Monday, June 2, 2014

Pakistan GDP Grew Just 4.1% in 2013-14: Is it Another Lost Decade?

Meager 4.1% GDP growth reported by Pakistan for 2013-14 caps sixth consecutive year of disappointing economic performance under "democratic" governments in the country. This slow growth brings back bitter memories of the last lost decade of 1990s when economic growth plummeted to between 3% and 4%, poverty rose to 33%, inflation was in double digits and the foreign debt mounted to nearly the entire GDP of Pakistan as the governments of Benazir Bhutto (PPP) and Nawaz Sharif (PMLN) played musical chairs.

Pakistan GDP Growth Rates Since 1993. Source: World Bank

Economy in 1990s:

Before the current Prime Minister Nawaz Sharif was ousted by General Pervez Musharraf  in 1999, Pakistan's two main political parties had presided over a decade of corruption and mismanagement. In 1999 Pakistan’s economy was the slowest in South Asia while its total public debt as percentage of GDP was the highest in the region– 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% and 528.3% respectively in 1998) and India (47.2% and 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% and 264.8% respectively in 1998) and India (44.0% and 358.4% respectively in 1998).

Musharraf Era:

Under President Musharraf's leadership, Pakistan became one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging over 6 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.

The above facts were acknowledged by the PPP government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008. The document clearly (but grudgingly) acknowledged that "Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07" elevating Pakistan from low-income to middle-income country.

IMF MOU of 2008 further acknowledged that Pakistan's "volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Pakistan experienced rapid economic and human capital growth in years 2000 to 2008 on President Pervez Musharraf's watch. Savings, investments and exports hit new records and the rate of increase in human development reached new highs not seen before or since this period.

Exports as Percentage of GDP in South Asia. Source: World Bank

Savings and Investments:

Domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.

Pakistan Per Capita Income 1960-2012. Source: World Bank 

The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07" to elevate Pakistan from low-income to middle-income group. It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Human Capital Development: 

In addition to the economic revival, Musharraf focused on social sector as well. Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.

Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent. Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

R&D Spending Jumped 7-fold as % of GDP 1999-2007 Source: World Bank

Acceleration of HDI growth during Musharraf years was not an accident.  Not only did Musharraf's policies attracted significant new domestic and foreign investments to accelerate economic growth, they also helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman.

Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. Government R&D spending jumped from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which  continue to sustain huge losses due to patronage-based hiring.

To see a discussion of the above subject and the current situation, please watch the following video:

Civil-military Stand-Off on Musharraf Trial; Musharraf Govt's Performance Record from WBT TV on Vimeo.

Related Links:

Haq's Musings

Musharraf Earned Legitimacy By Good Governance

Musharraf Wants to Face Trial; Military Opposed to it

Saving Pakistan's Education

Political Patronage Trumps Public Policy in Pakistan

Dr. Ata-ur-Rehman Defends Pakistan's Higher Education Reforms

Twelve Years Since Musharraf's Coup

Musharraf's Legacy

Pakistan's Economic Performance 2008-2010

Role of Politics in Pakistan Economy

India and Pakistan Compared in 2011

Musharraf's Coup Revived Pakistan's Economy

What If Musharraf Had Said No?

Human Development in Musharraf Years


Majumdar said...

Prof Riaz ul Haq sb,

I think you need to do something about it. Lucky thing is that for the last five years India too has been mismanaged. But with Narendra "Adolf Hitler" Modi in power, that cannot be assumed to continue forever and you guys may be left behind.

You need to sound out Brigade 111 asap.


Usman K. said...

4.1% is still better, reached up to this level in the last 6 years, isnt it?

Nadeem H. said...

Usman: "4.1% is still better, reached up to this level in the last 6 years, isnt it?"

why Pakistanis content with crumbs and droppings when nowadays all countries leaping ahead.

Usman K. said...

it is slow, agree but still achieving something.

Riaz Haq said...

Usman: it is slow, agree but still achieving something.

Pathetic!! Pl read abt Nawaz Sharif's perf in lost decade of 1990s.

Anonymous said...

PMNL-N doing well in ECONOMY and we hope GDP will be increased more as compare to MUSHARRAF, Trend in Economy is POSITVE, if PML-N managed Governance of 5 year GDP will be around 7-8.

Riaz Haq said...

Anon: "PMNL-N doing well in ECONOMY and we hope GDP will be increased more as compare to MUSHARRAF, Trend in Economy is POSITVE, if PML-N managed Governance of 5 year GDP will be around 7-8."

