Economic Progress (Part III)

[united pakistan]

ISLAMABAD: Terming it the highest in the past three years, Finance Minister Abdul Hafeez Shaikh announced that the government achieved a growth rate of 3.7% this year as compared to 3% last year. “It has been constantly growing, but not as fast as we wanted. Our medium-term goal is to take it up to 5-6%.
The minister, addressing the media at the Economic Survey 2011-12 launch on Thursday, said that the government could not achieve the growth rate it wanted due to several certain factors, including the unstable security situation which made international investors reluctant to invest in Pakistan. He added that the monsoon season last year also hindered growth as it destroyed crops in Sindh and Balochistan and caused a loss of $3 billion.
Curbing inflation
Shaikh added that in order to bring down inflation in the country, the expenses of the civilian government were cut and it was 10% lesser this year in comparison to the last year.
“The government’s first priority is to curb inflation. The government has done everything which was in its capacity for the purpose,” said Shaikh.
The minister outlined the three ways of measuring inflation: consumer price index, wholesale price index and the sensitive price index. “The average consumer price index this year was 10.8% as compared to last year’s 13.8%… The wholesale price index was 21% last year, but this year it was 11.2%. The sensitive price index was also brought down from 18% last year to 8.5%.”
Shaikh maintained that despite these reductions, the results have not been good enough. “People are facing inflation… But the government is trying its best to get rid of the problem.”
Tax revenue collection
The minister highlighted that the tax revenue, one of the ways for the government to curb inflation, needs to be collected to ensure self-sustenance of the country. “This is a very difficult job. There are powerful people, groups and representatives of industries, who do not want to be burdened by tax.”
But, he added, the government brought down the federal excise duties, special excise duties and reduced the taxes.
“The tax collection in the first 10 months of this year amounted to Rs1,449 billion, while in the same 10 months last year, it was Rs1,250 billion.”
“The tax revenue collection in one year was 25%, which is unprecedented in the history of Pakistan.”
Budget allocation to provinces
The minister said that the government provides all provinces with their due shares right away. “Around 65-70% of the budget is given to the provinces on the very first day. The federal government is then left with only 30%, in which it has to oversee a lot of things including the defence budget, federal government’s expenses and loan repayment.”
The minister said that the government has allocated more money to provinces to strengthen the country. “The provincial governments can directly help its people and fulfill their needs.”
Terming it as the biggest expense, the minister said that Rs300 billion were allocated for developmental projects.

[united pakistan]

http://www.finance.gov.pk/survey_1112.html

[mintgum84]

Insha-Allah 5-6% growth can be achieved soonish. If energy and security situation can be tamed, such rates are well within our grasp.

[brightside.]

Can anyone explain how taxes curb inflation?

[mintgum84]

They soak up money from the money supply.

[purenyork123]

An attempt to temper populism with*realism

From the Newspaper | Khaleeq Kiani | 9 hours ago

Finance Minister Hafeez Shaikh. — Photo by AFP

ISLAMABAD: The PPP government unveiled its fifth budget, which tried to balance the economic mess the government faces with the demands of the upcoming election.
As a result in one stroke it reduced subsidies and increased taxes — measures that are worth about Rs330 billion in total. But at the same time, it added Rs45 billion to its salary and pensions bill.
Announced on Friday by Finance Minister Abdul Hafeez Shaikh, the PPP-led coalition’s fifth budget estimated an expenditure of Rs2.960 trillion and a deficit of Rs1.105 trillion which is around 4.7 per cent of GDP.
However, the confusion over the government’s figures started soon after the speech ended.* The budget document put the federal expenditure at Rs3.23 trillion, instead of Rs2.960 trillion announced by Mr Sheikh.
One possible explanation for this discrepancy could be that in his speech the finance minister left out the Rs591 billion the government plans to spend on development.
This includes Rs360 billion under public sector development programme (PSDP), Rs77 billion in development loans and grants to provinces and Rs154 billion on other development expenditure such as the Benazir Income Support Programme, Export Development Fund, Crop Insurance etc.
The federal budget set an ambitious tax revenue target of Rs2.381 trillion and the finance minister claimed that his government would take the FBR tax to GDP ratio up to 10.1 per cent.
However, not everyone was willing to agree with his ambitious mathematics. Officials said the additional taxation measures would generate about Rs62 billion extra revenue but the net impact of this would be partially offset by the Rs31 billion fiscal stimulus. Hence the net gain would be only Rs31 billion.

