tag:blogger.com,1999:blog-5848640164815342479.post1692084469892517003..comments2024-03-18T16:01:13.871-07:00Comments on Haq's Musings: Pakistan's Economic Performance 2008-2010Riaz Haqhttp://www.blogger.com/profile/00522781692886598586noreply@blogger.comBlogger57125tag:blogger.com,1999:blog-5848640164815342479.post-36468507368764045522014-03-03T16:53:13.586-08:002014-03-03T16:53:13.586-08:00Here's a Dawn report on avg 2.9% gdp growth ra...Here's a <a href="http://www.dailytimes.com.pk/business/27-Feb-2014/pakistan-s-gdp-grow-2-9-in-5-years" rel="nofollow">Dawn report</a> on avg 2.9% gdp growth rate in last 5 years since Musharraf's departure:<br /><br /><i>The economy grew at an average rate of 2.9 percent per annum during the last five years though GDP growth witnessed growth in financial year 2012-13 to stand at 3.6% against the target fixed was 4.3%, the yearly report published by Federal Board of Revenue (FBR) said.<br />The performance by the important sectors of economy like agriculture, manufacturing and services remained below their capacity. However, the recent EU approval of duty waiver in the form of awarding GSP PLUS status (Generalized System of Preferences Plus) has created much wanted space for the economy.<br />Duty free access to Pakistan’s exports to the bloc of 27 member countries of European Union has offered much attention for the domestic and Chinese investors. The Chinese investors have started entering into joint ventures with local manufacturers to take advantage of trade concessions. Due to these developments, the ambitious growth of textile and clothing sector has become possible. One may hope that a prudent use of EU duty concessions avoiding any caveat therein will lead towards improvement of business environment and to the desired destination of economic stability.<br />The economy of Pakistan continued facing various shocks since beginning of FY: 2012-13. The energy crises got complex and worsened. The security hazards vastly affected the economic and social environment. The fight against terrorism got another additional front of sectarian extremism. The extensive financial constraints, economic mismanagement and less than capacity electricity generation despite its acute shortage have been the major weaknesses in the economy. An estimate indicated that around 2% of the GDP has been washed away due to power shortage. Moreover, the challenging scheduled payments due, to the international donor agencies added further difficulties for the economic management.<br />However, the positive aspects of the economy included comparatively lower trade deficit, strong remittances and above 33% decline in inflation rates i.e., reduced from 11.0% in 2011-12 to 7.4% in FY: 2012-13. Some prudent measures have been taken for improvement of economy (most important step was the settlement of circular debt to the tune of Rs 480 billion which paved the way of 1700 megawatts additional electricity generation). Similarly, easy monetary policy with low interest rate during the FY: 2012-13 increased the cheap credit borrowing by the corporate sector. Resultantly, improved performance by the large scale manufacturing sector became possible and observed.<br />Despite unfavorable economic conditions, the FBR has been able to collect Rs 1,946 billion at the end of the fiscal year 2012-13. A growth of 3.4 percent over last year’s collection has been recorded. The FBR revenue target for the FY: 2012-13 was fixed at Rs 2,381 billion with an envisaged growth of 26.5% over last year’s collection of Rs 1,883 billion. Keeping in view the broad based challenges faced by the economy, the revenue target was revised downward to Rs 2,007 billion and expected a growth of 6.6%. The important indicators considered for assigning of revenue targets includes expected growth in GDP, the rate of inflation, level of ease in monetary policy, growth in the Large Scale Manufacturing sector, tax buoyancy, budgetary measures and imports.</i><br /><br />http://www.dailytimes.com.pk/business/27-Feb-2014/pakistan-s-gdp-grow-2-9-in-5-yearsRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-35205645807067362622013-02-13T08:48:55.324-08:002013-02-13T08:48:55.324-08:00Here's ET on increasing e-banking in Pakistan:...Here's <a href="http://tribune.com.pk/story/506723/e-banking-transactions-cross-rs7-trillion-state-bank/" rel="nofollow">ET</a> on increasing e-banking in Pakistan:<br /><br /><i>The overall value and volume of e-banking transactions throughout the country increased during the second quarter (October to December 2012) to Rs 7.6 trillion (18.02 per cent)and Rs 79.45 (11.31 per cent) million respectively, the State Bank of Pakistan reported on Wednesday.<br /> <br />State Bank of Pakistan’s Payment Systems report for the second quarter of FY13 released today revealed that the branches of 484 banks in Pakistan were added to the Real-Time Online Branches (RTOB) network during the second quarter of the current fiscal year (FY13) and now 94 percent branches are offering online banking services.<br /> <br />Calculating the overall internet banking services across the country, overall 9,896 branches of banks out of 10,523 are offering the service. During the second quarter, the overall value and volume of internet banking transactions had seen an increase in of 18.82 percent and 14.29 percent in the overall value and volume of internet banking from the first quarter of 2012, respectively.<br /> <br />The Payment Systems infrastructure in the country had also seen an increase because of the installation of 245 new Automated Teller Machines at banks around the country. Today, the number of ATMs across Pakistan has reached a total of 6,232. The report further said that ATM transactions had a major share of 61.12 percent in terms of transaction volume with an average value of Rs9,779 per transaction.<br /> <br />The overall e-banking transactions in value terms was 6.27 percent during the second quarter, increasing the value and volume of ATM transactions by 10.33 percent and 10.68 percent respectively in the second quarter as compared to the first quarter of the current fiscal year.<br /> <br />The report also said that over 20.72 million banking cards were issued in the country by the end of December, 2012, witnessing an increase of 5.33 percent in the second quarter compared to the preceding quarter.<br /> <br />Point of Sale (POS) terminals showed a growth of 6.25 per cent and 5.06 per cent in value and volume respectively as compared to the first quarter of the current fiscal year, with value and volume of transactions standing at Rs22.1 billion and Rs4.5 million, respectively, in the second quarter.<br /> <br />The report also pointed out an increase of large-value payments through Real Time Gross Settlement (RTGS) with 9.46 percent in value and 10.35 percent in volume as compared to the first quarter. The recorded value and volume was Rs42.13 trillion and Rs12.16 billion respectively in the second quarter.<br /> <br />The report also revealed that major portion for the increased number of overall Pakistan Real Time Interbank Settlement Mechanism (PRISM) transactions increased 14.06 percent during the same period, which was contributed by Interbank Funds Transfers (IBFT). Similarly, the value of overall PRISM transactions increased by 14.96 percent due to securities settlement.</i><br /><br />http://tribune.com.pk/story/506723/e-banking-transactions-cross-rs7-trillion-state-bank/Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-76353936370888849392012-11-24T18:54:19.634-08:002012-11-24T18:54:19.634-08:00Here are some excerpts of an interesting Op Ed in ...Here are some excerpts of an interesting Op Ed in <a href="http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/25-Nov-2012/economic-challenges-for-pakistan-going-into-2013" rel="nofollow">The Nation</a> newspaper by former finance minister Shaukat Tarin:<br /><br /><i>Despite all the gloomy news and events that has started to define Pakistan, our national resilience remains intact. However, the question that is one every one’s mind is for how long?<br /><br />Let’s start with the positives (yes there are always some!) of Present Day Pakistan;<br /><br />• CP Inflation while high is showing signs of becoming range bound;<br /><br />• Foreign Remittances continue to rise (the PRI scheme launched under my stewardship has borne fruit with remittances expected to cross the $l2b annual mark this year);<br /><br />• We have finally started to debate/define our role in the devastating ‘War on Terror” and the end game of Afghan conflict has started to be played out.<br /><br />• Pakistan’s banking system remains insulated from the Western banking meltdown.<br /><br />• Booming Agrarian economy, despite devastating floods; with corporate sector moving into dairy, live-stock and value added processing.<br /><br />• While most of the rest of the world is ageing our population is getting younger<br /><br />• Democracy is still holding on!<br /><br />However, we are far from the country we all aspire. The negative list (so to speak) is long, makes a somber reading, but largely includes:<br /><br />• Lack of governance and transparency (lack of meritocracy).<br /><br />• Unrelenting and crippling energy shortages.<br /><br />• Lack of Scale/infrastructure to support GDP growth.<br /><br />• Security and Law and order situation (Perception twice as worse as reality with the reality bad enough especially in Karachi and Quetta)<br /><br />• Weak Social Sector reforms/indicators.<br /><br />• Increasing friction amongst state institutions.<br /><br />---<br />... the economic and social sector performance of Pakistan has also been severely impacted by the following:<br /><br />1) Inability of the successive governments to balance their budgets by increasing tax to GDP ratio, reducing non-development expenses and losses of the Public sector enterprises.<br /><br />2) Negligible expenditures on education and health sectors to develop our most important asset i.e. human resource.<br /><br />3) Creating a competitive environment of high economic growth by focusing on the productive sectors of our economy such as agriculture and manufacturing, and<br /><br />4) Focusing on infrastructure and energy sectors to facilitate the economic growth.<br /><br />Whereas, we have seen efforts in the past to address these weaknesses they have been at best weak and far between.