Looks like PMLN loading up on debt to boost growth to 5% next year …

Anonymous said...

Lucky thing is that for the last five years India too has been mismanaged.

that is the understatement of the decade!

Pakistan born Sardarji always said we were the same ppl and for proof our GDP growth is now almost the same at Pakistan(Down from 9%+)!!

That in a nutshell is UPA for you.

But now right wing govt with absolute majority in place we can hope for it to climb back to around 7% this year and maybe 8-9% by next year...

Anonymous said...

And yet many serious analysts around the world predict Pakistan becoming a major global player due to its strategic location... What do u think will be the economic repercussions of that Mr Haq!

Riaz Haq said...

Anon: "And yet many serious analysts around the world predict Pakistan becoming a major global player due to its strategic location... What do u think will be the economic repercussions of that Mr Haq!"

In addition to its geo-strategic location, Pakistan is well endowed with a young dynamic population and vast natural resources like oil, gas, copper, gold, etc that remain untapped.

Even modest investments with sharp focus can unleash this great potential to make Pakistan an economic powerhouse.

Kadeer said...

The world perception of Pakistan is not very ideal due to:

Poor governance
Poor security
Poor savings

and therefore: poor investment both local and international when compared to what other countries are doing or getting.

We have resources and man power but, if the above doesn't change there will not be massive growth which is sorely needed.

VC said...

Why does military rule always collapse in spectacular catastrophes in Pakistan, leaving the nation to clean up the disastrous aftermath?

It must be that military rule is always an illegal edifice built on lies that must crash.

Riaz Haq said...

VC: "Why does military rule always collapse in spectacular catastrophes in Pakistan, leaving the nation to clean up the disastrous aftermath?"

Military rule has ended like that everywhere....there's a period of chaos that followed in South Korea, Taiwan, Indonesia etc.

But the gains in human and economic development remained, helping the nations make the transition.

The difference between Asian Tigers and Pakistan is that the Asian Tigers had continuous 30 years of military rule with continuing high growth. In Pakistan, the growth in both human and economic development was interrupted by poor civilian governance in alternate decades.

Kiran said...

Did the developed countries of the world have dictatorships when they were developing? And what in your opinion is the time frame of development? How many of the developed countries of the world had dictators?

The arguement you make of continuous military rule can also be turned on its head and said, if the military had not stepped in every now and then Pakistan would be much better place. And for this, I would place USA, England, France and the rest. From developing to developed, could you please highlight when they had dictatorships?

Riaz Haq said...

Kiran: "Did the developed countries of the world have dictatorships when they were developing?"

Unlike Asian Tigers, the developed countries took centuries to develop. Democracy does not promote rapid growth as is obvious by the huge and growing gap between China and India.

As China's share of the world's extreme poor (living below $1.25 per day per person level) has dramatically declined, India's share has significantly increased. India now contributes 33% (up from 22 % in 1981). While the extreme poor in Sub-Saharan Africa represented only 11 percent of the world’s total in 1981, they now account for 34% of the world’s extreme poor, and China comes next contributing 13 percent (down from 43 percent in 1981), according to the World Bank report titled State of the Poor.

Hopewins said...

^^RH: "Pakistan GDP Grew Just 4.1% in 2013-14: Is it Another Lost Decade?"

Yes, it is. And it is not going to change anytime soon.

To get back to high growth, we need significantly higher investment. This can come through the following mechanism:
1) Higher Internal Saving, OR,
2) Higher Foreign Investment, OR,
3) Both.

Savings are at all time low today. And the continuing instability with Afghanistan and TTP will prevent FDI/FII or foreign debt availability from returning to Musharraf levels.

So there is no chance of returning to higher growth rates in the next 4-5 years at least.

This implies that the "lost decade" is almost guaranteed now.

Riaz Haq said...

HWJ: "So there is no chance of returning to higher growth rates in the next 4-5 years at least."

Not necessarily. It all depends on Nawaz Sharif govt policies and execution.

Already, the recent 3G 4G licenses have begun to bring in new capital.

In addition, the govt is offering dozens of state-owned companies for sale to private sector which could bring additional new investment.

Anonymous said...

Riaz Haq said...

Here's an excerpt of a Wall Street Journal story on Pakistan leading positive sentiments increase among top 20 frontier markets:

The corporate world’s fascination with Africa shows through clearly in the rates of change of sentiment, too. The data compare an average of corporate sentiment for year-to-date 2014 with an average of the results over the full-year 2013.