Subsidy (mis)calculations
However, the government hopes that its cuts in subsidies will also be a major gain. Subsidies have been reduced to Rs208.6 billion, which is 59 per cent less than what the government spent in 2011-12.
Hence the government promises to provide only Rs135 billion to Wapda instead of the Rs419 billion it provided in 2011-12 while it aims to dole out Rs50.3 billion to KESC, which got Rs45 billion in 2011-12.
However, very few people are willing to buy these figures. An economist working for the government admitted on the condition of anonymity that the reduction in subsidies seemed unrealistic. He pointed out that in 2011-12 the government had put aside Rs166.5 billion for the power sector but ended up providing subsidies worth Rs512.3 billion. There are no indications this year that the next fiscal year would prove to be any different.
Perhaps the finance minister was aware of this as he said in his speech that the government had injected Rs1.25 trillion in the power sector in five years. “This is a huge burden on country’s fiscal system. After the NFC award, federal resources cannot carry this burden for too long”. But it remains to be seen if the provinces will heed his words or that the federal government will stop doling out cash for this hungry monster.

Federal government earnings
According to the budget, the federal government estimates it will have Rs3.23 trillion to spend in 2012-13, compared to Rs2.732 trillion it had in the previous fiscal year. This means it hopes for an 18.3 per cent hike in its revenues.
Out of this amount, it estimates to earn Rs2.504 trillion from taxes and Rs730 billion worth of non-tax revenue. It hopes to collect Rs932 billion from direct taxes and Rs1.572 trillion from indirect ones.
Telecom sales and CSF earnings
Interestingly, the government plans to collect Rs730 billion non-tax revenue, which is 42 per cent higher than what it got in 2011-12 — Rs512 billion. The low figure for 2011-12 can be blamed on the failure to hold telecom sales and because Washington didn’t deliver the coalition support fund.
Hence, the ambitious target the government has set itself in the budget is primarily based on the notion that it will earn Rs197 billon in CSF and third generation telecom earnings.

Deficit gaps and hopes
The overall federal fiscal deficit for the next year has been estimated at Rs1.185 trillion but the budget documents put it at Rs1.105 trillion because the government expects that the provinces will provide a cash surplus of Rs80 billion.
But even if the provinces deliver, the federal government will meet the Rs1.105 trillion deficit from Rs971 billion of domestic loans and the rest from external loans. But as the finance minister pointed out in his speech, the deficit target for 2011-12 was missed by a huge margin especially if subsidies and debt consolidation were added to it — all this took the deficit to 7.4 per cent of GDP in 2011-12.

Back breaking expenses including salary hikes
The total current expenses have been estimated at Rs2.612 trillion. The largest share of expenditure would be consumed by interest payments of Rs926 billion, about 9.7 per cent higher than 2011-12’s revised estimate of Rs844 billion. The total expenditure on pensions has been estimated at Rs129 billion which includes Rs98 billion for military personnel and Rs31 billion for civilians.
In addition the government has announced another Rs45 billion for the proposed increases in salaries and pensions. The finance minister announced an across the board 20 per cent increase in salaries and pensions for government employees. That this was a political move forced on him as confirmed by officials in the finance ministry who said Mr Shaikh had wanted to stick to a 10 per cent increment but federal ministers such as Khursheed Shah, Qamar Zaman Kaira and Firdous Ashiq Awan wanted a 30 per cent raise. Eventually, the two sides compromised on 20 per cent.

