Chapter 1Growth and Stabilization Introduction The resilience of the economy of Pakistan has been tested several times by one crisis after another. The economy has witnessed numerous domestic and external shocks from 2007 onwards. The sharp rise in international oil and food prices, the internal security hazards brought on by the campaign against extremism and the repeated natural disasters in the form of successive floods have buffeted the macroeconomic strategy with shock after shock. Domestically, two floods, the difficult security situation and the energy crisis have combined to drastically impact economic growth. The campaign against extremism with its associated destruction of physical infrastructure, the displacement of thousands of people from the affected areas and the associated rise in expenditure to support the moved people has all taken their toll. The growth in our export markets has slowed down compared to last year. Gross Domestic Product (GDP) growth has been stuck at a level, which is half of the level of Pakistan’s long-term trend potential of about 6.5 percent per annum and is lower than what would be required for sustained increases in employment and income and a reduction in poverty. Amidst the critical challenges of the floods and heavy rains of 2010 and 2011, skyrocketing oil prices and global contraction, the government’s strategy continued to focus on regaining macroeconomic stability. There have been some successes. Pakistan has been able to withstand the pressures and improve its performance in some key areas such as the check on inflation, the increase in exports and revenue generation and maintenance of comfortable foreign exchange reserve levels. The focus on reforms and austerity through the control of public expenditures despite the difficulties has continued. The economy is now showing signs of modest recovery. The commodity producing sectors and especially the agriculture sector are doing better. Some improvement is also witnessed in the Large Scale Manufacturing (LSM) sector. The Service sector also gained from healthy trade activities and the improvements in the commodity producing sectors. The smooth functioning of the supply chains is playing a key role in improving the economic situation and ensuring the availability of essential items. Pakistan has the potential to grow at 6 to 7 percent in the next couple of years. The GDP growth for 2011-12 was projected at 4.2 percent on the back of 3.4 percent growth in Agriculture, 2 percent growth in LSM and 5 percent in Services sectors. However, the torrential rains in Sindh province during August 2011 compelled the government to revise its GDP growth target to 3.6 percent from 4.2 percent on the basis of 2.5 percent growth in Agriculture, 1.5 percent in LSM, and 4.4 percent growth in services sector. The revised growth targets have been met and marginally exceeded. The economy has shown resilience. GDP growth for 2011-12 has been estimated 3.7 percent based on nine month data as compared to 3.0 percent (revised) in the previous fiscal year 2011. The Agriculture sector recorded a growth of 3.13 percent against a target of 3.4 percent and previous year’s growth rate of 2.38 percent. The Large Scale Manufacturing sector grew by 1.78 percent as compared to the target of 2.0 percent and against the growth of 1.15 percent 1 Pakistan Economic Survey 2011-12 in the last year. Although the Services sector recorded steady growth of 4.02 percent as compared to 4.45 percent in 2010-11, this was Fig-1.1 GDP Growth (%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 lower than the target of 5.0 percent set for the outgoing year. Figure-1.1 presents an overview of GDP growth over the previous years. 9.0 7.5 5.8 4.7 3.1 2.0 3.7 1.7 3.1 3.0 3.7 6.8 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 The 3.7 percent growth based on the nine months data 2011-12, up from 1.7 percent in 2008-09 and 3.0 percent last year, indicates the potential growth trajectory. The country has enormous potential to grow at much higher rates which is demonstrated by the achievement of the 3.7 percent growth this year despite the numerous internal and external shocks that the economy has been forced to withstand. Some of Pakistan’s economic problems are structural in nature. The objectives of sustaining high growth, low inflation, and external payment viability can not be achieved without removing certain structural barriers. To this end the major structural reforms of the government have included tax legislation, trade reforms, further privatization of State Owned Enterprises (SOEs), financial sector reforms, human resource development and social protection. The EU approval of duty waiver on textile items is being pursued aggressively, which would help in improving the exports and providing support to the business environment. In recent times, Pakistan has also undergone political and constitutional changes. Civil societies and other organizations are now playing a more active and independent role and this coupled with government reforms are helping economic growth. Global Developments The International Monetary Fund (IMF) has warned that the euro zone debt crisis is escalating 2 and dragging down the entire world economy. In this scenario China has remained a bright spot. Its growth rate, although down to a forecast of 8.2 percent for this year compared to 9.2 percent last year, has remained relatively high. If China can maintain its growth, it’s good for the world, providing support for commodities markets and growth in other countries. The IMF maintained its forecast of 2.1 percent growth for the US in the year 2012 and 2.4 percent for the year 2013. For Japan the growth rate projected for 2012 is 2.0 percent and for 2013 it is 1.7 percent. Overall, economic activity in advanced economies is likely to expand by 1.7 percent on average in 2012 and 2013. Growth in emerging economies is projected at 5.7 percent in 2012. The IMF expects growth in oil exporting countries in the Middle East and North Africa to slow to 3.9 percent in 2012, from 4.9 percent in 2011. Net oil importers in the Middle East and North Africa region are expected to record 2.6 percent growth in 2012, after sluggish growth of 1.4 percent in 2011. GDP growth across the Gulf Cooperation Council (GCC) countries is expected to be moderate at a rate of 4 percent in 2012. Unfortunately, Europe is now caught in a vicious cycle of high debt and low growth. Highly burdened by debt, most of the economies in the region may not attain respectable levels of growth to improve their fiscal position. This will imply 2011-12 Growth and Stabilization potential debt servicing difficulties and limit their abilities to unshackle their growth potential. Almost 17 percent of total exports of Pakistan are to the Euro zone as are a reasonable portion of its total import from this region. Problems in this area can impact on Pakistan’s trade and hence its overall growth. Asia on the other hand, continues to move ahead, with China and India leading the growth. There is some hope that perhaps Asia has created some distance from the OECD, and has therefore, not been dragged down so far. However, if the OECD continues its downward slide, the export-led Asian giants could see their growth prospects diminish. Table-1.1: Comparative Real GDP Growth Rates (%) Region/Country 2009 2010 2011 World GDP -0.5 5.3 3.9 Euro Area -4.1 1.9 1.4 United States -2.6 3.0 1.7 Japan -6.3 4.4 -0.7 Germany -4.7 3.6 3.1 Canada -2.5 3.2 2.5 Developing Countries 2.7 7.5 6.2 China 9.2 10.4 9.2 Hong Kong SAR -2.7 6.8 5.4 Korea 0.2 6.1 4.5 Singapore 0.6 2.8 3.3 Vietnam 5.3 6.8 5.9 ASEAN Indonesia 4.6 6.2 6.5 Malaysia -1.6 7.2 5.1 Thailand -2.3 7.8 0.1 Philippines 1.1 7.6 3.7 South Asia India 6.6 10.6 7.2 Bangladesh 5.9 6.4 6.1 Sri Lanka 3.5 8.0 8.2 Pakistan 1.7 3.1 3.0 Middle East Saudi Arabia 0.1 4.6 6.8 Kuwait -5.2 3.4 8.2 Iran 3.9 5.9 2.0 Egypt 4.7 5.1 1.8 Africa Algeria 2.4 3.3 2.5 Morocco 4.9 3.7 4.3 Tunisia 3.1 3.1 -0.8 Nigeria 7.0 8.0 7.2 Kenya 2.6 5.6 5.0 South Africa -1.5 2.9 3.1 Source: World Economic Outlook (IMF), April 2012. P: Projected. 2012 3.5 -0.3 2.1 2.0 0.6 2.1 5.7 8.2 2.6 3.5 2.7 5.6 6.1 4.4 5.5 4.2 6.9 5.9 7.5 3.7 6.0 6.6 0.4 1.5 3.1 3.7 2.2 7.1 5.2 2.7 2013 (P) 4.1 0.9 2.4 1.7 1.5 2.2 6.0 8.8 4.2 4.0 3.9 6.3 6.6 4.7 7.5 4.7 7.3 6.4 7.0 4.3 4.1 1.8 1.3 3.3 3.4 4.3 3.5 6.6 5.7 3.4 Pakistan’s economy is very closely linked to the rest of the world due to its high external sector exposure. Several countries of the euro zone are important trading partners of Pakistan. As such, any untoward development in these countries could have a substantial negative impact on the economy of Pakistan. A contraction or stagnation in economic activity in the global economy, can potentially affect the level of our exports, Foreign Direct Investment (FDI) and home remittances adversely. Similarly further increase in oil prices 3 Pakistan Economic E Sur rvey 2011-12 2 te hurdles in the ongo oing econom mic can creat activities of the countr ry. The increa ase in oil pric ces Box-1 E Acti ivities Rise in Oil Prices and Economic Rising oil prices affect an economy through t direct t and indirect ch hannels. The direct d channel works through h the supply sid de whereas the e indirect chan nnel works thr rough the demand side. The va ariables ultimat tely affected by b oil price hikes include con nsumption, inv vestment, exch hange rate, balan nce of paymen nts, and unemp ployment. The first nine month hs of the fiscal l year 2011-12 2 depict that oi il bill has reache ed $11.14 billio on indicating a rise of 38 percent over $8.01 billion for the same pe eriod of last year. Soaring oi il prices are ca ausing massive e trade imbalan nces; the trade deficit d has reach hed to $16.1 bi illion which is $4.8 period of prev billion hig gher than the corresponding c vious period. Fig g 1.2: Impact of Oil Prices on o LSM S Sector 120.0 0 100.0 0 Rs. Per Liter 80.0 0 60.0 0 40.0 0 20.0 0 0.0 0 Jan-08 Jan-10 Jan-11 Jan-12 Jan 09 Jan-09 July-07 July-08 July-09 July-10 July-11 Mar-12 LSM Growth rate YOY Y Oil Prices ady seriously hampering economic e acti ivities is alrea (Box-1). 20.0 00 15.0 00 Growth (%) 10.0 00 5.00 0 0.00 0 -5.00 -10.00 In the first t stage, rising oil prices mak ke input expen nsive which effe ect producers’ price p and lowe er the real profi fits of firms and investment i for future projects s. Decomposin ng the investme ent in different t sectors reveal ls further that the t fall in investm ment was more in the manufa acturing sector r compared to construction, transportation and communi ication sectors. Th hus Large Scale e Manufacturin ng (LSM) grow wth was more adversely a impa acted as shown n in the Fig-1.2. The increa asing oil pric ces also cripp pled our econ nomic growth du ue to the backw ward and forw ward linkages with agriculture e and the servi ices sector. Th hus oil price sh hocks hampered capacity utiliza ation and lowe ered the availab bility of inputs th hus adding to the capacity utilization u issue es. In response, firms attemp pt to minim mize the cost of production n through the minimization m o the variable of e cost resulting in n large layoffs. . Another im mportant aspec ct is the energy y mix for electr ricity generation-in Pakistan which w is creat ting huge fina ancial pressures and a massive electricity e shut tdowns. Pakist tan is generating almost 40 per rcent of electri icity (Fig-1.3) from thermal re esources (impo orted input), which w is the least cost-effective option due to the ever inc creasing furnac ce oil prices. Fi ig-1.3: Electric city Generatio on Others 3% Oil 40% 4 Gas 24% Hydel H 3 % 33 Heavy reli iance on impor rted oil has res sulted in circu ular debt and electricity short tages, which is s eroding our export competitiv veness and crea ating fiscal im mbalances. So just the oil pric ce hike by itse elf has been a major challen nge for Pakistan’s economic grow wth. A of Growth G Sectoral Analysis It is esse ential to loo ok into the performance p of various components c of Gross Na ational Produ uct (GNP) to understand what w is happe ening to over rall growth. The growth h performance of vario ous componen nts of GDP over the las st five years is 4 ted in Table-1.2. These data d highlight ts the present relative e importance e of various sectors and d subsectors s and the inter r- relationship p between the em. Growth and Stabilization Table 1.2: Growth Performance of Components of Gross National Product (% Growth at Constant Factor Costs of 1999-2000) Sectors/Sub-Sectors 2007-08 1.3 1.0 -6.4 10.9 4.2 9.2 -13.0 4.4 4.8 4.0 7.5 -5.5 -23.6 6.0 3.8 5.3 11.1 3.5 1.2 9.8 3.7 2008-09 1.8 4.0 7.8 -1.2 3.1 2.3 -3.0 -0.5 -3.6 -8.1 7.5 -11.2 59.0 1.7 3.6 -1.4 -7.6 3.5 3.6 8.9 1.7 2009-10 3.56 0.62 -2.28 -7.72 4.28 2.20 1.47 2.23 5.46 4.79 7.51 4.33 16.34 6.16 2.63 1.89 4.49 -12.16 3.51 2.52 7.83 3.07 2010-11 R 1.47 2.38 -0.23 2.68 3.97 -0.40 1.94 -1.28 3.06 1.15 7.51 4.38 -7.09 -7.25 4.45 0.87 3.53 -1.41 1.79 14.17 6.90 3.04 2011-12 P 3.28 3.13 3.18 -1.26 4.04 0.95 1.78 4.38 3.56 1.78 7.51 4.46 6.46 -1.62 4.02 1.25 3.58 6.53 3.51 2.61 6.77 3.67 Commodity Producing Sector 1. Agriculture -Major Crops -Minor Crops -Livestock -Forestry -Fishing 2. Mining & Quarrying 3. Manufacturing -Large Scale -Small Scale -Slaughtering 4. Construction 5. Electricity & Gas Distribution Services Sector 6.Transport,Storage and Communication 7. Wholesale & Retail Trade 8. Finance & Insurance 9. Ownership of Dwellings 10. Public Administration & Defence 11. Social, Community & Public Services 12. GDP (Constant Factor Cost) Source: Pakistan Bureau of Statistics P : Provisional, R : Revised, - : Included in Small Scale Commodity Producing Sector The commodity producing sector (CPS) comprises of agriculture and industry. It is the most important sector of the economy, with relatively stronger forward and backward linkages for economic development and prosperity of the country. It accounted for 46.5 percent of GDP during the outgoing fiscal year. This is a decline from 49.1 percent of GDP in 2001-02, indicating that the share of the non-commodity producing sector has increased. The commodity producing sector has performed much better in outgoing fiscal year compared to last year; its growth rate this year was 3.28 percent against only 1.47 percent in last year. The recovery in both agriculture and industrial sector, though moderate, has helped to achieve this level. However, the growth of the commodity producing sector remained far below its potential due to largely unforeseen climatic factors. Agriculture Sector Agriculture is a key sector of the economy. It provides food items and raw materials for industrial units and accounts for 21 percent of GDP, 45 percent of employment and 60 percent of exports. In the inevitable process of structural transformation its share shrank to 21.1 percent in fiscal year 2011-12 compared to 24.1 percent ten years earlier in 2001-02. Despite its declining share, it is the single largest sector of Pakistan’s economy. Moreover, an overwhelming majority of the population depends directly or indirectly on income generated by this sector. The agriculture sector has strong backward and forward linkages. As a result its growth has a larger impact on the overall economic performance. The performance of the agriculture sector remained weak due to recent catastrophic floods. However, the government’s supportive polices in this sector resulted in a growth of 3.13 percent 5 3 percent. wheat registered a negative growth of -6. maize and gram and minor crops namely. due to energy shortages. chilies and garlic etc. onions. The share of livestock in agriculture has increased to 55 percent. This has increased in 2011-12 to 18. goat. Manufacturing Sector: The manufacturing sector contributes much to the progress of our economy. asses.87 of agricultural value added and registered an accelerating growth of 3. The main reason for this negative growth of minor crops is the heavy flood in Sindh and Balochistan provinces. Forests are a key component of our environment and degradation of forests can pose severe socioeconomic challenges for the coming generations. The growth of pulses is estimated at -3. horses. in Punjab also the extended fog season delayed the planting of seed beyond the optimal period. sesamim.Pakistan Economic Survey 2011-12 against the growth of 2. camel.94 percent last year. contributed to an overall increase in value addition in the fisheries sub-sector. Livestock includes cattle. in particular. The main reason for the negative growth of wheat is the 2. poultry products and other livestock items has increased at the rate of 3. cotton. namely. The crop sub-sector is further divided into major crops.50 percent. The major crops including cotton.24 percent respectively.28 percent in fiscal year 2009-10.90 percent and 0.7 percent. poor law and order situation.1 percent and 2. barley. This sub-sector is highly labour intensive. pulses.26 percent. This shift is visible in Pakistan also.97 percent last year. fisheries and forestry. Livestock has witnessed a marginally higher growth of 4. and sugarcane. rice.68 percent positive growth last year. grew at 0. However. Minor Crops: Minor crops contributed 10.6 percent decline in area under cultivation. The growth of the . The improved performance is mainly attributed to a sharp pick-up in the production of rice. maize. gram. The production of milk. rapeseed and mustard and tobacco showed mixed trends but their share in the overall sector is small. Components of fisheries such as marine fishing and in-land fishing. The gross value addition of marine fish increased by 1.35 percent and that of inland fish by 1. 7.04 percent against the growth of 3. cotton. timber and fire wood. Livestock: Global integration.7 percent in 2001-02.46 percent respectively. sheep. sugarcane and rice witnessed growth in production of 18. The demand for livestock has grown at a phenomenal pace. Fisheries: The fisheries sector witnessed a growth of 1.6 percent of GDP. The importance of this sector may be recognized by the fact that the majority of people living in rural areas depend directly or indirectly on the livestock and dairy sector. rising income and living standards as well as changing dietary patterns across regions have brought a paradigm structural shift. Production in this sub-sector declined by -1.96 percent.62 percent in fiscal year 2009-10. potatoes.40 percent last year. The agriculture sector consists of various sub-sectors which include crops. vegetables -10.95 percent as compared to the contraction of -0. wheat. sugarcane. In lower Sindh. The other major crops bajra. The main components of forestry. onion -15. livestock.18 percent compared to a negative growth of 0. 6 buffalos. 4.6 percent. Livestock also registered a significant growth.23 percent last year and -2. This negative growth is far below the 2. jowar.0 percent. mules and poultry and their products. It has also emerged as a major source of income for the small farmers as well as the landless rural poor.78 percent against the growth of 1. The heavy floods also depressed the supply chain and affected market demand.7 percent respectively. Major Crops: Major crops account for 31. which caused the slowing down of its output.9 percent and 27.4 percent and oil seeds -26. The manufacturing sector has remained under stress for the last several years.4 percent. The increase in prices has provided incentive for greater production and spurred growth. The share of the manufacturing sector in GDP was 17.11 percent to value addition in overall agriculture. Forestry: The growth of the forestry sub-sector is recorded at 0. sowing was delayed mainly because of late receding rain water which resulted in a decline in both the acreage as well as the yields.9 percent. The manufacturing sector has been hard hit by international and domestic factors. chilies -78. Moreover.38 percent last year and 0. electric transformers 27. buses 25.25 percent. This performance is dominated by Finance and Insurance at 6.15 percent last year. Finance and Insurance.78 percent against the growth of 1.61 percent. The services sector also plays a vital role in sustaining economic activities in Pakistan.02 percent in 2011-12. motor tyres 25. soaps and detergents 8.54 percent. Our services sector has a great potential to grow at a rapid pace. Mining and Quarrying: Extraction of minerals and ores through efficient mining and quarrying provides convenient and economical access to raw materials and a competitive edge to the country.19 percent and deepfreezers -49. namely the Large-Scale Manufacturing (LSM).28 percent respectively. registered substantial decline of -47. The financial subsector consists of all resident corporations principally engaged in financial intermediations or 7 .72 percent etc. The contribution of this sector in GDP has expanded remarkably and now accounts for 9. It has shown a growth of 1.60 percent.38 percent during the year 2011-12 against the negative growth of -1. The output of chromite. The major LSM industries which registered notable growth include.51 percent and slaughtering growth is estimated at 4. Storage and Communication.5 percent in 2011-12. storage and communication is estimated at 1. The increase in growth is due to rapid execution of work on the rehabilitation of the flood affected areas. This growth was also made possible in some part due to the increase in natural gas production. Finance and Insurance Sector: The finance and insurance sector comprises the State Bank of Pakistan. The contribution of transport.Growth and Stabilization manufacturing sector was 3. Ownership of Dwellings. The extraction of bentonite.47 percent etc. Manufacturing has three main sub-components. cooking oil -1.82 percent. 82. In developed countries the share of services sector in GDP is around 75 percent. The Services sector has registered a growth rate of 4. The recovery in agriculture and industry have resulted a positive impact on the performance of the whole sale and retail trade. This sector has emerged as the main driver of economic growth. Modaraba/Leasing companies. On the whole 38 major industries group recorded positive growth.V. Pakistan has recognized the needs to liberalize operating rights and has separated regulators from operators. gypsum. The industries which reported negative growth include.46 percent against 4. Wholesale and Retail Trade.02 percent. The services sector consists of the following subsectors: Transport. liquid/syrup 15. sugar 27.53 percent. all scheduled banks (domestic and foreign).0 percent. all insurance (life and general) companies. T.38 percent last year.56 percent compared to the growth of 3.58 percent. Social and Community Services 6. Money Changers and stock exchange brokers.15 percent. Improvement in the security situation in the country would also lead to greater production.56 percent. electric bulbs 15.53 percent. 52 percent in India and 42 percent in Indonesia. injection 6. increased investment in small scale construction and rapid implementation of PSDP schemes which are near completion. beverages 10. chalk and fluoride increased by 591. The economy has gone through a major transformation in its economic structure. The mining and quarrying sector recorded positive growth of 4. The share of the services sector has increased to 53.15 percent. Public Administration and Defense. and Social Services. Construction Sector: The construction sector has shown 6. 24. Development Financial Institutions (DFIs). 82.06 percent last year.28 percent last year. bauxite. In order to develop the services sector. Small Scale Manufacturing and Slaughtering.43 percent. Infrastructure improvements are necessary to sustain and achieve higher growth rates in future. Large Scale Manufacturing (LSM) has also witnessed a slight improvement. refrigerators 7.73 percent. Much of the country’s mining reserves exist in remote areas.09 percent. This share is 65 percent in Singapore.18 percent and 111.93 percent.45 percent of the industrial value addition.77 percent and Wholesale and Retail Trade 3.46 percent growth as compared to negative growth of -7. Small scale manufacturing maintained its growth of last year at 7.09 percent in last year. sets -22. however. Services Sector: The importance of the services sector has been recognized all over the world. Contribution to Real GDP Growth (Production Approach) As in previous years the improvements in economic growth in the fiscal year 2011-12 came mainly from the services sector.23 0. while the commodity producing sector (CPS) contributed only 41. pipeline transport 34.03 . Social Services grew by 6. Storage and Communication: The role of Transport.86 Industry 0.51 percent during the year 2011-12 compared to 1.13 1.17 percent last year. The TS&C sub-sector grew at 1. 23.67 percent is shared between the Commodity producing sector and Services sector.93 percent. agriculture contributed 0.57 2. The percentage share of agriculture.61 percent as compared to 14.92 -0.98 percent to economic growth compared to 23.36 3.98 percent. The overall growth of 3. The services sector contributed the remaining 2.68 1.08 0.Manufacturing 0.88 percent.4 percent.58 percent to overall economic growth.66 0.66 2. The services sector contributed 58. In 2011-12. The sectoral contribution to the GDP growth is shown below in Table-1. NGOs and private sectors. Transport.50 0.15 percentage points. The rise in the growth of Ownership of Dwelling and social services is mainly due to the fast track work on reconstruction and rehabilitation of flood affected areas by government.90 percent. The current global economic crisis and the level of integration of these sub-sectors in the globalized economy including the presence of multi national enterprises (MNEs) in the markets of all countries of the world puts a greater need for major investments in physical and qualitative terms to meet expected demand. 2009-10 0.25 percent as compared to 0.58 percent as compared to 3.43 percent and 58. and Air Transport by a massive -27. manufacturing and services in overall growth was 17.93 percent.57 0.3.38 -0.77 percent against the last year’s growth of 6. Ownership of Dwellings: Ownership of Dwellings has recorded a growth of 3. Within the commodity producing sector.53 percent in the last year.04 2011-12 0.86 0. Public Administration and Defense: Public Administration and Defense posted a growth of 2. The positive change in the wage component of public sector employees.58 percent respectively.10 1.79 percent last year.10 percent and communication 0. Water Transport has declined by -3.18 0.69 Services 3.41 percent last year. road transport 2. and an increase in defense and security related expenditures were largely responsible for this growth. The agriculture sector contributed 17. Pakistan’s financial sector is integrated with the world economy and this is reflected in its performance.72 Source: Pakistan Bureau of Statistics 8 .86 percentage points.3: Sectoral Contribution to the GDP growth (% Points) Sector 2007-08 2008-09 Agriculture 0.89 Real GDP (Fc) 3.37 3.53 percent in 2011-12 as against contraction of -1. while industry contributed 0.Pakistan Economic Survey 2011-12 in auxiliary financial activities related to financial intermediation. Wholesale and Retail Trade Sector: The wholesale and retail trade sector is based on the margins taken by traders on the transaction of commodities traded. Finance and Insurance sector recorded positive growth of 6.15 3. Storage and Communication (TS&C) sector is very important in boosting the economic activities of the country.14 percent during 2011-12. Information and Communication Technologies (ICTs) are perhaps the most critical tool for a dynamic and flexible services sector. this sector grew at 3.64 percent. storage 2. Sub-sectors that showed a positive growth are.87 percent last year.07 2010-11 0.67 Table 1.66 percentage points to overall GDP growth.43 percent contribution by the industrial sector. 