Macroeconomic Insights
Performance of Pakistan’s Economy(2007-2012)
Ali Salman [email protected]
Sara [email protected]
Policy Research Institute of Market Economy (PRIME)www.primeinstitute.org
Presidents Chambers Conference 25/02/2013Macro Economic Indicators PRIME Presentation
Presidents Chambers Conference 25/02/2013
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
Presidents Chambers Conference 25/02/2013
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.
Presidents Chambers Conference 25/02/2013
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
Presidents Chambers Conference 25/02/2013
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
Presidents Chambers Conference 25/02/2013
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
Presidents Chambers Conference 25/02/2013
Source: State Bank of Pakistan
Presented by: Ali Salman (PRIME)Macro Economic Indicators
• FDI has decreased by 3 times in 4 years.
PRIME Presentation
Presidents Chambers Conference 25/02/2013Macro 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
Presidents Chambers Conference 25/02/2013
Source: State Bank of Pakistan
Presented by: Ali Salman (PRIME)Macro Economic Indicators
Advances PKR bn.Manufacturing 1,349.30
Electricity, Gas and Water Supply
271.9
Agriculture, Hunting and Forestry
199
Commerce and Trade 200.3
Transport, Storage and Communications
110.9
Real Estate, Renting and Business
104
Others 157.7
Total 2,393.10
PRIME Presentation
• Manufacturing Sector has the largest share in private sector advances, constituted 56% of total 2.3 trillion rupees.
Presidents Chambers Conference 25/02/2013Macro Economic Indicators
Source: State Bank of Pakistan, Annual Report 2011-12, page 64
Financing of Fiscal Deficit FY 2011-12
PKR bn,
Fiscal Deficit 1,369.70
Financing of fiscal deficit
A. External Sources 128.7
B Domestic Sources 1,241.10
1. Non-bank 529.4
2. Bank 711.1
3. PIBs issues for PSEs debt 391.0
PRIME Presentation
• 91% of fiscal deficit of PKR 1.3 trillion is financed through
domestic sources, out of which, 44% was contributed by
banks.
Presidents Chambers Conference 25/02/2013
Source: Ministry of Finance
Presented by: Ali Salman (PRIME)Macro Economic Indicators
Total: PKR 1,323.25 bn.
• Total subsidies of PKR 1.3 trillion has been given to power sector PSEs
PRIME Presentation
Presidents Chambers Conference 25/02/2013
2007 2008 2009 2010 2011 20120
100
200
300
400
500
600
Total Debt to PSEs
Billi
on R
upee
s
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
Presidents Chambers Conference
Pakistan has crossed all threshold of debt
entrapment
25/02/2013
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
Macro Economic Indicators PRIME Presentation
Authors’ ProfileSara Javed
Research [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.
Ali Salman Executive [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.
PRIME Presentation