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Wednesday, June 12, 2013

Economic Survey says GDP target missed; growth stayed at 3%

Govt to clear Rs 500bn circular debt in 60 days

* Dar says macro-economic situation in serious danger; investment to GDP ratio pathetic
* Foreign exchange reserves come down to $6.2 billion from over $10.5 billion

Staff Report

ISLAMABAD: Finance Minister Ishaq Dar said on Tuesday that the government would try to clear the Rs 500 billion circular debt within next 60 days to enable
the power sector to perform in accordance with expectations.
Dar made the announcement while releasing the Economic Survey 2012-13 at the Planning and Development Ministry along with the entire economic team, including Federal Minister for Planning and Development Chaudhry Ahsan Iqbal and top officials of the finance and planning divisions. According to the survey, the real gross domestic product (GDP) growth during the five-year tenure of the PPP-P government averaged at 3% against the required rate of 7%, and the fiscal year 2012-13 GDP growth target has been missed, with 3.6% growth against the target of 4.3%.
Ishaq Dar said the macro-economic condition of the country was in serious danger and announced that the new government is faced with a serious challenge of putting the economy on the right track. He said that the agriculture growth target was set at 4.1% but actual growth stood at 3.3%, services sector achieved 3.7% growth against the target of 4.3%, however, industrial growth witnessed a positive trend and against the target of 2% its growth was recorded at 2.8%. While terming investment-to-GDP ratio as pathetic, Ishaq Dar said that it should be increased to 20% of the GDP.
He said that investment-to-GDP ratio was targeted to be enhanced to 13.3% but it could only be increased to 12.6%. Similarly, national saving ratio stood at 12.8% against the target of 13.5%. The current account deficit crossed its limit of $2 billion and is expected to reach at $2.9 billion by June 30. The budget deficit target was fixed at 4.7% of the GDP, however, this deficit is likely to reach at 8.5% of the GDP by the end of fiscal year 2013-14.
The foreign exchange reserves of the country have come down to $6.2 billion from over $10.5 billion. Public debt which was Rs 3000 billion in 1999 has increased to Rs 13,250 billion and is expected to hit Rs 14,000 billion mark by the end of fiscal year 2012-13. Ishaq Dar said that Fiscal Responsibility and Debt Limitation Act (FR&DLA) has limited public debt to maximum 60% of the GDP and at present it stands at 62%, which is a violation of the act.
Ishaq Dar also said that due to the power shortages Pakistan is loosing at least 2% of the GDP growth annually and government would try its level best to minimise it to a bearable level. He said the circular debt has crossed Rs 500 billion mark and the Ministry of Finance is releasing Rs 13 billion to Rs 15 billion per month which is not enough to reduce the load shedding duration. He announced that the Ministry of Finance would now streamline this and adequate funds will be provided for generation of power in the country.
He also said that a comprehensive plan is being finalised to reduce the power theft and line losses so as to put the power sector on a sound footing. He noted that during the last five years the last government had spent Rs 1400 billion for subsidising power to the consumers and this huge amount could have been spent on education, health and poverty-reduction initiatives. He also said that to bridge the gap between selling price of power and purchase price, some Rs 6 per unit increase in power tariff would be required. According to the Economic Survey, Consumer Price Inflation averaged 7.8 percent against corresponding increase of 10.8 percent.

Courtesy www.dailytimes.com.pk

 

 

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