8 -4.9 1.5 -3.0 2.35 percent of GDP in fiscal year 2011-12 compared to 83 percent in the last fiscal year. The contribution of net exports has also been negative.1 0.3 8. The composition of aggregate demand highlights an alarming factor.0 5.5 3. The balance between investment and consumption has been disturbed from 2008-09 onwards due to domestic and external shocks.3 1.2 -0.7 9. The share of investment in GDP growth remained negative.4 -2. is in the process of structural transformation during the last few decades.8 0.1 0.3 -1.) [M] 3.1 Imports (Goods & Serv.9 4. the decline in the external demand of the domestic production.7 Net Exports [X-M] -1. Domestic demand continued to be the most significant driving force for economic growth.5 Public Consumption 3.2 Source: Pakistan Bureau of Statistics Composition of Gross Domestic Product The economy of Pakistan.7 1.7 2.4 2.54 percent.4 0.0 -0.6 -2.4: Composition of GDP Growth Point Contribution Flows 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Private Consumption 0.4 5.4 Gross Fixed Investment 2.1 3. As a result private consumption is the major sub-component of aggregate demand. Contribution to Real GDP Growth (Aggregate Demand Side Analysis) Consumption is the largest and relatively smooth component of aggregate demand.3 -2.5 2. Private consumption expenditure has increased to 75 percent of GDP.1 0.5 8. a decline of 15.6 2. with private consumption being the major driver for sustaining aggregate demand.9 Domestic Demand (C+I) 7.2 1. like all developing economies. These include: slow down in global business activities affecting foreign direct investment.7 -1. A number of factors may be responsible for this decline. The contribution of fixed investment to economic growth has become negative since 2008-09.9 2.6 2.5 3.3 -1. unstable law and order situation and higher interest rates in the recent years.9 0.9 3.5 Change in Stocks 0.2 1.2 -1. serious energy shortages.1 0.1 0.2 0. There has been a clear shift away from the Commodity Producing Sector (CPS) which accounted for almost 62 percent of the GDP in 1969-70 to 46.4 -1. The decline in the share of CPS is offset by the increase in the share of the services sector.2 2. A further breakdown of the CPS shows that the share of the agriculture sector has been falling over time.9 -1.6 3.1 Total Investment [I] 2.5 -1.Growth and Stabilization Furthermore.4 -1.8 Aggregate Demand (C+I+X) 9.7 -1. increase in rural income due to higher production of crops and the sharp increase in commodity prices also supported the consumption demand.46 percent in 2011-12.2 5.1 3.5 1.6 4. investment and net exports (exports minus imports) of the goods and services.4 -1.0 GDP MP 6. agriculture accounted for 38. whereas public consumption expenditures are 13 percent of GDP. In every economy of the world consumption may be disaggregated into the public and private sector consumption.6 3.1 0.6 2.2 1. Total consumption has reached 88.9 percent of 9 . Private consumption has increased on the back of sustained growth in remittances.0 4.7 0.3 1. the other two components are investment and net exports. In 1969-70. Aggregate demand is the sum of consumption.9 2. having a high marginal propensity to consume.7 0.6 3.3 1.4 Exports (Goods & Serv.2 5.0 0. Table-1.8 3.9 Total Consumption [C] 4. Similarly investment may be classified into public and private investment.3 -2.1 -1.) [X] 1. Pakistani society like other developing countries is a consumption oriented society.9 8.2 1. Pakistan Economic Survey 2011-12 GDP.Large Scale 9.4 0. Table 1.9 5.2 8.7 percent to 18. Other Services 9.2 18.2 20.1 2.79 2. for 30 years until 1999-2000.9 12. Storage & Communication 11.3 11.3 48. Wholesale and Retail Trade 17.5: Sectoral Share in Gross Domestic Product (GDP) (At Constant Factor Cost-in percentage) 1999-00 2004-05 2008-09 2009-10 2010-11 Commodity Producing Sector 49.7 1.1 percent in 2011-12.7 4.3 10. at around 14.7 percent.6 11.1 percent.5 5.Minor Crops 3.3 0.12 4.0 Fig-1.7 16.2 10.65 11.9 .24 25.9 2. almost all the sub-sectors have increasing contributions. Structural.54 14.5 9.2 4.9 4.0 5.5 11.74 2.8 21.3 6.2 Industrial Sector 23.7 0.7 47.4 10. Construction 2.3 25.1 .GDP (Constant Factor Cost) 100.5 .7 4.8 2. the higher risk and vulnerability to natural calamities have encouraged investors to switch to the nonagriculture sectors.7 51. & Defence 6.0 9. The contribution of agriculture to overall GDP will continue to decline as development takes place. Mining & Quarrying 2.72 6.1 4.90 6.Forestry 0.Fishing 0. This is an inevitable consequence of the process of growth and development. It may be concluded that on the whole structural transformation has been slow during the decade under discussion.4 0.2 Services Sector 50.15 2. This has gradually declined to 21. The decline in the share of agriculture in GDP indicates that the non-agriculture sectors grew more quickly as compared to the agriculture sector.4 .5 2.Major Crops 9.3 18.3 . Scientific development and revolutionary innovations in the business climate have encouraged the manufacturing and services sectors more than the agriculture sector. The share of manufacturing in GDP has remained stagnant.7 2.1 6. Transport.8 2.1 2. Electricity & Gas Distribution 3.65 100.0 100.5 12.6 46.61 0.0 100.5 2.62 12. The share of the services sector has increased from 50.0 6.0 100.12 17.4 7.6 11.0 100. Manufacturing 14.5 2.3 11.7 2.5 2.9 3. Ownership of Dwellings 3.7 2.7 18.7 . Finance Division P: Provisional 2011-12 P 46.3 26.Small Scale 5.9 6.0 Source: Economic Adviser’s Wing. social and cultural problems of the agriculture sector. The sectoral share of the manufacturing sector has increased from 18 percent to 18.0 17.5 2.9 6.3 2.3 12.13 11.4 25.5 18.3 12.3 0.6 2.9 52.4 21.6 18.37 0.4 0.5 percent in the same period.3 52.4 presents the structural shift in the economy. Its contribution to GDP has increased after 19992000 from 14.2 5. The share of the commodity .8 12. Within the services sector.40 2.1 10.6 percent and the share of other industries has remained more or less stagnant 10 around 7 percent of the GDP over the last 10 years.65 percent in 2011-12.46 21.40 18.9 22. Finance and Insurance 3.3 6. Agriculture 25.8 2.71 2.7 10.2 2.4 53.Livestock 11.3 0. It has been observed during the last two decades that the major momentum to economic growth has come from the services sector which has emerged as the main driver of the economic growth.2 2.5 .0 7.8 17. Public Admn.1 12.9 percent to 53.19 53.7 4. During the last 10 years the sectoral share of the agriculture sector has decreased from 23 percent to 21.1 2.1 4.1 47.3 26.4 3.4 0.5 2.1 6.4 11.7 10.6 8. 7% Services 53. and markets in attractive and well-connected locations.9% Manufactu ring. The strategy focuses on governance. markets. It identified a coherent approach to growth that goes well beyond projects and targets public service delivery. innovation and entrepreneurship The strategy is based on sustained reform that builds efficient and knowledgeable governance structure. Resolving issues regarding energy and governance and ensuring credible macro stability. Targeting Growth ` ` ` Around 68 percent of Pakistan’s population is in the youth category (under 30 years) with the size of the workforce increasing by over 3 percent annually. incentives.). The salient features of the new growth strategy are summarized in Box-2. this could be achieved in a short time Deep and sustained reforms for a number of years in areas such as public sector management. The government Box-2 New Growth Strategy ` ` is making efforts to accelerate the operationalization of the growth strategy by initiating specific policies and programs in key strategic areas. connectivity and cities.Growth and Stabilization producing sector and the services sector has increased marginally. Thrust of Growth Strategy Pakistan is facing several external and internal challenges. etc.1% Agriculture 21. productivity. To absorb this youth bulge productively.4: Contribution to GDP Other Industries 7.17. taking the view that good government complements 11 . It does the following: ` ` Puts emphasis on productivity and efficiency beyond brick and mortar perspective Seeks to build a better government and markets. Pakistan's real GDP needs to grow at an annual average rate in excess of 7 per cent Efforts will be undertaken to revive the economy to its short term potential GDP growth rate of about 5–6 percent annually.6% The government has approved the Framework of Economic Growth which lays out a wide-ranging strategy for long term competitiveness and growth. competitive markets.8% Agriculture 24. Other Industries 6. developing competitive markets.1% Fig-1. and provides an environment in which the ‘hardware’ of growth (physical infrastructure) could be expanded and made more productive at every level. It focuses on the ‘software’ of economic growth (issues of economic governance. In order to achieve economic growth in this scenario the new growth framework has the following characteristics. human resources. New growth strategy is an approach to accelerate economic growth and sustain it. institutions. This is precisely what fast growing economies have done.5% Manufactur ing 18. This is also the direction towards which Pakistan is now aimed to move. urban management and connecting people and places are the way forward for accelerating growth to above 7 percent.3% 2001-02 2011-12 Services 50. institutions. 1percent in 2011-12 compared to 17. 1258 823 904 1015 990 1068 1372 582 663 724 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Investment and Savings Investment plays an important role in the economic growth of a country. Focuses on urban development as a crucible for the nurturing of innovation entrepreneurship and productivity Includes youth through community development and the provision of market opportunities while continuing to impart skills and education. Fig-1.8 percent growth last year. The contribution of national savings to domestic investment is indirectly the mirror image of foreign 2011-12 . affects the employment levels. Private investment witnessed a contraction of 7. Public investment as a percent of GDP also declined to 3. Investment has been hard hit by international and domestic factors during the last few years. which contributed in the rise of per capita income. competitive and connected markets Recognizes that economic well-being is a result of the variety and frequency of economic transactions. law and regulation must seek to minimize transaction costs and allow speedy and frequent transactions. Investment spending is usually volatile. include acceleration in real GDP growth. It raises the productive capacity of the economy. Fixed investment has decreased to 10. The composition of investment between the private and public sector has also changed during the period under review.9 percent of GDP in 2011-12 from 20.0 percent in 2011-12 against the 5.1 percent of GDP in 2007-08 to 12. Policy. That is why it is responsible for much of the fluctuations of the GDP.Pakistan Economic Survey 2011-12 ` ` ` efficient.372 in 2011-12. Per Capita Income in dollar terms grew at a modest rate of 9. inflows of workers remittances and the stable exchange rate. The major factors.5: Per Capita Income ($) 1600 1400 1200 1000 800 600 400 200 0 The per capita income in dollar terms has increased from $ 582 in 2002-03 to $ 1. Source: Planning and Development Division Per Capita Income: Per capita income is defined here as Gross National Product at market price in dollar term divided by the country’s population. Total investment has declined from 22.5 percent of GDP in 201112 12. and promotes technological progress through embodiment of new techniques. because it depends on multiple factors.0 percent of GDP in 2007-08.9 percent in 2011-12 compared to 15.5 shows the improvement in per capita income during the last ten years.5 percent of GDP in 2007-08.4 percent in 2007-08. Per capita income is widely used and recognized as one of the important indicators of economic growth and general well-being of a society. Fig 1. Brazil and Indonesia also appear to be moving in a positive direction.3 10.3 1.6: Structure of Savings and Investment (As Percent of GDP) Description 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Total Investment 16. The Board of Investment (BOI) under the Prime Minister’s Secretariat is making efforts to provide an increasingly investment friendly environment to investors.4 percent.9 20.7 15. However. exploration of its natural resources and mechanization of industries. alternative energy like wind power. and natural gas transmission from foreign lands. less than the $ 1 trillion achieved in 2007.7 million during July-April 2011-12 as against $ 1292.0 12. Pakistan will certainly attract foreign direct investment with the resolution of the energy shortages and improvement in the law and order situation.5 5.6.2 13.5 percent of GDP in 2007-08 to 8.4 13.9 percent of GDP in 2011-12.7 percent of GDP in 201112 compared to 13.5 20.7 15.3 Source: EA Wing Calculations P: Provisional 2010-11 2011-12 P 13. The Euro crisis has dampened enthusiasm. world class education systems.4 4.9 1. It creates spillover effects for private sector investment because private sector development is facilitated through public sector development spending particularly on infrastructure.6 19.6 11.9 5. The share of Oil and Gas Exploration in total FDI during JulyApril 2012 stood at 69.5 1.2 17. The country also needs infrastructure.6 percent in 2007-08.3 4.5 13. Global foreign direct investment will be close to $ 800 billion during 2012. Efforts are being made to facilitate foreign investors in Pakistan with improved infrastructure and a better working 13 .6 1. Foreign Direct Investment (FDI) in Pakistan stood at $ 666.6 3.8 Investment -Public Investment 4. There is a great potential in the power and infrastructure sector and in natural resources.3 3. The requirement of foreign savings needed to finance the saving investment gap. Foreign investors can exploit all such opportunities.8 10.2 15.8 9.7 2.9 17.4 Changes in Stock 1. This is a decline of 48. People need food. Public sector investment is crucial for catalyzing economic development.6 1. Theoretically.5 16.6 13.5 20. Oil & Gas Exploration remained the major sector for foreign investors. However.6 -Private Investment 10.5 22.8 5.3 3.5 18. The United States is focusing on economic revival and its stock markets are responding positively.0 percent in 2011-12. Pakistan needs to gear up both savings and investment to enhance the employment generating ability of the economy as well as increase resource availability for investment. China.0 4.6 1.1 8.6 1. Table 1.9 8.6 1.9 million last year. Net foreign resource inflows are financing the saving investment gap.4 percent of GDP in 2007-08 to just 3.9 Foreign Direct Investment Pakistan has a very fertile market for foreign investors given its very large consumer base of 180 million people.2 National Savings 17.0 17. Public sector investment decreased from 5. National savings are 10. Saving and Investment as percentage of GDP are presented in Table 1.6 1.1 12.6 11. One is through increasing savings and the other is through decreasing investment.6 -0.1 22. India. there are two ways of improving the savings investment gap.4 16.5 10.4 15.Growth and Stabilization savings required to meet investment demand.1 13.0 7.1 22.9 2.6 Gross Fixed 15.2 Foreign Savings -1.1 15. reflects the current account deficit in the balance of payments. prospects from East Asia are looking good.8 percent.9 13. curtailment of development expenditures limits private sector development.7 8. energy and other amenities to live and thrive.5 9. Turkey.2 Domestic Savings 15. There seems to be huge scope for investment in hydel and coal based power projects. Domestic savings have also declined from 11.1 18.6 12.6 5.6 1.3 15. 61 million in the comparable period of last year.56 1688. Key problems affecting the economy include energy shortages and a host of structural impediments that have held back investment and growth.876.39 176. rice.876.65 247.74 1306. so that sustained high economic growth through exports may be achieved. flowers. Inter bank Fund Transfer (IBFT) facility have also helped to improve the remittance flow to Pakistan. . Other GCC countries (15. Bilateral arrangements of commercial banks with foreign entities under Pakistan Remittance Initiatives (PRI) have helped facilitate movement in this direction.K.38 1917. USA (14.67 2670.86 2386.35 1263.E. initiatives under the PRI such as introduced Xpress money.87 605.57 percent).59 1202. efforts are also going on to encourage the setting up of fruit processing industries and more export processing zones in the country. US$ Million 08-09 1735.67 2987.10 percent) during the period under review. edible oil.23 percent. poultry meat.65 07-08 1762. This resilience comes from the potential as well as the growth in remittances and in the informal economy.04 1023. and improve Table-1. reduce the unemployment problem.52 percent).61 304.66 million during the corresponding period last year.64 430.49 757. as against $ 9.25 percent.07 2597.59 1559. Despite positive developments including the easing of 14 inflation and reduction in fiscal deficit. Many of these countries need an assured supply of items like wheat. Increase in remittances is also the result of the higher demand of Pakistani workers.64 6451.59 10. Other GCC Countries EU Countries Total Source: SBP * : Provisional 06-07 1459.A.99 million in July-April of 2011-12.32 1090.K. (27. Monthly data on remittances suggests that the monthly average for the period of July-April 2011-12 stood at $ 1.66 7811.43 09-10 1771. fruit and vegetables and are ready to invest on the basis of long-term supply contracts. Foreign investment may also be attracted from the Middle East in agriculture and livestock sectors. Furthermore.Pakistan Economic Survey 2011-12 environment so that the favorable business climate may induce investors to initiate new investment projects. These have not only provided critical support to the balance of payments but have helped in stimulating the domestic economy and helped to alleviate poverty. Prospects of Economic Growth Pakistan’s economy is resilient. fragile macroeconomic fundamentals.03 458.30 983.56 866.52 1237.97 July-April* 11-12 1922.19 876.087.99 Workers’ Remittances totaled $ 10. The upsurge in the remittances may be attributed to the government’s efforts for redirecting these flows from informal to formal channels. and heightened vulnerability to balance of payments shock.7. This is an increase of 20.76 11200. followed by U.87 1199. In particular.18 354. Saudi Arabia U. Remittances from Saudi Arabia recorded massive growth of 43.70 million compared to $ 904. Reinitiating the privatization process will attract foreign investment for Pakistan.90 10-11 2068.21 8905. Significant flows of remittances also helped Pakistan to partially counter the adverse effects of the oil price shocks.66 2038. Pakistan’s economy remains in an unsteady state with slow growth. milk.26 1226.86 252. An overview of country wise remittances is presented in Table 1.34 percent) and UAE (14.33 149.87 1251.00 5493.7: Country Wise Workers’ Remittances Country USA U. Workers Remittances Remittances from overseas Pakistanis have been an important source of foreign exchange during the last four years.046.24 the standard of living of recipient households. Necessary reforms are under process to remove the structural impediments. and the rising cost of doing business in Pakistan are also contributing to the decline. These young entrepreneurs have the potential to cause a paradigm shift in the economic fortunes of Pakistan. With the existence of such a vibrant middle class the consumer goods industry can provide a strong impetus to economic growth. the middle class households provide a breeding ground for the professional and skilled labour force. There is rising trend of youth entrepreneurship in Pakistan. Moreover. These have been and are the focus of the government’s attention. A vibrant middle class not only generates demand of goods and services but also the savings required to fund productive investments. Pakistan’s middle class has expanded and is currently estimated at 35 percent of the population. The opening up of trade with India is another major initiative that can boost economic growth by providing greater market access as well as easy and cheaper availability of raw materials for domestic producers. This decline is due largely to the unstable security situation. The government is aware that several long term savings instruments may need to be developed to increase household savings. Such human capital is essential for growth in the long run. There is also need to expand the network of National Savings Schemes. The government is making efforts to address these negative factors in order to improve investment climate in the country. Policies are being implemented which give savings incentives such as. banks and postal savings to far flung areas of the country. Many young entrepreneurs have succeeded in establishing various businesses that are booming. Despite an overall slump in the economy. the consumer goods industry in Pakistan has registered a steady growth and has a great potential for further expansion. tax breaks and compulsory savings in employee provident funds. This has produced a strong demonstration effect for others to follow. Measures to stimulate growth will not yield full potential unless the structural weaknesses responsible for the decline in the investment are addressed. 15 .Growth and Stabilization Savings are the mover of growth. Having substantial size and composition primarily urban and associated with professional white-collar occupations the middle class may play a major role in boosting economic growth. microfinance institutions. The shortage and high cost of energy. 1 percent mainly due to positive growth in agriculture related subsectors. Under this Programme the Ministry shall donate up to 500. Major crops accounted for 31. affected crops like rice. Provincial and local level Governments. The agriculture sector recorded a growth of 3.1 percent in 2011-12. The significant growth in major crops is contributed by rice. the overall performance of agriculture sector exhibited a growth of 3. Secondly. The first step is the establishment of the National Food Security Council representing Federal. cotton and sugarcane.Chapter 2 Agriculture The agriculture sector continues to be an essential component of Pakistan’s economy. Ministries performing tasks which were provincial subjects were devolved from the Federal level.000 metric tons of wheat per year and the World Food Programme intends to negotiate with local producers to exchange part of the donated wheat for High Energy Biscuits (HEB) and similar products manufactured in Pakistan factories for distributions through WFP operations to primary school children.2 percent in 2011. siblings of malnourished children and the vulnerable populations especially children at risk of malnutrition. is launching the Zero Hunger Programme worth US $ .6 billion to address the food security objective. through a Letter of Intent the Ministry. reducing poverty and the transforming towards industrialization. It currently contributes 21 percent to GDP. has planned to take two major steps in order to solve the food security issues on a permanent basis.9 percent of agricultural value added and experienced a growth of 3. which allowed for greater financial resources passed on to the rural economy. in collaboration with World Food Programme. In order to improve governance in the public sector the government took bold steps and brought in the 18th Amendment to the Constitution of 1973. under the aegis of the present government. productive and profitable sector of the economy. remained high because the farmers received good prices for rice. However. realizing the food security concerns across the country the government took timely steps to establish the Ministry of National Food Security and Research to tackle the Food Security issues. It has a vital role in ensuring food security. Flooding in 2011. The fund will also be converted to fortified wheat flour for distributions aimed at combating food insecurity in Pakistan. 201112. except minor crops. 1. including the Ministry of Food and Agriculture. Agriculture generates productive employment opportunities for 45 percent of the country’s labour force and 60 percent of the rural population depends upon this sector for its livelihood. The profitability of agriculture sector during 2011-12. Accordingly. Recent performance During 2011-12. The present government is determined to improve the quality of life of the people and to banish hunger and malnutrition from the country by making agriculture an efficient. cotton and sugarcane. cotton and sugarcane 17 The newly created Ministry. generating overall economic growth. The WFP will also cooperate in the capacity building of the Ministry’s officials in areas addressing food security and monitoring progress. they performed well and provided support and continued to support food security objectives this year. although in the current year.2 percent in fiscal year 2011-12 with negative growth of 0. 1 percent of the value added in overall .4 MAF.2 -1.7 -1. but 15 percent less than last year’s Rabi crop (Table 2. Rice.9 24. 18.9 2008-09 4.1 30.Pakistan Economic Survey 2011-12 by 27.8 -15.6 -2.9 94.0 4. begins October-December and is harvested in April-May. The Livestock sector.0 7. sugarcane.8 4.6 29.8 92.0 34.0 -6.9 59. grew by 4.4 Total I. Over the Avg.1 65.2 3.0 Table 2.8 -1.1 -5. which has a 55.8 2. Forestry sector posted a positive growth of 1.3 percent in 2011-12 against 2. Livestock 15.0 -13. cotton. cotton and sugarcane account for 91 percent of the value added in the major crops.9 percent.0 percent to GDP.5 97.7 percent.6 percent and 4.5 .1 percent share in the agriculture.1 70.5 23. mash.0 percent in 2011-12.2. the availability of water as a basic input for Kharif 2011 (for the crops such as rice.7 2010-11 2.1 -13.2 2009-10 0.4 percent last year. Crop Situation Major crops. such as wheat.9 25.7 percent growth of 2011.5 1. sugarcane and cotton) has been 10 percent less than the normal supplies but 13 percent higher than last year’s Kharif 2010 season.8 .9 . and sugarcane) on average.2 -0. "Rabi".0 Fishery 20.5.4 60.20. During 2011-12.6 .8 percent as against last year’s growth of 1.3 98.4 82. tobacco.4 31. lentil (masoor).4.2 percent less than the normal availability.1 70.4 1. rapeseed.8 66. Wheat.9 67.1 4. maize.2 2. (Million Acre Feet) %age incr/decr.2 2. which is 19. contribute 29 percent to the value added in overall agriculture and 6.9 percent. barley and mustard are "Rabi" crops.0 89.4 sowing season.3 4.1 percent value addition in agriculture and exhibited a negative growth of 1. Pakistan has two crop seasons.7 2011-12(P) 3.8 15.1 31. is estimated at 29.3 -3.4 10.0 percent this year as compared to negative growth of 0.8 63. The water availability during Rabi season (for major crop such as wheat).9 . cotton.2 27.4 Rabi 36.7 91.1 7.1: Agriculture growth percentages from 2005-2012 Year Agriculture Major Crops Minor Crops 2005-06 6. the second Table 2.8. 103. The value added in major crops accounts for 32 percent of the value added in 18 the agriculture. respectively.0 2.4 2006-07 4.6 -11.9 0.4 9.3 1. rice.0 -3.3 -7.8 Forestry -1. four major crops (wheat. mung.9 1.3 53. The Fishery sector grew by 1. "Kharif" being the first sowing season from April-June and it is harvested during October-December.2 100. These crops make Pakistan an agricultural country and its performance is dependent upon timely availability of irrigation water.3 -10.2: Actual Surface Water Availability Period Average system usage 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Source: Indus River System Authority Kharif 67. rice.4 -0. bajra and jowar are “Kharif" crops. The minor crops account for 10.2). gram.0 2007-08 1.1 3.3 88. Thus.3 Source: Pakistan Bureau of Statistics P:Provisional Minor crops contributed 10. 