali Bank and providing it financial and technical assistance.


        Yes, I'm well aware of it.

        "We are confused that how the government is going to achieve the desired agriculture growth target with the prevailing trend of performance in this sector," he said, adding that now the government has instructed the departments concerned to study this issue thoroughly and come up with detailed report immediately.
        When There's A Will, There's A Way


          According to the Asian Development Bank, Pakistan was bound to recover this year, but the effects of Sept 11 caused havok on the economy. This plus the continued drought will lead to a growth of about 3.2 or 3.4 percent. This is still not that bad, considering that most of the world suffered even lower growth rates, some in the negatives. Also, despite the drought cotton has increased to 22 percent above expectations. The Karachi stock exchange is doing really well, although i dont have the link, I read that Karachi stock had the highest rates of return this year in Asia. They are expected to hit 3000 points by the end of the year. ADB says that by next year, the Pak economy will have borne the brunt of Sept 11 and will begin it recovery with a growth rate of 4.5 percent. This assuming nothing else goes horribly wrong. After next year, asuming ther reforms are continued, Pak economy should be on its way to real sustainable growth. According to the bank, Paks global position is ideal, and if the govt plays its cards right, they can really capatalize on this fact. The world will be particularly appreciative of Pak next year when the "Democratically elected" govt returns to power since most countries are more comfortable dealing with democracies then dictatorships.


            All I can say, is I hope that happens. All of us disagree over Pak future with Mush, and we could argue day and night, all I have to say is 'time will tell'.


              Originally posted by RealDeal:
              All I can say, is I hope that happens. All of us disagree over Pak future with Mush, and we could argue day and night, all I have to say is 'time will tell'.
              Well, Musharaf isn't an economic analyst, he is a general. ADB however, does this profesionally, and has been quite familiar with Pak for some time. So considering this is the firt sign of light in Paks future from ADB analysts (and others), we should pay close attention. I to hope they are right...


                Just remember we are supposed to have a 'rosy' next few years because we are a front line state against terrorism, and the world is now going to help us, just like the $1 billion loan teh ADB is giving us, along with many others we are expecting. Remember you compare to BB and NS times, Pak couldn't get anything like that then.


                  Recently Moody upgraded Paks credit rating


                    Adnan-funny you mention the ADB, because todays Jang has a piece from the ADB that doesn't paint such a rosy picture.In fact,
                    it expects unemployment to go up.

                    It points out that reduction in the budget deficit from almost 7 per cent of GDP to 5.3 per cent of GDP during the fiscal 2000-01 was achieved at the expense of the development spending, which recorded its lowest EVER level during the year.

                    -poverty related expenditures had declined further by 15 per cent during the first half of the current fiscal year.

                    -investment has been SLOWING for the last two years (meaning even less than BB or NS!)

                    -and of course it again takes away any claim
                    Army people can have to being responsible for the rise in foriegn exchange.

                    Well, here's the article: Jang, Apr.13

                    Pakistan economy still at crossroads: ADB

                    Country director says referendum, elections can create doubts over future course of action

                    By Nadeem Malik

                    ISLAMABAD: Pakistan's economy is still at the crossroads, where consistent reforms would yield dividends, but associated political risks could derail the whole process, says the Asian Development Bank (ADB).

                    In a detailed briefing on the economic outlook here on Friday, Marshuk Ali Shah, country director of the ADB, counted April referendum and October elections as two political uncertainties, which could create doubts over future course of action.

                    Shah observed that recent strengthening of the reserves, totalling $5.3 billion, was not due to enhanced earning capacity of the export sector. Exports from Pakistan had been falling during first three-quarters of the fiscal 2001-02.

                    The special circumstances created by the post-September scenario helped Pakistan attract large inflows of remittances through official banking channels. The Central Bank bought almost $2.6 billion to restrict further appreciation of rupee.

                    According to the ADB, Pakistan's support for international coalition helped it attract large multilateral support, and $1.16 billion commitments from the major bilateral creditors. These developments, and a fall in imports, helped shore up the official foreign exchange reserves. However, overall investment had been decelerating for last two years. During the fiscal 2000-01, total investment as a percentage of GDP declined from 15.6 per cent to 14.7 per cent. This could be largely attributed to lower private investment and excess capacity of the industrial sector. Recent fall in exports had further reduced the production demand of the export sector.

                    As a result the rate of unemployment, estimated at 7.8 per cent during the fiscal 2000, could go up further. The ADB reckons that absorptive capacity of the economy had declined over the last few years due to deceleration in the growth rate. Shah observed that GDP growth could be between 3-3.5 per cent during current fiscal year.

                    On the fiscal deficit, the ADB reckons that reduction in the budget deficit from almost 7 per cent of GDP to 5.3 per cent of GDP during the fiscal 2000-01 was achieved at the expense of the development spending, which recorded its lowest ever level during the year. The Bank observed that given the current high poverty level and low level of human development, this trend should be reversed. However, poverty related expenditures had declined further by 15 per cent during the first half of the current fiscal year.

