lec 01 economy of pakistan 2012 13

8/13/2019 Lec 01 Economy of Pakistan 2012 13

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ECONOMY OF PAKISTAN: 2012-13

Presentation by

Sehrish Abro

Main Focus

1. Structure of Economy of Pakistan

2. Federal Budget: 2012-2013

3. Economic Challenges: 2013

4. Fiscal Policy

5. Monetary Policy

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Economy of PakistanPRESENTATION 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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DEFINITIONSOFECONOMICS

Economicsis 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


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1: ECONOMY OF PAKISTAN

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S. No. Components

1. Agriculture

2. Manufacturing

3. Services

Components


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TERMS: 'GROSSDOMESTICPRODUCT- GDP'

The monetary value of all the finished goods

and services produced within a country's

borders in a specific time period, though GDP

is usually calculated on an annual basis. It

includes all of private and public consumption,

government outlays, investments and exports

less imports that occur within a definedterritory

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INFLATIONANDDEFLATION

Inflationis an increase in the overall price level.

Hyperinflationis a period of very rapid increases in

the overall price level. Hyperinflations are rare, but

have been used to study the costs and consequencesof even moderate inflation.

Deflationis a decrease in the overall price level.

Prolonged periods of deflation can be just as

damaging for the economy as sustained inflation


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The unemployment rateis the percentage of

the labor force that is unemployed.

The unemployment rate is a key indicator of

the economys health.

UNEMPLOYMENT


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DEFINITIONOF'INCOMEPERCAPITA'

A measure of the amount of money that is

being earned per person in a certain area.

Income per capita can apply to the averageper-person income for a city, region or country

and is used as a means of evaluating the living

conditions and quality of life in different areas. It can be calculated for a country by dividing

the country's national income by its

population. 8


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DEFINITIONOF'BALANCEOFPAYMENTS- BOP'

A record of all transactions made between

one particular country and all other countries

during a specified period of time. BOP

compares the dollar difference of the amount

of exports and imports, including all financial

exports and imports. A negative balance of

payments means that more money is flowingout of the country than coming in, and vice

versa.

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OTHERS:

FDI Public Debt-Domestic and foreign debt

Remittances

Fiscal deficit

Trade deficit

Capital Market

Foreign Reserves

Foreign Exchange

Poverty, poverty line 10


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1-1: AGRICULTURE

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S. No. Components

1. Livestock

2. Crops:

1. Major2. Minor

3. Fishing

4. Forestry

Components


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1-2: MANUFACTURING

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S. No. Components

1. Industry:

High Tech

LSM

SME

Cottage

2. Minerals

3. Electricity

4. Construction

Components


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1-3: SERVICES

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S. No. Components

1. Physical (wholesale, retail,

transport, storage)

2. Social (telecom, housing, health,defense)

3. Financial (finance and insurance_

Components


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3-1: FEDERAL REVENUE BUDGET: 2012-13

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FEDERALREVENUEBUDGET2012-13Particulars Rs. b %

CURRENTREVENUE1. Indirect Taxes 1,572* 49

Composition Rs.b %

Sales Tax 1,077 69Custom Duties 248 15

Federal Excise 125 08

Others (Plus Petroleum Levy) 122 08

1,572* 100

2. Direct Taxes 932 292,504 78

3. Non-Tax Revenue 730 22

3,234 100


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3-1: FEDERAL REVENUE BUDGET: 2012-13

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Rs. B %4. Less: Transfer to Provinces 1,459

Net Federal Revenue 1,775

CURRENTEXPENDITURE

1. Debt Servicing 1,142 442. Defence Affairs & Services 545 21

3. Cost of Running Govt 404 15

4. Grants & Transfer to Provinces 312 12

5. Subsidies 209 08

2,612 100

Less: Deficit in Revenue Budget 837

1,775


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3-2: FEDERALANNUALDEVELOPMENTPLAN2012-2013