7 10.1.883 (-1. control ov ver widesprea ad attack of cotton leaf curl c virus (CL LCV) and su ucking pests s which help ped Table 2.7) Maize 3.0) 25.3: Production of o Major Crop ps Cotton Year Sugarcane e (0 000 bales) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12(P) 13.7 9.4) 11.7 7) 3.311 (-3.7) 23.373 (-1.0.8) 50 0.261 (-9.9) (41.4 and Figure F 2.4 12.4: Area.019 (-8. prod duction and yield y of cotto on for the last t five years is s given in Ta able 2.3) 3.914 (9.1 percent to agricultur ral value ad dded–much more m than the t combined d contribution n of major an nd minor cro ops Table 2.045 (-2 21.0) 5.5) 54 4.3 1.033 (14.952 (25.Agricu ulture agricultur re.2 2) 3.2) 11.9. .0) 24. Th he production n performanc ce of major crops c is docum mented in Ta able 2.823 (-30.7) 49 9.8 pe ercent of va alue added in agricultur re and 1.666 (-5.655 (-9.214 (8. Livestock contributes 55.088 8 (-0. It accounts for 7.160 (27.1 -13.593 3 (-0.7) 12.7 -7.4 percent mor re than last ye ear (2689 th housand hect tares). (i in thousands of f tons) R Rice 5.271 (15.4 increas se in yield pe er hectare as s compared to last year.3) 11.959 (-10.0) 6. Produ uction and Yie eld of Cotton Area Year (000 0 Hectare) % Change 2007-08 2008-09 2009-10 2010-11 2011-12(P) 3054 2820 3106 2689 2835 .110 0 (11. The increase in cultiva ated area and a production n is attribute ed to the use e of BT cotto on.3) 55 5.438 (-2. The production is reported at 13.4) 5.295 (9.605 5 (16.5) 20.2 2) 3.6) 63 3.6 milli ion bales dur ring the peri iod rch) 2011-12.547 (10.819 (1.7 7) 3.460 (-11.517 (-6.6 (Kgs/He ec) Yield % Cha ange -8.3) 13.0) 58 8.2 2) Wheat t 21.0) 4.6 percent ov ver (July-Mar the last year’s product tion which was w 11.7 7) 4. The T area.4 9.742 (2 22.3 1 18.3 -1 11.856 (-1. surh as cotto on lint as an export item.277 (-1.309 (1 12.3) 6. Figures in n parentheses ar re growth/decline rates a) Major Crops: i) Cotton: i an important cash h crop whi ich Cotton is significan ntly contribut tes to the nat tional econom my by provid ding raw material m to th he local text tile industry.6 649 713 707 724 815 Source: Pak kistan Bureau of o Statistics P: Provisional (July-March) 19 .9 -0.1: Cotton Production P (000 bales) 140 000 135 500 130 000 125 500 120 000 115 500 110 000 07-08 08-09 09-10 10-11 11-12(P) Source: PBS P Production (000 Bales) % Chang ge 1165 55 1181 19 1291 14 1146 60 1359 95 . During 201 1112.6 per rcent of GDP P.4) 12. Figu ure 2.2) 23.9 percent).6) 44 4.038 (4.5 milli ion bales.563 (2.920 (1 16.8 2. the crop c was cult tivated on an n area of 28 835 thousand hectares. . higher by 18 8.3.4 5.707 7 (13.7) Source: Pa akistan Bureau of Statistics P: Provisio onal (July-Marc ch).0) 6.595 (18.6) 23. 5. How wever.39 2.1 18 5 5.76 USA 2. respect tively.69 3. negativ produc ctivity gain could c not be sustained be ecause water receded very y slowly in sugarcane ar rea of lower Sindh.9 per rcent this year.3 30 4 4. produc ction and yie eld of sugarca ane for the la ast five years are given in Table 2.70 3.22 World Total 22.2 29 4 4. Sugarc cane was cul ltivated on an n area of 1. M/O Tex xtile Industry E: Estimate ed.2. 20 .63 1.96 Fig-2. The area. P: Provisio onal (in n Millions of To ons) 2011-12 P 7. However.8 85 0 0. .46 0.0 02 0 0.3 million n tons.6 65 3 3.94 Pakistan 2.9 92 6 6. 2 Table 2.1 19 1 1.17 World Total 25.49 Source: Pa akistan Central Cotton Comm mittee.9 percen nt as compar red to ve 0.56 2.28 2 26.5: Production and a Consumpt tion of Major Cotton Grow wing Countries s 200 09-10 20 010-11 E Production n China 6. The mai in factors co ontributing to t the produc ction are luc crative mark ket prices of f last year’s produce and d timely ava ailability of inputs i encour raged the farm mers to grow w more suga arcane crop.20 East Asia/A Australia 1. Sugarc cane production for the year 2011-12 is estimat ted at 58.00 0. H the yield per he ectare.85 Others 3.90 0.10 Consumpti ion China 10. This shows s an incr rease of 4.6 and d Figure 2.3 36 24 4.91 Brazil 1.88 5.9 percent p over the producti ion of last ye ear. h 5.59 India 4.2 2: Sugarcane Production P (0 000 Tons s) 65000 60000 55000 50000 45000 07-08 08-0 09 09-10 10-11 11-12(P) ) Source: PBS cane: ii) Sugarc The sugar rcane crop is the second major m cash cr rop and is use ed as a raw material m in th he production of refined su ugar and gur.0 million m tons.0 07 1 1.33 1.40 5. and as a result. in contrast to t last year’s production of 55.7 and 0.75 Europe & Turkey T 1.96 Uzbekistan n 0. Its share in value added d in agricultur re and GDP P is 3.9 percent p higher r than last year’s y level of 988 th housand hec ctares. .49 Brazil 1.5.91 Others 3. pos sted a negative growth.8 86 1 1.5 55 1 1.1 17 25 5.3 39 2 2. if com mpared with la ast year.1 10 9 9.7 77 0 0.40 India 5.38 4.35 2.96 9.48 Pakistan 2.8 perce ent.96 USA 0. yield per he ectare posted a growth of 6.04 46 thousand hectares.01 2 23.Pakistan Economic E Sur rvey 2011-12 2 World Co otton Outloo ok The produ uction and con nsumption of f major cotton n growing cou untries are giv ven in Table 2.3 36 3 3. The floods of 2010 enhanced the e soil fertilit ty of Sugarc cane crop. 6 52 2357 7.6: Area.8 55309 12. Recently y the govern nment has incr reased the pro ocurement pr rice to Rs.0 0 6160 27.5 percent to the value added in agriculture and a 2.7 2009-10 943 -8. It contribu utes 12. Figu ure 2. This increase e in area is du ue to 8.8 2008-09 1029 -17.9 58038 4.7 Source: Pa akistan Bureau u of Statistics P: Provisio onal (July-Marc ch) produc ction and yiel ld of rice for the last five years are sho own in Table 2.7 2010-11 2365 -18.9 55 5486 -0.3. Produc ction and Yiel ld of Sugarcan ne Area Produ uction Year (000 Hectare) H % Change (000 Tons) % Change 2007-08 1241 20.5 percent as compared d to -14. Ric ce accounts 4.0 2346 6. Its impo ortance is always recognized wh hen formulatin ng agricultur ral policies.7 perce ent increase in i area sown n.2 percent as a compared to 11 percent t growth last year.0 0 6883 -1.7 7 Yield (Kgs/Hec c.9 iii) Rice: Rice rank ks as second amongst a the staple food gra ain crops in Pakistan P and it i has been a major source e of foreign ex xchange earni ings in recent t years.3: Rice P Production (000 Tons) 75 500 70 000 65 500 60 000 55 500 50 000 07-08 45 500 Source e: PBS 08-09 09-10 10-11 11-12(P) Production ( (000 Tons) % Change 5563 2.0 2011-12(P) 1046 5.8 2009-10 2883 -2.) % Cha ange 2212 5.4 49373 -1.7: Area.9 4 percent of the value added a in agri iculture and 1. The yield per p hectare has h shown im mproved gro owth of 17 7. The sown area for f rice is 25 571 thousand hectares. Produc ction and Yiel ld of Rice Area Year (000 He ectare) % Change 2007-08 2515 -2.0 percent of GDP.9 Source: Pa akistan Bureau u of Statistics P: Provisio onal (July-Marc ch) Yield (Kgs/Hec c.6 2008-09 2963 17.7 2039 -14.) % Cha ange 51 1507 -3. showing ga decrease of 2.6 63920 16.6 percent last year.5 iv) Wheat: fo most of the t Wheat is the basic staple food for population n and largest grain source e of the count try.1 50045 -21.6 perce ent over last year’s area of 8901 thousand t hec ctares.3 3 6952 25.1 2387 1. 8. 10 050.6 2396 17. This ste ep would he elp the farme ers to 21 .7 55 5981 6. Th he yield per hectare in 2011-12 pos sted a negativ ve growth of 4.2 48 8635 -5.Agricu ulture Table 2. y The ar rea. 27 7.0 2011-12(P) 2571 8.7 2 and Figur re 2. The production of the crop is i an estimate ed 6160 thou usand tons.5 million n tons is estim mated during July-March 20112 12.3 2010-11 988 4. Wheat W is cultiv vated in an ar rea of 8666 thousand t hect tares in 2011 1-12.6 percen nt to GDP.7 percent more m than the4 4823 thousand d tons produc ced last year. The production p of f 23. Table 2.0 0 4823 -30. Pakist tan grows a high h quality of o rice to fulf fill the domes stic demand and a also for exports.7 percent more m than last l year’s 2365 thousand hectares. This is due to the fac ct that the sow wing of whea at was delaye ed due to sta anding water and other climatic c facto ors. jawar r and barley also.3 percen nt during 2011-12 reducti mainly y because of unfavorable u w weather condi itions. respectivel ly. Fig 2. against 49 96 thousand tons of last year.0 24033 14.8: Area.Pakistan Economic E Sur rvey 2011-12 2 on and its impact i will be increase its productio n the later par rt of 2011-12.7 Source: Pa akistan Bureau u of Statistics P: Provisio onal (July-Marc ch) 22 .8 2 2657 8.8 percent and d 1. . the pr roduction of maize m increas sed During 20 by 15. Produc ction and Yiel ld of Wheat Area Year (000 he ectares) % Change 2007-08 8550 -0. .7 23311 -3.3 2008-09 9046 5. p while e rapeseed an nd mustard ro ose by 5.4 percent t.2 23517 -6.7 pe ercent.8 and Figur re 2.6 Source: Pak kistan Bureau of o Statistics P:Provision nal(July-March h) Produ uction (000 tons) % Change 20959 -10.5 2011-12(P) 8666 -2. the e largest Rab bi pulses cro op in Pakistan. realized in The overa all decrease in area is du ue to problems farmers faced in th he disposal of the wheat produced during last year. where pr roduction sto ood at 291 thousand tons. 2.9 2 2833 11.4 2 2553 -3. p 8.2 Bajra 548 34 46 458 304 4 -12.7 Yield (Kgs /Hec c.9: Area and Pro oduction of Ot ther Major Kharif K and Rab bi Crops 201 10-11 2011-12 (P P) % Change In Crops production n over Are Area Production ea P Production Last yea ar (0 000 hectares) ) (000 hec ctares) ( (000 tons) (000 tons) Kharif Maize 974 370 07 1083 4271 15.) % Cha anges 2 2451 -9. y showing ga ion of about 41.4 Rapeseed & Mustard 203 17 76 213 186 6 5. The ot ther crops li ike bajra. y The area and produc ction of major r crops are giv ven in Table 2.9.0 2010-11 8901 -2.8 Rabi Gram 1054 49 96 1055 291 -41.4: 2 Wheat Pro oduction (000 0 Tons) 2700 00 2500 00 2300 00 2100 00 1900 00 1700 00 07-08 08-09 09-10 10-11 11-1 12 (P) Source: PBS Table 2. .8 2009-10 9132 1. in 2011-12 as compar red to the cor rresponding period p last year.2 percent.2 v) Other Major Crops 011-12.0 2 2714 -4.0 25214 8.7 Tobacco 51 10 03 47 94 4 -8. 2 Table 2. to obacco.1 Jawar 229 14 41 214 137 7 -2. y Farmers s then began to increase predisposition p n of growing early sown BT B cotton and d reducing th he area of BT T cotton sown n in rain affect ted districts of o Sindh This phenomenon n is demonstra ated in Table 2.1 percent. witness sed a decline e in producti ion of 12. This is in contras st to crops li ike gram.3 Barley 77 7 71 75 70 0 -1.4. .7 percent. 611 billion) in 2010-11. The area and production of oilseed crops during 2010-11 and 2011-12 is shown in Table 2. However.5 125.2 Mash 24.7 Source: Pakistan Bureau of Statistics P: Provisional (July-March) percent.1 13. Local production during 2011-12 was 0.6 1939.5 10. masoor (lentil) and mash decreased by 78.9 -3.865 244 50 696 877 27 8. respectively.2 percent. 15.0 percent and 17.0 24. The area sown for masoor. It is estimated that 10 percent of the total availability of edible oil is consumed in industries like cosmetics.2 -78. The import bill reached Rs.3 percent.6 171.Agriculture b) Minor Crops i) Oilseeds The major oilseed crops grown in the country include sunflower.0 -15. This does not include smuggling through porous borders which is not accounted for.9 percent and 65. Around 200.11.696 million tons (34 percent of the requirement).5 11.3 3491.4 percent 12. total requirement of edible oil in the country is 2. mainly to Afghanistan.958 Rapeseed/ Mustard 439 157 50 575 Sunflower Canola Total 1. Although the cotton crop is grown for its lint.8 140. rapeseed and mustard.10.450 2.918 179 11 636 Source: Pakistan Oilseed Development Board P: Provisional (July-Feb) ii) Other Minor Crops: The production of mung and potato has increased by 22.3 23 . During the year 2010-11. 224 billion (US$ 2.1 4104.079 million tons. The area and production of minor crops are given in Table 2.5 11.8 percent. the total availability of edible oil was 3. onion and chillies decreased by 13. the production of chillies.5 Table: 2.4 76.045 million tons.467 million tons of edible oil worth Rs.437 2011-12 (P) Production Seed Oil (000 Tons) (000 Tons) 3.5 percent and 16.108 223 8. while imports of edible oil or oilseeds was 2. respectively.6 -12. of which local production contributed 0. cottonseed. onion.934 352 6. There was an increase of area sown for mung and potatoes by 2. During the year 2011-12 (July-February) 1. respectively during.7 percent.6 Chillies 63. Table 2. 14. respectively. 145 billion (US$ 1.230 643 131 3.8 93.6 1640.383 million ton.11 Area and Production of Minor Crops 2010-11 Crops Area Production (000 hectares) (000 tons) Masoor 26. 2011-12.4 17. At present.5 percent.654 billion) was imported.000 tons of edible oil is exported.8 Onion 147. paints and other allied products.5 185. canola.3 Potato 159.3 Mung 137. cottonseed contributes 50 to 60 percent of local edible oil production.0 22. 2011-12(P) %Change In Area Production Production (000 hectares) (000 tons) 22.636 million tons.4 21.8 percent and 3.10: Area and Production of Major Oilseed Crops Crops 2010-11 Area Production Area (000 Acres) Seed Oil (000 Acres) (000 Tons) (000 Tons) Cottonseed 6.212 385 203 61 473 30 3.8 37. 9 ii) Improved Seed: Quality seed is also an essential input for improving yield in Pakistan.4 percent in July-March. Details of fertilizer production are presented in Table 2.4 percent when compared to the last year’s production. future crops are threatened from loss of micronutrients and other essential plant nutrients. The prices of urea went up by 81. Seed has a unique position among the other various agricultural inputs because the effectiveness of all other inputs depend primarily on the potential of the seeds.0 1444 154. Improving access to good quality seed is a critical 24 requirement for sustainable agricultural growth and food security. Despite the increased supply of urea. 2011-12 as compared to the same period of the last fiscal year.2 645 -55.12. . Hence the availability of quality seed of improved varieties is essential to achieve production targets. When these soils go without being replenished. a timely import of urea addressed the absence in supply and total availability of fertilizer increased by 16.3 (‘000’ Nutrient Tons) % Off-take Change 3581 3711 3. This is the desired positive impact of improved seed for greater rural development.6 16. The wide spread deficiency of micronutrients is also appearing in different areas.3 percent.7 percent.8 percent. Seed is a high technology product and is an innovation readily adapted for Pakistan’s climate.1 2009-10 3082 6.5 percent and 45.9 percent.6 4360 17.12 Production and Off-take of Fertilizers Domestic % % Year Import Production Change Change 2007-08 2822 876 2008-09 2907 3.5 3933 -9. which leads to increased net incomes of farming families. However.0 568 -35. which adversely affected crop lands. 2. Lands used for single crops are depleting soil fertility because lands are using only certain essential plant nutrients and are intensely cultivated. Nitrogen consumption increased by 0. 75.6 Source: National Fertilizer Development Centre P : Provisional (Jul-March) Total 3698 3475 4526 3721 2819 3279 % Change -6. Effective use of improved and certified seed can result in higher agricultural production. over the same period last year. The fertilizer industry experienced a curtailment of natural gas (the raw material for urea) and some urea plants produced less than their production capacity. The contribution of balanced fertilizer use towards increased yield varies from 30 to 60 percent in different crop production areas of the country. One kg of fertilizer nutrient produces about 8 kg of cereals (wheat. maize and rice).5 kg of cotton and 114 kg of stripped sugarcane. The prices of DAP.0 30. and 30 percent are lacking in potassium (K). 2011-12 declined by 1. All of Pakistan’s soils are deficient in nitrogen (N).3 percent while that of phosphate decreased by 22. Table: 2. respectively.Pakistan Economic Survey 2011-12 II.2 0. Farm Inputs i) Fertilizer: Fertilizer is Pakistan’s most important and expensive input in agricultural production.8 3064 2913 -4. CAN and NP also increased by 38. total consumption of fertilizer reduced by 4.3 percent and potash by 36 percent. The major reason for reduced fertilizer consumption was the effect of heavy and destructive rains in the Sindh province during the monsoon season in 2011.4 2010-11 P 2287 532 2011-12 P 2255 -1. The domestic production of fertilizers from JulyMarch.2 2010-11 3076 -0. Another reason for the reduction in consumption of fertilizer was the increase in price of all fertilizers. 80 to 90 percent are deficient in phosphorus (P).4 1024 92. 2011-12 about 361. an aim Pakistan hopes to achieve throughout the country. 3287. etc) is currently underway. (2) pulses and (1) fodder}.0 820.6 5108. Islamabad for detection of fungal and viral disease using latest diagnosis techniques and protocols.13. Almost 718 samples of seed and propagating material of various vegetable and fruit crops were tested at the Central Seed Testing Laboratory. Under the provision of the Seed Act. Twenty-two (22) new crop varieties were approved {(5) wheat. five cases were filed in different courts of law against the seed dealers found selling substandard seeds.6 Maize 1372.0 thousand tons of improved seed of various Kharif/Rabi season crops were procured. During 2011-12. It provides seed quality control services through its 28 seed testing laboratories as well as monitoring of seed quality in the market. The details of this procurement are demonstrated in Table 2.0 Potato 145. paddy.0 1649. totaling 502. making the total number of registered seed companies in the country 774. different crops offered by the various seed agencies. The procurement of seeds for various Kharif crops (cotton.3 0.5 Fodders 11.9 (Metric Tons) Total 319890. were purposes.8 25406. The activities and achievements of the department during 2011-12 are described below: ` During the year 2011-12.8 Paddy 22749.2 1189.6 4963.0 0.0 328. which includes four public sector and five multinational companies.6 million. Lahore and Karachi. with a total value of Rs. forty-five (45) new seed companies were registered.0 Oilseeds 23.1 3739.4 Vegetables 256. Pre and post control trials of all pre-basic. basic seed lots and 20 percent of certified seed lots were carried out in the fields to determine the quality of seed distributed by various seed agencies. (3) oilseeds.0 thousand MT seeds of various corps were sampled and tested for purity.0 Cotton 1649.6 564.2 Source: Federal Seed Certification & Registration Department * : July-March 2011-12 Imported 0. ` inspected for certification A total quantity of 361. mung bean.Agriculture During July-March.1 iii) Irrigation Universally an efficient irrigation system is a prerequisite for higher agricultural production as it helps in increasing crop intensity. Despite the existence of a good irrigation canal network in Pakistan. 1991 at the port of entries i. germination and seed health purposes. maize.7 MT of imported seed of various crops and hybrids.2 1485.7 5112.6 thousand acres. large amounts of water are wasted in the 25 .0 352.0 Total 347287. The Federal Seed Certification and Registration Department (FSC&RD) is engaged in providing seed certification coverage to public and private sector seed companies of the country. was tested under the Seed (Truth in Labelling) Rules. a total of 13. (11) cotton.6 13726. During 2011-12.6 361014.e.13: Seed Availability* Crop Local Wheat 319890.0 2657.7 1473. ` ` ` ` ` ` Table 2.9 Pulses 1189. 3mm -51.5mm 34. (January-March).86 54 KPK 0. Normal Actual Shortage (-)/excess (+) % Shortage (-)/excess (+) Source: Pakistan Meteorological Department * : Area weighted (in Millimetres) Winter Rainfall* (Jan-Mar) 2012 70.14..4% During the monsoon season.5mm + 99. October-March.15: Canal Head Withdrawals (Below Rim Station) Kharif Kharif % Change in Provinces (Apr-Sep) (Apr -Sep) Kharif 2011 2010 2011 over 2010 Punjab 29.0 % and winter season is presented in Table 2.42 -15 Table 2.4 MAF during the same period last year. included modernizing and rehabilitating irrigation systems.61 23.21 1.5 mm and the actual rainfall received in 2012 was 34. The strategy is focused on priority investments in the water sector to achieve additional water storages and reorganization for effective and responsive institutional reforms. sustainability and accountability have been adopted.2 mm. During the winter.56 17 29. (July-September).5 mm. while the actual rainfall received in 2011 was 236. or the lining of irrigation channels. the normal average rainfall 137. Protection of infrastructure from onslaught of floods and water logging and Salinity.12 27 0. an integrated water resource management approach. c. normal average rainfall during this period is 70. the canal head withdrawals declined to 29.48 34.40 13 Source: Indus River System Authority Rabi (Oct-Mar) 2010-11 18. participatory decision making.6 MAF during the same period last year.e. sprinkler and drip.60 0. Augmentation of surface water resources by construction of storage small/medium dams.96 60 Total 53.51 0. 2011-12.4 percent under the normal rainfall average. The Province-wise details are given in Table 2.Pakistan Economic Survey 2011-12 irrigation process because of improper lining of waterways. Million Acre Feet (MAF) Rabi % Change in (Oct –Mar) Rabi 2011-12 2011-12 Over 2010-11 17. Introduction of high efficiency irrigation systems i. strategies and future water sector policy.0 percent.14: Rainfall* Recorded During 2011-12 Monsoon Rainfall* (Jul-Sep) 2011 137. compared to 34. The focus areas of investment in the water sector are: a. The canal head withdrawals in April-September 2011 increased by 13 percent and stood at 60. b. 26 .2mm -36. guiding principles of equity.13 -30 1.88 0.15. indicating an increase of 99.29 18 Sindh 22.73 14.61 -6 10. Water availability is continuously diminishing.41 60. lining of waterways and enhancing efficiency by rehabilitating and improving the operation of the existing system. indicating a decrease of 51.4 MAF. Conservation measures.00 34. Rainfall recorded during the monsoon Table 2. d.4 million acre feet (MAF) as compared to 53. The challenge is to formulate an effective implementation of a comprehensive set of measures for the development an efficient management of water resources. efficiency. During the second planting season.0mm +72.5mm 236.5 mm.29 3 Balochistan 1.59 To address the water sector issues. 800 million is expected to be utilized on lining various irrigation channels in Punjab. In Balochistan. submitted for approval to P&D Division Water Sector Programmes during (2011-12) These programmes are: ` Completion of phase-I of the Greater Thal Canal.00 billion is expected to be utilized on construction of new small to medium sized dams across Pakistan.000 (B R) Pakistan Satpara Dam Skardu 4.467 1. 27 ` ` ` ` ` ` ` .707 88% Physically Completed RBOD-II Sindh 29.014 65% Physically Completed RBOD-III Balochistan 6.9 million acres. completed (3 Phases) Rainee Canal * Sindh 18.00 billion are expected to be spent on the construction of new small. 91. II & III projects hope to protect and reclaim 4. 3. Planning Commission * Progress of all three canals is for Phase-I.553(O) 2. 1.4 MW power ` Rs.139 acres of agriculture land and generation of 17.892 1.862 412.16: Major Water Sector Projects under Implementation Projects Location Total Live Irrigated Latest Status App.Agriculture It is expected about Rs. continued fast track implementation of the RBOD-1.535 75% Physically Completed Source: Planning & Development Division.00 billion would be utilized on the water sector’s programmes under the Ministry of Water and Power for 2011-12.536 Physically completed Multi. More than Rs. Substantial completion of Gomal Zam Dam Project in Tribal/ Khyber Pakhtunkhwa (KPK) area for irrigation of 1.9 MAF and additional power generation of 644 GWh. Revised cost of all three canals is un-approved. Completion of Mangla Dam Raising Project for additional storage of 2.829 0. Sindh. 30. 1.05 15. Sindh and Khyber Pukhtunkhwa during the year 2011-12.16.739. 2. In the drainage sector.cost Storage Area (Expected up to June 2012) (Rs. whereas app. The following major water sector demonstrated in Table 2.000 62 % Physically completed (3 Phases) Phase-I Raising of AJ&K 62.397 0.90 million acres of irrigated land.204 713.purpose Right Bank Outfall Drain (RBOD) RBOD-I Sindh 14.400 94 % Physically completed (3 Phases) Phase-I Kachhi Canal * Balochistan 31.600 million is expected to be utilized during the year 2011-12 on improvement of existing irrigating system in Punjab.000 Phase-I. cost is reflected for total project.139 75 % Physically completed Pakhtunkhwa Greater Thal Canal * Punjab 30. Nai Gaj and Naulong dam). Completion of Satpara Dam in Gilgit Baltistan for irrigation of 15. In (MAF) (Acres) million) Gomal Zam Dam Khyber 12.3 MW power generations. An amount of Rs.536 acres of agriculture land and 17. delay action dams and improvement of existing irrigation system and flood schemes. 91. projects are Table: 2.90 All over Physically completed Mangla Dam 97. about Rs. (Winder. Darwat. KPK and Balochistan. substantial completion (60 percent) of Kachhi Canal in Balochistan and Rainee Canal (92 percent) in Sindh for irrigating 2. 0 0.9 percent of their target and the PPCBL disbursed Rs 6.0 billion or 79.2 billion went to the Microfinance Banks.7 119. During July-March. livestock. 263 billion during 2010-11).6 PPCBL 8. The Agricultural Credit Advisory Committee (ACAC) has allocated an indicative agriculture credit disbursement target of Rs.7 197.7 110. and the reasonable prices of agricultural commodities are attracting investment into Pakistan’s agriculture sector.5 6.0 Table 2.3 percent of their whole year’s targets.4 2010-11 P 37. ZTBL disbursed Rs 37. A well-established network of lending institutions operates to meet the financial requirements of farmers in the rural areas. This issue. 285 billion.8 Source: State Bank of Pakistan.3 10. orchards.7 37. Out of the total amount of agricultural credit disbursed.6 140. in Billion) Total MFBs 0. to a slowdown in the adoption of modern farming techniques and inputs. 2011-12 five major banks.0 2010-11 65. nurseries.8 25.4 94.9 billion or 54 percent of its targets and Domestic Private Banks (DPBs) disbursed Rs 37.4 billion. of Rs. The details are presented in Table 2. 2011-12. 5 2007-08 66. and Rs. (five MFBs included since July 2011).17.0 0. Muslim Commercial Bank (MCB).17: Supply of Agricultural Credit by Institutions Year ZTBL Commercial Banks 80.7 7. 12. ranging from the exploitation of poor farmers at the hands of informal sources of credit.9 2008-09 75. These banks provide credit to the farming community for all types of farming activities such as growing crops. Furthermore.0 5. Punjab Provincial Corporative Bank Limited (PCBL). The Government of Pakistan and the SBP is cognizant of the centrality of access to agriculture credit in the growth of the agriculture sector. forestry. Currently 26 commercial and microfinance banks.0 0.2 percent of the target.6 233.0 0. 7. viz. and 14 private domestic banks. Rs.0 Domestic Private Banks 24.6 43.900 agriculture designated branches.3 107. with around 3. Billion 168.3 billion or 69 percent of their targets.2 4.1 percent of its allocated target.5 Rs.1 263.9 41. if not addressed. as a group. 70.4 6.1 billion was allocated to Commercial Banks. are facilitating farmers by extending agriculture credit throughout the country.0 43.6 5. disbursed Rs 107.5 billion or 69. As a result. Zarai Tarqiti Bank Limited (ZTBL).3 93. five microfinance banks (MFBs) are also providing financing to farmers.1 billion to ZTBL.0 0. These include. resulting in slow development of this chief sector of our economy. P: Provisional (July – Mar) 28 . two specialized banks. bank disbursement to the agriculture sector surged by 17 percent on a year-to-year basis to Rs 197. During the period July-March. 285 billion for 2011-12 as compared to the target of Rs. 195. apiculture and sericulture. poultry.8 50. (fixed for last year and the actual credit disbursement of Rs.1 6. Rs.7 billion or 76.4 %Change 22.3 2006-07 56. This goes in contrast to the disbursement of Rs 168.8 211.7 billion during corresponding period last year. the flow of credit to agriculture sector from banks is showing improvement. and they have been making all efforts for the promotion and development of agricultural finance in the country at affordable prices.9 5.0 168.0 8. Rs. MFBs disbursed Rs 8.4 2011-12 P 37. Credit on food resources and high prices of agriculture inputs.2 33. Habib Bank Limited (HBL).1 2009-10 79. United Bank Limited (UBL). fisheries.0 17. (Rs. can cause a multitude of problems.0 248. The increasing demand for credit is due to an array of factors.6 billion was allocated to the Punjab Provincial Cooperative Bank Limited (PPCBL). such as the rising pressure from the quickly expanding population. ABL. 270 billion. or 69.Pakistan Economic Survey 2011-12 iv) Agricultural Credit: The role of credit is instrumental in the agriculture sector where Pakistani farmers often lack finances necessary for carrying out vital farming activities. 