<br /><br />The present economic scenario is again infected by the same weaknesses i.e. large fiscal deficits, low expenditure on education and health, chronic electricity and energy shortages, lack of focus on the productive sectors resulting in high inflation, high unemployment and low economic growth. We all want a Pakistan which is economically prosperous, institutionally resilient and strategically oriented. In essence, we want to make Pakistan an economic welfare state. In my view, a key pre-requisite for an Economic Welfare State is to ensure that a country experiences equitable and sustainable growth for a prolonged period of time. Look at the examples of India and China where uninterrupted economic growth has changes the whole value proposition of these countries.<br />------------<br />To reduce our fiscal deficit we will have to increase our taxes. As I have said it many a times, all incomes will have to pay taxes and there cannot be any sacred cows. Agriculturists will have to pay their taxes and so should the retailers, real-estate developers stock-market and all professionals. Our tax to GDP is woefully inadequate at 9pc, where Sri Lanka is 17pc, India 19pc, China 21pc and Turkey 33pc. Before I left the government, there was a tax plan in place, which needs to be implemented. It will require a strong political will.....</i><br /><br />http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/25-Nov-2012/economic-challenges-for-pakistan-going-into-2013<br />Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-16992677680806516882012-05-19T18:38:47.187-07:002012-05-19T18:38:47.187-07:00Here's an ET piece on history of economic grow...Here's an <a href="http://tribune.com.pk/story/381450/setting-the-record-straight-not-all-dictators-equal-nor-all-democrats-incompetent/" rel="nofollow">ET piece</a> on history of economic growth under various leaders since 1947:<br /><br /><i>The Express Tribune took the trouble to go through Pakistan’s historical GDP growth rates and compared various governments. We used GDP growth numbers from the Pakistan Bureau of Statistics records, which go all the way back to fiscal year 1952. We then calculated the geometric average (which calculates the compound average growth rate) rather than the simple arithmetic average to calculate the growth rates during the entire tenure of a government and then we ranked them. The results were somewhat surprising.<br /><br />For instance, former President Ayub Khan – widely regarded as Pakistan’s best ruler when it comes to economic growth – is actually in second place. The number one spot is held by former President Ziaul Haq, who averaged 5.88% growth during his 11 years in office.<br /><br />For fans of President Ayub who insist that his record before the 1965 war was better, we checked: it is not true. Pakistan’s growth rate during that period averaged 5.73% per year, which is actually lower than President Ayub’s own overall average of 5.82%. Having said that, industrial growth from the 1958 coup to the 1965 war averaged 9.21%, higher than any Pakistani ruler’s record, including Ayub’s own overall average of 8.51%.<br /><br />Another surprising insight: if one ranks the ten rulers Pakistan has had since 1952 according to the average economic growth rate during their tenure, both the top five and the bottom five include three dictators and two democrats.<br /><br />Yes, the top three slots are undoubtedly all taken up by the usual suspects: former Presidents Ziaul Haq, Ayub Khan and Pervez Musharraf, in that order. The next two are somewhat surprising: Benazir Bhutto comes in at fourth place and her father Zulfikar Ali Bhutto is not far behind. The supposedly pro-markets Nawaz Sharif comes in at seventh place.<br /><br />Yet another surprise: Benazir Bhutto’s average was 5.08%, not far off from Pervez Musharraf’s 5.14%. She beat her rival Nawaz Sharif by a full percentage point: Pakistan’s economic growth averaged 4.06% during Nawaz Sharif’s both terms as prime minister.<br /><br />Length of time in office appears to matter far more than whether the ruler was a dictator or a democrat. The top three were all in office for at least nine years, with the top two each in office for eleven years. Yahya Khan, Iskandar Mirza and Ghulam Muhammad – none of whom was democratically elected or subject to a popular mandate – all come in close to the bottom of the rankings. None of them had longer than four years in office.<br /><br />But the more intriguing question to ask is why both the Bhuttos vastly outperform Nawaz Sharif.<br /><br />The answer lies in the breakup of the GDP number: while Nawaz beat both Bhuttos on industrial growth, he was abysmal when it comes to agriculture. Benazir Bhutto was the best in Pakistani history for agriculture, which grew at an average of 6.65% during her five years in office.<br /><br />Zulfikar Ali Bhutto, meanwhile, had blowout growth in services, averaging 10.63% during his only term in office, the highest of any Pakistani ruler. (Oddly enough, the elder Bhutto had a poor track record on agriculture, despite his family background. Agriculture grew at a paltry 2.12% per year during his tenure, worse even than Nawaz.)<br /><br />For those who are currently pessimistic about Pakistan’s economic prospects, you may find some comfort in knowing that the numbers back you up: President Asif Ali Zardari ranks dead last in terms of economic growth, averaging a paltry 2.62% during his term in office so far.</i><br /><br />http://tribune.com.pk/story/381450/setting-the-record-straight-not-all-dictators-equal-nor-all-democrats-incompetent/Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-33985898769356958372012-05-19T08:36:45.341-07:002012-05-19T08:36:45.341-07:00Here's a BR story on FDI plummeting in Pakista...Here's a <a href="http://www.brecorder.com/editorials/0/1190691:slump-in-foreign-investment/?date=2012-05-18" rel="nofollow">BR story</a> on FDI plummeting in Pakistan: <br /><br /><i>According to the latest data released by the State Bank of Pakistan on 15th May, foreign private investment in the country dropped to only dollar 595 million in July-April, 2012 as compared to dollar 1.622 billion in the corresponding period last year, showing a huge fall of over 63 percent.<br /><br />Out of this, foreign direct investment (FDI) fell to dollar 667 million as against dollar 1292.8 million in the comparable period of 2011-12, while portfolio investment showed an outflow of dollar 71 million in sharp contrast to an inflow of dollar 329 million in the corresponding period last year.<br /><br />Sector-wise, the most discouraging news was in the telecommunication sector which used to be the favourite area of investment of foreigners but witnessed a profoundly high net outflow of dollar 327 million of investment during the first ten months of the current fiscal as against an inflow of dollar 73 million in July-April, 2011.<br /><br />The power sector also recorded a net outflow of dollar 25 million compared to a net inflow of dollar 129 million in the same period of last year.<br /><br />FDI in financial business declined to only dollar 54 million compared to dollar 223 million in the corresponding period of 2010-11.<br /><br />Transport and trade sectors also witnessed massive declines of 83 percent and 55 percent, respectively, in FDI during the year.<br /><br />However, investment in the oil and gas exploration sector at dollar 466 million witnessed an increase of 12 percent during July-April, 2012.<br /><br />Country-wise, FDI from the US was the highest at dollar 196 million followed by the UK at dollar 171 million, Italy at dollar 162 million and China at dollar 113 million.<br /><br />A steep fall in FDI during the first 10 months of 2011-12 is definitely disturbing news for the country, especially at a time when the economy is in dire need of liquidity to revive its growth prospects to create job opportunities and reduce poverty.<br /><br />Also, foreign investment is crucial for technological upgradation, innovative improvements and overall modernisation of the industrial base to allow it to be competitive at the international level and enhance exports to narrow the widening trade gap.<br /><br />Of course, the compulsion to attract FDI would have been less severe if the country was able to generate the required level of domestic resources to finance the needed investment, but obviously this is not the case as indicated by a huge gap in these two variables.<br /><br />The most worrying aspect of the situation is that foreign investors have, over the years, changed their perception about the country as a favourable destination of investment and shifted their attention to other countries.<br /><br />This is indicated by a steady decline in FDI in the country from dollar 5.4 billion in FY08 to dollar 3.7 billion in FY09, dollar 2.2 billion in FY10 and dollar 1.7 billion in FY11.<br /><br />If the present trend continues which we have no reason to contest, the inflow of FDI during 2011-12 could be less than dollar one billion or highly inadequate to make any meaningful contribution to the country's economic prospects.<br /><br />The reasons for a rapid decline in FDI in the recent years are not difficult to understand.<br /><br />Although, there are ample opportunities for investment in various sectors of the economy and Pakistan has one of the most conducive policy framework to attract FDI, the inhibiting factors are so dominant and pervasive that foreign investors seem to avoid the country without giving much thought to the positive gestures of the government.<br /><br />Some of the deterrents to foreign investment include poor infrastructure, energy crisis, very poor law and order situation, corruption, political instability, lack of good governance and increasing militancy......</i><br /><br />http://www.brecorder.com/editorials/0/1190691:slump-in-foreign-investment/?date=2012-05-18Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-78307502634871954672012-04-11T19:23:58.951-07:002012-04-11T19:23:58.951-07:00Here's a News report of losses at sta6e-owned ...Here's a <a href="http://www.thenews.com.pk/Todays-News-3-102456-Pakistan-Steel-Mills-denied-Rs9bn-bailout-package" rel="nofollow">News report</a> of losses at sta6e-owned Pakistan Steel Mills:<br /><br /><i>The Federal Cabinet that met here on Wednesday with Prime Minister Yousaf Raza Gilani in the chair turned down the loss making Pakistan Steel Mills’ (PSM) request for Rs9 billion to bail it out of financial crisis.<br /><br /> <br /><br />PSM, a few days ago, had moved a summary to the federal cabinet through the Ministry of Production to seek a Rs9 billion bailout package from the government as it was in severe financial crisis; and the Mills was running below 20 percent of its capacity. The cabinet deferred the Mills request until the next meeting of the cabinet.