Four of the five countries with the highest positive change in sentiment are in sub-Saharan Africa, as well as seven of the top 10.

Pakistan, though, is ahead of the pack in terms of the number of companies newly taking an interest in it. Sentiment toward the South Asian nation of 183 million people improved by 5.6 percentage points, putting it ahead of Africa’s rising stars Nigeria and Kenya, which each saw sentiment improve by just over four percentage points.

In absolute terms, though, Nigeria is still the clear leader among the three with twice the number of companies in the index considering investing there. Nearly three in 10 companies have Nigeria on their watch list.

By contrast, Pakistan’s South Asian neighbors Bangladesh and Sri Lanka appear to be losing their appeal, with each seeing the number of companies focused on them slashed by more than half.

Myanmar, which has only recently emerged as a potential destination for investment, saw a similar decline in corporate interest, with a meager 4% of companies including it in their watch list. Companies’ waning interest in Myanmar most likely reflects the realization among executives that the country is far from ready to receive significant foreign investment in most sectors.

Not surprisingly, the country that saw the greatest decline in attention from multinationals was Ukraine, whose 12.5-point decline was almost double that of the next-worst performer, Oman. While financial investors have seen healthy returns from their high-risk bets on the tumultuous central European economy, businesses are looking elsewhere for long-term opportunities.

Overall, sentiment toward frontier markets among the 200 or so multinationals included in the survey declined. All but 14 of the 70 countries covered in the survey have seen the level of corporate interest in them subside since last year.

Mr. Lasov believes the slide is less about the fundamental appeal of newly emerging markets and more about the revived interest in the developed world. “In the past few years, there has been a rebound in developed markets, which has attracted companies’ attention,” he says. “At the same time, companies have looked at the frontier markets and realized that many of them have tiny populations, so to build a business or manage a business in these smaller markets may not be worth the time.”

Kadeer said...

Riaz Sir, that WSJ article illustrates my earlier comment how investors are looking more at the developed and BRICs countries now and much less at Pakistan.

I am not optimistic or pessimistic but there is a limited amount of investment dollars to go around and if Pakistan doesn't have its act together than only a few dollars will trickle in. Let us get a grip on reality first.

You are already talking about two lost decades now which in my opinion is devastating.

Could you do an analyses of World GDP growth rates say 1990 to present and compare where Pakistan stands? Another comparison should be with Emerging Countries.

Riaz Haq said...

Here's Wall Street Journal on Pakistan's outstanding stock market performance up 88% since Jan 1, 2013:

Investors who ventured into frontier markets—the smaller, lesser-known cousins of emerging markets—have been rewarded with impressive equity returns over the past 18 months.

While the MSCI Emerging Markets Index has been essentially flat since the start of 2013, the MSCI Frontier Markets Index has shot up by more than 50%. Developed markets grew strongly too, but the 32% surge in the MSCI World Index was still dwarfed by frontier markets’ growth.

Individual countries have posted some significant returns, too. Since the start of 2013, Bulgaria’s market has soared 91%, Pakistan’s has jumped 88%, and Nigeria’s has risen 47%. The strong performance is helping frontier markets—usually defined as countries that have a stock exchange but don’t meet the size and liquidity requirements to be in the emerging-markets index—to gain more acceptance in the investment community

Data from EPFR Global show that funds focused on frontier markets saw inflows of more than $1.5 billion in the first four months of this year. Since the start of 2013, the funds have attracted $5.6 billion.

There may be more good news: New research shows that frontier markets, often tagged as risky and unstable because of political and economic factors, may be less volatile than commonly assumed.

A previously unpublished study by the New York-based fund manager LR Global, released by the firm in late May to selected clients, looked at the weekly returns, in U.S. dollars, of 80 stock-exchange indexes across developed, emerging and frontier markets in the 10 years to the end of 2013.

The research showed that frontier markets’ stock indexes were significantly less volatile than emerging markets and slightly less bumpy than even developed markets.

LR Global, which has $200 million under management invested in frontier markets, defined volatility as the annualized standard deviation of stock-market returns. Standard deviation, which LR Global measured on a weekly basis, is a measure of how much the market swings up or down. The higher the standard deviation, the more volatile the market.

Brent Clayton, a portfolio manager at LR Global and one of the report’s co-authors, acknowledged that he was surprised by the results. “We had an inkling from looking at the indices that frontier markets would be less volatile than emerging markets, but we were shocked to find that not only was that clearly the case, but also they were less volatile than developed markets over most periods.”