                    This policy failure could be attributed to the sheer inability of the country to reform its tardy tax system. The ADB chief observed that Pakistan had not done enough to reform its tax administration or to improve the tax collection system.

                    "In the greater national interests, the country has to swallow more bitter pills, like broadening the tax net to cover medicines, edible oils, hike in utility bills etc," the ADB maintained. The Bank stressed the need of speedy reforms of tax administration, which had remained elusive so far.

                    The ADB stated that the bureaucracy of the Central Board of Revenue (CBR) was responsible for non-implementation of administrative reforms despite a large number of reports and action plans that were prepared on the subject. The ADB observed that as a result of these difficulties, the CBR was finding it hard even to collect the much reduced revenue collection target of Rs 414 billion.

                    Shah also advocated strongly for the reforms of the State Owned Enterprises (SOEs), which had been inflicting heavy losses due to inefficiency and corruption over the years. "These are difficult and politically unpopular decisions that required to be implemented."

                    The ADB said that investment climate had not been restored in the country, as there was a perception and credibility problem. The domestic investment was mainly confined to the modernisation of textile sector. There were issues of deregulation and procedural bottlenecks that inhibit the investment growth.

                    The Bank observed that conducive investment climate was crucial for sustainable growth of the economy. In this regard, the ADB observed that political factors associated with the presidential referendum of April and October elections for the parliament were also issues that had created uncertainty. "If things move in the right direction, if reforms go forward, investment would return to Pakistan," observed Shah. He said Pakistan was still being seen as a politically unstable and unsafe place to put your money in. This external perception, he said, would need to be reversed through consistent and transparent policies.

                    The ADB stated that post-September scenario had presented Pakistan new challenges and new opportunities. "If the government continues to follow sound macroeconomic policies and implement the planned economic and governance reforms, it could fairly quickly achieve rapid and sustainable economic growth and poverty reduction," the Bank observed.

                    However, it added that if increased aid flows are used to postpone the necessary reforms and macroeconomic developments, as happened in the 1980s, Pakistan will be unable to break out of the existing vicious circle of low growth and rising poverty.

                    In this regard, the ADB underscored the need for tax reforms, restructuring of the public sector enterprises, more aggressive banking reforms, control on non-essential expenditures, higher allocations for development and social sector spending, and fast-track privatisation. The Bank on its part would help Pakistan sell off Karachi Electric Supply Corporation (KESC), by initiating its divestment plan by end-April.


                      I did say that they had to continue with the reforms... I never said that Pak would turn into a economic power house over night. The fact is that Pakistan is on the right path, uncertainties exist ofcourse, but if you want to return to democracy, then this is part of the package. Pakistan is at a cross road as everyone has been saying, so this is not new. So Pakistan can either start growing or continue to regress even further. As i see it, there are many problems still existing, but signs point in the right direction and most analysts i think will agree. This is a matter of the glass being half empty or half full. I see it as half full; why be such a pessimist?


                        Today's Dawn:

                        ADB recommends Musharaff to increase the prices of all utilities...including edible oil, electricity and transportation in order to cut some losses.

                        My opinion: Musharaff will do it after he becomes the elected president!

                        Also why does ADB involve itslef in economic management? Anybody wanna shed any light on this? I am more interested because, in India, there are some states which borrow from ADB directly (in addition to the centre).

                        Also, Adnan, KSE's growth rate doesn't mean anything. KSE still remains one of the most volatile indices to invest.

                        [This message has been edited by kumarakn (edited April 13, 2002).]


                          Originally posted by kumarakn:
                          Today's Dawn:

                          Also, Adnan, KSE's growth rate doesn't mean anything. KSE still remains one of the most volatile indices to invest.

                          [This message has been edited by kumarakn (edited April 13, 2002).]
                          Really? I did not know that... But it must be indicative of something... I mean these are investors, and investors do look to the economic regional situation to quide them in buying stocks and stuff... So obviously, since the KSE is doing relatively well, then there must besomething in the atmosphere which is keeping the KSE in a Bullish mood?!
                          Anyways, i dont know, you input is welcomed and appreciated...



                            53 percent Karachi Stock Exchange companies post Rs 37.9 billion net profit



                              Investors' interest wanes on Karachi Stock Exchange

                              KARACHI (April 15 2002) : Karachi stock market during the past week moved in a thin band where interest of the genuine investors waned which could be gauged from the daily volume falling to around 100 million shares a session from 170 million shares last week.

                              The IMF Board released the second tranche of US$ 108 million as part of the Poverty Reduction and Growth Facility (PRGF) boosting the foreign exchange reserves. Moreover, the World Bank has more than doubled the loan amount of Second Structural Adjustment Loan/Credit-II from $200 million to $500-600 million.