Defence has been allocated Rs545.4 billion for the next year, about 10 per cent higher than what it was supposed to get in 2011-12 and 6.8 per cent higher than what it actually ended up with.
The civil government will get a mere Rs240 billion, slightly higher than current year’s Rs216 billion while subsides will swallow up Rs208 billion.
The subsidy to the poor through Utility Stores would be increased from Rs2 billion this year to Rs6 billion to provide relief during Ramazan. In addition, the allocation for BISP has been increased from Rs50 billion to Rs70 billion.
Jobs in an election year
The finance minister also said that fresh employment opportunities would be generated for 100,000 educated youth.

Tax cuts for the salaried class
The budget promises to reduce tax rates. Mr Shaikh announced income tax exemption from existing Rs350,000 a year to Rs400,000 for the salaried class and businesses. The income tax slabs were reduced to five from 17 and only the portion of income exceeding a specific tax bracket would be charged at higher tax rate. He said this would benefit all existing income tax payers.
He also said that major tax relief had been extended to capital markets and investments. As such profits and gains of venture capitals would be exempt from taxes until the year 2024. Likewise, investments, retirement funds, dividends received by banks would be exempt from withholding tax provisions on capital gain tax.

[purenyork123]

Hmm if these subsidies are cut, the budget seems like a good budget along with elimination of circular debt.

As for education and healthcare, it's the provinces now that manage it. PakistAn today is like the EU or a tight confederacy and people can't point their finger at Islamabad for these issues any longer.

[everywhere]

KUNMING, June 6 (Xinhua) -- For the Maldives, an island nation known for its sunny beaches, trade and tourism links with China have become an important aspect of its everyday economy.

Over the past few years, as China has grown richer, the resort islands have received cohorts of Chinese holidaymakers, and commodities imported from China have gained immense popularity in the local market.

But the Indian Ocean archipelago is now expecting more from this relationship.

With fishing one of the country's pillar industries, it is unfortunate that tuna exports from the Maldives to China have remained scarce. But a free tariff agreement that came into effect in the last few years has sparked plans to export more fish and other products to China, according to Ahmed Mohamed, the Maldives' minister of economic development.

Furthermore, the Maldives is aiming to build itself into a favorable destination for not just Chinese tourists, but also Chinese investors, known for bringing funds and technologies with them as they have ventured into neighboring countries.

The Maldives' appeals are not alone in South Asia, where nations have called for China to play a bigger part in boosting the local economy and narrowing their trade deficit.

At the 7th China-South Asia Business Forum held in Kunming, capital of Yunnan province, on Monday, South Asian officials expressed hopes for increasing exports to China and inviting more Chinese investments.

According to official statistics, the trade volume between China and South Asian countries reached 97.43 billion U.S. dollars in 2011, marking a 20.9 percent rise year on year. But the fast growth is characterized by a rising trade imbalance.

"In India, there are a lot of demands for Chinese manufactured goods, which boast good quality and low prices, so China's export has been growing up very fast, but India's export to China has not been expanding at the same pace," said Indra Mani Pandey, consul general of India in Guangzhou, at the forum.

Total India-China trade in 2011 was 73.9 billion dollars, with 50 billion dollars accounted for by China's export to India and 23 billion dollars by India's export to China, Pandey said.

The consul general explained that, to further unlock trade potential, India hopes to export more IT services, pharmaceuticals, engineering goods and agricultural products to tap into China's surging domestic demands.

Pandey and other South Asian officials also called for the arrival of more Chinese investments.

China has the capital and technology that could help Nepal exploit its abundant natural resources, said Bhaskar Raj Rajkarnikar, senior vice president of of the Nepalese Chamber of Commerce and Industry.

"China is now an important source of foreign direct investments and advanced technology," added Munshi Faiz Ahmad, ambassador of Bangladesh to China, who noted that Chinese companies have invested billions of dollars in local mining, electricity and chemical industry.

Ren Jia, vice head of the Chinese Association for South Asian Studies, agrees Chinese investments could aid South Asian countries in improving their economic structure and increasing their export to China.

"China exports mechanical and electronic products, while South Asian countries rely on exports with low value added, such as marine products; that's how the trade imbalance came into being," Ren said.

