ECONOMY OF PAKISTAN: 2012-13 Presentation by Prof. Dr. Khawaja Amjad Saeed Founder Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan (2003----), Member Governing Council, International Federation of Accountants (IFAC), New York (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of Cost and Management Accountants of Pakistan (1997-2000), President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96), Pro Vice-Chancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996) & Senior Faculty Member of Hailey College of Commerce, University of the Punjab, Lahore (1965-73). Earlier he served in Main Focus 1. Economy of Pakistan 2. Federal Budget: 2012-2013 3. Economic Challenges: 2013 4. Fiscal Policy 5. Suggested Charter of Economy 1
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ECONOMY OF PAKISTAN: 2012-13 Presentation by Prof. Dr. Khawaja Amjad Saeed Founder Principal, Hailey College of Banking & Finance, University of the Punjab,
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ECONOMY OF PAKISTAN: 2012-13
Presentation byProf. Dr. Khawaja Amjad SaeedFounder Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan (2003----), Member Governing Council, International Federation of Accountants (IFAC), New York (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of Cost and Management Accountants of Pakistan (1997-2000), President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96), Pro Vice-Chancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996) & Senior Faculty Member of Hailey College of Commerce, University of the Punjab, Lahore (1965-73). Earlier he served in Corporate Sector in Pakistan for eight years (1958-65).
Main Focus1. Economy of Pakistan2. Federal Budget: 2012-20133. Economic Challenges: 20134. Fiscal Policy 5. Suggested Charter of Economy
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WELCOME TO OUR PROGRAM PRESENTATION FRAME
1.Economy of Pakistan
2.Constitution of Pakistan 1973: Economic Matters
3.Federal Budget: 2012-13
4.Pakistan: Economic Challenges: 2013
5.Economic Management Matrix
6.Fiscal Policy
7.Suggested Charter of Economy
2
1: ECONOMY OF PAKISTAN
3
S. No. Components
1. Agriculture
2. Manufacturing
3. Services
Components
1-1: AGRICULTURE
4
S. No. Components
1. Livestock
2. Crops: 1. Major 2. Minor
3. Fishing
4. Forestry
Components
1-2: MANUFACTURING
5
S. No. Components
1. Industry: High Tech
LSMSME
Cottage
2. Minerals
3. Electricity
4. Construction
Components
1-3: SERVICES
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S. No. Components
1. Physical
2. Social
3. Financial
4. Intellectual
Components
2: CONSTITUTION OF PAKISTAN 1973:ECONOMIC MATTERS
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Article Emphasis
03 Exploitation: Eliminate
18 Freedom: Trade, Business or Profession
37 Promotion: Social Justice and Elimination of Social Evils
38 Well Being: Social and Economic of People
3: FEDERAL BUDGET: 2012-13
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MASTER CHART (FEDERAL BUDGET 2012-2013)
Particulars Rs. b %NEEDED
1. Current Expenditure 2,612 812. ADP: 2012-2013 591 19
3-3: PROVINCIAL ALLOCATION: 7TH NATIONAL FINANCIAL AWARD
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Province Allocated%
Population*%
Punjab 48 57.36
Sindh 27 23.71
KPK 16 13.82
Balochistan 09 5.11
100 100
*Based on Population Census of 1997.
4: PAKISTAN: ECONOMIC CHALLENGES: 2013
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A: Economy Challenges 2012
1. Business Environment: Deteriorating 2. Foreign Investment: Declining3. Exchange Rate: Depreciating 4. Inflationary Pressure: Building Up5. Foreign Exchange Reserves: Depleting 6. Industrialists relocating their Industries Abroad 7. Electricity and Gas Shortages: Aggravating 8. Relations with International Financial Institutions Including
IMF: Deteriorating9. Exports Growth: Turning Negative 10. Mysterious Growth in Remittances: Continuing 11. Economy Remaining the off radar Screen of the
Government
4: PAKISTAN: ECONOMIC CHALLENGES: 2013
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B: Measures with Question Mark7th NFC Award
1. New NFC Award diverted bulk of Federal Government Resources to Provinces at a time when they were needed more: a. To Finance Growing Interest Paymentb. Security Related Expenditure c. Bailing out of PEs with lossesd. Paying WAPDA/PEPCO to Finance their
Inefficiencies2. Tax System:
Failure to Reform Taxation System and Broadening Tax Base to Generate more Tax Revenues.
4: PAKISTAN: ECONOMIC CHALLENGES: 2012
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B: Measures with Question Mark
3. Petroleum Products These are doubly taxed: a. Exchange rate depreciation has increased the
landed cost of oil.b. Petroleum Development Levy (PDL) is levied on
Inflated basis to mobilize more resources.
4: PAKISTAN: ECONOMIC CHALLENGES 2013
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C: 2013 Outlook Outlook for 2013 is Likely to Further Deteriorate. 1. Political uncertainty with adverse consequences on the
economy.2. Fiscal indiscipline hallmark of the Government during
election year.3. Mobilization through taxation will take the back seat. 4. Reliance on Non-Tax Revenues would increase further. 5. Expenditure is expected to rise further with budget deficit
likely to be in the range of 6% 6.5% of GDP.6. Economy will remain out of focus of the political
leadership. 7. Energy shortage (electricity and gas) to aggravate further. 8. Politics is likely to dominate economics.
4: PAKISTAN: ECONOMIC CHALLENGES: 2013
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D: Expected Trends 20131. GDP Trend : 3-4%2. Domestic Investment : Not expected to Pick up3. Unemployment and Poverty are likely to rise further4. Inflationary pressure to rise on account of senseless increase
in government administered prices 5. External balance of payments to come under pressure due
to following: a. Flat, even negative export growth b. Search in payment to the IMFc. FDI to witness a sharp decline d Sharp depreciation of exchange rate e. Public debt is likely to worsen on account of large fiscal deficit.
4: PAKISTAN: ECONOMIC CHALLENGES: 2013
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E: Consequences
1. National Security at Stake
2. Miss-Governance to Continue
3. In Search of a Direction
5: ECONOMIC MANAGEMENT MATRIX
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Economic Dimension
ManagementDimension
Consumption Production Exchange Distribution Public Finance
Planning
Organizing
Staffing
Leading
Controlling
6: FISCAL POLICY
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1. Objectives a. Full Employment b. Resource Mobilization c. Resource Allocation d. Maintenance of Economic Stabilitye. Income Re-Distribution
2. Canons of Taxation: Adam Smitha. Equityb. Certainty c. Convenience d. Economy
5. Capital gains- With holding period less than six months
10%- More than six month but less than 12 months 8%
7: SUGGESTED CHARTER OF ECONOMY 1. Domestic Resource Mobilization 2. Income Tax by All3. Self Reliance for Financing4. ADP Financing5. Provincial Govt Budgets 6. Public Enterprises Losses 7. Good Governance & Corporate Governance8. Inflationary Impact: Salary increase 9. CBA----PSA10. NPLs11. Professionals Role 12. Holistic approach to Economic Development with equitable
distribution of wealth and income across the board