<br /><br /> <br /><br />It is worth mentioning that PSM remained a profit-making entity for seven years, from 2000 to 2007, but as the PPP-led coalition government came into office, the entity started accumulating billions of rupees losses and continues to nosedive. The Mills is spending about Rs1.2 billion a month under different heads, whether it is making profit or raking up losses. The giant holds a constant burden of 21,000 employees despite suffering from low productivity.<br /><br /> <br /><br />The Ministry of Production is also now distancing itself from this politically sensitive entity and believes that the Mills is more in control of the Cabinet Committee on Restructuring of State-Owned Enterprises, headed by the Finance Minister Dr Hafeez Sheikh, well-placed sources told The News.<br /><br /> <br /><br />Interestingly, last year in November, the federal minister for production Chaudhry Anwar Ali Cheema also gave a blatant statement by calling the Mills “nothing but a burden on the economy of the country” and had advised the government that it is better to get rid of it rather than feeding it with billions of rupees every year.<br /><br /> <br /><br />Official sources, while giving a blue print of the Mills performance, said that during 2007-08, PSM production attainment stood at 82 percent of its capacity utilisation and after that, it took a declining course to 64 percent in 2008-09, 40 percent in 2009-10 and 35 percent in 2010-11.<br /><br /> <br /><br />This year too, due to shortage of raw material including iron ore and coal, the Mills is running on less than 20 percent of its capacity.<br /><br /> <br /><br />As far as the sale of PSM products is concerned, it was recorded at Rs42.938 billion in 2007-08 and has been on the decline since then, with Rs34.340 billion in 2008-09, Rs23.832 billion in 2009-10 and Rs27.379 billion in 2010-11.<br /><br /> <br /><br />The last time PSM had fetched Rs2.38 billion in profit was in 2007-08, while after that it continuously racked up losses. In 2008-09, its losses were 26.53 billion in 2009-10 it was Rs11.52 billion and in 2010-11 it was Rs11.49 billion.<br /><br /> <br /><br />According to PSM data, during the first quarter (July-September 2011-12) it accumulated losses of about Rs4.3 billion.</i><br /><br />http://www.thenews.com.pk/Todays-News-3-102456-Pakistan-Steel-Mills-denied-Rs9bn-bailout-packageRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-58976366012173813142012-02-29T17:56:20.477-08:002012-02-29T17:56:20.477-08:00Pak threat to Indian science
Hindustan Times
Pa...Pak threat to Indian science<br /><br /><a href="http://www.hindustantimes.com/News-Feed/NM13/Pak-threat-to-Indian-science/Article1-124925.aspx" rel="nofollow">Hindustan Times</a> <br /><br /><i>Pakistan may soon join China in giving India serious competition in science. “Science is a lucrative profession in Pakistan. It has tripled the salaries of its scientists in the last few years.” says Prof C.N.R. Rao, Chairman of the Prime Minister’s Scientific Advisory Council.<br /><br />In a presentation to the Prime Minister, Rao has asked for a separate salary mechanism for scientists. The present pay structure, he says, is such that “no young technical person worth his salt would want to work for the Government or public sector”.<br /><br />He adds, “You needn’t give scientists private sector salaries, but you could make their lives better, by say, giving them a free house.”<br /><br />Giving his own example, he says, “I have been getting a secretary’s salary for the last 35 years. But I have earned enough through various awards.<br /><br />But I can raise a voice for those who aren’t getting their due.” Last year, Rao won the prestigious Dan David Award, from which he created a scholarship fund. So far, he has donated Rs 50 lakh for scholarship purposes.<br /><br />The crisis gripping Indian science seems to be hydra-headed. “None of our institutes of higher learning are comparable with Harvard or Berkeley,” points out Rao. The IITs, he says, need to improve their performance: a faculty of 350 produces only about 50 PhD scholars a year. “That’s one PhD per 5-6 faculty members,” says the anguished Professor.<br /><br />Rao fears that India’s contribution to world science would plummet to 1-1.5 per cent if we don’t act fast. At present, India’s contribution is less than three per cent. China’s is 12 per cent.<br /><br />“We should not be at the bottom of the pile. When I started off in the field of scientific research at 17-and-a-half, I had thought that India would go on to become a top science country. But now, 55 years later, only a few individuals have made it to the top grade,” he laments.</i><br /><br />http://www.hindustantimes.com/News-Feed/NM13/Pak-threat-to-Indian-science/Article1-124925.aspxRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-37369971510921821722012-01-24T19:20:08.294-08:002012-01-24T19:20:08.294-08:00Here's a Global Post story on NATO using smugg...Here's a <a href="http://www.globalpost.com/dispatch/news/regions/asia-pacific/pakistan/120123/pakistan-border-nato-us-troops-afghanistan" rel="nofollow">Global Post</a> story on NATO using smugglers to supply its troops in Afghanistan through Pakistan: <br /><br /><i>With few other options available to it since Pakistan closed its border crossings almost two months ago, NATO has at times resorted to paying local smugglers to get much-needed supplies to its troops fighting in Afghanistan, Pakistani officials say.<br /><br />The Pakistani and Afghan smugglers, who must pay bribes to militants to travel safely through some areas, navigate treacherous routes over the 1,800-mile mountainous divide that separates the two countries to bring containers of oil, food and other essential items — all at a price — to soldiers on the other side.<br /><br />“Borders mean nothing to us. We have been crossing in and out for centuries,” Sahib Khan, a smuggler who said NATO had hired him, told GlobalPost.<br /><br />The hiring of illegal smugglers came after a failed attempt by NATO to pay private companies, which truck goods across the border under the Pakistan-Afghanistan Free Trade Agreement (PATA). These private companies, Pakistani officials said, were secretly swapping out their normal cargo for NATO supplies until Pakistani security forces caught wind of the scam.<br /><br />A senior officer for the Frontier Corps, an elite military unit that is responsible for security along the border, told GlobalPost that a total ban on the movement of containers under PATA, which was signed in 2010 to promote bilateral trade, eventually foiled the strategy.<br /><br />“We had concrete evidence that some of the containers being imported by private companies, under PATA, were being used to smuggle supplies for NATO troops under cover of commercial imports,” the official said.<br />----------<br />Smuggling between Pakistan and Afghanistan has long been a profitable and vibrant business. Various trade agreements have been signed between the two neighbors in a bid to contain the practice, but high import and export taxes coupled with little government oversight, thwarted those attempts.<br /><br />Mostly items like flour, edible oil, lentils, dried vegetables, contraband cigarettes, and animals for meat are smuggled into Afghanistan, while spare auto parts, electronics and unregistered vehicles are smuggled the other direction.<br /><br />Smuggling is so widespread that it has become the backbone of the economy in towns and villages along the border, where locally it is treated simply as normal trade. The mountainous terrain provides an edge over security to smugglers who regularly trickle across the border without any trouble.<br /><br />Sahib said that most of the food and oil supplies he has carried across the border for NATO originate from the southern port city of Karachi, and are moved through Peshawar and Quetta, and finally through Pakistan’s tribal areas, which are largely under the authority of various militant groups.<br /><br />For those militants, the smugglers have been an important source of income. Smugglers are required to pay “rahdari,” or “passage,” an unofficial tax that allows them safe passage.<br /><br />“Once we are onto the route, it’s the responsibility of those who receive rahdari to ensure we are able to safely enter into Afghanistan,” Sahib said.<br /><br />Any smuggling that is done on behalf of NATO can in no way make up for the closed borders, however. Smugglers say they carry between 20 and 25 small containers a day while, when the border crossings were open, NATO shipped an average of 250 large containers a day — making the reopening of the borders essential to the war effort.</i><br /><br />http://www.globalpost.com/dispatch/news/regions/asia-pacific/pakistan/120123/pakistan-border-nato-us-troops-afghanistanRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-68656551317053671812012-01-20T20:10:38.261-08:002012-01-20T20:10:38.261-08:00Here's a Dawn report on ADB's assessment o...Here's a <a href="http://www.dawn.com/2012/01/20/pakistan-growth-challenging-dependant-on-reform-pace-adb.html" rel="nofollow">Dawn report</a> on ADB's assessment of Pakistan economy:<br /><br /><i>...After devastating summer floods caused economic growth to slow to 2.4 per cent in the 2010/11 fiscal year, ADB country director for Pakistan Werner Liepach forecast growth to pick up to just 3.6 per cent in 2011/12. The government targets an expansion of 4.2 per cent.<br /><br />“Short-term there are huge challenges… (the) next few months will continue to be protracted as there are repayments and not enough inflows, reserves will go down,” Liepach said.<br /><br />“But I don’t see a crash coming, and I don’t see the economy taking off either and that’s not good enough.”<br /><br />There is grave concern amongst analysts about a possible balance of payments crisis as Pakistan’s current account deficit has widened to $2.154 billion in the first six months of the 2011/12 fiscal year.<br /><br />Pakistan had a surplus of $8 million in the same period last year.<br /><br />The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.<br /><br />The country’s foreign exchange reserves stood at $16.90 billion in week ending Jan. 13, compared with its record of $18.31 billion in July last year.<br /><br />The pressure on reserves is likely to continue especially as IMF repayments start from next month.<br />---------<br />Pakistan has to repay IMF about $1.1 billion by the end of 2011/12 fiscal year.<br /><br />“Pakistan has huge potential and not all is negative or gloom and doom,” said Liepach. “I am positive in the long term if right decisions are taken today.”