Macroeconomic Insights
Performance of Pakistan’s Economy(2007-2012)
Ali Salman
[email protected]
Sara Javed
[email protected]
Policy Research Institute of Market Economy (PRIME)
www.primeinstitute.org
Presidents Indicators
Chambers Conference
Macro Economic
25/02/2013
PRIME Presentation
•
GDP has increased approximately by 2.37 times in 5 years.
•
Real Exchange rate was substantially higher than the exchange rate
* Right Axis: Exchange Rate
Left Axis: GDP
Presidents Indicators
Chambers Conference
Macro Economic
Source: State Bank of Pakistan
25/02/2013
PRIME Presentation
• Money supply has increased nominally though, it has decreased as a
percentage of GDP.
• CPI was increasing till 2009, afterward, it has decreased substantially.
* Right Axis: Percentage (M2)/ Index (CPI)
Left Axis: M2 (Money Supply)
Presidents Indicators
Chambers Conference
Macro Economic
Source: State Bank of Pakistan
25/02/2013
PRIME Presentation
• Government debt from domestic sources has increased 3 times over the years.
•
Debt from IMF stood at PKR 2.7 trillion over the last 5 years.
Source: State Bank of Pakistan
Presidents Indicators
Chambers Conference
Macro Economic
PRIME
Presentation
Presented by:25/02/2013
Ali Salman
(PRIME)
• Revenue expenditure has increased by 2 times over the years.
• Development expenditure has not increased except slightly for last year.
Source: State Bank of Pakistan
Macro Economic Indicators
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• Tax revenue has increased by 2.3 times over the last five years.
• The distribution of direct and indirect taxes has remained constant.
* Right Axis: Tax Revenue and its components
Left Axis: Non-tax revenue
Presidents Indicators
Chambers Conference
Macro Economic
Source: State Bank of Pakistan
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• The exports over five year have been rising, though it has not helped in improving
trade balance.
Source: State Bank of Pakistan
Presidents Indicators
Chambers Conference
Macro Economic
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• FDI has decreased by 3 times in 4 years.
Source: State Bank of Pakistan
Presidents Indicators
Chambers Conference
Macro Economic
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• The national income has increased by 2.37 times whereas, the national debt has
increased by 2.5 times.
* Right Axis: Total Domestic Debt
Left Axis: GDP
Presidents Indicators
Chambers Conference
Macro Economic
Source: State Bank of Pakistan
25/02/2013
PRIME Presentation
• Manufacturing Sector has the largest share in private sector advances,
constituted 56% of total 2.3 trillion rupees.
Advances
Manufacturing
Electricity, Gas and Water
Supply
Agriculture, Hunting and
Forestry
PKR bn.
1,349.30
271.9
199
Commerce and Trade
200.3
Transport, Storage and
Communications
110.9
Real Estate, Renting and
Business
Others
Total
104
157.7
2,393.10
Source: State Bank of Pakistan
Presidents Indicators
Chambers Conference
Macro Economic
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• 91% of fiscal deficit of PKR 1.3 trillion is financed through domestic
sources, out of which, 44% was contributed by banks.
Financing of Fiscal Deficit
FY 2011-12
PKR bn,
Fiscal Deficit
1,369.70
Financing of fiscal deficit
A.
External Sources
B
Domestic Sources
1.
Non-bank
529.4
2.
Bank
711.1
3.
PIBs issues for PSEs debt
391.0
128.7
1,241.10
Source:
State Bank of Pakistan,
Annual Report 2011-12, page 64
Presidents Indicators
Chambers Conference
Macro Economic
25/02/2013
PRIME Presentation
• Total subsidies of PKR 1.3 trillion has been given to power sector PSEs
Total: PKR 1,323.25 bn.
Source: Ministry of Finance
Presidents Indicators
Chambers Conference
Macro Economic
Presented by:25/02/2013
PRIME
Ali Salman
Presentation
(PRIME)
• In last five years, the PSEs accumulated total debt of PKR 2.2 trillion
Total: PKR 2,233 bn.
600
Billion Rupees
500
400
300
200
100
0
2007
2008
2009
2010
2011
2012
Total Debt to PSEs
Source: State Bank of Pakistan
Presidents Indicators
Chambers Conference
Macro Economic
25/02/2013
PRIME Presentation
Pakistan has crossed all
threshold of debt entrapment
Indicators
Threshold
Actual values
for Pakistan
Fiscal Deficit/GDP
3
8
Public debt servicing/ government revenues
15
37
Public domestic debt/government revenues
200
400
Presidents Indicators
Chambers Conference
Macro Economic
25/02/2013
PRIME Presentation
Authors’ Profile
Ali Salman
Executive Director
[email protected]
Ali Salman is the founder and Director of Policy
Research Institute of Market Economy (PRIME)
based in Islamabad. Earlier, he has worked as a
consultant and trainer for major international
development
organizations,
public
sector
organizations and non-profits. Ali is author of several
studies and monographs including the “Liberate to
Learn: Review of Education Vouchers Scheme in
Lahore”, a critique of price controls Price Controls:
Implications for Liberty and Welfare, and “Discord
between Economic Freedom and Social Justice in
Islam.” He has also published a book ‘Alternative
Youth Policy in Pakistan.’ Ali regularly writes columns
in Express Tribune and a blog on economic issues. Ali
Salman has held Fulbright scholarship, Royal
Netherlands Fellowship and Charles Wallace
fellowship and has master degrees in Economics,
Public Policy and Business Administration. He is an
adjunct faculty member at Government College
University Lahore and is a visiting fellow at Institute of
Economic Affairs, London. Ali is an alumnus of
International Academy of Leadership, Germany
and Atlas Network Think Tank MBA Program.
Sara Javed
Research Analyst
[email protected]
Sara is Research Analyst at Policy Research
Institute of Market Economy (PRIME) and
specializes in trade policy, competition and
private sector development. Sara holds
masters in Economics & International
Economics from University of Nottingham
and in Business Administration (Finance &
Risk Management) from the Institute of
Business Management. She was awarded
Globalization and Economic Policy (GEP)
scholarship from School of Economics,
University of Nottingham where she wrote
thesis on Useful Government Spending
Under Fixed Exchange Rate: A study on
crowding-out effect. She is a regular
contributor in economic policy debate
through her articles and has attended
several
national
and
international
conferences and workshops. Besides her
work, Sara has interests in paintings, reading
and movies.
PRIME Presentation
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Source: State Bank of Pakistan