According to the academic, China has expressed interest in investing in local mining, energy, and high-tech sectors and helping South Asian countries manufacture and export such goods back to China as a way to reduce deficits.

But investment moves made by Chinese companies still face restrictions in some South Asian countries, many of which have barred Chinese involvement in areas regarded as strategic resources, Ren said.

Wang Jinzhen, vice head of the China Council for the Promotion of International Trade, suggested on Monday that South Asian countries should seize the vast business opportunities brought by China's ongoing industrial restructuring.

"China is speeding up its overseas investment. And prompted by the efforts to transform its growth pattern, it is vigorously boosting domestic consumption and increasing imports," Wang noted.

http://www.shanghaidaily.com/article...a.asp?id=75387

[united pakistan]

LAHORE: The Punjab government allocated a budget of Rs780 billion for the province for the upcoming fiscal year 2012-13 on Saturday.
Punjab Finance Minister Mujtaba Shujaur Rehman, presenting the budget in the Punjab Assembly, announced a 20% increase in salaries of government employees and a 5% reduction in salaries of MPAs. Around 125,000 laptops will be distributed to students under the scheme of Punjab Chief Minister Shahbaz Sharif.
The finance minister, accusing the federal government of inefficiency, claimed that the provincial government met with a lot of hurdles in the energy sector and many projects were disrupted because of the federal government.
“We had allocated Rs9 billion for the energy sector last year, but the sector did not see any progress because of the federal government. We have tried to solve the issues ourselves. Now, we are allocating Rs10 billion for the energy sector.”
More details of the budget are as follows:

Rs31.56 billion allocated for the education sector
Rs32.38 billion allocated for general administration
Rs 81.86 billion for public order and safety
Rs1.5 billion allocated to courts to help them enhance their performance
Rs2 billion allocated for initiation of Ashiana Schemes in four different cities
Rs27.5 billion allocated to keep the price of wheat reasonable
No new tax on the lower and middle class will be imposed
Rs320 million allocated for minorities
Rs20 billion allocated for eight more Danish Schools
Rs6.5 billion allocated for Punjab education fund
Solar panels worth Rs1 billion will be installed
Rs62.9 billion allocated for infrastructure
Rs15 billion allocated for the youth

[khalid-don]

Rs. 20 billion for Danish school? that seems to be a lot of money.

[united pakistan]

Originally Posted by khalid-don

Rs. 20 billion for Danish school? that seems to be a lot of money.

for just 8 danish schools

[KB]

Rs. 20b for just 8 schools and Rs 31b for the rest of education sector?

[sandiego]

i think our politicians need a lesson in basic math.

[united pakistan]

[purenyork123]

Jang news aka owner of the news and geo news are so irresponsible along with express tribune. Bunch of pessimist fcuks that give only bad news for viewers. Ban them and I assure you Pakistanis will be a lot happier.

The other channels aren't so bad

[united pakistan]

+1 but others are also following this group, I was shocked how they did coverage of the dead bodies of Bhoja airline crash and there was no other news for 3 days

[united pakistan]

ISLAMABAD:
Suffering from militancy, sectarian violence and a separatist insurgency – the country’s top political and military leadership is betting on trade to uplift Balochistan.

The decision to open at least two more border crossing points with Iran and Afghanistan in Balochistan appears to be the first step towards a plan to create ‘vital links’ to transform the province into a transit route between South and Central Asia — a proposal given the green light by the United States, but one that may affect Islamabad’s relationship with one of its closest ally, China.
According to officials familiar with the development, the top political and military leaders met in Islamabad last month to tame what some participants called an ‘active insurgency’ in the province.
The huddle to address the breakdown of law and order and missing persons in Balochistan was presided over by Prime Minister Yousaf Raza Gilani and attended by Chief of Army Staff Gen Ashfaq Parvez Kayani and Inter-Services Intelligence (ISI) chief Lt Gen Zaheerul Islam.
The meeting that came on the heels of calls by top political leaders to curtail the role of the military in Balochistan also decided to form a six-member committee to spearhead dialogue with rebel Baloch chieftains.
At least three top officials, including a federal minister, told The Express Tribune that the top leadership was unanimous on addressing the Balochistan imbroglio with a mix of political means and economic measures.
“One thing that we all agreed was that the youth in Balochistan don’t have many opportunities to earn. There is no industry in the province, no agriculture. So we decided to give them a chance to have cross-border trade,” said the federal minister, who attended the meeting.
Currently, there are only two active international crossing points between the two countries – one at Taftan with Iran and one at Chaman with Afghanistan. However, these facilities are being used as transit points for smuggling.
Another official, requesting anonymity, told The Express Tribune, that a decision had not been taken yet as to where the crossing points would be established, adding that they could be located anywhere between Jeewani and Lasbella.
The official went on to add that another crossing point may be established in Khyber-Pakhtunkhwa, while at least two would be set up in Balochistan.
Published In The Express Tribune, June 13th, 2012.