<br /><br />Pakistan has been criticised over its slow implementation of fiscal reforms which include elimination of energy subsidies and restructuring of the state owned utilities.<br /><br />The government also received criticism for not being committed towards implementing the necessary reforms to bring the economy back on track.<br /><br />“The people who we are talking to in the government, technocrats, they are committed and want to see the benefits and improvements in Pakistan, they are very sincere in bringing a change in Pakistan,” said Liepach.<br /><br />“But when you move away from the technocrat level, that’s when it becomes more complicated. It is a complex decision making system.”<br /><br />Focus on projects and delivery of results<br /><br />ADB’s focus and therefore assistance largely now revolves around projects with four core areas, energy, urban services, water infrastructure and irrigation, and transport.<br /><br />“We want to fight poverty through growth and right now our business is focused on implementation of projects and to get results on ground,” said Liepach.<br /><br />ADB does not require a letter of comfort from the IMF for approval or disbursement of project-based assistance.<br /><br />ADB has an envelope of $2.9 billion for energy for Pakistan until 2016, out of which $1.4 billion has been utilised and $1.5 billion remains to be drawn down by the government.<br /><br />Pakistan’s power sector faces a shortfall that often peaks at 5,000 megawatts per day.<br /><br />For urban services, the board has approved $300 million, out of which $260 million remains, water infrastructure and irrigation $900 million has been approved with about $400 million left to be drawn down and $1.1 billion has been approved for transport, and $700 million is left.<br /><br />Government can draw down the assistance when a project is approved and made effective.<br /><br />“It’s a success when power reaches families and industries or when water becomes available to the families etc,” said Liepach.</i><br /><br />http://www.dawn.com/2012/01/20/pakistan-growth-challenging-dependant-on-reform-pace-adb.htmlRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-75546933935468358452012-01-19T08:55:47.028-08:002012-01-19T08:55:47.028-08:00Here are excerpts from a Dawn report on World Bank...Here are excerpts from a <a href="http://www.dawn.com/2012/01/19/pakistans-economy-recovering-wb.html" rel="nofollow">Dawn report</a> on <a href="http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdf" rel="nofollow">World Bank's assessment</a> of Pakistan's economy:<br /><br /><i>...Pakistan is South Asia’s second largest economy, representing about 15 per cent of regional GDP.<br />----------<br />The portion on Pakistan points out that the country’s economy firmed in the second half of 2011. Industrial production surged to grow at a robust 32.1pc annualised pace during the three months ending in October, after falling at 9.1 and 10.1pc rates during the first and second quarters, respectively.<br /><br />Part of the strengthening in growth reflects base effects due to the widespread flooding that had hampered activity in the second half of 2010. Since the floods occurred in July and August 2010, GDP growth on a fiscal year basis (ending June-2011) slowed to 2.4pc.<br /><br />The report notes that Pakistan’s weak growth outturns are also tied to “worsening security conditions, accompanied by greater political uncertainty and a breakdown in policy implementation”.<br /><br />The report also notes that “infrastructure bottlenecks, including disruptions in power delivery,” remain widespread.<br /><br />A notable bright spot has been a strengthening of exports, evident particularly in the first half of 2011, led by textiles that surged 39pc in the first half of the year.However, like India, Pakistan’s export volume growth saw a sharp fall-off in October.<br /><br />Indeed, Pakistan’s export volumes fell to a minus 46pc rate in the three-months ending October.<br /><br />Along with an upswing in worker remittances inflows, robust exports have supported Pakistan’s external positions and contributed to an improvement in the current account from a deficit of 0.9pc of GDP in 2010 to a surplus of close to 0.5pc of GDP in the 2011 calendar year.<br /><br />The World Bank notes that monetary tightening in Pakistan brought about positive real lending rates in early 2011 as well, the first time since late 2009.<br />------------<br />The bank points out that for South Asian nations, including India and Pakistan, domestic crop conditions and price controls are more important determinants of domestic food price inflation.<br />------------<br />Regional monetary policy authorities face several challenges in reducing inflation.<br /><br />More recently, currency devaluation has contributed to inflation as well. In Pakistan, monetary authorities have also been monetising the deficit, complicating the efficacy of other monetary policy efforts to reduce inflation.<br /><br />A key factor working against monetary policy efforts is the overall stance of fiscal policy, which despite some consolidation, remains very loose.<br /><br />Monetary authorities in Pakistan have responded to persistent price pressures by raising policy interest rates and/or introducing higher reserve requirements.<br /><br />Lower revenue growth has contributed to larger fiscal deficits in Pakistan. Terms of trade losses are estimated at about 1.9pc of GDP for the region in aggregate. India and Pakistan saw negative impacts of close to 1.8pc of GDP – estimated January through September 2011 terms of trade impacts relative to 2010.<br /><br />Remittance inflow to Pakistan rose by an estimated 25pc in 2011, partly in response to the widespread flooding in the second half of 2010.<br /><br />International reserve positions in South Asia have generally improved since mid-2008. Latest readings of foreign currency holdings were equivalent to at least three-months of merchandise imports in Pakistan.<br />-----------<br />A good crop year (2011-12) in much of South Asia and sustained high regional stocks are providing a buffer for grain prices and import demand in 2012....</i><br /><br />http://www.dawn.com/2012/01/19/pakistans-economy-recovering-wb.html<br /><br />http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdfRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-39502994571399121252012-01-09T19:13:41.590-08:002012-01-09T19:13:41.590-08:00Here's a report on Fortune magazine's inte...Here's a report on <a href="http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/?section=magazines_fortune" rel="nofollow">Fortune magazine's interview</a> with Pakistan's former leader Shaukat Aziz Part II:<br /><br /><i>You mentioned the need for good management. How would you assess the current management of the economy? I ask that in light of the lapsing of the stabilization plan with the IMF.<br /><br />Being out of the IMF -- obviously this reflects the desire of the government to have more flexibility to pursue its reforms. The IMF program does bring with it certain macroeconomic discipline and that's beneficial, but I also believe in economic sovereignty. You need good governance and good management, but abdicating the economy to the IMF is not the way to succeed. What we need is growth and job creation, like every other country in the world.<br /><br />The disagreement with the IMF is at least in part related to tax collection, which has been notoriously weak in Pakistan. There is a lot of concern whether Pakistan can muster the political will to make tough reforms, partly because of self-serving elites among the political class that have brought the country to the point of being nearly a failed state. <br /><br />No, I think that's not true. The country is large -- roughly 180 million people -- and it's functioning. It has many challenges -- governance issues, transparency and management issues -- on top of the security issues that have cost us dearly. But the country is functioning. Obviously it could function better, but it's not come to a grinding halt. Life is going on.<br /><br />Don't expect an Iranian oil crisis<br /><br />Clearly, the country is facing a challenging situation financially, and tax reform has been an issue. It's true there is low tax compliance, but you have to look at the political impact -- not just the economic impact -- of taxes. The tax system has been around for a long time. Trade-offs have to be made; indirect taxes -- sales tax and customs duties -- have grown because of that, quite handsomely. Income tax is also up, but that is mostly out of big corporations' profits.<br /><br />The key question is: How do we get growth? The pie has to get bigger for you to collect more taxes. You can't squeeze the lemon if there's no juice in it.<br /><br />Moving on to Afghanistan, the U.S. is being more realistic about its transformative agenda and the Obama administration seems to be determined to wind things down. How do you see this playing out?<br /><br />I think this is the right way to go. The presence of foreign troops generates ill effects and the sooner they are gone, the better. But the exit strategy has to be very carefully choreographed.<br /><br />We need a Marshall Plan-like approach, a massive program for reconstruction. The World Bank, the Asian Development Bank, the sovereign banks, and many individual countries, have to be involved. There was a very successful meeting recently of Turkey, Pakistan, Afghanistan and others in Istanbul. People need to see a future, that tomorrow will be better than yesterday. The people of Afghanistan will have to work hard themselves to leverage this opportunity. It's a good thing that the U.S. and the Taliban are talking -- all stakeholders have to be included. I'm cautiously optimistic that adversity can be changed into an opportunity if it is funded well.<br /><br />U.S.-Pakistan relations are generally refracted through the prism of Afghanistan but also through the fact that Pakistan is a nuclear power.<br /><br />I think certainly the relationship is opportunistic on both sides. But I think the U.S. is pursuing a policy of both engagement and containment of Pakistan at the same time. We are both a friend and an adversary. Therein lies the conflict in the relationship. There is a trust deficit and when it comes to the nuclear issue there is a fundamental problem.....