07 1.3 percent in March. Livestock contributed approximately 55. It can uplift the socioeconomic condition of Pakistan’s rural masses.6 percent and 11.67 45.71 197. showing an increase of 4.64 70.73 billion.69 III.68 27.97 63.5 percent was extended to farm sector and Rs 58. Livestock and Poultry A.78 20.82 33.83 68.04 0. 29 .60 2.6 percent during the same period last year. Gross value added of the livestock sector at constant factor cost has increased from Rs.91 71.09 0. an amount of Rs 110.23 12.0 percent as compared to previous year. The livestock population for the last three years is given in Table 2. 672 billion (2010-11) to Rs.94 0.18.64 billion was disbursed to the farm sector while credit disbursement to non-farm sector stood at Rs 71.74 15. Livestock is central to the livelihood of the rural poor in the country and can play an important role in poverty alleviation. 2012. Therefore. Forestry During the year 2011-12.1 percent to the agricultural value added and 11. IV.82 28.46 65.Agriculture Box-1 Credit Disbursement to Farm and Non-Farm Sector The sector-wise classification reveals that the share of the non-farm sector showed healthy growth and its share in overall agriculture credit disbursement rose to 36. forests have contributed 92 thousand cubic meters of timber and 262 thousand cubic meters of firewood as compared to 91 thousand cubic meters timber and 261 thousand cubic meters firewood in 2010-11. especially in cases of crop failure due to a variety of causes. Last year. Historically livestock has been the subsistence sector dominated by small holders to meet their needs of milk.36 2010-11 July-March 2010 110.73 19. against 54. The sector provides a net source of foreign earnings. During the period under review Rs 125.02 52. Sector A Farm Credit 1 Subsistence Holding i Production ii Development 2 Economic Holding i Production ii Development 3 Above Economic Holding i Production ii Development B Non-Farm Credit 1 Small Farms 2 Large Farms Total (A+B) Source: SBP 2011-12 July-March 2011 125. is a source of employment generation at the rural level.6 percent to national GDP during 2010-12.46 billion or 65.23 33. It also helps to reduce income variability. livestock is considered a more secure source of income for the small farmers and landless poor.81 15.97 2.98 19.72 58. food security and daily cash income.5 percent was disbursed to non-farm sector.23 billion or 34.56 168. and. Livestock The livestock sector occupies a unique position in the National Agenda of economic development of the present government. 700 billion (2011-12). 7 Sheep 27.652 Sheep " 36 36 37 Goat " 739 759 779 Camel " 808 818 829 000 Tons 2.4 4.133 16.19: Milk and Meat Production Species Units 2009-101 2010-111 2011-121 000 Tons 44.6 4.741 Buffalo " 27.546 16.9 61.457 13.20.475 38.655 1.5 Camels 1.640 2011-121 13.9 32.4 0.995 6.7 28.694 29.2 Source: Ministry of National Food Security & Research 1 : Estimated Figure based on inter census growth rate of Livestock Census 1996 & 2006 (Million Nos.769 Mutton " 603 616 629 Poultry meat " 707 767 834 Source: Ministry of National Food Security & Research 1: The figures for milk and meat production for the indicated years are calculated by applying milk production parameters to the projected population of respective years based on the inter census growth rate of livestock census 1996 & 2006 2 : The figures for the Milk production for the indicated years are calculated after adding the production of milk from camel and sheep to the figures reported in the livestock census 2006. 4 : The figures for meat production are of red meat and do not include the edible offal’s.848 28.144 13.0 1.481 6.1 1.565 Sheep2 " 36 36 37 Goat " 739 759 779 Camel2 " 808 818 829 000 Tons 36.951 Milk (Gross Production) Cow " 15.955 23.19.18: Livestock Population Species 2009-101 2010-111 Cattle 34. The production of these products for the last three years is given in Table 2.040 6.906 13.279 22.Pakistan Economic Survey 2011-12 Table 2.711 1.6 Buffalo 30.8 0.965 3.20 Estimated Livestock Products Production Species Units Eggs Million Nos Hides 000 No's Cattle " Buffalo " 2009-101 11.4 Asses 4. Table 2. 3 : Milk for human consumption is derived by subtracting 20% (15% wastage in transportation and 5% in calving) of the gross milk production of cows and Buffalo.7 Mules 0.095 3.393 Buffalo " 22. Table:2.299 37.2 0.8 31.232 Meat4 Beef " 1.839 13.741 6.440 47. The production of other livestock products over the last three years is demonstrated in Table 2.496 6.0 0.978 46.4 63.437 12.3 35.1 Goat 59.690 Milk (Human Consumption)3 Cow " 12.0 Horses 0.2 The major products of livestock are milk and meat.842 30 .) 2011-121 36.8 28.445 2010-111 12.938 6. The overall livestock development strategy resolves to foster “private sector-led development”.728 11.495 10. Sales tax exemption has been allowed to 31 .509 Lamb skin " 3. yogurt. semen and embryos for crossbreeding.4 735.2 23. with the public sector providing an enabling environment through policy interventions and playing a capacity building role for improved livestock husbandry practices.9 Bones " 713.117 3.6 0.745 Goat Skin " 23.192 Kid skin " 10.20 Estimated Livestock Products Production Species Units 2009-101 2010-111 2011-121 Camels " 99 100 101 Skins 000 No's 47.582 Sheep Skin " 10. The Ministry of National Food Security and Research created a “Livestock Wing”. It also included duty free import of veterinary dairy and livestock machinery/equipment.1 Ducks. vaccines and animal feed additives. the subjects of animal health and production have been delegated to the provinces. The rise in production cost has increased the retailer’s and consumer’s price index for milk. delegating the following roles: 1. Co-ordination of foreign aid and technical assistance in the livestock sector and related fields. and other items.318 Wool 000 Tons 42.685 24.846 14.019 11. Laying down national grades. The emphasis will be on improving per unit animal productivity and moving from subsistence to market oriented and then to commercial livestock farming in the country to meet the domestic demand and surplus for export.347 14. certain feed ingredients. poultry and livestock products. The Livestock Wing with its redefined mandate continued regulatory measures that included allowing import of high yielding animals. Animal Quarantine Departments/ stations/ facilities located anywhere in Pakistan.154 3.8 Edible Offal’s " 334 344 353 Blood " 56. Import and export.071 Urine " 311 320 329 Head & Trotters " 208. 3.008 1.237 Fancy Skin " 13.886 48. b.061 23.2 214.173 14.478 49.402 48. allowing import of feed inputs.1 757. eggs.5 Fats " 228.6 23. a. Drakes & Ducklings Million No’s 0.0 Hair " 22. Livestock. Veterinary drugs. Import and export.1 234.0 220.7 Dung " 1.5 Source: Ministry of National Food Security & Research 1 .Agriculture Table:2.0 42. increase in per capita income and the potential for export is fueling the demand of livestock and livestock products.6 0.5 43.5 50. In order to reduce input costs in livestock/poultry feed production.089 Casings " 13. 2.832 Horns & Hooves 000 Tons 48. The figures for livestock product for the indicated years were calculated by applying production parameters to the projected population of respective years Consequent of 18th Constitutional Amendment. b.8 241. Procurement from abroad for federal requirement and for interprovincial supplies. The population growth. and vaccines at zero rates.3 59. a. growth promoters and vitamin premixes have been zero rated.8 Guts 000 No's 47.974 50.620 10. 4.879 14.039 1. meat.8 58.1 49. Its contribution in agriculture and livestock is 6. The current investment in the poultry industry is about Rs 200.00 8690.768 semen doses and 4300 embryos of high yielding animals have been imported in the country from July 2010 to December 2012.00 598.00 Poultry Birds " 610. 32 .81 597.02 Day Old Chicks " 515. Poultry meat contributes 25. yogurt.00 13114.00 3742.47 662.61 million in 2011-12. The figures for the indicated year are statistically calculated using the figures of 2005-06.39 8.59 0.74 34.4 percent and 11.73 Commercial Poultry Layers Million No's 30. The future road map has clear mile stones in the shape of entering into global Halal Food Trade Market.77 0.80 0.58 9.00 721. The production of commercial and rural poultry and poultry products for the last three years is given in Table 2.00 Source: Ministry of National Food Security & Research 1 .36 566.10 Hens " 36. milk processing and meat processing units have been established in the private sector.00 Poultry Meat 000 Tons 707. The future plan for the livestock sector is to persuade the policies to achieve 5 percent or more growth in meat and 8 percent or more in milk production through shifting from subsistence livestock farming to market-oriented and commercial farming.42 38.21: Domestic/Rural & Commercial Poultry Type Units 2009-101 2010-111 2011-121 Domestic Poultry Million No’s 77.56 0.00 623.68 Cocks " 9. 2 : The figures for Eggs (Farming) and Eggs (Desi) are calculated using the poultry parameters for egg production.58 Meat 000 Tons 603.89 9.21.00 Eggs " 11839. Table 2.5 percent.00 12857.00 Meat 000 Tons 102.9 percent. butter and cream in order to encourage establishment of a value added industry in the country.00 767. New slaughterhouses. cheese and flavoured milk.5 million people.00 3809. The focus will be to encourage and promote high yielding animal’s production and their crossbreeding through Artificial insemination services. The export of the meat (beef. showing an increase of 13.02 31.40 104.51 79.18 9281. controlling trans-boundary animal diseases of trade and economic importance. respectively. The poultry sector has shown a robust growth of 8 to 10 percent annually.82 Breeding Stock " 8.28 25.54 million (2010-11) to US $123.48 Eggs2 " 3676.13 Meat 000 Tons 0.40 542.Pakistan Economic Survey 2011-12 uncooked poultry meat. mutton and camel meat) has increased from US $108.51 Duck.54 44.18 24. Drake & Duckling Million No's 0.8 percent of the total meat production in the country. processed milk.76 37.43 106.25 31. small-scale livestock farmers.09 Chicken " 31. Poultry The poultry sector is one of the most organized and vibrant segments of the agriculture industry of Pakistan.00 655. 318.54 Eggs2 " 26. More than 9500 exotic animals.00 663.00 billion.10 Broilers " 493.84 10. which reflects its inherent potential.41 32.35 78.25 Eggs2 Million No’s 8137. as well as a socio-economic uplifting mechanism of poor. This sector generates direct and indirect employment and income for about 1.00 834.00 Total Poultry Day Old Chicks Million No’s 546. It envisages poultry sectors growth of 15-20 percent annually.000 beef animals and 200. 8.004 Red Sindhi. Distribution of 2200 Motor-Cycles to field staff of provincial livestock departments on hire purchase basis to strengthen and improve the veterinary health coverage.3 tons of fodder seeds and 663 tons of animal ration/feed on cost basis to the members of MPGs Registered 1. 23. disease control and genetic improvement in rural poultry. It is aimed at facilitating and supporting private sector-led development for sustainable poultry production.e. Wool Producers Association. and Established the National Epidemiology Network for Livestock Disease Surveillance and Reporting.000 mutton animals have been produced.150 community organizations (COs) have been formed and 3000 rural community persons have been trained by imparting one month training in basic veterinary services through the government livestock institutes have been trained in better animal husbandry practices to enhance their income through enhanced milk productivity National Programme for the Control and prevention of Avian Influenza ` ` Established 40 surveillance and response units (RRUs) 66 rapid ` ` ` ` ` A total of 4. The achievements of these projects are summarized below: Strengthening of Livestock Services Project (SLSP) ` Field studies on (5) models of service delivery were conducted (CAHEW. improving bio-security. The strategy revolves around improving the regulatory framework.265 rural livestock female farmers ` Livestock Production and Development for Meat Production ` Completed more than 13.000 feed-lot fattening operations (beef and mutton) in which more than 163.5 million as compensation to Avian Influenza affected farmers Pakistan is maintaining Avian Influenza (bird flu) free status since June 2008 ` ` ` Milk Collection Processing and Dairy Production and Development Programme 33 . high tech poultry production under environmentally controlled housing. ` ` ` Prime Minister’s Special Initiative for Livestock (PMSIL) ` A total of 290 veterinary clinics have been established providing veterinary services at 70 percent reduced cost to rural farmers at their door steps i. tissues and swabs for screening against Avian Influenza Establishment of the Bio security Laboratory-3 is under process Disbursed Rs. Sahiwal and NiliRavi livestock breeders for production of quality breeding animals. Processed 0.Agriculture Poultry Development policy envisions sustainable supply of wholesome poultry meat. processing and value addition. PRSM). DFCM. Introduced PPR vaccine production in the country.8 billion. WLEW. 100 percent achievement Quality medicines/vaccines are available to rural farmer at 30 percent reduced cost as compared to market prices A total of 3. Azad Jammu & Kashmir and Gilgit Baltistan Installed 150 milk cooling tanks Provided 63.4 million samples of blood. need based research and development and farmers training and education. MEGA DEVELOPMENT PROJECTS The Ministry of Livestock and Dairy Development. eggs and other value added products to the local and international markets at competitive prices. ` Formed 207 Milk Producer Groups (MPG) in all the four provinces. before devolution concluded the following (7) projects in the Livestock sector at an estimated cost of Rs. (v) Resumption of Export to the EU Countries The European Union (EU) has expressed satisfaction with most of the steps taken by the government of Pakistan. boat owners have started modifying boat using their own expenses.498 million tons of fish and fish preparation were exported during the July-March. A number of initiatives have been taken by the federal and provincial fisheries departments which also include strengthening of extension services. 2011. 2010-11 the production was estimated to be 937. Malaysia. Fishery plays an important role in Pakistan’s economy and is considered to be a source of livelihood for coastal inhabitants. submitted this report on December 31. and Karaniwala Embryo Transfer Technology Centre has produced 502.Pakistan Economic Survey 2011-12 Improving Reproductive Efficiency of Cattle and Buffaloes in smallholder production systems ` ` Civil work of Embryo Transfer Technology Centre at Okara has been completed For strengthening and improvement of Provincial Semen Production Units (SPU) 6 Semen Quality Analyzer (SQA-VB with Test Kit) were given to SPU’s in Korangi. MFD. Fisheries i) ii) During July-March.082 million tons.3 percent.031 embryos from elite exotic animals for cross breeding purposes and carried out 178. ponds. lakes. introduction of new fishing methodologies. in consultation with a UNIDO consultant. Pakistan’s major buyers are China. 2011-12 the total marine and inland fish production was estimated at 951. with regard to the Hazard Analysis Critical Control Point (HACCP) of processing plants. out of which 681.652 m. Thailand. dams) are also a very important activity throughout the country. ` ` Up gradation and Establishment of Animal Quarantine Stations in Pakistan ` A total of (5) Animal Quarantine Stations (AQS) have been up-graded in order to facilitate import/export of livestock and its products A total of 2 new AQS are being established at Khunjrab and Khokhrapar. In July-March. Although the contribution is very small it adds substantially to the national income via export earnings. As a result of introducing modular boats by the MFD. Quetta. So far. ` V. 502 boats have been modified.324 million tons. tons was marine and the remaining was produced by inland fishery sector. Pakistan earned US $222. iv) Modernized Fishing Fleets: A project for the improvement of fish holds of local fishing boats was approved and four local fishing boats have been modified by the federal government (Marine Fisheries Department) as demonstration boats at a total cost of Rs. Sri Lanka and Japan. embryo transfer has been carried out in 168 animals Provided training to artificial insemination technicians million tons was from marine production and the remaining came from inland waters.318 artificial inseminations.8 million from these exports. inland fisheries (based in rivers. iii) The government is taking a number of steps to improve the fisheries sector. 5. The Government has made adequate and effective efforts to resume of export to the EU. enhancement of per capita consumption of fish.0 million with the aim of assisting boat owners to modify their boats on similar lines. 2011-12.996 semen doses and 2. A total of 84. The export of fish and fishery products to the European Union was suspended in April 2007. However. Apart from marine fisheries. the EU has now asked for an inspection report. This shows success in the fishermen community because they have accepted and are using the technology of lining of fish holds with fiberglass coatings. development of value added products. Middle East.700 34 . where 672. Based on this report it is hoped that fisheries’ exports will be resumed. Khairimurat. Qadirabad. Harichand. and the upgrading of socio-economic conditions of the fishermen’s community. Fisheries share in GDP is 0. will be selected and notified for implementation by the fishermen to ensure juveniles and/or undersized fish cannot escape from the trawl-net. while 25 percent contribution was made by the owner to upgrade present standards. the present government is determined to support the sector by promulgating policy that will continue to make agriculture an efficient. Despite the floods of 2011. remained high because the farmers received good prices for rice. The knowledge and skills of MFD inspectors under official watch have been enhanced. The profitability of agriculture sector during 2011-12. the sector recorded a growth of 3. two laboratories of the Marine Fisheries Department achieved accreditation under ISO/IEC-17025 international standards and now the test report of these laboratories are recognized all over the world. productive and profitable sector of the economy. Conclusions The agriculture sector continues to play a crucial role in Pakistan’s economy. The optimal mesh size. more than 500 fishing boats have been upgraded. Karachi Fisheries Harbour Authority and other stakeholders undertook research/experimental surveys to test different sizes of the cod-end of trawl-net being used by local fishermen. As mentioned above. Recognizing the vital role the sector plays in ensuring food security. the requirement of EU and SPS has been fulfilled. reducing poverty and the transforming towards industrialization. Currently it contributes 21 percent to GDP. 35 . Training has also been provided to the fishermen on hygienic preservation and handling of a catch once it is onboard the fishing vessels. v) Conservation and management of marine resources MFD in collaboration with fisheries department of the government of Sindh. Thus. Fisherman’s Cooperative Society Ltd. the government of Sindh contributed 75 percent. Landing sites and auction halls at Karachi Fish Harbour have also been upgraded.Agriculture In this connection. on the basis of results of the surveys.1 percent in 2011-12. during the tenure of the present government. and provides employment to 45 percent of the country’s labour force. processing plants have rectified the deficiencies. which allowed for greater financial resources passed on to the rural economy. while 60 percent of the rural population derives its livelihoods from this sector. cotton and sugarcane. generating overall economic growth. Due to revision of the base year as well as new industries being added. A modest improvement was seen in Large Scale Manufacturing (LSM) in JulyMarch 2011-12 as the Quantum Index of Box-1 The methodology to compute Quantum Index of Manufacturing (QIM) has been revised during the current fiscal year.56 percent during the current fiscal year JulyMarch 2011-12 compared to 2.366 70.397 75. Previous QIM • • Base Year 1999-00 Weight derived from the Census Manufacturing Industries (CMI) 2000-01 • • Rebased QIM Base Year 2005-06 Weight derived from the Census of Manufacturing Industries (CMI) 2005-06 using UN International Standard Industries Classification (ISIC) Rev 3.96 percent of the same period last year. Important Changes can be gauged from the table below. it is not prudent to compare the performance of the LSM sector on the revised base against the official growth target of 2.075 percent for 100 items is being used for computation of QIM • Comparison of Weights CMI 2000-01 Sources MOIP/1 OCAC /2 CMI 2005-06 Weights (%) 44.05 percent against the target of 2.075 Sources MOIP/1 OCAC /2 No of Items 35 11 54 100 No of Items 36 11 65 112 Weights (%) 49. addition of new industries and revision of weights.332 BOS/3 All /1 /2 BOS/3 All : Ministry of Industries and Production : Oil Companies Advisory Committee /3 : Bureau of Statistics (Provincial) 37 .332 percent for 112 items is being used for computation of QIM of • Cumulative weight of 75.232 25.446 5.1 Introduction Manufacturing (QIM) increased by 1.98 percent during the same period last year.1 Cumulative weight of 70.410 15.Chapter 3 Manufacturing and Mining 3.556 5. The manufacturing sector posted a growth rate of 3. This includes rebasing.0 percent (Box-1).0 percent compared to growth of 0. 0 percent was witnessed in Feb-2012. beverages and tobacco. 0. LSM production began to revive in December 2011 as the impact of flood began to subside. agro-based industries which were recovering from the impact of the floods of 2010. Effective fiscal policy helped in revitalizing the growth to some extent due to reduction in duties on beverages. The production data received from the Oil Companies Advisory Committee (OCAC) comprising of 11 items.0 10.Pakistan Economic Survey 2011-12 Statistics 65 items respectively have contributed in LSM growth as -0. Group-wise Performance The group-wise analysis (Table 3.0 Growth rate 5. Ministry of Industries and Production 36 items and the Provincial Bureau of Fig 3.0 -5. The Year to Year positive growth during the start of current fiscal year (JulySep) can be partially attributed to export demand which has increased the production in the short run.0 0. Moreover.75 percent and 0. The floods also damaged industrial supply networks and rural demand and this coupled with severe power and natural gas shortages led to a number of key industries (textile.1) indicates some of the groups in the Large Scale 38 . was again hit by another natural calamity in the form of heavy rains in Sindh during August 2011. automobiles.0 June-11 Oct-10 Feb-11 Oct-11 Aug-10 Nov-10 Aug-11 Sept-10 May-11 Sept-11 Nov-11 Mar-11 Apr-11 Feb-12 Jan-11 Jan-12 Jul-10 July-11 Mar-12 Dec-10 Dec-11 Source: Pakistan Bureau of Statistics The growth rate in Large Scale Manufacturing (LSM) has recovered. cement and air conditioners. pharmaceutical and leather products compared to negative growth seen during the second quarter of the current fiscal year. largely due to good performance among the sub categories such as food.0 -10. fertilizer. This step was necessitated in view of the costly input prices and the need to absorb the volatility in the production of these industries. This could also be attributed to the beneficial effect of specific policies on large scale industry. the year to year performance of the sector turned negative by registering a decline of 3. In addition. Dismal performance was seen in the winter season (Oct-Dec) which was due to persistent gas shortages.55 percent.7 percent owing to prolonged power and gas shortages. the growth in agrobased industries was based on increase in cotton (Punjab) and sugarcane production during the current fiscal year. A remarkable growth of 6. steel.1: LSM Growth rates (Y-o-Y) 15. The cotton crop is most vulnerable to floods and almost all major sugarcane producing districts were affected but losses to sugarcane were lower as the crop is relatively resilient to flooding.26 percent. glass etc) not operating at expected levels. In March 2012. textile. non-metallic mineral products. paper and board. wheat milling and pharmaceutical industry.02 9 Electronics 1. electronics (7.51 1.49 6. better marketing strategies in smaller food processing industries and the government’s supportive policies for tractors.2: LSM growth rate (Annual Basis) 12.00 9.37 14.8 0.05 0.4 -7.39 5 Chemicals 1.81 3 Coke & Petroleum Products 5.19 12 Engineering Products 0.73 0.6 0.00 4.4 -0.7 -0.15 0.0 6.2 -24. coke and petroleum products (5.15 0. paper and board (8.61 11.7 -0.3 -28.77 percent).87 percent).04 0.63 percent).5 -0.04 -0.16 2 Food.68 percent).42 percent).15 15 Wood Products 0.06 14 Non-Metallic Mineral Products 5. food beverages and tobacco (6.59 6.98 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (July-Mar) Source: Pakistan Bureau of Statistics The sectors showing a decline in production during July-March.25 -0. automobiles (0.70 percent).28 -0.39 percent).March 2010-11 % Change % Point Contribution July-March July-March S.00 -2.00 -4. The performance of LSM production for the remaining period of 2011-12 augurs well due to the improvement in some other external factors such as higher textile export.3 8.02 -0.04 Source: Pakistan Bureau of Statistics 39 .08 6 Automobiles 4.55 -0. July.8 0.04 -0.4 1.76 percent) and textile (0.7 0.96 -14.00 6.00 0.05 product (7.6 -5.91 0.26 9. rubber products (24.02 1.Manufacturing and Mining Manufacturing (LSM) experienced a positive growth during the first nine months (July-March) of the current fiscal year. The group wise growth and the contribution of each of the LSM for the period July-March 201011 versus July-March 2011-12 is presented in Table-3.04 13 Rubber Products 0. non-metallic mineral products (2.19 percent).9 -0.89 percent). chemicals (4.02 11 Paper & Board 2.47 percent). leather product (1.00 8.86 17.00 2. wood Fig 3.51 0.33 -5.44 -9.00 -6.38 percent).88 percent). Beverages & Tobacco 12.56 -1.04 7 Iron & Steel Products 5.4 0.9 -0. The groups showing substantial increase include pharmaceutical (10.05 0.5 -10. 0.8 0.5 1.9 -0.9 0.00 -8.84 percent) and fertilizers (0.41 -0.1.00 10.9 7. engineering products (10.40 -9.31 4 Pharmaceuticals 3.15 10 Leather Products 0.39 -10.3 10.53 8 Fertilizers 4.72 -2.2 -0.5 -4.2 -0. Table 3. 2011-12 were iron and steel products (28.31 -2.1: Group-wise Growth and Points Contribution rate of LSM for the month of July-March 2011-12 vs.No Groups Weights 2010-11 2011-12 2010-11 2011-12 1 Textile 20.51 -4.62 1.4 -0.6 2.36 -9.53 percent). 675 195.25 0.600 0.20 228.42 0. syrups and squashes (26.09 percent).53 16 Tea Blended (000 tones) 0.259 14.511 13.87 percent).76 -0.972 0.24 percent). Table-3.56 percent).40 385.80 101532 110430 8.03 8 Tablets (Milion Nos) 1.141 4485. However.02 14 Cotton Yarn (000 tones) 13.) 2.No.39 19324 18350 -5.434 1. sugarcane machine (19. heavy machinery & equipment (20. liquids/syrups (14.00 2200.74 -0.04 1667.86 0.44 percent).05 13 Vegetable Ghee (000 tones) 1.) 