Mr. Clayton attributes frontier markets’ low volatility partly to their limited exposure to the global financial system. In a panic-driven flight to safety, investors tend to bail out of emerging markets. Frontier markets, because they have seen lower inflows of foreign capital, have generally been less affected by such moves.

“These are markets that are primarily driven by local investors and avoid the whims of shorter-term-driven foreign capital flows,” Mr. Clayton said.

Not surprisingly, Ukraine is one of four frontier countries among the 10 most volatile markets in the world. The other three are Romania, Argentina and Kazakhstan. Five of the top 10 were emerging markets and the most volatile country of all was Iceland, a developed market that suffered especially badly during and after the financial crisis.

The least volatile of the 80 markets in the study was Trinidad and Tobago, one of nine frontier markets in the top-10 least volatile. The U.S. came in at No. 11 in the least-volatile ranking.

Mayraj said...

Pakistan has lowest ADR in region

Despite high hopes of the finance minister for greater credit off-take by the private sector, poor deposit growth and higher attraction of government’s papers slowed down the credit flow, making the country having lowest advance-to-deposit ratio (ADR) in the region.

The attraction of government papers with zero risk has changed the banking in the country. The ADR in Pakistan, about 54 per cent, is the lowest in the region compared with India’s 76pc and Bangladesh’s 80pc.

Both the countries have been enjoying high economic growth rate compared to Pakistan.

The credit off-take by the private sector grew by just 4 per cent since the start of the outgoing fiscal year. The growth is even lower during the last two months.

Finance Minister Ishaq Dar recently said the government’s lesser borrowing from the banking system provided space for the private sector to use the banks’ money for growth. The government’s borrowing from the scheduled banks till May 23 was Rs339 billion compared to Rs780bn during the same period last year.

Deposits of the banking sector grew by only 0.25pc since January to April this year, increasing by just Rs19bn.

Despite lesser government borrowing as claimed by the finance minister, the banks have invested heavily in the Pakistan Investment Bonds (PIBs) setting new record.

A latest report of the State Bank showed that the banks’ holdings of the PIBs till April this year rose to Rs1.844 trillion which practically made the banks short of cash. The SBP injected liquidity six times during May to fill a gap of more than Rs400bn.

“Banking sector credit off-take remained weak, growing by only 1pc since March 31, 2014,” said a JS research report issued on Friday.

Investments during this year have grown by 11pc since the start of the year showing heavy participation of banks in PIB auctions, said the report.

Riaz Haq said...

Here's an excerpt of Bloomberg story about Pakistani Taliban warning foreign investors and MNCs to leave Pakistan:

Pakistan’s military began a full-scale operation in the Taliban stronghold of North Waziristan, prompting insurgents to warn foreign investors, airlines and multinational companies to leave the country.
“We’re in a state of war,” Shahidullah Shahid, a spokesman for the Tehrik-e-Taliban Pakistan, or TTP, said in a statement today. “Foreign investors, airlines, and multinational companies should cut off business with Pakistan immediately and leave the country or else they will be responsible for their damage themselves.”
Pakistan Army Starts Offensive Against Taliban in Tribal Area
Pakistan Military Says 80 Terrorists Killed in N. Waziristan
The army said yesterday it would target local and foreign terrorists in North Waziristan, a tribal region near the Afghan border the U.S. has called the “epicenter” of terrorism. The operation, long sought by the U.S., comes a week after militants attacked the country’s biggest international airport.
As Islamic militants capture cities in Iraq and the U.S. draws up plans to withdraw from Afghanistan, public opinion in Pakistan is shifting in favor of stronger action against fighters who were previously seen locally as more of a threat to America’s interests. The Taliban wants to impose its version of Islamic Shariah law in Pakistan, which includes a ban on music and stricter rules for women.
Pakistan’s Future
“At stake is the future of Pakistan,” Mahmud Ali Durrani, a former national security chief and ex-ambassador to the U.S., said by phone. “Do we want a Talibanized Pakistan or do we want to live according to the constitution, democracy? If we want to live according to our constitution and democracy then we have to fight for it, because they are the kind of people who don’t believe in these things.”
Prime Minister Nawaz Sharif’s party won an election last year after pledging peace talks with the TTP, the group at the forefront of an insurgency that has killed 50,000 people since 2001. Negotiations that began in March collapsed over the TTP’s demands for prisoner releases even before progressing on issues such as Shariah law.