</i><br /><br />http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/?section=magazines_fortuneRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-83776484453963787832012-01-05T22:14:40.870-08:002012-01-05T22:14:40.870-08:00Here's a Reuters report on increase in Pak for...Here's a <a href="http://www.dawn.com/2012/01/05/pakistani-forex-reserves-rise-to-16-85-billion.html" rel="nofollow">Reuters report</a> on increase in Pak forex reserves:<br /><br /><i>Pakistan’s foreign exchange reserves rose to $16.85 billion in the week ending Dec. 30, compared with $16.77 billion the previous week, the central bank said on Thursday.<br /><br />Reserves held by the State Bank of Pakistan (SBP) were flat at $12.81 billion, unchanged from the previous week, while those held by commercial banks rose to $4.04 billion, compared with $3.96 billion the previous week.<br /><br />Foreign exchange reserves hit a record $18.31 billion in the week ending July 30, but have since eased due to debt repayments.<br /><br />Reserves were boosted in June last year by inflows of $411 million, including a $191.9 million loan from the World Bank, and a $196.8 million loan from the Asian Development Bank.<br /><br />Higher export proceeds and a record inflow of remittances have also helped support Pakistan’s foreign exchange reserves.<br /><br />According to official data, remittances rose 18.33 per cent to $5.24 billion in the first five months of the fiscal year (July-June), compared with $4.43 billion in the same period a year earlier.<br /><br />However, they fell slightly to $923 million in November, compared with $926.89 million received in November last year.<br /><br />Islamabad has to start repaying an $8 billion International Monetary Fund loan in early 2012. Without additional sources of revenue, that will put further pressure on Pakistan’s foreign exchange reserves.</i><br /><br />http://www.dawn.com/2012/01/05/pakistani-forex-reserves-rise-to-16-85-billion.htmlRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-81559411832637189252011-12-03T22:14:19.528-08:002011-12-03T22:14:19.528-08:00Here's an Express Tribune story on a discussio...Here's an <a href="http://tribune.com.pk/story/301827/failed-rescue-act-too-many-visions-for-pakistan/" rel="nofollow">Express Tribune story</a> on a discussion at Inst of Business Admin in Karachi, Pakistan:<br /><br /><i> A vigorous difference of opinion among technocrats, economists and corporate leaders on a number of socio-economic issues was witnessed during an interactive session held at the Institute of Business Administration (IBA) on Saturday. And at the end it was unclear whether democracy was the answer, or a dictatorship, as advocates for both arguments came up with pretty convincing logic.<br /><br />Speaking at the session organised by IBA in collaboration with Blinck, a youth resource group, under the title of “New Year Resolutions for the Economy of Pakistan,” panellists candidly expressed disagreements over the questions of foreign aid, democracy and the interplay of policy-making and implementation at the national level.<br /><br />“Many people think that a non-democratic set-up is a panacea for the economic problems of Pakistan. They’re wrong. A non-democratic government is not sustainable,” said Ishrat Husain, former governor of the State Bank of Pakistan, who is currently serving as dean and director of IBA. “Democracy is slow and messy. It takes two steps forward and four steps backwards. Yet it’s the only option. The democratic process shouldn’t be interrupted.”<br /><br />Husain said military regimes do make an extra effort in the beginning to improve the economy because they have not yet developed a constituency of their own. “But later on, they start making compromises.”<br /><br />Claiming that a democracy needs low poverty and high literacy rates to prosper, Gillette Pakistan CEO Saad Amanullah Khan said Pakistan had only two eras of development: first, in the early 1960s, and second, during the first three years of the Musharraf government. “I don’t care if a dictator is there as long as he revamps the economy,” Khan said.<br /><br />He said that the idea of a government led by technocrats that could bring the economy back on its feet had its relative merits. Khan emphasised the need for adopting a national vision for long-term growth, adding that the entire nation should work towards its realisation. “Go to Proctor & Gamble or Gillette, and they’ll tell you their five-year goals in detail. But ask a government representative what the vision for Pakistan is for the next five years, you won’t get any definite answer.”<br /><br />Disagreeing with Khan, Husain said Pakistan did not need any more “visions,” as the problem existed in their implementation only. “The country is full of pious documents. These are beautifully written policy papers that nobody reads. We all agree on the substance of policy, but the implementation is the real issue.”<br /><br />Responding to a question, former Asia editor for The Economist Simon Long said it was wrong to attribute Pakistan’s dismal economic performance of six decades to its culture or laid-back attitude to work. He said that 35 years ago people often assumed China’s poor economy was a consequence of Confucianism. He said it was now obvious that Confucianism had nothing to do with the slow growth in the economy of China.<br /><br />Talking about Pakistan’s economic indicators, Long said an economy with a tax-to-GDP ratio of less than 9% was not sustainable. He said it was hard for him to understand how Pakistan’s economic managers would bring down the fiscal deficit in next two to three years.<br /><br />In response to the comment of a business student that Pakistan should stay away from all kinds of foreign aid and assistance to achieve self-reliance, Husain said the assumption that the Pakistani economy depended on US aid to survive was wrong. “Isolationism won’t solve our problems. Transfer of knowledge and technology is important. You’ve to be outward-oriented.”</i><br /><br />http://tribune.com.pk/story/301827/failed-rescue-act-too-many-visions-for-pakistan/Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-8179750693298736942011-11-21T17:59:49.125-08:002011-11-21T17:59:49.125-08:00Here's an excerpt from an Op Ed by Dr. Ashfaqu...Here's an excerpt from an Op Ed by Dr. Ashfaque Khan published in <a href="http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=78636&Cat=9" rel="nofollow">The News</a>:<br /><br /><i>Reviving the economy will require addressing both near and medium-to-long term economic challenges. The solution to these challenges boils down to restoring macroeconomic stability on the one hand and promoting economic growth through growth critical reforms on the other.<br /><br />Let me share my thoughts on these economic challenges. For addressing near term economic challenges, the commitment to fiscal discipline is a pre-requisite. A sound fiscal position is essential to achieving macroeconomic stability, which is increasingly recognised as a critical ingredient for promoting strong and sustained economic growth and lasting poverty reduction. An adequate level of revenue generation is sine qua non for the public policy to fulfil growing expenditure requirements.<br /><br />The thrust of revenue mobilisation must include reducing tax rates, broadening the tax base, shifting the incidence of taxes from imports and investments to consumption and incomes, and providing a congenial environment to increase tax compliance. Every sector of the economy must be brought under the tax net. An equitable taxation system demands that income originating from any sector, if it crosses the threshold level, must be taxed.<br /><br />Potential areas which can be brought under the direct tax net include agricultural income, incomes of doctors, lawyers, beauty parlours, chartered accountants, wholesalers and retailers and transporters to name a few. Improving withholding tax regime would increase the government’s tax revenue immensely. Taxes are being collected by withholding tax agents but are not being deposited in the government’s treasury. I am glad that the FBR has taken note of this and is making efforts to address this issue.<br /><br />On the expenditure side, the government will have to take a bold decision as to the future of the rotten PSEs. In particular, how long can the government bail out these bleeding institutions from taxpayer money? The time has come to offload some of them even at a rupee each and appoint the best team available to manage the others. The government can save at least over Rs300 billion which can be spent on millions of defenceless poor and improving the country’s physical and human infrastructure.<br /><br />Inept handling of the power sector has resulted in the accumulation of unsustainable circular debt. By raising the power tariff alone, the government has caused circular debt to balloon. Raising the power tariff is tantamount to raising tax rates. It is common knowledge that if we keep on increasing tax rates people will avoid paying taxes. Similarly if we keep on raising power tariffs it will encourage people to use unfair means to avoid paying electricity bills. As long as there are line losses and power theft, the issue of circular debt will always be there.<br /><br />The government will have to reduce fiscal deficit from 6.5 percent of GDP last year (2010-11) to three percent by 2013-14. This can be achieved, provided there is commitment to fiscal discipline. Reduction in fiscal deficit will reduce the government’s borrowing requirements which in turn will help the SBP to reduce interest rate thereby freeing more credit for the private sector. This would also help the government to lessen its borrowing from the SBP and to moderate inflation.<br /><br />Restoring fiscal discipline would help maintain price stability provided the government maintains moderation in enhancing government administered prices such as support price of wheat, and power and gas tariffs. Mobilising more resources through taxation on POL products would not help in reducing inflation. Thus, reducing budget deficit, moderation in government administered prices and maintaining exchange rate stability would be critical to bringing inflation down to a single-digit...</i><br /><br />http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=78636&Cat=9Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-37920793521755151982011-11-19T17:26:03.806-08:002011-11-19T17:26:03.806-08:00Here's the latest IMF assessment of Pak econom...Here's the latest IMF assessment of Pak economy, as reported by <a href="http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=10412&Cat=13" rel="nofollow">The News</a>:<br /><br /><i>ISLAMABAD: The International Monetary Fund (IMF) on Saturday said that Pakistan’s economy is braving serious challenges of an energy crisis and fast dwindling investment that is why it needs to ramp up efforts to carve out a long-term recipe to stimulate growth and reduce rising unemployment.