0. electric transformer (31.369 17550.480 769. Food and pharmaceuticals showed the strongest contribution. footwear (6.15 6 Liquids/Syrups (Milion Liters) 1.76 0.458 45.15 percent). electric tubes (17.298 -4. Nevertheless capacity in the local industry and expected domestic demand based on high consumption trends remained the driving force in helping to stimulate revival.16 7 Phosphatic fertilizer (000 N tones) 0.67 0.25 3 Refrigerators (Nos.05 17 Petroleum products (Milion Liters) 5.) 2.15 percent) and LPG (3.Pakistan Economic Survey 2011-12 juices.68 percent).m. kerosene oil (14.58 326. fertilizers and petroleum products posted a modest contribution in overall LSM performance.20 764.10 62.04 -0.20 9 Cooking oil (000 tones) 2.04 20 Pig iron (000 tones) 1.31 1.25 0.08 0.59 -0.86 percent). 40 .65 -0. alternate energy sources in the long run could help to further foster growth in the industrial sector. Some important items wise contribution in Large Scale Manufacturing growth witnessed in generating sets (143.88 percent).09 0.783 57.15 15 Sugar (000 tones) 3.08 2 Jeep & Cars (Nos.16 67380 35316 -47.) 7.30 20814 21410 2. Growth was mainly derived from consumer goods.10 816.) 0.2.02 4 Upper Leather (000 sq.809 8046.08 19 Coke (000 tones) 0. blankets (109. intermediate goods such as building materials.834 0.617 10. In addition.824 138.99 percent).24 690236 737146 6.06 -0.74 0.) 0.02 12 Cotton Cloth (Million sq.m.592 15.649 228.80 0.456 71.924 829.10 47.02 5 Cement (000 tones) 5.344 -6.918 1674.41 2225.00 11 Nitrogenous fertilizer (000 N tones) 4.53 0.674 -3.10 218.313 359.81 -40.2 : Production of selected industrial items of Large Scale Manufacturing July-March % Change % Point S.90 15848.53 -0.63 Source: Pakistan Bureau of Statistics The country has been faced with energy shortages due to which the utilization capacity remained low (Box-2).616 -36. An Item wise review of production of selected items in Large Scale Manufacturing during JulyMarch 2011-12 is presented in Table 3.25 18 Cigarettes (Billion Nos.13 0.50 3892.40 50. Items Unit Weight (Jul-Mar) Contribution 2011-12 (Jul-Mar) 2011-12 2010-11 2011-12 1 Deep Freezers (Nos.50 8427. M2 12.939.740 48.326 34. Coils Tones 210. Tones 6.30 288.76 34.205 301.000 37 Motor Cycles Nos 2.230.e. Global Overview The international statistics report on export of textile and clothing trade indicates some signs of recovery in this sector after the global financial meltdown in 2008-09.665 3.896 962.28 41.048 172.No Items Unit of Annual 2010-11 (July-June) 2010-11 (July-Jan) Measure Installed Capacity % Age Capacity % Age Capacity Utilization Utilization Th.000 18.913 358.00 57.7 percent.57 0. It is a labourintensive industry and offers entry-level jobs for unskilled labour.05 0. The availability of basic raw material for the textile industry i. In 2010 China became the major exporter of textiles.77 Th.421 135.715 14.47 Tones 120. The contribution of the textile industry in total exports is around 54 percent of the total export earnings of the country. Job creation.464 378.60 11.92 27.Manufacturing and Mining Box-2 LSM Data Annual Installed & Utilized Capacity of 37 Items S.484 24 Bicycles Nos 700.026.94 Tones 36.342 28.10 35.03 31.20 94.98 Min Nos 96. has been particularly strong for women.0 billion in 2009 to US$ 602.700 22 Glass Sheet Th.264.844 214.630 52.M2 71.630 91.37 19.72 55.532.638. Tons 41.647 158.14 18. has played a significant role in the growth of the industry because of which Pakistan has been able to prove its strength in the world by sustaining its position and growth.00 34.946 2.986 78.997 3.457 28. The textile and clothing industry accounts for 46 percent of the total manufacturing and provides employment to 38 percent of the manufacturing labour force. pushing the European Union into second 41 . increasing from US$ 9.96 18.59 82. Kgs 3.240.041 33.25 5.300 70.307 106.000 23 Cement Th.21 0.81 16.88 2.169 61. Products Tones 100.800 4.000 26 Pig Iron/H.000 30 Glav.22 49.266 74.38 13.611 13.135 99.104 3.076 1.480 90.000 36 Tractors Nos 75.100 72.61 74. cotton. Coils/ Plates Tones 792.320.525 Source: Ministry of Industries and Production 3.644.86 33.235 16.2 Textile Industry The textile industry plays a pivotal role in Pakistan's economy.91 10. an increase of about 20 percent.22 1 2 3 4 5 6 7 8-11 Sugar Cigarettes Cotton Yarn Cotton Cloth Jute Hessian Jute Sacking Jute Others Paper & Paper Board 12 Chip Board Tones 95.597 87.855 1. Metal Tones 1.2 billion in 2010.9 billion in 2009 to US$ 11.218 75.665 30.91 75.403 68.000 31-33 Cars/LCVs/Jeeps Nos 280.000 25 Coke Tones 970.00 13.52 Th.000 14 Caustic Soda Tones 230.13 Tones 24.716 343.19 34.42 74. The export of Pakistan textile and clothing trade has also shown positive signs.000 62.107 16. especially in the clothing sector.400 3.8 billion in 2010.000 29 Cr.403 117.031 6.36 25.230 1.000 434. who previously had limited income opportunities outside the household or the informal sector.79 69.521 61.000 27 Cast / Rolled Billet Tones 660.261 48.57 67.309 54.47 55.24 7.000 13 Sodah Ash Tones 500.720 153.08 83.05 56.85 22.935.650 15-21 Fertilizer Tones 7. The exports of textile and clothing trade has increased from US$ 524.187 65.000 12.59 45.000 34-35 Trucks/Buses Nos 25.000 28 Hr.980 71.701 433.53 Tones 900.628 94.71 1.000 9.31 2.40 73.812 8.008. an increase of 14.734. 5 3.1 Ancillary Textile Industry The ancillary textile industry includes cotton spinning.7 315. 2005 202.4 2.5 percent in 2000. hosiery and knitwear and readymade garments. gas and law and order situation.5 World Clothing 197. to sustain its position and increase its share and to move into high value added products. towels. .01 percent in 2000.2 1.8 3.1 2. However. Besides this. from 14.2 percent. cotton yarn.2 7.4 3.4 9.1 1.2 361.91 2008 250.7 1. while its share in the country’s total exports declined to 8. rising from 18.2 6. The export performance of this industry is reported in Table 3. The training of workers. cotton fabric.15 2007 240.4 345.81 (US $ Billions) 2009 2010 209.0 9.88 6.1 6.1 351. research and development.9 11.9 250. India recorded a 40 percent increase in its exports of textiles in 2010 to become the third largest exporting nation. cotton cloth.9 11.5 3.5 7.0 456.1 3. India registered a decline of 3.9 612.7 2.0 602.4: Export of Pakistan Textiles 2006-07 Cotton & Cotton Textiles Synthetic textiles Wool & Woolen Textiles Total Textiles Total Exports Textile as %age Source: Ministry of Textile 10390 430 233 11053 17011 65% 2007-08 10071 490 216 10777 19224 56% 2008-09 9308 319 145 9772 17782 55% 2009-10 9754 446 137 10337 19290 54% 2010-11 13104 670 132 13906 24827 56% 3.88 7.7 276.4 309.00 Domestic Overview Domestically Pakistan is facing problems of shortage of electricity.8 586.9 11.23 2006 220. (US$ Millions) 2011-12 (Jul-Mar) 8513 395 95 9063 16913 54% Table 3.9 1. The unscheduled/scheduled load shedding along with increasing rates of gas and electricity have obstructed the viability of the textile industry as exporters are unable to meet their commitments. product diversification and branding are the immediate areas to focus on.6 Total:355.6 10.8 2. These 42 components are being produced both in the largescale organized sector as well as in the unorganized cottage/small and medium units.1 percent.9 11.1 529.Pakistan Economic Survey 2011-12 place. fabric processing. home textiles.7 260.5 7.4.2 3.5 2.1 Pakistan Textile Pakistan Clothing Total % Age of World Trade Source: Ministry of Textile 4. high interest rates of bank financing have also hindered new investments in the textile industry and layoffs and closures have become common in the industry. Among the major exporters of clothing.3 195.5 524.3: Export of Textile and Clothing 2000 2004 World Textile 157.2.1 3. improvement in labour productivity. just ahead of the United States.8 479.1 7.3 Table 3. The performance of these various ancillary textile industries is discussed below. China’s share in world exports of clothing increased to 37 percent in 2010. large investments in machinery equipment and new technology are essential. Performance of Textile Industry The textile industry of Pakistan has the potential to perform better both in production as well as in export by virtue of its inherent competitiveness on account of its conventional products. 96 -4.45 -4.850 6745.US$) Bed Wears Quantity (M.448 9.14 9.68 75.US$) 1716.75 -31.768 % Change -24. it is comprised of 521 textile units (50 composite units and 471 spinning units) with 9. during July –March.120 19.802 43 .98 -15.455 1276.07 0.5: Production and Exports of Clothing sector Production July-Mar (M.383 1216.961 % age Change 0.385 1356.US$) Other Made up Value (M. The following table presents the production and export performance of the cloth sector.6.984 508. For the non-mills sector.722 25.741 1216.130 Cloth Exports Quantity (M.12 -0.US$) Towels Quantity (M.) 1294.Doz) Value (M. 2011-12.Doz) Value (M.221 29. At present.49 -12.051 1556.US$) Readymade Garments Quantity (M.99 million spindles and 116 thousand rotors in operation with capacity utilization of 89 percent and 60 percent respectively.US$) Source: Ministry of Textile tents and canvas.Sq Mtr.260 243. bed-wear.139 67. The major product groups are towels. July-Mar 2011-2012 769.) 2010-2011 Mill Sector 764. as per the record of Textile Commissioner Organization (TCO).722 149.US$) Tents/Canvas Quantity (M. therefore.67 0. 2010-2011 (July-Mar) 100.656 418.224 580.120 101.88 96.75 -22.Manufacturing and Mining (i) Cotton Spinning Sector The spinning sector is the most important segment in the hierarchy of textile production.863 Value (M.600 5975. The production of cotton cloth has increased substantially.Doz) Value (M.480 Non Mill Sector 5971.508 488.273 18.Doz) Value (M.6: Exports of Made-Ups 2011-2012 (July – Mar) Hosiery Knitwear Quantity (M. Clothing Sector The pattern of cloth production is different from that of the spinning sector. and readymade garments including fashion apparels. This sector served as the main strength for the down stream sectors such as bed wear and made-ups and garments.451 1276.963 1709. Usually production of cloth in the mill sector is reported and the nonmills sector is not reported. Export performance of the madeup sector is presented in Table 3.650 Total 6736.Doz) Value (M. estimated numbers are taken as proxy. Mtrs.300 Source: Ministry of Textile (ii) Textile Made-up Sector This is the most dynamic segment of the textile industry.87 -17.71 130.369 Table 3. Sq. Table 3.406 188.37 -22. hosiery and knitwear.450 1412. cotton bags. 311.9 percent. which are used for packing and handling of wheat. readymade garments worth $ 1.139 (000 Doz) Value 67.meter). Quantity exported declined by 31.96 -11. Large units are now coming up in the organized sector of the industry.406 (M.Sq.235. showing a decrease of 11.37 iv) Art Silk and Synthetic weaving industry The art silk and synthetic weaving industry has developed as a cottage industry over the time based on power looms. exports in this sector stood at $ 488 million as against $ 580 million in the comparable period of last year.8 percent. During 2011-12 (July-March).80 vi) Jute Industry The main products manufactured by the jute industry are jute sacks and Hessian cloth.8: Exports of Tent & Canvas Industry (July– Mar) 2011-2012 (July – Mar) 2010-2011 % Change Quantity 18.sq. This value-added sector also has great potential for export. The major concentration is in Karachi. shawls 13.Mtr) Value (M.kgs.kgs.Sq. During 2011-12 (July-March). blanket 657.960 M.3 billion in the comparable period of last year.09 b) Readymade Garment Industry The garment industry provides highest value addition in the textile sector.5 percent.US$) 96.221 29. c) Towel Industry During July-March 2011-12. Pakistan is the cheapest source of tents and canvas. Swat. rice and food grains. v) Woolen Industry The main products manufactured by the woolen industry are woolen yarn 6. The industry consisted of small.9: Exports of Carpets and Rugs (Woollen) (July – Mar) (July – Mar) 2010-2011 2011-2012 % Change Quantity 75. Table 3. acrylic yarn 6. Khyber Agency and Waziristan). Quantity 2. d) Canvas This is the highest raw cotton consuming sector.512 95.meter).2 billion were exported compared to $ 1. There is greater reliance on this industry due to the substantial value addition in knitwear.5 (M. The exports of carpets during the period July to Mar 2011-12 is as below Table 3. showing a decrease of 15. During July-March 2011-12.9 percent. However the sector remained under pressure from its competitors.460 96. no change has been recorded in spindles installed capacity whereas single addition has been recorded in the looms installed capacity compared to last 44 . Nearly 60 percent of its production is exported while 40 percent is consumed locally mostly by the armed forces.9.3 percent. The production capacity is more than 100 million sq. This sector has tremendous export potential also.353 million.7: Export of Knitwear (July – Mar) 2011-2012 (July – Mar) 2010-2011 % Change Table 3.383 (000 Doz) Value 1534. production of synthetic fabric recorded at 1.571 million square meters during the same period last year. medium and large scale units most of them having 50 machines and below.US$) Source: Ministry of Textile 100. Table 3. meters.478. Units comprising of 0-10 looms are spread all over the country.61 0. Gujranwala and Jalalpur Jattan as well as in the unsettled areas (Bara.550 million square meters as compared to 1. and carpets 3. In quantity terms the decline in the exports of readymade garments was 22.305 13. Faisalabad.123 (M.US$) Source: Ministry of Textile 9. fabrics 3. thus showing a decline of 4.139 -24.078 Source: Ministry of Textile 2.71 130.662 (M.Pakistan Economic Survey 2011-12 a) Hosiery Industry There are about 12.445 (M.000 knitting machines all over the country.451 1726.864 M. 2010-11 and 2011-12 was 92. LCVs and two/three wheelers managed to grow by 23 percent.753 M. The electric fan industry is mainly clustered in Gujrat and comprises of more than 2. ton respectively. there are other industries as well which progressed rapidly and also contributed to the manufacturing sector. 3. A number of measures have been taken during 2011-12 and are currently underway to facilitate the industry to produce domestic fans at par with internationally accepted standards. 5. Table 3.3-2 Automobile Industry The four sectors of the automobile industry have shown mixed trends of growth during the year July-March 2011-12. The EDB has taken initiatives to boost the production of the surgical industry and electric fan Industry. 16. The increasing competition that the international market presents has been challenging.10 shows the installed and working capacity of the industry during the period under review.7 percent and 3.666 M. the EDB has initiated the compilation of the Engineering Goods and Services exporters Directory of Pakistan 2012.Manufacturing and Mining year. The industry is not only fulfilling local demand for domestic fans of various categories but is also earning handsome foreign exchange besides providing ample employment opportunities. The industry seems to be less buoyant in comparison with the corresponding period of last year 2010-11. In addition to projecting the engineering image of Pakistan.2 percent. The EDB is 45 . showing an increase of 6. During 2011-12 (July-March).5 percent and 12. 3.1 percent.3 Other Industries Although Pakistan’s exports are mostly confined to cotton and textile products in the international market.1% -7% Source: Ministry of Textile The production of jute goods for the period of July – Mar. Engineering Development Board (EDB) is the apex government body entrusted with strengthening the engineering base of Pakistan. The Fan Development Institute (FDI) is also being updated with the cooperation of the Pakistan Council for Science and Industrial Research (PCSIR).6 percent respectively during the same period last year. production of tractors declined substantially by almost 70 percent after the imposition of the 16 percent general sale tax (GST) in April 2011. During the start of the current fiscal year.4 percent.7 percent. The directory shall have the complete profile of the Exporters and shall be circulated to Pakistan’s Foreign Missions. 20. 9. cars. Its main objective is to maintain international standard in the field of engineering goods and services. A larger decline was witnessed in tractor production which was recorded at 48 percent compared to negative growth of 2. Table 3.6 percent. The current capacity in the surgical sector is under utilized. 3. Foreign Chambers of Commerce and the EDB’s International support partners in the potential markets. Following the government’s announcement to cut GST from 16 percent to 5 percent production Spindles Installed Spindles Worked Looms Installed Looms Worked 36076 27697 1851 1129 36076 24279 1852 1047 0% -12% 0. exports of surgical goods and medical instruments reached US$ 221 million compared to US$ 186.7 million during the same period last year. negative growth was observed in the working capacity of both spindles and looms during the current fiscal year.000 small and medium enterprises. Buses. ton and 98.3-1 Engineering Sector The engineering industry in Pakistan has enjoyed some success as a result of some really hard work.10: The installed and working capacity of jute industry (July – Mar) 2010-11 (July – Mar) 2011-12 % Change planning to prepare a growth strategy with active participation of all stakeholders in order to touch the export target of US$ 500 million by 2015. However.1 percent respectively compared to 24. 000 662 Buses 5. The intensity of the prevailing energy crisis specifically in relation to the supply of natural gas to supply curtailment (20 percent on Sui Network plants and 12 percent on Mari Network) to the fertilizer industry since May. Smooth supplies of natural gas to urea plants are essential to run the plants at 100 percent of their installed capacity for making urea available (as per requirement) at stable/affordable prices and for avoiding its import.893 26. India.664 Two/Three Wheelers 1. Three companies namely Sui Northern Gas Pipeline Limited.8 percent respectively. some urea plants produced substantially less than their production capacity. This has added annual production capacity of 1.Pakistan Economic Survey 2011-12 figures have started to recover.11: Production of Automotive Industry Installed 2010-11 Products Capacity (July-March) Cars 240.800.741 % Change 9.000 357 Trucks 28. and for this purpose. it was assumed that the country will attain self-sufficiency at least in urea availability because of the operationalizing of two new plants. the government had to pickup the price difference to equalize the prices of domestic and imported urea.8 -48.159 Jeeps 5. This policy of gas supply is adversely affecting domestic production of fertilizer and resulting in a price hike and increase in the import bill. As a result 1. However.500 2. it is estimated that the government spent around Rs.900 14. 2010. 3. 3. Africa.3 million tonnes per annum. has meant that the winter load shedding has increased from normal 45 days to 60 days.3-3 Fertilizer Industry The fertilizer industry.0 -6.268 Source: Pakistan Automotive Manufacturing Association (PAMA) 2011-12 (July-March) 110. The fertilizer sector is the second largest consumer of gas after the power sector. due to the curtailment of natural gas (the raw material for urea manufacturing).000 51. and Middle 46 . Hence.6 million tonnes of urea had to be imported by the government during 2011-12 to meet the deficit.031 Tractors 65.1 5.7 -44. The two other components of the automotive industry such as jeeps and trucks also showed dismal performance by registering negative growth of 44 percent and 6.1 The potential demand for vehicles in the economy is helping to grow the industry but it is highly dependent on the long term policy commitments.000 100. The table given below presents the comparative analysis of the sector. The government’s commitment with the industry would reflect in a new program which may bring new hope and opportunities for growth. The term of the current Auto-industry Development Program is expiring on June 30th 2012.971 371 439 1.840 620. Sui Southern Gas Company Limited and Mari Gas Company Limited are providing gas to the fertilizer sector.059 14. Table 3.0 3.000 602. Pakistan’s cement is being exported to Afghanistan.870 LCVs 43. being provider of one of the key inputs for crop production. in addition to spending foreign exchange for imports.3-4 Cement Industry The cement production capacity in Pakistan has increased to 44 million tonnes in 2011-12 from 30 million tonnes in 2006-07 due to the establishment of new cement plants.0 23. has significant importance in the country’s economy. At the beginning of 2011-12.8 million tonnes to the national installed capacity taking it to 6. And on the SNGPL system the rotational load management (shedding) of 15 days for fertilizer plants has also been observed. 45 billion as fertilizer subsidy in 2011-12. Natural gas is used as feedstock as well as fuel in the manufacturing of nitrogenous fertilizers. It may be added that the forthcoming opening up of trade with India would bring new opportunities as well as challenges for the auto-industry and thus a transformation is inevitable. Local Market (Cement) 21 22 20 23 22 11 Export (Cement + Clinker) 3 8 11 11 9 4 Total Production 24 30 31 34 31 15 3. the government had re invigorated the privatization program by focusing on a policy of “Privatization for the People. Export of cement is exempted from the Sales Tax and Federal Excise Duty (FED). Trusts have been registered in 64 entities. So far. The Privatization Commission. besides conducting privatization through the capital markets.Manufacturing and Mining East.000 employees of 78 SOEs will benefit from this scheme. the strategic sale of two entities. Out of these. unstable law and order situation and negative economic outlook adversely affected the investment climate in the country. is also exercising the traditional privatization mode i. the privatization program entered into an extended lean period due to domestic and global challenges. In addition.12 presents the production and utilization capacity along with the total production of cement. Unit Certificates have 47 . Thereafter. The transactions are at an advanced stage and the privatization process is expected to be completed soon subject to market conditions. 500 per ton Federal Excise Duty are being charged on the domestic consumption. It may be noted that the privatization program cannot be conducted in isolation and is highly dependent on both the domestic and international regulatory. However. Pakistan’s privatization program was the most successful program in the whole of South Asia. Central Asia and the Middle East as it successfully managed to complete approximately 167 privatization transactions. The transactions will be launched in the near future subject to market conditions. generating revenue of over US$ 9 billion. The key factors hindering the overall production capacity of cement industry are the energy crises and demand and supply mechanism.12: Supply (Million tonnes) Years Production Capacity Capacity Utilization(% age) 2006-07 30 80 % 2007-08 37 82 % 2008-09 42 75 % 2009-10 45 77 % 2010-11 41 76 % 2011-12 44 70% (July-Dec) Source: Ministry of Industries plant machinery and equipment for the manufacturing sectors is allowed at 5 percent customs duty. a 16 percent sales tax and the Rs. The import of coal used as fuel for the cement plants is allowed at 0 percent customs duty and 16 percent sales tax. offering 12 percent stock options to employees of 78 public organizations.e. which includes a secondary public offering of Pakistan Petroleum Limited and an Exchangeable Bond for the Oil and Gas Development Company Limited. Despite many challenges. the global financial crisis of 2008 and the on-going Euro zone sovereign debt crisis affected the flow of investment into the country. The last privatization transaction completed by the Privatization Commission was Hazara Phosphate and Fertilizers Limited (HPFL) in November 2008. financial. As per the investment policy of the government.5: Privatization Programme Pakistan’s privatization program was initiated in the early 1990s to demonstrate the government’s high priority to private sector development.” Under this program a renewed focus is placed on domestic capital market listings. Table-3. the Ministry has also initiated a landmark program for empowerment of employees of public sector entities in the form of the Benazir Employees Stock Scheme (BESOS). the import of Table 3. economic and political environment. It is expected that approximately 500. the Privatization Commission is actively pursuing a capital market road map. Internationally. the National Power Construction Company (NPCC) and Heavy Electrical Complex (HEC). Despite the challenges. Domestically. is providing technical assistance to SMEs in the relevant industrial units to upgrade their skills and improve systems. SMEDA as a government agency for SME development has been involved in various activities such as providing over the counter services to SMEs. In Pakistan. Efforts are for exploration and evaluation of coalfields in Sindh and Balochistan. Parallel to infrastructural support. gypsum. supplement power generation. SMEDA. construction mineralslimestone. precious and semi-precious stones.6: Small and Medium Enterprises SME-led economic growth has become the hallmark of economic prosperity and general wellbeing in the world. auto parts. absorbing 80 percent of unskilled labor. However. The most significant benefits to be derived from an expansion of the mineral sector activities are: expansion of employment opportunities. natural stones. The factors that impede development of the SME sector in Pakistan are well-known. helpdesk facilitation.756 employees of 50 entities. During July-March 2011-12. SMEs are globally recognized as critical for economic development and poverty alleviation. lack of support of concrete data and quantifiable research are making the task of securing attention of policy makers and key government stakeholders difficult. increase revenue flow to the provincial and federal governments. out of which Rs. in collaboration with international agencies like Japan International Cooperation Agency (JICA). Major sectors facilitated under the Industry Support Programme are: textiles (spinning. electric fans sector and furniture sector across the country. The total dividend received from the Trusts of 11 entities stands at Rs. nearly 99 percent of economic establishments are SMEs. Deutshe Gesellshaft Fur Internationale Zusammenarbeit (GIZ). Senior Experts Services (SES.Pakistan Economic Survey 2011-12 been distributed to 142. 1. technological up gradation and infrastructural support. Buyback claims received till date stand at Rs.7: Mineral Sector The production of minerals are important for the growth of mineral based industries due to their use in the other sectors of the economy such as energy minerals-coal. sportswear and apparel). 16 technical training workshops. expanding business opportunities for local industries. ranging from Pre-Cambrian to the present that includes a number of zones hosting several metallic minerals. Asian Productivity Organization (APO) and local experts.160 billion has been paid. 3. To revive industrial growth.45 billion. 6. SMEDA took the initiative of bridging this information gap through publication of the SMEDA Research Working Papers Series. and 48 . During 2011-12. Most important of these initiatives include approval of the first SME Policy of Pakistan and Infrastructural Development through Public Sector Development Program. 3. garments.79 billion (approx. industrial minerals. agriculture mineralsrock phosphate. and regional infrastructure development. To further boost its significance in the economic development process the government has introduced various initiatives to promote SME-led economic growth with the dual aim to accelerate industrial development and export diversification. These studies are aimed at enhancing the coal resource base. The government has extended special incentives for mineral development through public and private investment and facilitating private sector to contribute in this sector. which would convert into 1000 MW power plant. 