Macroeconomic Insights Performance of Pakistan’s Economy( ) Ali Salman Sara Javed Policy Research Institute of Market Economy (PRIME)

25/02/2013Presidents Chambers Conference Macro Economic Indicators PRIME Presentation

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Macro Economic Indicators PRIME Presentation * Right Axis: Exchange Rate Left Axis: GDP GDP has increased approximately by 2.37 times in 5 years. Real Exchange rate was substantially higher than the exchange rate

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Macro Economic Indicators PRIME Presentation * Right Axis: Percentage (M2)/ Index (CPI) Left Axis: M2 (Money Supply) Money supply has increased nominally though, it has decreased as a percentage of GDP. CPI was increasing till 2009, afterward, it has decreased substantially.

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators 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.

25/02/2013 Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators Revenue expenditure has increased by 2 times over the years. Development expenditure has not increased except slightly for last year. PRIME Presentation

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators * Right Axis: Tax Revenue and its components Left Axis: Non-tax revenue Tax revenue has increased by 2.3 times over the last five years. The distribution of direct and indirect taxes has remained constant. PRIME Presentation

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators The exports over five year have been rising, though it has not helped in improving trade balance. PRIME Presentation

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators FDI has decreased by 3 times in 4 years. PRIME Presentation

25/02/2013Presidents Chambers Conference Macro Economic Indicators * Right Axis: Total Domestic Debt Left Axis: GDP Source: State Bank of Pakistan The national income has increased by 2.37 times whereas, the national debt has increased by 2.5 times. PRIME Presentation

25/02/2013Presidents Chambers Conference Source: State Bank of Pakistan Presented by: Ali Salman (PRIME) Macro Economic Indicators AdvancesPKR bn. Manufacturing1, Electricity, Gas and Water Supply Agriculture, Hunting and Forestry 199 Commerce and Trade200.3 Transport, Storage and Communications Real Estate, Renting and Business 104 Others157.7 Total2, PRIME Presentation Manufacturing Sector has the largest share in private sector advances, constituted 56% of total 2.3 trillion rupees.

25/02/2013Presidents Chambers Conference Macro Economic Indicators Source: State Bank of Pakistan, Annual Report , page 64 Financing of Fiscal Deficit FY PKR bn, Fiscal Deficit1, Financing of fiscal deficit A. External Sources128.7 B Domestic Sources1, Non-bank Bank PIBs issues for PSEs debt391.0 PRIME Presentation 91% of fiscal deficit of PKR 1.3 trillion is financed through domestic sources, out of which, 44% was contributed by banks.

25/02/2013Presidents Chambers Conference Source: Ministry of Finance Presented by: Ali Salman (PRIME) Macro Economic Indicators Total: PKR 1, bn. Total subsidies of PKR 1.3 trillion has been given to power sector PSEs PRIME Presentation

25/02/2013Presidents Chambers Conference Macro Economic Indicators Source: State Bank of Pakistan Total: PKR 2,233 bn. In last five years, the PSEs accumulated total debt of PKR 2.2 trillion PRIME Presentation

Pakistan has crossed all threshold of debt entrapment 25/02/2013Presidents Chambers Conference IndicatorsThresholdActual values for Pakistan Fiscal Deficit/GDP3 8 Public debt servicing/ government revenues15 37 Public domestic debt/government revenues Macro Economic Indicators PRIME Presentation

Authors’ Profile Sara Javed Research Analyst 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. Ali Salman Executive Director 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.Liberate to Learn: Review of Education Vouchers Scheme in LahorePrice Controls: Implications for Liberty and Welfare“Discord between Economic Freedom and Social Justice in Islam.Alternative Youth Policy in Pakistancolumns in Express Tribuneblog PRIME Presentation