<br /><br />Pakistan’s economy is exposed to the worst effects of the floods and appalling security. The government has though undertaken many economic reforms, yet there are many serious challenges of energy crisis and dwindling investment.<br /><br />Adnan Mazarei, Assistant Director of IMF for Middle East and Central Asia, after a seminar on “Revival of Pakistan Economy” stated this during a press briefing here on Saturday.<br /><br />Mazarei expressed his dissatisfaction over the government’s performance in the energy sector and asked it to restructure the power sector to make it turn around. “The broadening of the tax base is also one of the biggest challenges the Pakistan economy is braving as the political consequences also negatively impact on the economy and people avoid paying taxes because they wanted an honest government and some dividends in return.”<br /><br />He said that fiscal imbalances are also needed to be addressed. “Pakistan needs inclusive growth and employment generation as well as better distribution of resources and lowering of poverty rate to ensure equitable benefit to the people.”<br />-------------<br />Finance Minister Dr Abdul Hafeez Sheikh said that role of the government representative during the day-long seminar was to listen to the economists, business community and development partners and share with them the steps taken for the economic reforms in the country. He said the economic team held very constructive discussion with the IMF during Article IV discussion in Dubai on economic reforms and about way forward policy mix to move on to high growth path.<br /><br />Hafeez Sheikh said that first four months of the current fiscal year were very positive with exports going over 6 billion dollar which were 23% more than the same period of previous year and remittances 4.2 billion dollars, 23% up by the same period of last year. The minister said the growth in taxes during the first four months was 28% with total collection of Rs509 billion compared to the same period of last year.</i><br /><br />http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=10412&Cat=13Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-76514861734933153172011-09-29T17:00:45.068-07:002011-09-29T17:00:45.068-07:00There are a lot of different figures and forecasts...There are a lot of different figures and forecasts floating around different websites and publications that significantly overstate India's GDP and understate Pakistan's. <br /><br />The figures I have posted in my recent blog posts were released in May 2011 by India and in July 2011 by Pakistan. This is the only apples-to-apples comparison that is valid. The rest is irrelevant.<br /><br /><a href="http://www.infopak.gov.pk/EconomicSurvey/Highlights.pdf" rel="nofollow">Economic Survey of Pakistan</a> 2010-11 puts the nation's population at 177 million and nominal gdp at $222 billion or $1254 per person.<br /><br />And <a href="http://articles.economictimes.indiatimes.com/2011-05-31/news/29604458_1_capita-income-national-income-economy-at-current-prices" rel="nofollow">Economic Survey of India</a> 2010-2011 says India's population is 1.2 billion and puts nominal GDP at $1.46 trillion or $1218 per person.<br /><br />http://articles.economictimes.indiatimes.com/2011-05-31/news/29604458_1_capita-income-national-income-economy-at-current-prices<br /><br />http://www.infopak.gov.pk/EconomicSurvey/Highlights.pdfRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-89257234641929742292011-08-10T22:17:07.774-07:002011-08-10T22:17:07.774-07:00Here's a News International report on impact o...Here's a <a href="http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=61883&Cat=3" rel="nofollow">News International</a> report on impact of US downgrade on Pakistan:<br /><br /><i>The ongoing economic crisis across the world after downgrade of the United States credit rating would have a positive impact on Pakistan’s economy as analysts said that the current account balance would stay in surplus and the electricity subsidy will automatically be contained.<br /><br />The United States credit rating downgrade after enhancement of debt ceiling rattled the stock markets around the globe and majority of the equity markets have touched their lower locks. While major commodities, except gold, have also witnessed sharp decline in their prices after 2008.<br /><br />“With the decline in oil prices globally, Pakistan’s current account balance is likely to stay in surplus and the electricity subsidy will automatically be contained,” according to a JS research report on Tuesday.<br /><br />The report said that the growth is expected to rebound due to the bumper agriculture crops and inflation would tame further, whereas equity market will remain resilient compared to its regional peers due to lower foreign exposure.<br /><br />“However, political instability and deteriorating law and order situation are the key risks to the economy,” it added.<br /><br />Analysts said that the present global crisis is different to 2008. The crisis of 2007/08 was driven by excessive overheating of the global economy and resultantly commodity and real estate markets touched their peak levels.<br /><br />In that crisis, Pakistan suffered as a result of higher global commodity prices and the government flawed domestic prices of providing huge subsidy.<br /><br />“As a result, the twin deficits hit 16.3 percent of the GDP,” the JS report revealed, adding that this difficult scenario led to the International Monetary Fund (IMF) programme in order to bailout the economy from the brink of collapse.<br /><br />However, the report said that in 2011/12 crisis Pakistan’s macros will be resilient and will benefit from the decline in the global commodity prices.<br /><br />“Unlike 2008, Pakistan’s real interest rates are positive, real effective exchange rate is not overvalued and subsidies are largely contained,” it added.<br /><br />About the United States austerity plan and its impact on Pakistan, experts believed that the United States is unlikely to reduce its spending towards the war on terror.<br /><br />The American economy is going through its worst period in history, where Obama’s administration is left with very little fiscal space to finance its ballooning fiscal deficit that is around nine percent of the GDP.<br /><br />The stimulus package of post-Lehman crisis has left the Federal Reserve Bank of America literally with no option either. To smooth the functions of the US Treasury, the lawmakers have agreed to provide additional $2.4 trillion to the debt ceiling, subject to deficit saving of approximately $1 trillion over the next decade.<br /><br />This year the Americans are unlikely to reduce their spending as the austerity measures decided will be implemented from 2013 onwards, experts said.<br /><br />The JS report said that the United States will continue to pay for counterinsurgency programme in Afghanistan even if it plans to pullout from Afghanistan by 2014.<br /><br />On Pakistan’s front, the United States will definitely play the role of the devil’s advocate and delay the due payments or reduce the grant size, according to the report.<br /><br />Overall, the presence of the United States in Afghanistan will keep the dollar flows continued into Pakistan directly or indirectly, the report said, adding that the United States rationalisation of budgets will have a bare minimum impact on Afghanistan and Pakistan.</i><br /><br />http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=61883&Cat=3Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-21271138243058427112011-06-28T22:21:05.992-07:002011-06-28T22:21:05.992-07:00Here's an interesting Op Ed by Kamal Monnoo, a...Here's an interesting Op Ed by Kamal Monnoo, a Pakistani industrialist, as published in <a href="http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Opinions/Columns/29-Jun-2011/Is-economy-entering-recession" rel="nofollow">The Nation</a>:<br /><br /><i>Agreed, that some of the macro-indicators in Pakistan are showing healthy trends or resilience, exports are up, current account deficit is down, remittances are climbing, reserves are stable and the Pak Rupee is holding out, but gauging from the manufacturing and productivity figures over the last two quarters could Pakistan’s economy be finally sliding into a serious recession? Riding on the back of some positive figures, the economic managers have thus far not only been blowing their own trumpet of success, but also literally ignoring and mocking their critics, who have tried to draw their attention to the missed opportunities and rather weak economic scaffolding that can simply crumble one day without warning like a house of cards!<br />Based on industrial production and productivity (especially in the small and medium enterprise sector) Pakistan’s economy contracted by nearly 4 percent - much more than expected - for at least two quarters running now, which basically means that technically we have already entered recession. Going by this, the big question actually should be that does the country have the political and economic will to fight its way out? The data underlines how the worst natural disaster (floods) to hit Pakistan in decades has foiled all hope of recovery and how the government’s addiction to borrow and the absence of visionary economic policies have contributed to the decline leaving the country in a vicious trap of high debt and a low growth amidst a rapidly rising population.<br />The global scenario is not helping either. Serious downturns both in the United States (where the predictions of recovery continue to be proven wrong) and the Western European economies, the two main markets for Pakistani goods, mean that the coming months for Pakistani exporters will be even tougher. All political endeavours on ‘trade not aid’ and preferential ‘market access’ in lieu of our help in the war on terror have also not been fruitful so far. What this basically tells us is that to avoid sinking we need to look inwards and start taking our own measures to embark on a path of economic recovery before the recession turns into an economic quicksand. Time and again, I have pointed out to the examples of China, India and Bangladesh, who have consciously maintained focus on manufacturing at home as their ticket to sustained economic activity and job creation. To help keep their engine of the industry running all related state and private sector institutions, banking/financial, power and energy, human resource, commerce and trade, have played their due role.