Shaukat Tarin, Advisor to the PM on Finance, and State Minister for Finance Hina Rabbani Khar release the Pakistan Economic Survey 2008-09 during a media briefing in Islamabad.
ISLAMABAD: The country’s economy, hit hard by the global recession as well as the domestic security crisis, showed an abysmal growth of two per cent during the financial year 2008-09 as against 4.1 per cent last year, missing most targets.
The agriculture sector, however, performed well, partly offsetting the damage, according to the Economic Survey.
Shaukat Tarin, adviser to the prime minister on finance, unveiled the document at a press conference here on Thursday. He said the GDP growth slumped from the targeted 4.5 per cent because of internal and external challenges.
‘Pakistan’s macroeconomic environment is affected by intensification of war on terror and deepening of the global financial crisis, which penetrated into domestic economy through the route of substantial decline in Pakistan’s exports and a visible slowdown in foreign direct inflows,’ the survey said.
This decline in growth was saved by an unexpected 4.7 per cent growth in the agriculture sector as against the target of 3.5 per cent, Mr Tarin added.
He said that 2008-09 was a year of economic consolidation. ‘The economic fundamentals would have gone out of control had the government not taken corrective measures.’
He said the coming budget would focus on poverty alleviation and economic growth. ‘We will dole out money for development sectors to create jobs and generate economic activities.’
He warned that the budget deficit might cross five per cent of GDP next year, from IMF’s projected target of 4.6 per cent mainly because of external flows. However, he said, the money would be used in productive sectors.
Mr Tarin said that a string of measures would be taken to revive the economy and reduce poverty, adding that the government would soon launch a survey to assess ‘real poverty.’
He said whatever the final poverty figures revealed, the reality was that people were committing suicide.
In reply to a question about tax on agriculture, the adviser said he did not want to be ‘martyred.’ ‘Why you want me to be killed by someone after imposing tax on agriculture.’
He admitted that agriculturists had a strong lobby in the government and would oppose tax ‘tooth and nail.’ Although agriculture recorded a 4.7pc growth, it did not contribute anything to the national coffer, the adviser added.
He said the government had decided to bring all those sectors into the tax net which were not contributing anything to the exchequer. ‘We are going to extend taxes to all areas,’ he said, adding that taxes on the stock market and real estate were being considered.
‘I am not going to tax those people who are already paying taxes.’
Mr Tarin said the manufacturing sector would be revamped to increase exports. He said the debt-to-GDP ratio would start declining from the next fiscal year.
The overall tax collection by the Federal Board of Revenue witnessed deceleration in real terms. The FBR’s tax collection-to-GDP ratio is likely to decline to nine per cent from the projected 10 per cent.
According to the survey, real GDP grew by two per cent in 2008-09 as against the target of 4.5pc. Agriculture grew by 4.7pc, whereas the target was 3.5pc. Its growth was 1.1pc last year. The good performance in agriculture sector was mainly on account of bumper wheat and cotton crops.
Output in the manufacturing sector saw a stellar growth of 3.3pc in FY09, compared to 4.8pc last year and the target of 6.1pc. The large-scale manufacturing sector declined to 7.7pc.
The massive contraction was because of energy outages, a weak security environment and political uncertainty in March this year at the height of the campaign for reinstatement of the chief justice. The service sector grew by 3.6pc as against the target 6.1pc and last year’s target of 6.6pc. Per capita real income increased by 2.5pc from 3.4pc last year. Per capita income in dollar terms rose to $1,046 from $1,042 last year, a marginal increase of 0.3pc.
Real private investment consumption rose by 5.2pc as against the negative growth of 1.3pc last year. The total investment declined from 22.5pc of GDP in 2006-07 to 19.7pc of GDP in 2008-09. Fixed investment declined by 18.1pc of GDP from 20.4pc last year. Private sector investment has been decelerating since 2004-05 and its ratio to GDP declined from 15.7pc in 2004-05 to 13.2pc in 2008-09.
The national savings rate declined to 14.4pc of GDP from 13.5pc last year.
The agriculture sector, however, performed well, partly offsetting the damage, according to the Economic Survey.
Shaukat Tarin, adviser to the prime minister on finance, unveiled the document at a press conference here on Thursday. He said the GDP growth slumped from the targeted 4.5 per cent because of internal and external challenges.
‘Pakistan’s macroeconomic environment is affected by intensification of war on terror and deepening of the global financial crisis, which penetrated into domestic economy through the route of substantial decline in Pakistan’s exports and a visible slowdown in foreign direct inflows,’ the survey said.
This decline in growth was saved by an unexpected 4.7 per cent growth in the agriculture sector as against the target of 3.5 per cent, Mr Tarin added.
He said that 2008-09 was a year of economic consolidation. ‘The economic fundamentals would have gone out of control had the government not taken corrective measures.’
He said the coming budget would focus on poverty alleviation and economic growth. ‘We will dole out money for development sectors to create jobs and generate economic activities.’
He warned that the budget deficit might cross five per cent of GDP next year, from IMF’s projected target of 4.6 per cent mainly because of external flows. However, he said, the money would be used in productive sectors.
Mr Tarin said that a string of measures would be taken to revive the economy and reduce poverty, adding that the government would soon launch a survey to assess ‘real poverty.’
He said whatever the final poverty figures revealed, the reality was that people were committing suicide.
In reply to a question about tax on agriculture, the adviser said he did not want to be ‘martyred.’ ‘Why you want me to be killed by someone after imposing tax on agriculture.’
He admitted that agriculturists had a strong lobby in the government and would oppose tax ‘tooth and nail.’ Although agriculture recorded a 4.7pc growth, it did not contribute anything to the national coffer, the adviser added.
He said the government had decided to bring all those sectors into the tax net which were not contributing anything to the exchequer. ‘We are going to extend taxes to all areas,’ he said, adding that taxes on the stock market and real estate were being considered.
‘I am not going to tax those people who are already paying taxes.’
Mr Tarin said the manufacturing sector would be revamped to increase exports. He said the debt-to-GDP ratio would start declining from the next fiscal year.
The overall tax collection by the Federal Board of Revenue witnessed deceleration in real terms. The FBR’s tax collection-to-GDP ratio is likely to decline to nine per cent from the projected 10 per cent.
According to the survey, real GDP grew by two per cent in 2008-09 as against the target of 4.5pc. Agriculture grew by 4.7pc, whereas the target was 3.5pc. Its growth was 1.1pc last year. The good performance in agriculture sector was mainly on account of bumper wheat and cotton crops.
Output in the manufacturing sector saw a stellar growth of 3.3pc in FY09, compared to 4.8pc last year and the target of 6.1pc. The large-scale manufacturing sector declined to 7.7pc.
The massive contraction was because of energy outages, a weak security environment and political uncertainty in March this year at the height of the campaign for reinstatement of the chief justice. The service sector grew by 3.6pc as against the target 6.1pc and last year’s target of 6.6pc. Per capita real income increased by 2.5pc from 3.4pc last year. Per capita income in dollar terms rose to $1,046 from $1,042 last year, a marginal increase of 0.3pc.
Real private investment consumption rose by 5.2pc as against the negative growth of 1.3pc last year. The total investment declined from 22.5pc of GDP in 2006-07 to 19.7pc of GDP in 2008-09. Fixed investment declined by 18.1pc of GDP from 20.4pc last year. Private sector investment has been decelerating since 2004-05 and its ratio to GDP declined from 15.7pc in 2004-05 to 13.2pc in 2008-09.
The national savings rate declined to 14.4pc of GDP from 13.5pc last year.
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