[mintgum84]

Remittances have crossed $12 bn.

http://www.brecorder.com/pakistan/ba...6bn-mark-.html

[deltaone]

Rs577 billion allocated for Sindh budget 2012-2013

The Government of Sindh unveiled a Rs577 billion budget for the fiscal year 2012-13, Express News reported on Monday.

Provincial Finance Minister Syed Murad Ali Shah announced the budget.

During his speech, Shah mentioned that around 40% of the total budget have been allocated to developmental projects.

“We have reduced our non-developmental expenditure during the last few years,” he said.

He further added that the estimated revenue for year 2012-2013 is also 25% higher than the last year.

Entailing a capital of Rs570 billion and a deficit of Rs7 billion, the budget has allocated Rs20 billion for local governments which neither been restored nor dissolved under the Sindh Assembly Act.

According to a copy of budget obtained by Express News, an amount of Rs12 billion has been allocated for the health sector, while Rs9 billion will be spent on education.
Rs35 billion has been reserved for foreign projects, while Rs14 billion has been allocated for the projects funded by the federal government.

The budget has shown a growth of 40%, breaking the record of all the previous budgets.

http://tribune.com.pk/story/392021/r...get-2012-2013/

[deltaone]

VIP status: Pakistan added to EU trade preference list

The European Parliament’s plan of doing more “for poorer countries” has opened trade gates for three new countries including Pakistan.

The new rules will enable Pakistan, Philippines and Ukraine to apply for zero duty access on their exports to the EU under the “GSP+” incentive scheme, according to a Parliament statement.

“The new EU trade scheme is more predictable and more generous to countries that deserve it,” said British Conservative MEP and Legal Affairs spokesperson, Sajjad Karim. Pakistan will be allowed to apply for zero duty access if they agree to abide by the 27 international conventions in the field of human rights.

The new rules will reduce the number of countries that enjoy preferential access to EU markets from 176 to around 75. It will also reduce the total value of imports that qualify for EU preferences from 60 billion euros in 2009 to about 37.7 billion euros in 2014.

The updated generalised system of preferences (GSP), the Parliament informed, removes tariff preferences, such as reduced or zero duties, for EU imports from countries where per capita income has exceeded US 4,000 for four years. This rule ousted Russia, Brazil and Saudi Arabia from the beneficiaries list and will now have compete on an equal footing with the EU in world markets. Latin American countries Argentina, Brazil and Uruguay remained out of the benefitting list.

The GSP plus scheme will contribute to the promotion of human rights, democracy and freedom of speech in the developing world, added Karim who is also Chairman of the European Parliament Friends of Pakistan Group.
“The European Parliament Friends of Pakistan group has been campaigning to increase the threshold of the GSP+ scheme to allow Pakistan to enjoy more trade with the EU.”

He also dismissed the few MEPs who called for Pakistan not to be included in the trade scheme in a European Parliament debate on Monday.

“The clear long-term strategy is for the EU and Pakistan to cooperate on a wide range of issues including trade, security and policy. The EU-Pakistan Five Year Engagement Plan and the recent successful launch of the first Strategic Dialogue in Islamabad this month with Baroness Ashton is clear evidence of that,” he added.