</i><br /><br />http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Opinions/Columns/29-Jun-2011/Is-economy-entering-recessionRiaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-54275843762469555902011-06-28T10:44:16.881-07:002011-06-28T10:44:16.881-07:00Here's The Express Tribune story on Pakistan&#...Here's <a href="http://tribune.com.pk/story/194964/spanner-in-the-works-greek-debt-crisis-delays-issue-of-500m-ogdc-bonds/" rel="nofollow">The Express Tribune</a> story on Pakistan's decision to cancel $500m bond offering:<br /><br /><i>Two (Pakistan) government teams, which went to London, Singapore and Bangkok for holding road shows, have come back. They did not pitch the bonds at investors, instead restricted the presentations to the state of Pakistan’s economy, said one of the officials who travelled abroad for the road shows.<br /><br />Another official, who also took part in the road shows, said foreign investors told the visiting teams that capital markets were nervous at this time because of a couple of international developments. They proposed that Pakistan should wait until the Greece debt crisis and issue of increase in debt limit for the Obama administration are resolved.<br /><br />“In an effort to keep the budget deficit at manageable levels, the government wants to float $500 million worth of bonds before June-end,” said a spokesman for the finance ministry. Economists and a parliamentary panel have advised against the transaction, arguing that long-term assets cannot be consumed to settle short-term liabilities.<br /><br />Sources in the Privatisation Commission told The Express Tribune that the government suddenly decided to convert the road shows into a ‘no-deal’ event, where it would not disclose the size of the bonds and the indicative interest rate it wants to pay.<br /><br />Despite questions put up by international investors, the teams did not disclose details of the bonds. A Privatisation Commission official said the investors were keen to know the coupon price but the officials remained tight-lipped.<br /><br />The Cabinet Committee on Privatisation has approved the term-sheet of the exchangeable bonds with an indicative mark-up ceiling ranging between 6.5 and 8.5 per cent.<br /><br />Sources said international investors expressed interest in the bonds, as they were keen to invest in the energy company. However, some of them raised questions about Pakistan’s relationship with the International Monetary Fund (IMF). The Fund has suspended the $11.3 billion bailout programme since May 2010 after the government failed to meet some conditions.<br /><br />IMF and European Union approved a 110-billion-euro bailout package for Greece last year but have withheld payment of a tranche of 12 billion euros that will help Athens pay its debts coming due by September. The international lenders have asked Greece to first place deep cuts on spending, prompting riots across the country. The Greek parliament on Tuesday voted for reforms but still IMF has not disbursed the tranche.<br /><br />On the other hand, the United States too is coping with a crisis to avoid defaults on payments as the Obama administration reached its borrowing limit of $14.3 trillion on May 16. The administration sought an increase in the debt limit to avoid default that was overwhelmingly rejected by the House on May 31, reported the ....</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-37688375191370979382011-06-28T09:25:12.850-07:002011-06-28T09:25:12.850-07:00Pakistan bond offering withdrawn, says Dr. Ashfaqu...Pakistan bond offering withdrawn, says <a href="http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=54874&Cat=9" rel="nofollow">Dr. Ashfaque H. Khan</a>:<br /><br /><br />Yet another debacle has occurred on the economic front, with the government failing to float its exchangeable bond in the international debt-capital market. In an act of desperation, the Pakistani economic manager had decided to launch a $500-million exchangeable bond with 10 percent shares of Oil and Gas Development Corporation (OGDC) attached to this transaction, the proceeds of which were to come by the end of the current fiscal year. It was the intention of the government to use these proceeds for retiring its State Bank debt and reducing its budget deficit to that extent.<br /><br />The Pakistani team was informed by the global investors during the road show that they had little appetite for Pakistani paper at the moment, particularly in the presence of the Greek debt crisis and the unresolved issue of increase in the debt limit of the US administration. The Pakistani team did not pitch for the bond and returned empty-handed.<br /><br />Why did Pakistan have to abandon its transaction? Are the economic managers aware of the consequences of such a colossal failure for the country? One thing is clear from the perspective of the economic managers: who cares about the country? They are there to improve their resumes.<br /><br />What is an exchangeable bond? The country issues a normal sovereign bond with an option that the bondholder can convert the bond into common shares. The transaction under discussion provided an option to bondholders to convert their bonds into OGDC shares. The advantageous thing about such a bond is that it has the option for conversion of debt into portfolio investment.<br /><br />There are many reasons for the failure of this transaction. Firstly, the timing for floating the bond was highly inappropriate. This is summertime, when investors close their books and go for vacations. Secondly, the international economic environment, particularly the persistence of the Greek debt crisis and the emergence of issue pertaining to enhancing the debt limit of the US administration have created severe uncertainty in the international debt-capital market.<br /><br />Thirdly, Pakistan’s own economic fundamentals are weak. Why would anyone invest in a country’s paper whose debt is rising, budget deficit is averaging over six percent of the GDP, high double-digit inflation continuous persists for the last 45 months, and growth is slowing to an average of 2.6 percent per annum over the last four years. Fourthly, Pakistan’s relations with the IMF and other development financial institutions (DFIs) are not smooth. Fifthly, Pakistan’s relations with the United States are also on a bumpy ride. For an emerging market country, its relationships with the US, the IMF and the DFIs are critical in attracting global investors to invest in its paper.<br /><br />Sixthly, Pakistan’s domestic political and security environment are not conducive to attract global investors to invest in Pakistani paper. Seventhly, the Pakistani team involved in this transaction, barring one member, was quite immature and had no idea whatsoever about the transaction. All these factors have contributed to the failure of the transaction, damaging the reputation of the country and OGDC. In order to save face, the economic team could call this transaction “non-deal road show.” But the international capital market participants are not novices. Word has already travelled across the globe that Pakistan has failed to find takers for its paper.<br />----<br />It is in this perspective that Pakistan floated its paper from February 2004 to May 2007. Each time the Pakistani paper was oversubscribed substantially. Pakistan emerged as one of the few countries which successfully floated a 30-year bond. This simply reflected the confidence of global investors in Pakistan’s economic management....<br /><br />http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=54874&Cat=9Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-69859053211618278962011-05-11T08:58:07.360-07:002011-05-11T08:58:07.360-07:00South Korea's LOTTE is planning to invest $500...South Korea's LOTTE is planning to invest $500m in Pakistan, according to <a href="http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=46170&Cat=3&dt=5/11/2011" rel="nofollow">The News</a>:<br /><br /><i>KARACHI: Lotte, the parent company of Lotte Pakistan PTA Limited, has hinted at expanding its operations in Pakistan, besides entering into other businesses such as confectioneries and constructions, officials said on Tuesday.<br /><br />“If government of Pakistan offers us some concessions in taxation then we are keen to expend operations of Lotte Pakistan with a fresh investment of $500 million,” said Jung Neon Kim, Executive Director of Lotte Pakistan.<br /><br />The PTA plant was acquired by Lotte in September 2009 and renamed as Lotte PTA Pakistan Limited.<br /><br />Kim said Lotte is also in the process of acquiring Kolson. Therefore, it is about to enter the confectionary and food businesses in the country, as well.<br /><br />The parent company also wanted to concentrate on the beverage industry, as well as expand into the chemicals and construction sectors, he said.<br /><br />To attract more foreign investment and foreigners to the country, he said, Lotte wanted to develop and build residential projects exclusively for foreigners where they could live and enjoy sports and cultural facilities along with full security.<br /><br />“Pakistan is a big market and the government could help encourage foreign investment if it supports persistency in tariff rates and offers lower taxes and tax breaks.”<br /><br />He said that his company was the tenth largest taxpayer in Pakistan, contributing around Rs20 billion to the national exchequer in the form of taxes.<br /><br />In his opinion, the tax rates in Pakistan were among the highest in the region and should be reduced to attract more investment.<br /><br />Lotte Pakistan took CSR (Corporate Social Responsibility) very seriously and spent Rs400 million on CSR activities last year, besides contributing to the relief efforts for flood victims. He said Lotte is intensely involved in education and around Port Qasim where Lotte Pakistan PTA plant is located. Lotte, he said, is committed to spending Rs60 million annually on education in the area.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-29845212300353580012011-04-18T09:40:41.124-07:002011-04-18T09:40:41.124-07:00Pakistan's July 2010-March 2011 current accoun...Pakistan's July 2010-March 2011 current account surplus at $99 mln, according to <a href="http://www.reuters.com/article/2011/04/18/urgent-pakistan-economy-deficit-idUSL3E7FG03B20110418" rel="nofollow">Reuters</a>:<br /><br /><i>Pakistan's current account surplus for July-March period was a provisional $99 million, compared with a deficit of $3.106 billion in the same period last year, the central bank said on Monday.