Riaz Haq said...

Pakistan is eying the Beijing’s proposed huge investment of about $40 billion over the next eight years in the country’s energy, water, coal, roads and other infrastructure projects.

According to the Board of Investment, a sizeable growth will be recorded in the foreign direct investment inflows from the next year’s second half.

The BOI has also established facilitation centers in Islamabad and other provincial capitals to assist small entrepreneurs in setting up their businesses valued less than Rs100 million, Dr Miftah Ismail, special assistant to the prime minister and chairman of BOI, told the media persons on Tuesday.

These offices will facilitate small and medium enterprises through one-window operation in obtaining utility connections and government registration approvals at federal, provincial and district levels. These types of legal and other administrative approval always take time.

“We are working with the provinces on simplification of their laws regarding businesses establishment, as the government wants to encourage business and creation of jobs,” said the chairman.

Business persons who want to establish their businesses will have to first apply to the head office and if they require support in provinces in taking approvals or permits, “Our directors and other officers will fully facilitate them.

This facility is available to investors and entrepreneurs with capital of Rs100 million or less,” he said.

Dr Ismail said the investment to gross domestic product ratio decreased substantially to 14 percent in 2013-14 from 19.2 percent in 2007-08 because of lowering local and foreign investments.

The fixed investment to GDP ratio was recorded at 12.4 percent as against 13 percent last year.

Pakistan’s ranking in the World Bank’s ‘Ease of Doing Business’ and on the ‘Global Competitiveness’ has been deteriorating over the last several years.

In ease of doing business, the country’s rank was at 61, which gradually slid to 110 in 2014.

The investment board chief said the board has developed an implementation plan to simplify the procedures and reduce time/cost for investment facilitation and business improvement.

For that, the board is consulting with the finance ministry, Federal Board of Revenue, Securities and Exchange Commission of Pakistan and Employees’ Old-age Benefits Institution.

Besides, said the PM special assistant, the board is focusing on improvement of the five indicators in ease of doing business index, including starting a business, dealing with construction permit, tax payment, trading across borders and enforcing contract.

“We will try to simplify them as much as possible to facilitate investors and save their time.”

He said business regulatory environment is particularly relevant for small and medium enterprises – the key driver of competition, economic growth and job creation, especially in developing countries like Pakistan.

SMEs employ some 80 percent of non-agricultural labor force and contribute about 40 percent towards the gross domestic product.$40-billion-investment-from-China

Riaz Haq said...

The cash starved government spent huge amount of $7.697 billion on oil imports in just six months (July-December) of the current financial year (2012-2013) as petroleum products’ demand increased owing to loadshedding of CNG throughout the country.
Analysts said that severe energy crisis in the country and lower capacity operations of refineries pushed the oil import bill upwards. They said that rise in imports of finished products was due to high demand for energy generation. They further said that oil import bill might further increase in December and January. According to the figures of Pakistan Bureau of Statistics (PBS), the country’s petroleum products import has shown an increase of 1.15 per cent in one year, as it imported oil worth of $7.697 billion in July-December of the ongoing financial year against $7.610 billion of July-December of the last year 2011-2012.
Analysts said that the country should ensure energy supply through own resources; otherwise the oil import bill would affect the country’s fiscal position. “As gas supply situation in the country is not expected to improve in the near future, the oil import bill will continue to mount pressure both on value and volumetric basis,” an analyst said.
The break-up of $7.697 billion oil import bill revealed that country spent $4.920 billion on petroleum products and $2.777 billion on import on petroleum crude during the first six months of ongoing financial year.
The PBS figures revealed that country imported food stuff worth of $2.157 billion during July-December of the year 2012-13. The break-up of $2.157 billion revealed that import bill of milk products was up by 3.20 per cent, dry fruits and nuts 1.02pc, import of tea increased by 6.46 per cent, import of spices decreased by 30.06 per cent, soyabean oil’s imports went up by 26.47 per cent, palm oil import decreased by 18.92 per cent, sugar import declined by 78 per cent, import of pulses went down by 12.76 per cent and import of all other food items decreased by 24.80 per cent during the period under review.
Meanwhile, according to PBS figures, the country imported machinery worth of $2.907 billion. Transport group imports stood at $951 million, textile group $1.115 billion, agricultural and other chemicals $3.136 billion, metal group $1.529 billion, miscellaneous group imports were recorded at $402 million and all other items imports remained $ 2.026 billion during July-December period of 2012-13 against July-December period of 2011-12.
It is worth mentioning here that Pakistan’s overall imports were recorded to $21.922 billion in July-December period of ongoing financial year as compared to $22.678 billion of the corresponding period last year.

