ECONOMY OF PAKISTAN: 2013-14

Presentation bySania ShahabRamla ManzoorQambrani Shoaib Anwer (Volunteer)

Mansoor Ahmed

Main Focus1. Federal Budget: 2013-20142. Economic Challenges: 20143. Suggested Charter of Economy

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FEDERAL BUDGET: 2013-14MASTER CHART

(FEDERAL BUDGET 2013-2014)Particulars Rs. b %

NEEDED1. Current Expenditure 2892 792. ADP: 2013-2014 762 21

AVAILABLE 3,591 100Net Federal Revenue 1,918 53.4

SHORTFALL 1,674* 46.63,591 100

FINANCING PATTERN

1.Capital Receipts (Net) 507 302. Bank Borrowings 975 583.External Receipts 169 104.Estimated Provincial Surplus

22 2

1,674*

100

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FEDERAL REVENUE BUDGET: 2013-14FEDERAL REVENUE BUDGET 2013-14

Particulars Rs. b %CURRENT REVENUE

1. Indirect Taxes 1,622* 48

Composition Rs.b %Sales Tax 1,052 65Custom Duties 279 17Federal Excise 166 10Others (Plus Petroleum Levy)

123 08

1,622* 1002. Direct Taxes 976 28

2,598 76

3. Non-Tax Revenue 822 243,420 100

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FEDERAL REVENUE BUDGET: 2013-14

Rs. B %

4. Less: Transfer to Provinces 1,502

Net Federal Revenue 1,918

CURRENT EXPENDITURE

1. Debt Servicing 1,154 44

2. Defence Affairs & Services 627 24

3. Cost of Running Govt 275 10

4. Grants & Transfer to Provinces

337 13

5. Subsidies 240 09

2,633 100

Less: Deficit in Revenue Budget

1,651

892

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FEDERAL ANNUAL DEVELOPMENT PLAN 2013-2014

ANNUAL DEVELOPMENT PLAN 2013-2014Particulars Rs. b %

DEVELOPMENT EXPENDITURE

1. Federal Govt: 2012-13 Departments (rs. 375b), Corporations (Rs. 114b) Special Programs (Rs. 5b) Special Areas (Rs. 36b) and ERRA* Rs. (10b)

540 69

2. Other Developments Expenditure

172 22

3. Provincial Governments

76 9

788 100

*Earthquake Rehabilitation & Reconstruction Authority

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FEDERAL ANNUAL DEVELOPMENT PLAN 2013-2014

FINANCING PATTERN

Rs.b %

1. Bank Borrowings 975

2. External Receipts 169

3. Estimated Provincial surplus

22

4. Net Internal Resources

(1158)*

8*

* Financing pattern will be revised.

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FEDERAL ANNUAL DEVELOPMENT PLAN 2013-2014

BREAK UP OF INTERNAL RESOURCES

Rs. b

1. Deficit in Revenue Budget for 2013-2014

1,651

2. Less: Net Capital Receipts

(493)

(1158)*

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PROVINCIAL ALLOCATION: 8TH NATIONAL FINANCIAL AWARD

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.

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PAKISTAN: ECONOMIC CHALLENGES: 2014A: Economy Challenges 2013 - 14

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

Government9

PAKISTAN: ECONOMIC CHALLENGES: 2014B: Measures with Question Mark

8th NFC Award1. 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.

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PAKISTAN: ECONOMIC CHALLENGES: 2014B: 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.

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PAKISTAN: ECONOMIC CHALLENGES 2014C: 2014 Outlook

Outlook for 2014 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 6.5% to 7% 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.

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PAKISTAN: ECONOMIC CHALLENGES: 2014D: Expected Trends 2015

1. 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.

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PAKISTAN: ECONOMIC CHALLENGES: 2014E: Consequences

1. National Security at Stake

2. Miss-Governance to Continue

3. In Search of a Direction

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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. Professionals Role 10. Holistic approach to Economic Development with equitable

distribution of wealth and income across the board

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