Nationwide Updates

► Export earnings up on lower unit prices

In spite of soaring global commodity prices and currency advantage over the regional economies like India and China, Pakistan is set to miss its export target of $19.20 billion for the current fiscal. The official trade numbers for the first 10 months to April indicate that the country might reach just close to the export target in dollar terms but its share in the global trade would be substantially cut from what was last year in terms of quantity of the manufactured goods and commodities sold in foreign markets. “The government conveniently conceals this reality when it cloaks its failure to achieve export growth in dollar value.  (Dawn)

► Can the forthcoming budget address the challenges facing the economy?

The impact of inflation is not confined only to the poor but it has wide repercussions for the economy as a whole. It has exorbitantly increased the public debt, created uncertainty for the investor and eroded the competitiveness of exports.  It has made difficult the task of maintaining exchange rate stability and distorted the targets of monetary aggregates. The economy has persistently been on a downslide for the last couple of years, and the monetary and fiscal measures taken so far have desperately failed to arrest this trend. Despite a democratic government in place after the 18th February election, the political uncertainty which has intensified with the 9th March judicial crisis has not come to an end.  (The News)

► The house of deficit

There is no difference of opinion as to what is the state of the economy: abysmal is what all stakeholders have said. However, there is a marked difference of opinion as to the cause of such dismal performance. Members of the former government lay the blame on external factors, notably the dramatic rise in the international price of oil as well as lack of appropriate government oversight with respect to the price and movement of wheat and rice during their own tenure, though they lay greater emphasis on the greed of those operating in these two commodity sectors than on their flawed policies.  ( Business Recorder)

► Pak Economy: A highly pessimistic Scenario  

The Commission on Growth and Development, an independent body based at the World Bank headquarters in Washington, has painted a bleak picture of the economy of Pakistan. According to its assessment, Pakistan needs 159 years to catch up with industrialized nations. However, the country could reach this milestone by 2050 if it could maintain an annual average growth rate of 8.3 percent and in 2100 if it could achieve an average growth rate of 4.9 percent. During the last ten years, though, the growth rate was only 4.8 percent. Going back, Pakistan's growth rate between 1980 and 2006 was an average of 5.1 percent and between 1960 and 2006, it was 5.5 percent.   ( Business Recorder)

► Tumbling growth, surging inflation 

Signals emanating from the economy lend weightage to cries from some quarters that the country has already arrived in a worrisome and difficult zone called stagflation by the economists. It is a state when the economic growth becomes stagnant and high inflation more stubborn. While the economic growth has declined from the targeted 7.2 per cent to close to 5.8 per cent, the unabated double-digit inflation continues to haunt the policy makers. Critics say that the tightening of the monetary policy may not tame inflation in the short-term but may retard economic growth.  (Dawn)

► Concerns over food inflation

THE recent price hike especially of food items has adversely affected the economy.. The salaried class is the worst sufferer. The government has failed to overcome the wheat crises and it seems to have been caught napping on the inflation front. Official statistics released in February 2008 showed 18 per cent increase in food prices, the highest ever monthly increase from over 14 per cent in October 2007. Food inflation has registered 3.04 per cent increase in January 2008 as compared with the increase in the preceding month of December 2007.  (Dawn)

► Package for industrial revival

On the eve of the federal budget 2009, the business and industry have appraised the government about its the various problems and submitted suggestions to minimise the emerging threats to the industry. It is time for the new government to enable it to play its due role in the growth of national economy. The government needs to announce a package for the industrial revival and for businesses which are under tremendous pressure owing to multiple reasons including high oil prices, inflation and energy shortage. The cost of doing business is increasing with every passing day as a result of the depreciating rupee.  (Dawn)

► Resource limitation, choices and options

The most stubborn failure of Pakistan’s macroeconomic and structural reforms during the last eight years has been the long-term failure of tax revenues to rise as a proportion of GDP and wasteful use of resources. Pakistan was successful in reducing fiscal deficit around 4 per cent or below mainly because of windfall gains of debt rescheduling, higher revenues on the back of rising imports and ending some tax exemptions. However, no serious effort was made to assess efficiency of spending or taxation decisions. The scope of the withholding tax regime was broadened and that also helped in augmenting revenue generating efforts. FBR was in a false sense of self-praise that it has achieved the revenue targets every year.  (The News)

► An alternate method for procurement and development

Public private (PP) partnerships have, till recently, taken place mainly in economic infrastructure, such as telecommunications, power and water. However, the desire for greater efficiency and better services, coupled with resource constraints, are now increasingly leading governments to embrace PP partnership approach to provide services in health, education and other social segments, like garbage collection, facilities management, etc. In the Federal Budget for the fiscal year 2008-09, about 30 per cent of the total development outlay is likely to be earmarked for completion of development projects through PP partnerships.  (The News)

► Developing fertilizer industry for sustainable growth 

The demand for urea in Pakistan far exceeds the local production capacity and therefore the rest has to be imported and distributed by the industry. The main market for urea is wheat growers, followed by cotton growers and then rice and sugarcane cultivators. Wheat has the highest acreage under cultivation and therefore has the highest demand while sugarcane requires the highest application of fertilizer. According to an estimate, around 5.0 million tonnes of urea is consumed in the country in which more than 50 percent is utilised in the rabi season only. The rabi season has sowing in September to December and harvesting in February to May for sugarcane and wheat, which form the main market for urea.  (The News)