Anonymous said...

Musharraf govt exaggerated growth data in 2000-2008

Riaz Haq said...

Anon: " Musharraf govt exaggerated growth data in 2000-2008"

I would believe you if the government figures were not supported by private industry reports from 2000-2008 on a variety of things ranging from autos to cement to electronics and FMCG consumption data and employment data. But that is clearly not the case. For example, cement consumption more than doubled; auto sales quadrupled, and telecom business saw an unprecedented boom, and savings rate increased and FDI soared to over $5 billion a year.

Riaz Haq said...

Table 2 of Human Development Report 2016 shows that Pakistan's HDI grew at an annual growth rate of 1.55% in 2000-2010, much faster than 1.09% in 1990-2000 and 0.95% in 2010-2015.

Pakistan's overall HDI growth rate from 1990 to 2015 as 1.24, slower than India's 1.52%.

Riaz Haq said...

Pakistan received around $2 billion in foreign remittances, partly because of the seasonal effect of Eidul Azha.

The SBP is expected to officially announce the foreign remittances statistics next week.


Pakistan has received two short-term loans worth $230 million from international creditors, meant to keep the official foreign exchange reserves at a level sufficient to provide cover to three-month import bill.

According to officials, the country received an amount of $153 million from Citibank in August. Besides, Islamic Development Bank (IDB) gave a $77 million short-term loan in July for crude oil import.

The IDB’s short-term facility is meant for import of crude oil from Saudi Arabia and the lender directly makes payments to the oil supplier on behalf of an oil importer. It partially helped lower pressure on the country’s forex reserves.
From April to May this year, Pakistan had signed three separate short-term loan agreements with the IDB valuing $700 million. Of this amount, Pakistan has already imported crude oil equivalent to $340 million.

For the current fiscal year, the government has estimated receiving $1.55 billion short-term loan from the IDB against the oil import facility.


During the week ending August 31, 2017, the SBP’s reserves increased by $338 million to $14.681 billion due to official inflows, the central bank had reported on Thursday.

For almost one month, Pakistan was touching the three-month import cover border line as its reserves remained at around $14.3 billion.

In order to avoid downgrading in its credit ratings and keep the tap of budget financing open from the World Bank, Pakistan has to maintain its official foreign currency reserves above the three-month import cover level.

The finance ministry is currently making arrangements for floating about $1 billion worth of Sukuk Bonds by middle of November and a better credit rating will help lower the cost of borrowing. It had also raised $1 billion last year at 5.5% interest rate – the lowest rate on the Islamic bond that it ever paid.

The government was reviewing different options to keep the reserves above the level of three-month import bill. The options included incentives for expatriates to invest in Pakistani dollar-denominated bonds, more restrictions on imports and steps that will encourage exporters to bring back export proceeds.

Finance Minister Ishaq Dar on Friday held a meeting with his Chinese counterpart Xiao Jie and discussed issues of mutual interests – including ways and means to further enhance bilateral economic relations.

During FY2016-17, Pakistan had borrowed a record $10.1 billion external loans that included a record-breaking $4.4 billion short-term financing.

Out of this, $2.3 billion came from Chinese financial institutions. The government took $1.7 billion from the China Development Bank, $300 million from the Industrial and Commercial Bank of China, and $300 million from the Bank of China.

It also obtained $445 million from the Noor Bank of the UAE, $650 million from a consortium of the Suisse Bank, the UBL and the ABL, $275 million from Citi and $700 million from the Standard Chartered Bank, London.

This was the first time in Pakistan’s history that any government has taken over $10 billion as fresh foreign loans in a single year.

Pakistan Tahreek-e-Insaf Chairman Imran Khan on Thursday called Finance Minister Ishaq Dar Pakistan’s economic hitman while criticising his economic policies.

In July, Pakistan obtained a total of $254.9 million loans, including $77 million from IDB. It received $75 million from the World Bank for project financing.

China also gave $71.5 million worth of loans for carrying out various Beijing-funded schemes. The Asian Development Bank provided $28.8 million worth of loans.

The $254.9 million loans were 3.2% of the total annual budgetary estimates of $8 billion for FY2017-18.