4. These SMEs are collectively providing undeniable support to economic growth by contributing 40 percent to GDP and 30 percent to the exports from the manufacturing sector. a 100 MW power plant was established by using Thar coal deposits based on underground coal gasification.) out of which 50 percent has been distributed among employees of respective entities and the remaining 50 percent has been transferred to the Central Revolving Fund (CRF) of the Privatization Commission (PC). human resource development. whereas. technology transfer. In addition to these. Pakistan has a widely varied geological framework. seminars and awareness sessions were conducted. pozzolana etc. Germany). weaving processing. 27 industrial units have been the direct beneficiaries of this programme. 49 . up gradation/strengthening of Geosciences advance Research labs. The future programmes in the sector are: Reko Diq Cooper Gold Prospects. The indigenous problems faced by this sector are inadequate provision of the geological data base. limited mining experience and inadequate capital resources and finally the lack of infrastructure and security in geological promising areas.Manufacturing and Mining substitute furnace oil in different industrial units in the country. utilization of indigenous Iron ore resources at Nokkundi and Dilband area. exploring the hidden resources through private/multinational investment and. 7 percent. Accordingly. Going forward. 851 billion). during the course of the period the projection for fiscal deficit has been revised to 4. high public deficits and mounting debts. However the current global economic environment is characterized by a fragile financial system. ample liquidity and easy 1 monetary policy and most importantly restoration of confidence are urgently required for sustained economic recovery. sustained adjustment.9 percent in 2010-11. The global financial crisis and the policy responses of the governments around the world exemplified the potential role for fiscal policy to stabilize the global economy and to avert an employment collapse of the type witnessed during the great depression. unstable law and order situation. faced multifaceted challenges on external and internal fronts mainly campaign against extremism. In 2011-12 the fiscal deficit was projected to be 4 percent of GDP (Rs. 2012 51 . the fiscal situation was well contained. Global output is expected to increase by only 3. Consequently. It also helps to correct fiscal imbalances as well as promote investment and growth by optimal allocation of resources and through improving the tax system.5 percent in 2012 as compared to 4 percent in 2011 on account of the significant rise in sovereign vulnerabilities and deteriorated financial conditions in the advanced countries1. which largely remained impervious to the global financial crisis due to its lower exposure to international finance. Nevertheless. the emerging and developing countries are also expected to witness sluggish growth due to the worsening external environment and the weakening of internal demand. The fiscal deficit declined from 7. lingering energy shortages and non materialization of external inflows.Chapter 4 Fiscal Development The importance of a prudent fiscal policy cannot be overruled as it supports economic activity through sustainable growth and poverty alleviation. and strict control over expenditures. which can fund much needed public goods and services. Global Economic Outlook . a well structured fiscal policy ensures rapid economic growth and development in the country. However.6 percent in FY08 to 5. Efforts to manage the fiscal deficit within acceptable level through an expenditure management strategy. the non-tax revenues which depends on inflows into the Coalition Support Fund. Additionally the unprecedented calamity of floods in 2010 and torrential rain in Sindh in 2011 contributed further stress on the economy. achievement of this revised target depends crucially on the realization of the envisaged surpluses from provincial governments. April. Pakistan’s economy. The effective implementation of the policy endeavors to mobilize resources through taxes and public savings. austerity measures and reforms in public sector enterprises (Box-1) have yielded results. However. repair/maintenance and utilities by 20 percent of the budget estimates. 5. In this regard a nationwide BTB campaign is in progress. ` Containing fiscal deficit ` Elimination of general subsidies. entertainment. to be replaced by targeted subsidies ` Restructuring of public sector enterprises ` Power sector reform Improving domestic resource mobilization through. 2005. ` Benazir income support program ` Bait-ul-Mal ` Disaster management II. education and agricultural produce (Box-2). ` Transfer of concurrent subjects to provinces ` Equitable resource transfer to provinces Strengthening social safety nets through. Box-2 Revenue Measures The government introduced reform initiatives through presidential ordinance and withdrawal of SRO based exemptions. amendments were made in the Sales Tax Act. to create more fiscal space through the expansion of the tax base. Income Tax Ordinance. 1. health. 2011 to meet the growing need of flood affected people and to reach the assigned target. III. These reforms include: ` ` 15 percent surcharge on income and advance taxes Increase in the rate of special excise duty from 1 percent to 2. IV. stationery. In order to maintain the budgetary allocation of the development program a number of steps have been initiated such as curtailing the expenditure on traveling allowance. In addition. Expenditure Management Strategy through. various tax measures have been taken such as an exclusive and dedicated directorate general has been created specifically for broadening of tax base (BTB). however special excise duty was abolished in 2011-12 52 .Pakistan Economic Survey 2011-12 Box-1 Snapshot of Current Economic Reforms in Pakistan The government has undertaken various economic and financial reforms for economic stabilization. These measures were effective from 15th and 16th March.3 billion per annum.5 percent. the federal government has implemented the “Compulsory Monetization of Transport Facility for Civil Servants in BS-20 to BS-22” which will be help to save Rs. From these measures an amount of Rs. Similarly sales tax exemptions and zero ratings have been withdrawn for all major items except food items. It is also worth mentioning that as a part of the austerity measures. ` Harmonization of tax administration ` Strengthening risk based audits ` Improving efficiency of tax administration ` Broadening of tax base Achieving economic efficiency through devolution through. 1990.366 billion is expected to be saved during the financial year 2011-12. These include:I. advertisement. 2001 and Federal Excise Act. 3† 17. which is expected to be achieved as the total collection during first 53 .9 16. leather. For more than a decade now the low tax to GDP ratio has been a major economic issue confronting Pakistan. 29. * : Include earthquake related expenditure worth 0.5 9.1 3.8 4. The overall tax to GDP ratio has varied between 9.1 2. tractor and elimination of zero rating from plants.3 16. machinery and equipment ` Restriction of zero rating to registered person for export of textile.9 FY10 3.5 9.7 2.0 3. pesticides.8 12.8 and 0.7 2.4 3. Pakistan is characterized as having the lowest tax to GDP ratio not only amongst the peer countries but also in the region.7 FY05 5.4 13.0 10.3 4.5 5. 50 billion during July-March.5 FY12B Notes ^: The base of Pakistan’s GDP has been changed from 1980-81 to 1999-2000. which may crowd out private investment.0 14.1 6.6 22.6 13.6 10. The absence of an efficient tax system discourages well documented investment and compels the country to rely on continuous borrowing from internal and external sources to finance the budgetary deficit.8 14.5 percent of GDP for 2005-06 and 2006-07 respectively. the government is committed to increase this ratio by introducing various additional tax measures such as: monitoring and risk based audit.1 10. strengthening electronic payment.0 10.8 10.3 16.4 3.3 3.8 14.8 13.3 2.7 18. close watch on Afghan transit trade and recovering arrears etc. carpets.8 4.4 percent mainly due to structural deficiencies in the tax and administration system. therefore.5 to 11.Fiscal Development Withdrawal of special regime of assessable price for levy of GST at 8 percent on actual value of sugar Removal of SRO based exemptions from fertilizer.7 FY07 3. † : Statistical discrepancy (both positive and negative) has been adjusted in arriving at overall fiscal deficit numbers.6 15. Source: FBR ` ` These measures yielded a total of Rs. B : Budgted However.1 FY09 3.6 percent since 2007-08.7 3.2 FY04 9.1 13.0 14.5 14.5 15.5 13.6 FY01 3. FBR Tax collection has shown a significant growth of 54. wherever GDP appears in denominator the numbers prior to 1999-2000 are not comparable.3*† 18.1: Fiscal Indicators as Percent of GDP^ Expenditure Revenue Year Overall Real GDP Fiscal NonTotal Growth Tax Total Current Development Deficit Tax Rev.2 18.9 10. 1.8 5. For the current fiscal year 2011-12.2 16.4 3.9 19.2 4.7 5.7 7.7 4.8 14. Fiscal Policy Development Tax as a major source of revenue and growth plays a vital role in building up institutions and markets.7 3.4 FY08 1.5 3.1 4. 1.6 FY06 6.3 FY02 4.1 FY11 3.6 14.1 10. A good tax system not only helps in equitable distribution of economic benefits for social justice but also attracts investment at all levels of business activities. 2011-12.4 billion during 2010-11.3 20. the target of Rs.0 4.3 19. sports goods and surgical goods.0 5.8 11.008 billion in 2007-08.952.9 10.3† 16. 2.0 18.4 20.1 4.0 3. These measures helped the FBR to collect Rs.2 11.5 2.8 16. Table 4.8 14.6 4.4 14.8 3.2 2.4 15.0 billion has been set.5 3.3† 18.5 2.5 13.4 FY03 7.1 3.558 billion during 2010-11 against Rs.0 3. The withdrawal of exemptions and the left over amount of 15 percent flood relief surcharge contributed an additional amount of around Rs. 1. 2 billio on set for the e fiscal year r 2011-12. 2012) 2 about Rs.Pakistan Economic E Sur rvey 2011-12 2 hs of 2011-12 2 stood at Rs. expenditure es and the fiscal defi icit indicates a notable cha ange.8 billion in n the compa arable against period of last year r. R 300 billion were allocated by y the fede eral ent to the PSDP and no o cut has be een governme imposed.747. .9 perc cent in 2010-11 on accou unt of reducti ion in develo opment expen nditure. The fiscal deficit witnessed considerable deviation d fro om its origina al target due to some stru uctural deficie encies .0 billi ion ten month excluding g Rs 19 billion of sales tax t on servic ces collected by the Sin ndh Revenue e Board (SR RB) Fig-4. . 300 bi illion. 1. This acco ounts 73 per cent c of the tot tal allocation n of Rs. the fisc cal position last l year in terms t of key y fiscal indi icators such as revenues. R 219 billi ion committed for the Public Sec ctor Developm ment Program m (PSDP) has s been released. show wing an over rall decline since 2007-0 08.1 4 suggests th hat as a perc centage of GDP G the total expenditu ures remained in a narrow w band durin ng the last five fi years.6 pe ercentage points of GDP) during the past p four ye ears. The decl line in total expenditure e (3.6 perce ent in 2007-0 08 to 5.0 percent tage points of o GDP) is shared by cu urrent expend diture (2 per rcentage poin nts of GDP) ) and develop pment expend diture (1. 3.2 2 percent of GDP G in 2007-08 to 19.0 billion against the e budgeted estimates of f Rs.0 percent t.0 perce ent in fiscal year 2011-12.1: Fisc cal Deficit 23 22 21 t Rs. 2011-12 per riod total exp penditures sto ood at Rs. Every eff fort has been n made to pro otect the PSD DP program. During the first nine months of the t current fi iscal year (Ju uly-March. Table 4. This is an n increase of f 24. During the current fiscal year Rs. ayments.9 billion against Rs.721.6 641. On the e other hand the expendit ture to GDP ratio witness sed a simil lar pattern to t that for total expend ditures. During JulyMarch. However. De espite the larg ge demands for governme ent spending on subsidies (electric city subsidie es). 2.870. 1. The fis scal deficit ha as declined from fr 7. secu urity and floo od related issu ues interest pa (rehabilita ation and reconstruction) the governme ent has suc ccessfully brought b dow wn the to otal expenditu ures from 22.2 pe ercent in 201 10-11. These are expected d to decline to o 18.5 5 billion. 2. it was w well cont tained during fiscal year 2010-11 2 desp pite the chall lenges faced due to the e flood and d security re elated expend ditures.149. . 1. . Conseq quently the budget b defici it widened during d the pas st four years. Total Revenues 20 19 18 17 16 15 14 13 12 FY00 FY01 1 FY02 FY0 03 Expendi itures Fi iscal Deficit R Revenue FY04 FY Y05 FY06 F FY07 FY08 F FY09 FY10 FY11 FY12B Despite th he numerous challenges the t country has h faced sin nce 2001 including the continued and a intensified d security iss sues. During D the period p under review total l revenues were w Rs. 54 On the e revenue sid de the tax to o GDP ratio either remain ned stagnant or showed a secular de ecline.426. which not on nly gives imp petus to pove erty reduction but als so creates employme ent opportuni ities. 2 45.3 {60.6 47.6} {12.2: FBR F Tax Rev as a % of GDP 10.8} 238.0 {25. Howev ver.9 9. Billion) B Year Tax Rev v as % irect Di Total (FBR R) of GD DP Ta axes 124.7} {18} 195. .3} 91.2).4 8.7 [67.1] 225.2 {63. H the government is committed d to contain n the fiscal deficit throu ugh several measures m as well as to put the t economy on a high gr rowth trajecto ory. elimination of subsidies s (specially the t power sec ctor subsidies s).3} 132.5 2001-02 40 04.8 perce ent (Table 4.3 9.1 {57. These in nclude auster rity measures.6 2000-01 39 92.3} 47.1 2003-04 52 20. At present the t country has h a narrow w tax base.4 {28.6 49.6 and a 9. the e tax to GDP ratios varied between 8.6 [64.7] 308.3] 151.2 [35.5 53.8 {63.6} 115.0 4 perce ent to 4.2] 261.7 333.5 [68.8 To otal 267.0} 294.1 9.2} {14.7] 183.5 9.7 perc cent of GDP.5 Percent 9.4 [31.6 [33.0] 355.4} {18. the massive floods in 2010 and 20 011 have put an enormous s strain on public p financ ces due to the t unexpecte ed expenditur res to meet th he rehabilitati ion and reco onstruction needs n and resulted r in the t upward ad djustment in the fiscal def ficit target fro om Fig-4.9 2002-03 46 60.3} 166.8 {18.8 [68. However.6 9.5 55 .0 {24.1 44.0 2005-06 71 13. 9. Although revenue colle ection has inc creased in recent years.3 Indirect Taxes s Sa ales Exc cise 153.Fiscal Develop pment in the tax x system.8 {22. restructurin ng public sec ctor enterprise es and power r sector refo orms. .4 2004-05 59 90.2 9.7 Cus stoms 65.0] 165.3} {11.3] 407.5 8.5] 513.4 71.5} 219. broadening of the tax base through tax t measures.0 [68.9 [30.3} 309.4 [31.7 [68.8 55.4} 138.6 {61.4 {28. Structu ure of Tax Revenues R An ef fficient tax system is vital for ra aising sufficie ent revenu ues to fi finance ess sential expend ditures withou ut recourse to o excessive public p sector borrowing.3} 68.2 [31.5] 2006-07 84 47.1 {58.6} {13. larg ge additional subsidies to the t electricity y sector and d support to o public sec ctor enterprise es (PSEs).2: Structure of Federal Tax Revenue R (Rs.8] 142. massive tax t evasion and admini istrative weak knesses due to the chall lenges faced in i the imple ementation of f an efficien nt and effectiv ve tax system m.0 2001-02 2002-03 2003-04 4 2004-05 2005-06 2006-07 2007-08 2008-0 09 2009-10 20 010-11 2011-12B B Table 4.0 8.9] 488. 6} Customs {25. universal self-assessment.0 {17.3 {20.0 [61. the government has 56 placed Tax Administration high on its reform agenda.8] Under the present tax system. some sectors are under-taxed and others are not taxed at all. Customs and excise duties have registered a gradual decline on account of the tax and tariff reforms with excise and custom comprising only 8. During July-April.5 percent and 10. The policy reforms include simpler laws. The ratio can only be increased substantially if the major contributors to GDP growth not included in the tax net can be brought into the tax system.7] 745.2 [61. On the other hand the composition of taxes has been rationalized with a gradual decrease in the dependence on foreign trade taxes and a simultaneous increase in GST.2: Structure of Federal Tax Revenue (Rs.5 2008-09 1.2 8.327. This distortion is being addressed. In pursuance of tax reforms FBR has been restructured on functional lines.8} 150.7} 160.0 {70.8} Total [60.1 [38.9} 451. (iii) Audit.558.4 [60.0} 184.8 [38.6] 620.4 {66.Pakistan Economic Survey 2011-12 Table 4.7 117.6} 633. (ii) Information Management System (IMS). 2001 appointed professional members from private sector for (i) Human Resource Management (HRM). Billion) Year Tax Rev as % Direct Total (FBR) of GDP Taxes [39. 2011-12 indirect tax to GDP ratio stood at 4.8 {64.9 {19.3} {14.6 percent.008.1 9.6} {11.6 [38.3 percent in 2010-11.4 9.4 {20. deliver quality public services or improve human resources to reach a take-off stage for economic development.8] 801.6 percent respectively in 201112.5] 443.161.0 9. Reform Strategy The reform strategy had three main planks (a) policy reforms.2] Source: Federal Board of Revenue [ ]as % of total taxes { } as % of indirect taxes Indirect Taxes Sales Excise {60.1 9. Moreover. increase effectiveness of FBR.9 2007-08 1.4} 516. (iv) Facilitation and Taxpayers Education (FATE) and (v) Fiscal Research and Statistics (FR&S).4} 852.6 percent in 2010-11 and expected to be about 9.3 percent and direct tax to GDP ratio recorded at 2.5 [38.3} {14. and improve skills and integrity of the workforce and facilitation of taxpayers.4 137. the internal tax system has undergone substantial changes as the share of income tax has risen significantly from around 32 percent in 2000-01 to 38.7 [61.4} {15. With a view to supplement the level of skills in the FBR.6 [61.5] 717.0 [39.952.7 {24.0 140. The administrative reforms aim (i) to transform income tax organization on functional lines.9} {16. Pakistan’s tax to GDP ratio stood at around 8.0 2009-10 1.3percent and direct tax to GDP ratio at around 3. less dependence on withholding taxes and effective dispute resolution mechanism.2] 526.3} 215. To address this issue and others including debt servicing and defense needs. The FBR has prepared a new recruitment policy (with greater emphasis on skills that match . elimination of exemptions. reduction in number of tiers and reduction in the workforce.4 92.4] 955.1 {60.3} 148.3] 1207.3 124.9} {14. the government in March-April. (b) administrative reforms and (c) organizational reforms.6] 602.0 2011-12B 1.2 percent in 2011-12. The organizational reforms also included reorganization of the FBR on functional lines. Tax Reforms The low tax-to-GDP ratio restricts the country’s ability to counter inflation.4] 387.5 percent of GDP in 2011-12. The indirect tax to GDP ratio stood at around 5.5 2010-11 1. (ii) re-engineer manual processes of all taxes with the aim to reduce face to face contact between taxpayers and tax collectors.0} 377.5 {62. the FBR has established Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to test the reorganized structure of income tax and sales tax and Taxpayers Education and Facilitation Centers to improve voluntary compliance.5 million. • E-Notices and feedback to taxpayers. courtesy. increase in transparency and integrity. responsiveness. Facility for online filing of goods declarations and a website for information dissemination and helpline for taxpayers have been established (see Box-3). Simplification of Income Tax Law. Broad objectives of reforms included overall increase in the revenue collection/tax-GDP ratio. FBR through its reform program is strengthening audit and enforcement activities. facilitate and promote voluntary compliance with tax laws and provide transparent and high quality tax services. Box-3 Major Achievements under TARP General • • • • • • • • Income Tax • • • • • • • • Automation a. Gaining stakeholders respect.Fiscal Development FBR needs). Rules and Forms. Facilitating and providing service to the taxpayers. • 100% e-filing of sales tax invoice summaries. Reducing the cost of doing business. Moving towards optimum use of automation and IT. teamwork. Introducing professionalism. Self Assessment Scheme introduced. Customs processes have been re-engineered and Customs Administration Reform (CARE) was started which has minimized the time of clearance of goods and reduced the cost of doing business. Efficiency of the department improved with the introduction of working on functional basis. Infused confidence among taxpayers through regular facilitation and tax education which has bridged the gap between taxpayers and tax collectors. Computerized and updated taxpayers profiles. Creation of an enabling environment for various stakeholders To achieve reforms objectives. Integrated Tax Management System (ITMS) • 100% e-filing of corporate income tax returns. guarantee fairer and more equitable application of tax laws. Improved voluntary compliance and number of compliant taxpayers increased to more than 2. • 100% e-filing of Sales Tax returns. integrity. Creating business friendly environment. • E-Payment. strengthening audit and enforcement procedures. Reduced contact between tax officials and taxpayer. 57 . • E-Registration. broadening of the tax base. incentive and merit based remuneration and promotion mechanism and extensive training. Tax base widened. transparency and fairness. Share in total Revenue collection increased. 2011-12.7 8.1 3.9 4.0 -2.7 -3.6 22.7 2. It is expected to increase further on account of a settlement of circular debt issue.4 5.5 2.5 -1. continued security related issues and higher subsidies.6 1.1 2.2 4.6 5.5 17.3 4.3 -2.7 2.0 1.1 13.2 -1.6 7.6 2.3 13.7 11.4 4.8 5.4 6.0 18.8 -1.5 -0.0* -3.8 5.2 18.5 11.3 3.6 15. • Availability of country wide referential import value data.4 20.8 3.5 0.7 10.4 16.5 18.4 2.2 13. Audit case selection through Nexus Business Intelligence System.3 15.1 16. actual disbursement against the budgeted subsidy of Rs.4 billion set for the current fiscal year 2011-12 stood at Rs.8 3.4 3. 391 billion on account of debt consolidation).5 -0. Customs Automation • E-filing.8 16.2 1.4 15.5 4.5 2.3 4. • On-line Bank Payment System (24 NBP nation wide booths).4 3.3 B Budgeted * Budgeted number is revised to 4.1 0.3 4.8 3.Pakistan Economic Survey 2011-12 • • Risk based refund processing (Pilot Project). During July-March.3 3.0 5.8 5.3 12.2 19.9 -3.3 3. • System based random marking of examiners and appraisers.0 9. 103 billion (excluding Rs. in Pakistan.9 17.1 14.8 -2.5 2.5 1.9 3.7 13. • Electronic access to consolidated data to different stake holders. economic stabilization and growth.9 6.7 percent of GDP 58 .2 -1.9 2. paperless workflow and risk based selectivity.9 20.3 0.4 4.6 2. • Elimination of GD filling fee.5 12.0 3.4 0. Source: FBR Review of Public Expenditure Public expenditures are significant for provision of social services. The permanent solution of the circular debt issue requires the rationalization of electricity tariff and improving the overall efficiency of the energy sector.6 -0.0 10.0 16.0 9.8 18.5 -2.2 3.8 13.0 -0.3 14.4 6.3: Trends in Components of Expenditure (as % of GDP) Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12B Total Current Interest Defence Expenditure Expenditure Payments (A) (B) (C) (D) Revenue Development Non Interest Primary Deficit/ Expenditure NonFiscal deficit Surplus Defence Exp Deficit (TR-NI (TR-Total (E) (A-C-D) Exp) CE) 18.7 2.0 3.3 7.8 3.5 4.5 2.0 4. • Post Clearance Audit (PCA) introduced. • Nationwide e-filing.7 16.3 5. However.0 16.6 -0. public expenditures remained under tremendous pressure during 201112 owing to flood related expenses.1 4.3 3. Table 4.7 -1.3 19.2 18.8 2.2 2. 166. b.3 3.8 4. 3 1.8 19.1 billion or 10.154. Actual July-March 2011-12 1.8 percent (Rs.5 percent in 2010-11 and are likely to remain slightly below this level in 201112. The share of current expenditure in total expenditure has declined significantly from 89.1 352. The fiscal situation was further aggravated by the domestic and external imbalances together with the deteriorating security environment. 2.0 Growth (%) July-March 2011-12 16.8 23.8 9. 495.6 1.2 Federal 2.0 b) Non-Tax Revenue 719.016. During July-March. These are expected to decline further by 4 percent due mainly to the substantial fall in interest payments.909. Total Revenue 2.5 percent of current expenditure in 2010-11.9 percent to 84 percent in 2010-11. It is.0 Provincial Tax Revenue 77.8 377. However in absolute terms defense expenditure rose to Rs. unprecedented floods in 2010 and massive rains in 2011.Interest 791. 1.1 billion or 19. Total Expenditure 3.1 42.0 1.4 23.2 percent of GDP in 2010-11 as compared to Rs.379.870.3 Federal 2.Defence 495. Total expenditures are expected to decline by 18.9 billion or 3.3 percent of GDP in 2009-10.481.9 2. Table 4.006. 3.7 624.7 507.345. 517.6 1.747. persistent inflationary pressures.7 21. the allocation for development expenditure is 3.5 348.1 3.8 1. current expenditure were Rs. 2011-12 current expenditures stood at Rs.6 billion during 2010-11 from Rs.0 25.5 34. Development expenditures in fiscal year 2010-11 remained at Rs.4 percent of GDP. therefore.4 335.455.0 b) Development Exp.0 billion or 16.7 Prov.478.8 percent of GDP as compared to Rs. Pakistan has witnessed a sharp deterioration in fiscal indicators during the past few years due to the revenue-expenditure gap.8 billion or 10. 2.154.6 percent of GDP in the same period of fiscal year 2010-11. 3.641. The decline came from noninterest-non-defense spending.2 of which FBR Revenues 1. important to revamp the strategies of domestic and external financial resource mobilization through tax and non-tax instruments.151. 375.6 percent of GDP.1 billion or 2. As a percentage of GDP defense expenditures were 2.0 . In the current fiscal year's budget. Nevertheless the budget target is set at Rs. 2.2 a) Current Expenditure 2. 506.4 Consolidated Revenue & Expenditure Budget Estimate 2011-12 A.721.3 B.1 percent of GDP compared to Rs.3 .6 367. It is worth mentioning that despite the unplanned expenditures due to flood related activities at the start of the current fiscal year.6 16.2 Provincial 960.074. the expenditures as percent of GDP remained at 12.900.Fiscal Development Total expenditures (TE) stood at Rs.2 billion for 2011-12 which is around 2.8 1. 2.8 12.9 Prov. Actual July-March 2010-11 1.020. Current expenditures (CE) are expected to remain at 14.7 billion or 20.641.1 1.495.0 billion in 2009-10. & net lending 744.7 2. 450.5 a) Tax Revenue 2.074.6 -2.8 percent of GDP in 2009-10.4 57.280.3 59 .262.5 percent of GDP in 2009-10. Defense expenditures accounted for 15. Similarly insufficient external inflows have resulted in increased reliance of government on domestic resources.4 428.4 percent of GDP in fiscal year 2011-12.1 564.321.2 1.0 675.8 billion or 16. 2011-12 At present Pakistan is confronting unsustainable fiscal deficits and unabated debt service charges on account of both external and internal challenges including electricity and gas outages that have restricted the overall growth of the economy. During fiscal year 2010-11.4 percent of GDP compared to Rs.952. Fiscal Performance: July-March.9 23.909.0 percent.117.976.5 1.9 2.9 billion) during JulyMarch 2011-12. 3 5. 673. On the other hand non tax revenue declined by 2. 367.5 percent during the period under review.654 Growth (%) July-March 2011-12 52.5 783.2 -43.6 . showing growth of 30.0 billion compared to Rs. Within indirect taxes.641.3 billion in the same period of fiscal year 2010-11.5 GDP at Market Prices 21.5 35. which increased by 25.4 383.9 billion during July-March. 462.6 45.1 700.9 percent of the total FBR tax revenues.1 percent and 24. Actual July-March 2010-11 246.3 percent and 22.426.7 20.5 443.262. 