<br /><br />In March, the current account was a provisional surplus of $347 million, compared with a deficit of $2 million in February.<br /><br />The current account deficit for the fiscal year 2009/10 was $3.946 billion, compared with $9.261 billion in fiscal year 2008/09.</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-50303699902054725902011-04-14T23:00:26.794-07:002011-04-14T23:00:26.794-07:00Here's a Dawn-AFP story about a modest job rec...Here's a <a href="http://www.dawn.com/2011/04/10/pakistan-export-boom-will-not-repair-economy.html" rel="nofollow">Dawn-AFP story</a> about a modest job recovery in Pakistan's textile sector with rising exports:<br /><br /><i>KARACHI: After a year of unemployment and wondering if his family would be better off if he died, Pakistani textile worker Murad Ali has got the spring back in his step.<br /><br />One of thousands laid off by textile bosses last year, the father of four is now back at work and one of those to benefit from a surge in Pakistani exports in the current fiscal year, which ends on June 30.<br /><br />Experts say rising global commodity prices, a government decision to prioritise power supply to industry and currency devaluation that has made Pakistani products more competitive, have fired an export boom.<br /><br />Compared with the same period last year, the Trade Development Authority of Pakistan says textile exports such as silk rose 25.8 per cent and agricultural produce, such as basmati, rose 6.2 per cent from July to February 7, 2011.<br /><br />The textiles sector is one of the key drivers of the Pakistani economy, accounting for 55 per cent of all exports and 38 per cent of the workforce, according to official figures.<br /><br />Bosses have rehired staff who were laid off, but Ali is only getting a third of the salary as a skilled garment worker that he used to command.<br /><br />“I’m earning less than last year. It is difficult to live a better life due to price rises, but I’m happy,” Ali said.<br /><br />He has re-enrolled his sons at school but his wife will continue to work as a maid. Money is too tight for her to go back to being a housewife.<br /><br />“The situation has drastically changed in the favour of the country’s economy,” said textile tycoon Mirza Ikhtiar Baig, who employs more than 2,000 workers and predicts exports will rise 10 per cent for the fiscal year 2010 to 2011.<br /><br />“Now with demand for Pakistani products rising internationally we are employing more workers.<br /><br />“Our exports are getting healthier because of an increase in international commodity prices and the government’s will to give top priority to the country’s economy,” said Baig, an advisor to Prime Minister Yousuf Raza Gilani.<br /><br />The Asian Development Bank forecasts GDP growth for Pakistan of 2.5 per cent for fiscal year 2011 despite pressures from unprecedented floods in 2010, with a relatively modest rebound to 3.7 per cent for fiscal year 2012.<br />-------------<br />Pakistan suffers from a profound electricity crisis that restricts production to around 80 per cent of its needs — a situation that will only worsen as the temperatures crawl higher in the coming months.<br /><br />The budget deficit has grown to 5.5 per cent of GDP, above a 4.9 per cent target for the current fiscal year to June 30.<br /><br />To fund the shortfall, the government borrowed $4.4 billion from the central bank from July 1 to February 28, a move that worsened inflation, rather than raise taxes and cut spending as the IMF and World Bank would like.<br />---------<br />Mohammad Sohail, head of the Karachi-based Topline Securities research and brokerage house, said the export boom would contribute to economic recovery, yet warned the gains were minimal.<br /><br />“It is very fragile because the fiscal deficit is much higher than the target of 5.3 per cent because of the government’s heavy borrowing from the central bank,” he said.<br />----------<br />“Furthermore, the overall security situation in Pakistan is very uncertain, which is making the foreigners and local investors wary all the time.” Independent economist A.B. Shahid said rising international oil prices had hit the country’s economy hard, adding $4 billion to the oil bill.<br /><br />Pakistan could have benefited more from 8-9 per cent export growth, he said, by exporting cloth in its value-added forms rather than raw cotton and yarn.<br /><br />While Ali is content with life, he is also wary of uncertainties ahead.<br /><br />“Life has become too insecure. Everyone is ill at ease. Let’s just wait and see.” – AFP</i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-81848879941952490562011-01-25T19:28:58.556-08:002011-01-25T19:28:58.556-08:00Here are some interesting excepts from a piece on ...Here are some interesting excepts from a <a href="http://afpak.foreignpolicy.com/posts/2011/01/20/pakistan_s_political_crisis_the_limits_of_us_leverage" rel="nofollow">piece on Pakistan</a> by Nancy Birdsall of Center for Global Development:<br /><br /><i>------------U.S. policymakers should note well this series of events and remember a simple lesson. Billions of dollars of U.S. assistance-and a sustained diplomatic focus on the reform agenda-have not given the United States the ability to dictate the outcomes of Pakistan's political process. This is inconvenient for the United States, but not surprising. For the United States and for other major donors in Pakistan, money has never brought leverage. <br /><br />Pakistan's energy sector demonstrates the difficulty in achieving the kind of influence donor countries would like to have. For decades, the World Bank and the Asian Development Bank-armed with sums greater than the current Kerry-Lugar-Berman U.S. aid package-have urged the Government of Pakistan to finally reduce the price subsidies on electricity, to no avail. Time and again, project documents cite the same problems, the donors recommend the same solutions, the government of Pakistan promises to implement the same reform, the government breaks (and donors lament) the same promises. Meanwhile, the basic politics maintaining the status quo have not changed-there are too many reaping the benefits of subsidized power, and ordinary consumers feel they aren't getting service that warrants paying more. <br /><br />When Vice President Biden visited Islamabad this week, he promised that the United States would "keep the entire commitment" of the pledged $7.5 billion in Kerry-Lugar assistance. This assurance will surely be welcomed by Pakistan, and it's a fair reflection of Pakistan's short-term and long-term importance to U.S. interests. Adjusting where and how aid is spent-including by taking the requests of the Pakistani government into account-is necessary to respond to the real needs on the ground. (On that note, we applaud the decision to put $190 million into direct smartcard grants to help Pakistani flood victims rebuild their lives). But U.S. policymakers should not expect the aid money to give the United States greater influence on economic reforms in Islamabad. This is not the point, nor the potential, of U.S. aid. <br />----------<br />The key point is that certain aid projects can carry both direct benefits (better services and infrastructure for the people of Pakistan) and indirect benefits (incentives for the Pakistani political system to achieve greater results with their existing resources). Here are a few examples to consider: U.S. investments in energy generation and transmission capacity can be linked to public commitments to raise electricity tariffs only when brownouts have been reduced below an announced benchmark. In this grand bargain, as service quality improves, tariffs would go up, and another round of aid investments would be delivered. In another case, U.S.-financed tools can be deployed to help Pakistani citizens hold their government accountable-with regular reports on simple indicators of development, for example, or an easily accessible database of all development projects funded from internal or external resources. Or a pilot Cash on Delivery aid contract in one or more Pakistani provinces could put levers in the hands of education reformers and help their ideas gain traction. <br /> </i>Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-26526795188929892702011-01-23T09:51:45.514-08:002011-01-23T09:51:45.514-08:00In 2008, the PPP government pushed the procurement...In 2008, the PPP government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of <a href="http://www.statpak.gov.pk/depts/fbs/statistics/price_statistics/monthly_price_indices/mpi6/cpi_details.pdf" rel="nofollow">Pakistan's consumer price index</a>. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat <a href="http://jang.com.pk/thenews/jan2011-weekly/busrev-17-01-2011/p9.htm" rel="nofollow">surged by 120 per cent</a> since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07. <br /><br />The transfer of additional Rs. 300 billion to Pakistan's agriculture sector during the current fiscal year 2010-2011 by higher prices of agriculture produce and direct flood compensation to 1.6 million affected families at the rate of one hundred thousands rupees each will <a href="http://www.riazhaq.com/2011/01/pakistans-rural-economy-showing.html" rel="nofollow">boost economic confidence in the countryside</a>. It will generate rural demand for consumer items including consumer durables such as fans, TVs, motorcycles, cars, refrigerators, etc.<br /><br />Already, the upside of the government policy is that Pakistan's rural economy is being <a href="http://www.dawn.com/2011/01/03/economy-to-gravitate-towards-agriculture.html" rel="nofollow">spurred by high crop prices</a> that may help the GDP growth this year and next. Increased farm incomes are whetting the rural households' appetite for industrial and consumer goods in 2011 and beyond.<br /><br />While it is good to see Pakistan's rural farm economy perk up, it is also important to recognize that the overall national economic outlook can not improve significantly unless the growing budget deficits and rising inflation are brought under control. And this will require the ruling <a href="http://www.riazhaq.com/2009/08/ode-to-feudal-prince-of-pakistan.html" rel="nofollow">feudal elite</a> to pitch in by paying their fair share of income tax on their rising farm incomes. It is time for them to lead by example.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.com