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2. 2 THE ECONOMY OF PAKISTAN -Some Thoughts Presentation by: PROF. DR. KHAWAJA AMJAD SAEED Principal HAILEY COLLEGE OF BANKING & FINANCE University of the Punjab, Lahore. Email: principal@hcbf.pu.edu.pk

3. 3 WELCOME TO OUR PROGRAM

4. 4 PRESENTATION 1Overall Framework PEST Formula 2Constitution of Pakistan 3Global Tributes to Pakistan 4GDP 5Federal Budget 2006-07 6Growth in Federal Government Revenue 7Corporate Income Tax Rates 8Energy 9China Factor 10Pakistan-Economy Final Review

5. 5 1: OVERALL FRAMEWORK PPolitical EEconomic SSociological TTechnological

6. 6 2: CONSTITUTION OF PAKISTAN ArticleFocus 03Elimination of Exploitation 18 Freedom of Trade, Business or Profession 37Promotion of Social Justice and Eradication of Social Justice 38Promotion of Social and Economic Well-being of the People

7. 7 1:World Bank - Managing Director October 2006 1.Rich in Human Capital 2.Impressive Record -Growth -Development -Poverty Alleviation 3.Continuous Economic Reforms 3: GLOBAL TRIBUTES TO PAKISTAN

8. 8 4.Inflation-Down 5.Government: 5-10 Years Plans -Water -Energy -Food Security -Infrastructure -HRD

9. 9 6.Privatization Program 7.Gawadar-Corridor -Trade -Transportation -Energy -Central Asia & China.

10. 10 2: IMF-September 2006 Tributes 1.Excellent Medium Term Planning 2.Strong FDI 3.Growing Domestic Investment

11. 11 3: Economic Freedom Index 2006 Pakistan 110 better than India India 121 4: Opacity Index Economist London Pakistan rated higher than India 5: Moody’s Investors Service-2006 Pakistan’s Rating Improving B 2 to B 1 Foreign and Local Currency Bonds

12. 12 4: GDP Pakistan Average Four Years 7.0% 2005-066.6% Others World4.8% Euro1.3% USA3.5% Japan2.7% Germany0.9%

13. 13 China 9.9% Asian South Asian 5.0% -India8.0% -Pakistan6.6% -Sri Lanka5.9% -Bangladesh5.8%

14. 14 5: FEDERAL BUDGET 2006-07 Outstanding Features 1.Record ADP Rs 435b 2.Record Allocation to Provinces: -Revenue Budget Rs 378b -ADP Allocation Rs 115b 3.Record forecast for Rs 1,083b Current Revenue 4.Special Allocations ADP -Programs Rs 34b -Areas Rs 17b -ERRA Rs 50b

15. 15 6: GROWTH IN FEDERAL GOVERNMENT REVENUE YearRs b% Growth Index 2005-061,096214 -05900175 -04791154 -03721141 -02624122 553108 1999-00513100 Source: Excerpted from Pakistan Economic Survey 2005-06, Statistical Appendix, Table 4.3.

16. 16 7: CORPORATE INCOME TAX RATES YearPublic Company % Private Company % Bank % 2004354144 2005353941 2006353738 200735

17. 17 8: ENERGY A: Needed 1. Cheap 2. Abundant 3. Environmental Friendly

18. 18 B: Electricity Use% 1. Households43 2. Industry28 3. Agriculture12 83 4. Commerce07 5. Others10 100

19. 19 C: Energy PerspectiveMW Short Term 20071,000 Medium Term 2008-2010 45 Power Plants8,600 Long Term 31 Projects (Hydel & Nuclear)19,150 28,750

20. 20 Impact Job Creation -Direct08 Lac -Indirect16 Lac 24 Lac

21. 21 D: Installed Generation of Electricity Capacity% 1. Wapda (Hydel 58% + Thermal 42%)58 2. IPPs30 3. KESC09 4. Nuclear83 100

22. 22 E: IssuesMW 1. Untapped Hydel Potential50,000 2. Line Losses 3. Solar Energy 4. Wind Energy 5. Austerity/Consumption Planning

23. 23 9: CHINA FACTOR 1. Population Currency 1.3bRenminbi (Yaun) 2. Language Mandrin 3. World Ranking & other Economic Data Exports 4 th GNP6 th Per Capita$960

24. 24 3. World Ranking & other Economic Data Inflation 0.8% Unemployment 2% 4. Strengths 1.High Domestic Market 2.Food Self Sufficiency 3.Mineral Resources 4.Diversified Industrial Sector 5.Low Wages

25. 25 6.Rapid Sustained Growth 7.Growing Exports 8.Hong Kong as a Financial Sector 9.Heavy Investment in Communication and in IT Sectors 5. Weaknesses 1.Corruption 2.Underemployment 3.Geographical Disparities 4.Poor transportation

26. 26 Export-Destination% 1. USA22 2. HK18 3. Japan18 4. Taiwan13 5. South Korea10 6. Germany06 7. Others13 Total 100

27. 27 6. Contributions to Pakistan 1.Karakrum Highway 2.Heavy Mechanical Complex 3.Chasma Nuclear Plant 4.Gawader

28. 28 7. Upcoming Investment 1.Five years Linkage 2.Private Sector Industrial Estate in Punjab - Gawader -Refinery -Other Investment - 32 Point joint statement

29. 29 10: PAKISTAN-ECONOMY FINAL REVIEW Positive 1.GDP Growth7% 2.KSEBullish 3.FDIRobust 4.Consumer Credit fromGrowing 5.Poverty Alleviation 10% down Levelssince 2000

30. 30 Negative 1.Income DistributionSkewed 2.Trade GapWidening 3.Growth Non Sustainable Source: Edited from IBP Newsletter, November 2006.

31. 31 THANK YOU FOR JOINING US