2010-11 to Rs.6 percent and 33.9 C.9 percent respectively.2 -90. The increase is mostly due to a significant rise in FBR tax collection.8 billion and Rs. This reflects 24. voluntary payments and collection on demand. It has accounted for 62. The fiscal deficit as a percentage of GDP stood at 4.0 billion despite 60 the major challenges to the economy due to the dearth of electricity and gas.6 percent respectively during the first ten months of 2011-12.6 percent as it stood at Rs. total revenues grew by 16.Pakistan Economic Survey 2011-12 Table 4. 2.8 18.0 billion and Rs.9 4. 47. Total expenditures were recorded at Rs. Finance Division and FBR Prov.1 316. 1.1 40.6 i) External Sources 134. the gross and net collection of indirect taxes has witnessed a growth of 23.558 billion during 2010-11.4 14. 2011-12 net collection stood at Rs.2 -4.6 As % of GDP 4.8 percent during July-March 2011-12 and stood at Rs. FBR Tax Collection FBR tax collection for the fiscal year 2011-12 was targeted at Rs.1 billion respectively. 635.033 Prov.747.5).7 percent.7 billion in the same period last year.495.4 847.3 4. 2011-12.Bank 412. 1. growth in sales tax increased by 33.5 ii) Domestic 716. 2011-12 compared to Rs.2 14.7 percent respectively over the corresponding period of 2010-11. 1. 1. Direct Taxes The gross and net collection of direct taxes has registered growth of 31.3 percent against 4.2 14. 2011-12. Indirect Taxes During July-April 2011-12.5 783.9 Other Development 97. The gross and net sales tax collection during July-April 2011-12 reached Rs.952 billion which was higher by 25.5 According to the consolidated revenue and expenditure statement of the government.4 6. 377.3 894.9 billion in July-March 2011-12 from Rs.9 billion respectively during July-April.8 percent.0 percent growth over Rs. Of the net collection. During July-April.4 Consolidated Revenue & Expenditure Budget Estimate 2011-12 PSDP 639. The gross and net collection increased from Rs. 431.1 c) Net Lending 7.3 in July-April. 607. 2.5 percent during the same period of fiscal year 201011.3 percent over the actual collection of Rs.042 Source: Budget Wing.a net decline of 43 percent.9 billion and Rs.9 47. Major revenue spinners of direct taxes are withholding tax.4 27. 44.0 Financing of Fiscal Deficit 850.8 403. 1.7 70.149.4 billion .6 billion in the same period last year posted a growth of 16. Actual July-March 2011-12 375.8 billion collected during the same period last year (Table:4. 528. Insufficient external financing shifted greater reliance on domestic resources to finance the budget deficit during July-March. 1.0 21.8 percent of total sales tax was contributed by sales tax on domestic .Non-Bank 303. External resources for financing the budget deficit amounted to Rs. Overall Fiscal Deficit 850.3 83.1 .9 894. E) July-April 2010-11 2011-12 462.0 1. telecom services. 2011-12.7 -6. textile materials and organic chemicals.3 766. vehicles.426.8 78. edible oil.207.5 17.5 billion respectively during July-April.0 852.April. The major revenue spinners of custom duty have been automobiles. DIRECT TAXES Gross Refund/Rebate Net 602.0 73. The major revenue spinners of FED are cigarettes.0 1. cement and electrical Table 4. the major contribution came from POL products.0 102.3 40.5 percent has been recorded in the net collection of Federal Excise Duties (FED) during July. organic chemicals and oilseeds contributed significantly to the collection of sales tax from imports.9 TOTAL TAX COLLECTION Gross Refund/Rebate Net 1.092. paper and paperboard.6 1.1 1. 1. cigarettes. edible oil. plastic.9 943.6 33.8 0.3 475.0 102.9 30. 2010-11 to Rs.7 percent higher than the outlay of Rs.6 billion during JulyApril 2011-12 as against Rs. while the rest was derived from imports.3 74.2 FEDERAL EXCISE Gross Refund/Rebate Net 137.5: FBR Tax Revenues Change A.6 141. POL product and services. sugar.3 CUSTOM Gross Refund/Rebate Net 184.435 billion.2 0. 166.5 B.8 in both gross and net terms. petroleum products.9 607. 1.0 37.2 17. A negative growth of 6. plastic.1 % Change energy.2 897. 102. fertilizer.2 149.2 673.4 68.6 8.Fiscal Development goods and services during July-April.9 635.9 718. The gross and net collection has increased from Rs.0 745.2 125. fertilizers.6 174.2 percent and 17.5 74. The net collection stood at Rs.179 billion last year 61 .5 1.2 Source: Federal Board of Revenue (FBR) 2010-11 (Actual) 2011-12 (B.4 46. 21.6 515. Within net domestic sales tax collection.2 billion during the same period last year. natural gas.2 95.0 215. other services.3 71.1 SALES TAX Gross Refund/Rebate Net 633.8 42.4 billion during JulyApril. cement. On the other hand POL products. beverages.1 95.3 -6.0 24.3 -57.1 77.0 billion and 141.4 B. iron and steel.4 B. machinery. 174.6 431.149.4 1.551.5 47.952. 95. 2011-12. machinery.0 Custom duty collection has registered a growth of 17. Provincial Budget The total outlay of the four provincial budgets for 2011-12 stood at Rs. beverages.7 B.558. INDIRECT TAXES Gross Refund/Rebate Net 955. iron and steel.1 24.9 31. 2011-12. 149. Rs Billion Achievement (Percentage) 31.9 528. natural gas.3 22.6 23.1 166.0 7.0 140.6 billion and Rs. 6 359.8 1179 192.7 35.7: 4.6 957.7 -2.2 1.6 1435.2 26.8 b) Development Expenditure 262.6 -7.3 17.3 90.0 697.3 25. On the other hand the consolidated fiscal balance deteriorated during July-March. 65 billion compared to Rs. Budget Wing Punjab witnessed the highest increase of 24.7 C.3 397.4 387.9 722.1 101.2 119. This has not only allowed the transfer of more funds but also widen the range of responsibilities from the federation to the provinces.073.9 61.1 45.8 Total Exp (a+b) 759.4 296.0 1.8 99.2 88.7 1203.5 46. Baluchistan (20. 1.2 997.9 116.8 654.6 32.4 percent in budgetary outlay.5 149 74.8 46. Acount Total Exp (a+b) (Rs Billion) Punjab Sindh KPK Baluchistan Total 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12. .1 139.1 27.8 3. Total Tax Revenue Provincial Taxes Share in Federal Taxes B.2 19. Billion 2010-11 FY10 FY11 13. Non-Tax Revenue C.2 a) Current Expenditure 497.3 percent).5 1073.0 314.6 625.1 65.9 704.9 76.8 521.3 110.1 Source: Provincial Finance.2 203.9 191.0 20.6 23.179.2 62.2 107.6 -61.4 percent in 2009-10.5 percent compared to last year.9 3.2 225.3 68.6 882.9 1.165.5 percent). Account ii) Cap.0 234.Pakistan Economic Survey 2011-12 Table 4.4 35.9 54.0 3.0 The accelerated growth in revenues was mainly due to the increase in the provincial share in federal revenues under the 7th NFC award. Budget Wing Rs.1 0.4 0.5 111.7 204.3 57.7 13.0 1. This devolution refers to the devolution of responsibilities for public spending and revenue collection from the central to the local governments.8 281.404 billion.0 65.3 76.9 1291.357.4 19. which is up by 20.4 -13.4 58.6 200.1 114.3 526.8 3.2 334.5 13.2 -17.8 554.3 3.6: Overview of Provincial Budgets Items A.2 882.0 85.3 Provincial Taxes 50. 2011-12 and stood at Rs. During 2010-11 provincial revenues witnessed a growth of 34 percent compared to 20.6 49.7 11.4 57. All Others 48.7 20.2 283. or the transfer of fiscal power from the national government to the sub national governments. Total Tax Revenue 504.1 1.2 195.7 346.0 285.7 2.3 127. Allocation of Revenues between the Federal Government and Provinces Fiscal decentralization.2 45.1 612.8 -0.6 296.2 Total Revenues (A+B+C) 611.9 2.4 310.6 12.5 138.7 89.9 324.8 51.9 -7.7 220.2 92.0 27.3 54.Years Overview of Provincial Budget Growth Rates (%) Items 2007-08 2008-09 2009-10 A.6 81.0 95.0 31. is considered to be an 62 effective tool to improve efficiency in the public sector and to stimulate economic growth.6 58.8 B.4 160. The overall provincial revenue receipts for 2011-12 are estimated at Rs.5 1.4 156.9 37.7 39.1 667. All Others Total Revenues (A+B+C) a) Current Expenditure b) Development Expenditure i) Rev.5 688.0 56. 115 billion recorded in the same period of 2010-11. Non-Tax Revenue 59.2 52.6 Share in Federal Taxes 453.5 463.1 31. In 2010 the government took a major step towards fiscal decentralization by signing 7th National Finance Commission (NFC) award between the federal government and provincial governments and by passing 18th Constitutional Amendment.0 291.7 1404.7 628. The growth in total expenditure has outpaced the significant growth in revenues.4 122.6 434.2 11.6 576. followed by Sindh (22.4 5.002.4 477.7 Source: Provincial Finance.8 1165.8 870.4 34.6 1.6 141.4 424.2 10.2 1.1 72.1 997.0 48.3 percent) and KPK (14.2010-11 2011-12 2010-11 2011-12 RE BE RE BE RE BE RE BE RE BE 502.9 5.5 21. Table 4.8 277.4 100. 5 32. which include medium-term indicative budget ceilings for the recurrent and development budgets. The distribution of the resources has been made on multi–weighted criteria which consist of population (82 percent).3 percent in 2011-12 over the actual transfer of Rs. Firstly.022.270.2 82.6 2010-11 834. Billion) 2011-12B 1.1 21.4 38. Also. has upgraded the committee which is now chaired jointly by the Secretary Finance.2 1. the financial autonomy of the provinces has been ensured by increasing their share in the divisible pool from 50 percent to 56 percent in 2010-11 and 57. The committee now discusses both the recurrent and development budgets with increased focus on policy priorities.8: Transfers to Provinces (NET) Divisible Pool Straight Transfer Special Grants/ Subventions Project Aid Program Loans Japanese Grant Total Transfer to Province Interest Payment Loan Repayment Transfer to Province(Net) Source: Budget in Brief.1 1. the Priorities Committee meeting was headed by an Additional Finance Secretary (Budget) and would discuss only the development budget in detail.6 26.7 15. The OBB also presents key performance indicators for the outputs to introduce government wide monitoring system.9 Under the 7th NFC award.0 626.5 percent from 2011-12 onwards.3 18.7 163.0 54. Total transfers to provinces have been projected to increase to Rs. 2011-12 2008-09 477. Secondly.9 159.0 0.270.4 40.073. The Output Based Budget (OBB) has also been institutionalized in the federal government which presents policies of the ministries in the shape of goals.7 percent). While the share of the federal government in the net proceeds of the divisible pool stood at 44 percent in 2010-11 and 42. revenue collection/generation (5. outcomes.2 16.7 24.7 18.9 1. poverty/backwardness (10. and political parties. In addition to the above.8 18.313. 1.9 0.022.4 82.3 2009-10 574. the reform program is working with the Planning Commission to implement strategic planning processes in line ministries and introduce an Apex Monitoring and Evaluation function in the government to monitor service delivery and outcomes. outputs and medium-term budgets. the following important developments have been initiated as part of the reform program: 63 . the medium-term fiscal framework and budget policies have been incorporated into a medium-term Budget Strategy Paper on rolling basis.0 587. The MTBF reform.4 1. Secretary Planning and Secretary Economic Affairs Division.0 16. The reform program is also interacting with PIFRA (Project to Improve Financial Reporting and Auditing) to introduce SAP based budgeting in the line ministries. Standing Committees on Finance & Revenue.9 billion.0 0.8 (Rs. The political level involvement includes cabinet. an increase of 24.3 0.1 81. Before the reform program. and provides an opportunity to discuss the budget between the technical and political levels prior to the presentation of the annual budget.0 0.0 0.6 0.043. 1.0 753. the Priorities Committee has been upgraded.5 21.0 710.0 percent) and area or inverse population density (2.8 billion in 2010-11.Fiscal Development Table 4.3 percent). Similarly the MTBF reform program has drafted the Public Finance Act to legalize the MTBF reform program.5 percent from 201112 onwards.6 27. Medium Term Budgetary Framework The MTBF has improved the budget preparation process.4 55. Various external factors contributed to this revision. which would only discuss project funding prior to the MTBF has been upgraded and is chaired by Secretary Finance. the non-tax revenues which depend on inflows into the Coalition Support Fund. energy shortages. The achievement of the revised deficit target depends crucially on the realization of the expected surpluses from provincial governments. This allows greater focus on strategic economic and budgeting agenda of the government. The Budget Strategy Paper (BSP) is discussed with political parties. government efforts to contain the fiscal situation were effective and fiscal deficit has remained within acceptable level through an expenditure management strategy. austerity measures and reforms in public sector enterprises.Pakistan Economic Survey 2011-12 ` The Priorities Committee. ` ` Conclusion Fiscal policy has the potential of playing a crucial role in spurring economic growth and poverty 64 . However. domestic security concerns. Secretary Planning and Secretary Economic Affairs Division. alleviation.6 percent in FY08 to 5. The upgraded Priorities Committee discusses policy priorities of the Principal Accounting Officers together with medium-term budgets. and upheaval in the global economy.7 percent. Pakistan’s economy has fared well in terms of fiscal deficit in the recent past. 851 billion). growing burden from the campaign against extremism. reducing deficit from 7. for instance. The Budget Strategy Paper (BSP) is discussed with Parliamentary Standing Committees on Finance and Revenue. and strict control over expenditures. This process improves parliamentary input into the budgeting processes of the government. economic advisory council and chambers. during the course of the period the projection for fiscal deficit has been revised to 4. In fiscal year 2011-12 the fiscal deficit was projected to be 4 percent of GDP (Rs. unprecedented natural disasters. Nevertheless.9 percent in 2010-11. Global Financial Stability Report. April 2012. all these factors along with the global financial crisis caused a deceleration in the investment rate. economic activity in emerging and developing economies remained relatively vigorous on account of strong internal demand. but also for the ability to access safe assets. Similarly. IMF. the number of countries whose debt is considered safe has fallen. Hence policy makers should strike a balance between the desire to ensure the soundness of financial institutions and the costs associated with potential overly rapid acquisitions of safe assets to meet such goals. Because of this. the central bank through its monetary policy and strategies plays an influential role. The threat has been driven up on account of heightened uncertainty. In reaction to the crisis. On the other hand. There is a need for flexibility in policy design and implementation for a smooth adjustment in the markets for safe assets. The global financial crisis that erupted in late 2007 not only produced the severe worldwide economic contraction. However. Consequently. It influences the future expectations of economic activity and inflation. not only to financial stability. Pakistan’s financial sector has not witnessed a direct impact of the global financial crisis due to its limited exposure in international financial markets. A sound fiscal position is important for achieving macroeconomic stability. heightened security risks. performance slowed later in the year because countries with large public and private debt burdens faced serious problems accessing sovereign debt markets. The global economic activity rebounded in 2010 on the back of better macroeconomic performance and continued accommodative macroeconomic policies. Consequently.Chapter 5 Money and Credit Pakistan’s monetary policy aims at stabilizing economic growth through a number of channels. such as creating measures aimed at specific sectors. Lack of safe asset scarcity will increase the price of safety and compel investors to move down the safety scale. This occurs through efficient resource allocation and the mobilization of domestic savings. power shortages and a high cost of doing business posed numerous challenges for Pakistan’s economy. It will also lead to more short-term spikes in volatility. and shortages of high-grade collateral. a rise in 65 . regulatory reforms and the extraordinary post-crisis responses of central banks in the advance economies. The supply of safe assets has contracted as the ability of the public and the private sectors to produce such assets has declined. heightened concerns about long term debt sustainability in various parts of the world have posed additional risks. it has also hampered the ability of central banks to successfully manage the economy. as more general stimulus packages aimed at keeping financial institutions buoyant. Unfortunately. high inflationary pressures. markets of developed economies responded in a variety of ways. as well Box 1 High Demand for Safe Assets There is a potential threat to global financial stability due to high demand for safe assets. Inflation has persistently remained in double digits in the last few years on account of difficult domestic and external economic environment. and a sharp fall in foreign exchange reserves. the dearth of financial inflows resulted in a sharp diversion of credit away from the private sector. Moreover. Furthermore. control of money supply and rationalization of administered interest rate. dried up external financing and insufficient funds from non-bank sources resulted in short-term borrowing from the banking system. Hence. Consequently.5 percent from 14 percent on the back of an improved fiscal position. The power crisis and the precarious law and order situation are still an impediment to provide an environment conducive for productive activities.f. changes in key export and import prices in the international markets and the fragile global economic recovery are also affecting domestic economic conditions. the rate was further reduced by 150 bps points to 12 percent on October 8th. The decision continued to show progress. The devastating floods in 2010 and heavy rains in Sindh in 2011 once again brought on a plethora of challenges. April 13. 14. It slashed the discount rate by 50 bps points to 13. On the other hand increase in government borrowing to finance the budget deficit is adversely affecting the inflation outlook.5 14. Similarly.0 13. the less than expected external inflows intensified fiscal stress.1: Policy Rate Effective from Date 21-Apr-09 17-Aug-09 25-Nov-09 30-Jan-10 27-Mar-10 02-Aug-10 30-Sep-10 30-Nov-10 01-Aug-11 10-Oct-11 30-Nov-11 until date Source: State Bank of Pakistan Pakistan. SBP has injected substantial short term liquidity in the system.0 12. for a smooth functioning of a payment system and financial stability.9 percent of GDP in 201011). As a consequence.5 12. Similarly. Table 5. The government’s efforts to contain the fiscal deficit were undermined by the significant rise in federal and provincial government’s expenditures in favor of rehabilitation and reconstruction activities. the heavy reliance on domestic borrowings in the absence of diversified and sustainable financing sources has constricted the availability of credit to the private sector. as the consumer price index (CPI) and government borrowings from the Central Bank remained lower than its level at the end of June. In 66 . Given the difficult economic situation. 2011. Moreover. risks to macroeconomic stability due to fiscal weakness and decline in foreign inflows have not retreated. monetary policy remained under enormous pressure to strike a balance between supporting growth and keeping inflation under watch. the State Bank of Pakistan (SBP) followed a proactive policy response to shave-off additional demand from the economy. In addition. Despite the challenges faced by the economy due to flood and security related issues Pakistan holds enormous potential and resilience. It has also accommodated the fiscal deficit. Keeping the overall macroeconomic situation in view. the banking sector’s exposure to government papers has increased significantly. in order to boost to private sector credit and investment.0 12. This was evident when the fiscal deficit remained within reasonable limits.0 13. However.0 Monetary Policy Stance The continuation of sound monetary management is central to taking on the multifaceted challenges faced by any economy as it deals with major issues of price stability.5 percent for fiscal year 2012-13 and 8 percent for fiscal year 2013-14. an increase in the debt burden.e 5. Nevertheless. the SBP has decided to keep the policy rate unchanged at 12 percent w.0 13. monetary management has mainly focused on controlling inflation.5 13.e. The SBP adopted an expansionary monetary policy during the fiscal year 2011-12. The year to year CPI inflation was also recorded at 10.8 percent in March 2012 against 13 percent in the same period of the previous year.Pakistan Economic Survey 2011-12 unemployment and poverty.5 12.5 12. there is a need for a cautious approach to keep the inflation expectations around the medium term targets of 9. (i. 2012. 2: Profile of Mo onetary Indica ators Jul-14May 2010-11 506.1: Net Fo oreign Assets 200 100 0 -100 -200 -300 -400 2007-08 2008. Conversel ly. R 272.3 -101. During Ju uly – 11th May M 2012.1 4. period un nder review declined d to Rs.47%) b syst tem. 481.Net Fore eign Assets (NF FA) 6.6 0. 142 2. During the first hal lf of the fisca al year 2011-12. along with incr reased the banking govern nment borrow wing and a one-off settleme ent of circular debt.9 234.1 662.4 -81. however in Novembe er 2011 in or rder to partia ally resolve the t ment borrowe ed Rs.Monetary y Assets(M2) Source: Sta ate Bank of Pa akistan Net Dome estic Assets (NDA) ( from July J – 11th May M 2012 stoo od at Rs. Credit to Public Sect tor Enterprises (PSEs) f.6 billion n in 2010-11 1 to Rs.5 603.6 0. Billion Jul-11Ma ay 2011-12 1.09 9%) 1. Borrow wing for budge etary support b.7 -215.6 481.5 -143.2 0.6 6 (9.89 9%) -272.3 880. PSEs Special S Accoun nt-Debt repaym ment with SBP g.5 92. reflecti ing an increas se of 14.9 billion ag gainst Rs.0 0. 10. Rs. Credit to o Non-governm ment Sector (d+ +e+f+g) d. Figu ure-5.Other Ite ems(net) 4. Net Foreig gn Assets (NF FA) witnessed da significan nt contraction n on account of reduction in SBP’s for reign exchan nge reserves that t arose fro om the wid dening curre ent account t deficit and a deteriorating capital and fina ancial accou unt .2 608. Comm modity operatio ons c.7 (9.6 (11.6 -0. The T decelerati ion in money y supply is primarily p driv ven by the sig gnificant fall in the Net Fo oreign Assets of Table 5.09 percent p as com mpared to 11. Credit t to Private Sec ctor e.8 10. NFA of the e banking sys stem during the t surpluses. or money an nd close substitutes for mo oney.Net Dom mestic assets (N NDA) 5.084.1 billion n in the same period p of 2010-11. credit c to pub blic sector ent terprises (PSE Es) registered d a sharp decli ine from Rs. Other Financial Insti itutions(SBP cr redit to NBFIs) ) 3.9 (14. Others s 2. 880 0.3 1.003. Net government sector r Borrowing(a+ +b+c) a.Money and Credit C Recent Monetary M and d Credit Development During th he first eleven n months of th he current fiscal year.2. July y – 11th May 2012 broad money m (M2). . 181.2 billi ion as compar red to an inc crease of Rs.2 118. d The profile p of mon netary indicat tors for fiscal l year 2010-1 11 and 2011-12 is demonstrated in Tab ble 5.6 billion du uring the sam me period last year. The T expansion n in NDA is mainly du ue to a rise in demand for f private se ector credit and a governme ent borrowing gs. circular debt issue the governm illion from commercial c b banks through h 12391 bi month treasury bills and 5-year Pak kistan Investm ment Bonds.09 2009-10 2010-11 Jul-11May Jul 11May 2012 Jul-14May 2011 Govern nment Bank k Borrowing The government g b borrowing fr from the ba anking system m for budget tary support t and comm modity operati ions stood at Rs.47 percent during d the sam me period in n 2010-11. 1. a significa ant decline in capital fina ancial accoun nt inflows re esulted in depletion d of SBP foreign n exchange re eserves to fina ance the majo or part of curr rent account deficit.6 billion. Credit C to PSEs s was mostly concentrated d in electricity y generation n companies s. witness sed an expans sion of 9.003.8 -142.9 percent over th he last year.3 billion b during g July 67 .20%) 181.7 107. 0 0 350. During Ju uly – 11th May y 2012. compel lling the gov vernment to borrow from m the SBP an nd scheduled banks.2: Gov vernment Bor rrowings 800.9 billio on (Figure 5. Fig gure 5. loans s for commod dity financing registered a net retireme ent of Rs. 442. Additi ionally. sugar and d fertilizer. and d the support t price has be een raised to o Rs.3 3). un nder the crowd ding out effec ct.084. the t governme ent borrowing g from the SB BP is required d to be repaid d at the end d of each quarter q and the t existing st tock is to be retired r within n eight years.Pakistan Economic E Sur rvey 2011-12 2 – 11th Ma ay 2012 on account a of ris sing subsidy on commodit ties. According g to the recen nt SBP Am mendment Act.1 billion during d the per riod under re eview against t Rs.0 0 2007‐08 -200.1 billion n in the same e period of fiscal year 2010-11. 81. Non-ban nk and exter rnal financin ng for budget tary support t was less than expe ected.0 0 Commod dity Finance Commodi ity finance aims a to prov vide short te erm advances either to the e governmen nt. public sector s enterpr rises' losses and a less than target reven nue collectio on. On 11 May.6 billion against the retir rement of Rs.3: Comm modity Financ ce 450 400 350 300 250 200 150 100 50 0 . s fore. Rs. overnment pro ocurement tar rget is 7. 101. 68 Rs Billion The heavy y reliance on n the borrowi ing requireme ent of the go overnment fro om the bank king system has h also led to the slugg gish growth in the private sector.0 0 600.6 billion b last ye ear. ri ice. A 2012.0 0 2008‐09 20 009‐10 2010‐11 July‐14May y July‐ 11May 2011 2012 50. 385.4 billion as com mpared to Rs. Billion 400.0 Rs. 2012 the stock of governme ent borrowing gs for commo odity operatio ons stood at Rs R 315. public sec ctor corporatio ons or private e sector for the t procureme ent of the co ommodities such s as cotto on.7 billion. Financing F from m scheduled banks b witness sed a net incr rease of Rs. a cons siderable ris se in the credit Therefo require ement for wh heat procure ement is exp pected during the rest of th he months of current fiscal year 2011-12. 217 7. 1050 per p 40 kg fo or the forthco oming wheat crop. The T retirement t was prim marily concen ntrated in the t second quarter q of fiscal year 2012 as the t governme ent released Rs.0 200.3 4 billion as compared d to Figure 5.0 0.0 From SBP From Scheduled ba anks T Total borrowings 200. wheat. decli ine in interna ational whea at prices has h reduced d the incentive for its export e by th he private sector.3 billion n in p of the last year.72 million m The go tons (M MT) of wheat this year. The e SBP financi ing the same period has increa ased to Rs. Governme ent borrowing g for budgeta ary support al lone stood at Rs 1. 642. 603. R 78 billion to procureme ent agencies for the settlement s of accumulat ted th subsidies.0 0 500. 1 -4.2 215.0 25.0 16. Despite the t substantia al credit flow. substan ntial governm ment borrowin ng has crowde ed out the pri ivate sector from f receivin ng credit.2 13. Persona al 4.7 -5. Additio onally. Manufa acturing Textiles D.9 1.4 -17.0 -18.5 17.4 158. Electric city.4 -1.4 18. 3: Credit to Private Sector Sectors Overall Cr redit (1 to 5) 1.7 106.4 3.1 -4.7 205.7 ise growth in n credit to the private sec ctor Sector wi shows th hat loans to private sec ctor business ses register red a sharp decline.5 16.8 billion becau use of more th han usual sea asonal retirem ments in the fi irst quarter of f fiscal year 2012.7 105.4 4.3 -15.9 9.7 269.2 2 2.1 23.0 -0.2 28.0 5.263.5 67.1 229.8 1.5 -1.8 billion n as July-11th May.1 60. the t Table 5. Similarly.3 41.6 13.5 9.1 145.0 desired d boost in pri ivate investm ment demand could not tak ke place due e to energy shortages an nd an unfavo orable law and order situa ation.8 -5.9 -9. compared d to Rs 107.8 3.749. heavy bor rrowing from m the banki ing system ha as restricted the credit ex xpansion to the t private sector. Investment in Security y & Shares of Private P Sector Source: Sta ate Bank of Pa akistan End June St tocks Jun-10 2.4 -2.4 22. . There is a strong relati ionship betwe een private sector s credit and econ nomic grow wth.4 514. the credit expans sion during th he period und der review sto ood at Rs.2 29.8 180. 