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ANNUALDEVELOPMENTPLAN2012-2013

Particulars Rs. b %DEVELOPMENTEXPENDITURE

1. Federal Govt: 2012-13

Departments (rs. 207b),

Corporations (Rs. 80b)

Special Programs (Rs. 27b)Special Areas (Rs. 36b) and

ERRA* Rs. (10b)

360 61

2. Other Developments

Expenditure

154 26

3. Provincial Governments 77 13

591 100

*Earthquake Rehabilitation & Reconstruction Authority


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FINANCINGPATTERN Rs.b %

1. Bank Borrowings 484 82

2. External Receipts 386 65

3. Estimated Provincialsurplus 80 14

4. Net Internal Resources (359)* (61)

591 100


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BREAKUPOFINTERNAL

RESOURCES

Rs. b

1. Deficit in Revenue Budget

for 2012-2013

837

2. Less: Net Capital Receipts (478)

(359)*


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3-3: PROVINCIALALLOCATION: 7THNATIONAL

FINANCIALAWARD

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Province Allocated

%

Population*

%

Punjab 48 57.36

Sindh 27 23.71

KPK 16 13.82

Balochistan 09 5.11

100 100

*Based on Population Census of 1997.


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4: PAKISTAN: ECONOMIC CHALLENGES: 2013

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A: Economy Challenges 2012

1. Business Environment: Deteriorating

2. Security Threats: Increasing

3. Foreign Investment: Declining

4. Exchange Rate: Depreciating

5. Inflationary Pressure: Building Up6. Foreign Exchange Reserves: Depleting

7. Industrialists relocating their Industries Abroad

8. Electricity and Gas Shortages: Aggravating

9. Exports Growth: Turning Negative10. Mysterious Growth in Remittances: Continuing


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4: PAKISTAN: ECONOMIC CHALLENGES 2013

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C: 2013 Outlook

Outlook for 2013 is Likely to Further Deteriorate.

1. Political uncertainty with adverse consequences on the

economy.

2. Fiscal indiscipline hallmark of the Government during

election year.

3. Mobilization through taxation will take the back seat.4. Reliance on Non-Tax Revenues would increase further.

5. Expenditure is expected to rise further with budget deficit

likely to be in the range of 6% 6.5% of GDP.

6. Economy will remain out of focus of the politicalleadership.

7. Energy shortage (electricity and gas) to aggravate further.

8. Politics is likely to dominate economics.


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D: Expected Trends 2013

1. GDP Trend : 3-4%

2. Domestic Investment : Not expected to Pick up

3. Unemployment and Poverty are likely to rise further

4. Inflationary pressure to rise on account of senseless increase

in government administered prices

5. External balance of payments to come under pressure dueto following:

a. Flat, even negative export growth

b. Search in payment to the IMF

c. FDI to witness a sharp declined Sharp depreciation of exchange rate

e. Public debt is likely to worsen on account of large fiscal

deficit.


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E: Consequences

1. National Security at Stake

2. Miss-Governance to Continue

3. In Search of a Direction


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6: FISCAL POLICY

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1. Objectives

a. Full Employment

b. Resource Mobilization

c. Resource Allocation

d. Maintenance of Economic Stability

e. Income Re-Distribution


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MONETARYPOLICY

Tools:

Discount rate

Reserve Ratio OMO

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6: FISCAL POLICY

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4. Income Tax Rates 20131. Individuals

- Non-Salaried - 5 brackets (10% -----25%)- Salaried5 brackets (5.0% -----20%)

- Exempt upto Rs. 4 Lac

2. Companies

- Public, Private& Banking Companies 35%

- Small companies 25%

3. Dividend received by all tax payers 10% and 20% on banking

company from its assets management company

4. Property income

- Rs. 150,000 exempt

- Rates 5% -----10%

5. Capital gains

- With holding period less than six months 10%

- More than six month but less than 12 months 8%

lec 01 economy of pakistan 2012 13

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