28 82.5 percent up until 11 private se May.7 213.4 67.6 -7.6 -1.8 8 billion in th he same peri iod last year.9 -2.5 1.8 0.e.4 15.2 4.0 5. Other pri ivate business n. .1 42.0 percentages 2 20. However. 222. d In flow w terms.0 1 15.6 -2.3 65.6 13.6 6. Others 5.8 3.5 -0.0 0.1 -12.7 -0.6 8.3 2. storage and d communications I.8 2.5 11.3 1. However.258.0 2005-06 2007-08 2008-09 2009-10 2010-11 2006 07 2006-07 2011-12(July-11 0 (Ju y May) Rs Billion B Ju uly-March Growth Ra ates (Flows) 2010-11 2011-12 2010-11 2011-12 228.2 billion. Credit to Private Sect tor (Sectoral l Analysis) val of private investment in i the econom my The reviv was one of o the main concerns c for SBP S to ease the t monetary policy stanc ce in 2011-12 2. Trust Fu unds and NPO Os 3.6 -2. Loans to Private Secto or Business A.6 7.Money and Credit C Credit to Private Sect tor y the private e sector duri ing The credit availed by M 2011-12 2 stood at Rs 234.0 16.5 169.431.5 17. Fi ig-5. The priva ate sector wi itnessed the highest h flow of credit in the t second qu uarter of fisca al year 2011-12 standing at Rs.c 2. 42.3 3.9 billion aga ainst Rs.5 -2. 2012. due d to rising non-perform ming loans (NPLs) banks b preferr red to invest t in liquid assets a rather than extendi ing credit to the t private sector.1 billion in July— J 69 . On the other r hand year to o year growth h in ector credit was w 7.918. Constru uction F.5 -0. .385.0 1 10.4 222.6 -0. Thi is has limited d the availability of credit.1 Ju un-11 2 2.3 -7.7 105.0 294. Commer rce and Trade G.1 321.3 10. gas and wa ater supply E. the cum mulative private sector cre edit (PSC) ex xpansion dur ring July – 11 1 th May 2012 2 was limited d to Rs 234.4 -14. Agricul lture B.6 470.1 -4.4 : Growth of Private Sector S 2 25. Mining and Quarrying g C.5 2. Transpo ort. 1 percent during July 2011 March 2012 against 13. Rs. and agriculture (24. time deposits (excluding IMF A/C.40 -1. followed by textiles (38. registered a decline in credit when compared to last year.Pakistan Economic Survey 2011-12 March 2011. The manufacturing sector advanced over 100 percent (Rs 65. mortgages.70 0.8 percent.10 -3.90 -10.40 2. 107.4: Consumer Financing Description Consumer Financing 1) For house building 2) For transport i.20 In agriculture.2 percent).e.90 37. 93. and resident’s foreign currency.1 percent during the period under review.00 13.5 percent).60 -5. along with subsequent decline in cotton prices in 2011-12 explains the relatively lower requirement for credit during July .70 1.90 -16. 209. demand deposit. 168.50 -5. the stocks reached Rs 2474.g. rising cost of credit and increasing default). However.1billion in March 2012 from its peak of Rs. Particularly.60 1. counterpart). credit cards and personal loans have consistently been on the decline since January 2008 on account of multiple factors (e.40 -8.10 0.6 billion in July—March 2012 as compared to Rs. Each category within the consumer finance segment has registered a persistent increase in the loan infection ratio for the last three years. 197.00 -10. Total credit disbursement to agriculture sector during JulyMarch 2012 surged by 17 percent on year to year basis to Rs.10 0. MCB Bank Limited. Habib Bank Limited.03 0.5 percent). 14.40 -11.7 billion in March 2011-12 against the end June stock of Rs 2431.4 billion in the comparable period of 2010-11 . The stock of consumer finance reduced to Rs. gas and water supply (4. National Bank of Pakistan and United Bank Limited 70 . All of the major sectors.20 -7. Monetary Assets The component of monetary assets (M2) include: currency in circulation.40 -5. followed by electricity.9 percent in the same period last year. loans to textile sector are significantly lower than last year.4 billion against total disbursement of Rs.00 Loans for consumer durables witnessed a net expansion of 37.9 percent as compared to the decline of 7. purchase of car 3) Credit cards 4) Consumers durable 5) Personal loans 6) Other Source: State Bank of Pakistan July-March 2010-11 2011-12 -17. overall credit disbursement by five major commercial banks1 stood at Rs. auto loans. thereby registered a decline of 3.4 percent.5 billion as compared to the decline of Rs 17.00 55.7 billion in the same period of fiscal year 2010-11.0 billion) of total PSC. Billion Growth (%) 2010-11 2011-12 -7. This increase has been a combination of rising NPLs and declining credit to each category with the exception of consumer durables.8 billion.4 billion or 15. excluding agriculture. 371.May 2012.60 -3.3 billion in July—March 2011 posting an increase of Rs.70 27.20 -10.40 3. 1 Allied Bank.00 -12. On the other hand. The ample profitability of textile sector in 2010-11. However. credit to trade and construction declined by 14 percent. fragile economic conditions. Table 5.3 billion exactly four years earlier. reflecting an increase of only 1. Net decline in consumer financing during July March 2012 stood at Rs8. and then commerce and trade (2 percent). 2 77. as compared to an increase of 11.705.4 0.359 4.6 2.8 5.475. Other Deposits with SBP C.6 billion during the same period last year.0 2006 2007 2008 2009 2010 CIC/M2 CIC/GDP 10.303.0 billion as compared to Rs. demand and time deposits stood at Rs.194 22.695.924 5.234 22.878.501. Fig-5.5 6.09 percent during July – 11th May 2012.0 21. a well-developed financial system facilitates the exchange of goods and services by 71 .6 billion as against Rs 403.012 6.1 77. 255. 204.2 75. resident foreign currency deposits (RFCDs) have increased to Rs.7 2. Moreover.0 2.5 billion during the same period last year.640 374.202 416. stood at Rs.183. Deposits During July – 11 May 2012.586. Similarly.0 24.5 : Currency in Circulation % M2 & GDP 25.840 1.9 Currency in Circulation During July – 11th May 2012.0 23.945 6.0 20.Total Demand &Time Deposits incl.5 Monetary Aggregates Items A.385 6.Currency in Circulation Deposit of which: B.874 23. The decline in broad money (M2) came from the decline in both currency in circulation and deposit money.7 11. 22.4 0.4 5.5 billion in the same period last year.295.864 24.Money and Credit Table-5.RFCDs of which RFCDs Monetary Assets Stock (M2) A+B+C Memorandum Items Currency/Money Ratio Other Deposits/Money ratio Total Deposits/Money ratio RFCD/Money ratio Income Velocity of Money Source: State Bank of Pakistan (Rs Million) July-11May 2010-11 2011-12 1.439.438 5.5 5.666 368. 42.5 10. 402.3 billion as compared to Rs.1 percent during the same period in 2010-11.1 0.663 4.4 percent in 2011-12 as against 24.186 345. Monetary Management Efficient monetary management is crucial in providing a sound and secure financial environment that is favorable for the attainment of both macroeconomic stability and growth. currency in circulation (CIC).7 2.0 7.5 2011 2012(July-11May) Broad money (M2) grew by 9.0 9.550.4 0.409 10.7 End June 2010 1.962 7.47 percent during the same period last year.749 10.0 8.7 2011 1.5 9.5 8.145 5. the currency in circulation as percent of money supply (M2) has declined to 23. Hence the decline in currency in circulation is th offset by the increase in demand and time deposits.1 76.777.0 22. Similarly. in flow terms. the financial sector remained generally immune to the contagion of the unstable financial sector.881.45 640.412 437.0 13.486.55 11. the excess volatility in short term interest rates increased the challenges of monetary management.50 128. The average spread between the policy rate and the 6 month KIBOR has narrowed to 12 bps after the cumulative 200 bps reduction in the policy rate.490 1.433 2.8 5.501 1.0 13. The strains on the financial sector and the credit crunch in the aftermath of the global financial Table 5.086. deep and liquid market.05 196. it helps diversify and reduce liquidity and inter-temporal risk.7 12.032.8 12. and a higher currency to deposit ratio.25 2011-12 408.40 230.408 1. However.015 W.602 4. Million Offered FY11 2. It also allocates society’s savings to its most productive use by acquiring and processing the information about enterprises and finds possible investment projects.235 809.40 171.276 2.668.7: Market Treasury Bills Auctions JUL-JUN FY2010-11 Offered 3-Months 6-Months 12-Months 2.239.11 20. such as KIBOR and the weighted average lending rate (WALR).012 1.003 4.90 9357. billion crisis led to the closing of many credit lines and erosion various of financial mechanisms. a declining trend of foreign Table 5.85 67.00 3.55 36.85 119.226.50 102.90 969.515 FY12 671.101.194 Accepted 1. Pakistan’s financial markets witnessed a slowdown in deposit mobilization and profitability in the sector.2 inflows.A.975 Total Source: State Bank of Pakistan Average of maximum and minimum rates 72 . mainly due to a sharper deterioration in the external current account deficit.837. have largely followed the policy rate reductions.258.5 13.758 2. During the first half of fiscal year 2011-12 reliance on the banking system to fund the government’s finances created further challenges to striking a balance between cautious liquidity operations and payment system stability.15 Absorptions 2011-12 24.972.926 Jul-March Accepted FY11 1.65 1381.00 Rs.Pakistan Economic Survey 2011-12 providing payment services. Finally.20 540.A Rate* 12.10 1058.6: Summary of OMO's Injections July August September October November December January February March Total Source: State Bank of Pakistan 2010-11 75.00 27. Furthermore.50 51. other market interest rates.40 1210.05 165.878 908.50 54.587 FY12 363. Conversely.018.35 1025.348 3.614.247 W.144 2.85 1.10 106.478 883.479.8 13. A stable financial system is essential for an efficient.15 1244.552 599.Rate* FY1 FY11 2 12.45 1418.55 34.2 12.527.484.501.35 2010. Rs.208 234. 0 Source:SB BP * : Average of Minimum m and Maximum m rates During 2011-12.500 11.420 *W.6 12.5 11.712 16.8 billion in 2010-11. 83 3.277 108 8.360 49.3 billion in i the offered first nin ne months of f the fiscal year 2011-12 ag gainst Rs.9 32.875 12. R 2486.840 2.4 billion in n the same period last ye ear.295 14. accounted for 49.0 13.1 14.0 0.7 60.0 14.6 9. Million F 12 FY 12.355 460 875 225 169.3 14. 24 42.336 18.0 11.2 Nil Dec-11 Rs. 191 1.0 13.Money and Credit C The SBP P accepted Rs.262 0 0 159.0 0 20.0 12.684 6.668 101. During the first ni ine months of 2011-12 months m T-bills s.662 111.A Rate R FY 11 14.966 7. In an anticipation of a further cut in n the policy rate r in Octobe er 2011 and onwards o inves stment in long ger tenure pa apers increas sed. 159 9.938 64.8 12.0 0 35.779 A Accepted FY 12 50.306 176.674 57.446 200 210 242 2.6 billi ion during the e same period d of fiscal yea ar 2010-11.5 FY 11 49.0 Feb-09 Feb-10 Jun-09 Aug-08 Aug-09 Jun-10 Jun-11 A 10 Aug-10 g Aug-11 J 08 Jun-08 Feb-11 Apr-11 Apr-09 Apr-10 Oct-08 Oct-09 Oct-10 Dec-09 Dec-10 Oct-11 Dec 08 Dec-08 6-Month hs 12-Mont ths Feb-12 Table 5.2 14. The T market of ffered a total amount of Rs.5 12.1 Nil 14.5 14.537 B BR 525 B BR 83.0 0 0.2 Offered FY 11 42.3 14.5 13.2 billion from the t primary market m of T-bills T during g July 2011 1 March 20 012 as comp pared to Rs.960 33.1 14.171 57 7.5 pe ercent in 6 mo onths T-bills Figu ure-5.A * Rate PIBs Jul-Jun FY 2010-11 3 Years 5 Years 10 Years 15 Years 20 Years 30 Years Total 81.8: Pakistan Investment Bond ds Auctions Offered Accepted *W.113 191.2 billion fr rom the pri imary marke et of Pakist tan Investmen nt Bonds (PIB Bs) as compa ared to Rs.031 6.0 13. The mark ket d a total amo ount of Rs.177 Jul-March FY Y12 FY 11 74 4.0 0 3-Months 6-Months 12-Months Fig-5.370 2.227 18.032 2 2.5 0. 2527.413 315.9 perce ent of the tota al accepted am mount follow wed by 35. Apr-12 73 . R 4259 billi ion during the e first nine months m of cur rrent fiscal ye ear 2011-12. the SBP rose up p to Rs.246 2.8 13.3 FY Y12 Percent 40.6: Contr ribution of T-b bills 58.7: Weighted d Average Int terest Rates 14.607 41. 82 Source: Sta ate Bank of Pa akistan The weigh hted average lending rate (including ze ero mark-up) on outstand ding loans stood s at 12.76 Jun-11 14.854 4.0 30.80 Table 5. the t banking g spread remained high. Conseq quently. credit unions.660 4.1 14 7.142 2.82 Sep-11 14. Hence a sound and stable financial sector s contrib butes to econo omic and soci ial developme ent.02 May-11 14. microfi finance instit tutions and money len nders.5 58 7.A.172 5. However. as it mobilizes m savi ings for prod ductive invest tment.02 Feb-11 14.628 6.48 6.0 15.10 0: Highlights of o the Banking g System Rs bi illion CY*05 CY Y06 CY07 CY08 CY Y09 Dec-10 Sep-11 Dec-11 Total Asse ets 3. particu ularly in term ms of the dep posit base.9 9: Lending and Deposit R Rates Weight ted Average (W W.7 737 2. It includ des banks.15 Apr-11 14.845 3.9 97 8.349 3.0 FY 10 FY11 Percentages 45.428 2 2.45 6.20 Mar-11 14.173 3. This resulted in a spread of f 5. Pakista an’s Financial Sector A we ell-developed financial sector play ys an importa ant role in overall o econo omic develop pment. stock exchan nges. 7138 billion b in Dece ember 2010.98 5.03 Jul-11 14.2 20 7.8: Contr ribution of PIB Bs 75. The decli ine in the weighted av verage lending g rate is due d to the lag involve ed in contrac cting fresh loans in th he new decl lining interest t rate environ nment and th he decline in banks b return on o governmen nt securities.991 2.207 Investment ts (net) 800 833 1.2 22 7.1 18 7. .Pakistan Economic E Sur rvey 2011-12 2 percent t while the weighted ave erage deposit rate (includ ding zero mar rk-up) stood at 6.16 Aug-11 14. 8207 billion b in Dece ember 2011 as a compared to t Rs.2 28 8.98 perce ent in March 2012.7 786 5. facilita ates capital inflows i and remittances from abroad d.) LR R DR Spread Dec-10 14.40 5. there e was a lacklu uster movement in deposit t rates.06 Feb-12 13.138 7.1 19 6.03 5.8 80 6. insu urance companies. Comm mercial Banks s The as sset base of the t banking system s and it ts key elemen nts posted a st trong growth trend. Figure.341 Deposits 2.0 60.263 3.353 4 5.40 6.46 7.2 21 7. H the asset mix of f the banking g system shift fted further to oward investm ment. as ba anks continu ued to inve est in govern nment papers s and bonds of public sector s enterpr rises (PSEs).06 6.218 4.276 1.3 37 7.053 Advances (net) 1.4 perce ent of the tota al accepted am mount.88 Oct-11 13.12 6.17 Jan-12 13.238 Equity 292 402 544 563 6 660 697 753 784 Profit Befo ore Tax (PBT) 94 124 107 63 81 111 116 170 74 .450 5. It is pertinent p to mention m that since the Central Bank was w following g a tight mon netary policy y until August t 2011 and the t interest rates r were moving m up.2 25 7.10 Dec-11 13.99 7.2 23 7. he eavy investme ent During th occurred in i 10 years PI IBs which constituted alm most 40.832 3. and stimula ates investmen nt in both phy ysical and human h capita al.2 240 3.41 6.2 22 7.22 7.82 percent t.35 7.94 Nov-11 13.0 3 Years 5 Years 10 Years he period und der review.0 0.6 62 7.769 6.20 7.5 516 7.688 3.09 7.03 6.11 Mar-12 12. On a Year to year basi is the asset base b of the banking syst tem registere ed an increas se of 15 perce ent and stood at Rs.2 24 7.763 8.255 3.5.087 1.79 Jan-11 14. Table 5. In case of Pakistan.6 2005-06 45.0 14.9 76.4 percent year to year basis.7 12.3 14.9 70.5 8 BOX-2 Financial Development Financial development in reference to the increase in the ratio of money supply to GDP suggests that the more liquid money is available in the economy.9: Capital Adequacy Ratio (percent) 15.3 2008-09 39.0 14.7 percent to 47 percent in 2006-07. credit risk has been a major challenge for banks.5 11 9. the more opportunities exist in economy for sustainable economic growth.1 77.5 14 12.10: Highlights of the Banking System Rs billion CY*05 CY06 CY07 CY08 CY09 Dec-10 Sep-11 Dec-11 Profit After Tax (PAT) 63 84 73 43 54 65 76 110 Non-Performing Loans 177 177 218 359 446 548 613 607 Non-Performing Loans (net) 41 39 30 109 134 182 210 202 Base-I Base-II Capital Adequacy Ratio (all banks) 11.9).11: Key Indicators of Pakistan's Financial Development Years M2/GDP DD+TD/M2 2000-01 36.Money and Credit Table 5.11 suggests that the M2 to GDP ratio has shown a rising trend since 2000-01 with growing economic activity and rose from 36.0 2009-10 39. The ratio Table5. increase in M2/GDP ratio reveals that in nominal terms the financial assets are growing faster than the non financial assets.0 72. NPLs reached Rs. Therefore.2 2003-04 44. Considering M2 as a proxy for the size of the financial sector. With continuous growth in the non-performing loans (NPLs) since CY07.1 76.0 75. 548 billion recorded in December 2010. 607 billion in December 2011 against Rs. The capital adequacy ratio also increased to 14. 6238 billion in December 2011 from Rs. Table 5. Fig-5.6 74.1 75 .0 2011-12 34.5 2010-11 37.7 75. 5450 billion in December 2010 thus posted a growth of 14.4 2002-03 43.0 70.4 71.1 71.8 July-May 2010-11 35.8 2004-05 45.3 12. the development of the financial system (financial deepening) is interlinked with the economic development of any country.2 72.4 2001-02 40.7 73.6 Source: State Bank of Pakistan * Calendar year The deposits of the banking system increased to Rs.6 percent from 14 percent during the period under review (Table 5. the financial market has shown great resilience in the wake of global financial crisis due to low integration with global financial markets.3 12.1 2007-08 44.9 14.5 2006-07 46. 4 percent in banks deposits against 7. The saving deposits category now account for 38 percent of all bank deposits and 52 percent of total number of deposit accounts.90% 4. The growth in assets is mainly attributed to financing and investment that together grew by 40 percent year to year basis.95% 2.78% CY09 366. Over the past six years it has witnessed an average growth of 30 percent.9 83. CY08 276.16% Rs. 641 billion reflecting 34 percent Year to year (YOY) growth. while the share in bank assets increased to 7. average deposit rate of all saving related products increased from 2.7 percent during the period under review.8 percent from 6. Thus it contributed 8.90% Dec-10 477.80% 8. In an effort to improve financial deepening and competition in the banking system. in May 2008.9 Deposits of the Islamic Banks 49.12: Islamic Banks momentum in the wake of fragile economic conditions.1 6. 1 Monetary Policy statement. However.82% Source: Islamic Banking Department.1 percent in 2010-11.0 521.3 282. State Bank of Pakistan *Provisional data The asset base of the industry reached Rs. On the other hand deposits reached to Rs. with no significant change thereafter. Microfinance The Government of Pakistan and the SBP remain committed to promoting microfinance as a long term strategy to broaden access to financial services by the low income segments. During July —May 2012 M2 to GDP ratio has declined further to 34.1 Islamic Banking The Islamic banking industry in Pakistan has maintained a strong and sustainable growth Table 5.75% 2.6 percent to 71. Consequently.40% CY05 CY06 CY07 Assets of the Islamic banks 71.9 percent as compared to 35 percent in the same period last year on account of the pressure to the liquidity profile of the financial markets mainly due to the rising government’s borrowing needs. On the other hand another significant ratio DD + TD/M2.25 percent. has also shown the declining trend since 2004-05 by decreasing from 77.1 percent to 5.1 percent during July 2011—May 2012 from 70 percent during the same period last year. The breakup of financing in CY11 indicates that Murabaha dominates followed by Diminishing Musharaka and Ijara with all other modes constituting a relatively small share. as nonperforming financing (NPFs) declined while return on assets (ROA) and return on equity (ROE) both remained higher than that of overall banking industry average. resulted in a slight increase of 70.2 percent in Dec 2010. This is the period when the monetary policy stance changed from accommodating to tightening.7 147. SBP introduced a minimum percent floor on all categories of Savings/PLS Saving Products. 521 billion depicting YOY growth of 34 percent by end of Dec 2011. April.0 390.5 119.60% 5. which represents monetary depth. 2011-12 76 .0 7.3 205. Moreover. Similarly operating performance indicators also witnessed encouraging performance in 2011.8 percent in 2010-11.98% Share in Bank Deposits 1.0 201. thus improving their livelihood and income generating opportunities. reduced policy rate by 200 bps to 12 percent during the current fiscal year 2011-12.79% 3. Billion Dec-11 641.Pakistan Economic Survey 2011-12 started to decline gradually and stood at 37.62% 3.6 5.68% 7.6 4. SBP is already encouraging depositors to put their savings in government securities through Investor’s Portfolio Securities (IPS) accounts which may lead to better returns on deposits over time.4 Share in Banks Assets 1. 151 780.5 24.8 0.626 254. The overall performance of the sector remained positive in spite of the various challenges including the heavy floods/rains that adversely affected various parts of the country especially Sindh.Money and Credit Table 5.413. 13.024 7.8 2.732.206 10.739 business locations across the country.4 4.691 1.4 5.362.066 Microfinance Policy Initiatives The policy framework for microfinance has evolved in tandem with sector growth.140 2.073.7 Musharaka 0.339.9 0.3 14.059.667 9.4 2. for the second consecutive year.395 2.9 12.4 1.381 4.381 4. It encourages private sector participation by supporting a multi-institutional approach.066 14.045 717.190.2 1.2 29.9 5.44 million with a deposit base of Rs.000 14.13: Financing Products by Islamic banks Mode of Financing CY05 Murabaha 44.000 14.457 284 1. During the past two consecutive years Pakistan was globally ranked first by the ”Economist Intelligence Unit” (EIU) of the Economist magazine. in terms of 77 .927.8 14. The sector was able to expand its retail network to 1.000 19.202 13.0 1.3 25. In '000) 6.723.2 28.436 1. In '000) (Rs.826. The loan portfolio growth is attributable to the recent microfinance sector strategy that stresses the need for microfinance providers to diversify portfolio in different economic and geographic segments.4 Others 12.8 10.462 10.115.600 28.879 703.044 1. 28. The NPLs of microfinance banks have also dropped to two (2) percent as the quarter ended in March 2012 against 5.238 1.6 %age CY11 43.443 284 1.641 1.719.6 billion as of March 31.180 25.1 32.186 1.931 1.000 12.9 1.2 6.528.739 542.952. the number of depositors of Micro Finance Banks (MFBS) increased to 1.000 14.362.8 2.326 21.6 CY08 36.206 12.07 million active borrowers.342. of Deposits portfolio Loan Size Depositors (Rs) (Rs. Table 5.494.966.195.123.4 The overall microfinance sector witnessed loan portfolio growth of 13 percent over the year. 2012.0 CY07 44.159 1. The regulatory instructions are developed in view of the present market situation and MFBs’ preparedness allowing adequate room for further innovation and market development.099.000 13.4 Ijara 29.294 10.4 29.4 3.8 1.6 CY10 44.907 254.5 22.000 20.9 1.1 Source : State Bank of Pakistan CY06 48.001 1.0 1.000 13.000 18.4 30. of of MFBs Branches Borrowers Dec-08 MFBs MFIs Total Dec-09 MFBs MFIs Total Dec-10 MFBs MFIs Total Dec-11 MFBs MFIs Total Source: State Bank of Pakistan 7 20 27 8 21 29 8 21 29 9 23 32 271 1.462 11.115.461.294 10.141 1.289.1 0. Its gross loan portfolio stood at Rs.5 Mudaraba Diminishing Muskaraka 12.7 2.4 1.940 18.0 2.289.8 Salam 0.6 1.914 1.4 4.099.6 Istisna 1.5 1.845.252 1.84 billion as the quarter ended in December 2011 with 2.4 0. On the deposit side.1 3.1 2.536 303 1.650.576 459.202 13.004.071 Gross loan Average Total No.536 733.29 percent in March 2011 depicting effectiveness of the credit process.131 459.4 CY09 42.667 11.14: Microfinance Industry Indicators Year Institution Number Number of Total No.6 0.000 11.024 7.000 17.000 10.385 780.927.7 0. branchless banking. credit ratings. So far. 3. SBP has successfully launched a number of market interventions under FIP since 2008. 2001” to operate nationwide. 78 . Moreover. 1. So far partner banks have booked guarantees of Rs. 2011 the Waseela Microfinance Bank was granted a license under the “Microfinance Institutions Ordinance.000 under the general loans category will now be able to upscale their credit operations. The updates on government programs and SBP market interventions are as follows: 1. lower cost of delivery. the term microenterprise shall mean projects or businesses in trading. 150. market research. However. these businesses do not exceed 10 employees and they excluded seasonal labor.275million. the Auriga Group acquired the district wide Network Microfinance Bank with the intent of upscaling its operations as a nation wise MFB. Progress under each of these interventions is as follows: a.Pakistan Economic Survey 2011-12 microfinance regulatory framework via its reports released in 2010 and 2011. remittances. Financial Inclusion Program (FIP): FIP is implemented with grant assistance of 50 million pounds from the UK Government’s Department for International Development (DfID).846 small and rural enterprises by the end of March 2012. business plan/ strategic reviews. So far funding support of Rs. or other cash collateral with appropriate margin. the State Bank has revised Prudential Regulations No. and agriculture sectors that lead to livelihood improvement and income generation. 500. c. the general provisioning requirement for MFBs was withdrawn in cases where loans were backed by liquid securities.711 billion for 3. gold. The grant covers 22 projects addressing institutional strengthening needs of the grantee institutions for capacity building/ HR training. For these purposes. 957 million have been issued for mobilizing Rs. b. in case of all other loans. d. and treasury functions. Credit Guarantee Scheme (CGS) for Small and Rural Enterprises aims to facilitate credit to small and rural businesses through partial guarantees. Financial Innovation Challenge Fund (FICF): was launched in May 2011. enable systems and procedures to be more efficient and provide new ways of meeting the unmet demand for financial services. A number of applications were received under the 1st facilitate lending to microenterprise segment.107 billion against sanctioned loans of Rs. fourteen (14) guarantees with a total exposure of Rs. IT development. In September. 2. The Institutional Strengthening Fund (ISF) was launched to strengthen institutional and human resource capacity of MFB is in order to enhance scale and sustainability of microfinance services. MFBs that previously were unable to tap the microenterprise market constraints of lending up to Rs. It aims to foster innovations and test new markets. 10 and 11 for MFBs to Box-3 Program’s initiatives: SBP is playing a pivotal role in promoting inclusive finance through implementation of government and donor funded programs. services. These programs are managed with the objective of enhancing the provision of financial services to unbanked segments especially to the poor and marginalized population through sustainable models. microfinance banks shall maintain general provision of 1%. In addition. Also in the same month. 819 million has been approved for 19 microfinance providers including top and middle tier MFBs and MFIs as well as the Pakistan Microfinance Network. The revisions will facilitate lending of up to Rs.000 to eligible microenterprises. In March 2012. Microfinance Credit Guarantee Facility (MCGF) was launched to mobilize wholesale commercial funding for microfinance providers through partial guarantees to commercial banks. manufacturing. corporate governance. and others. Microenterprises are undertaken by micro-entrepreneurs who are either self-employed or employ few individuals. b. The insurance penetration and density remained Fig-5. 100.Money and Credit round and the selected applicants will be announced after due process. the industry’s total premium revenue stands at Rs. As of December 2010. products and services to the masses. regulations for disclosure requirements and consumer protection. regulations for Takaful Investment Products. training and capacity building to support the implementation of the improvised insurance regulatory framework. regulations for insurance & reinsurance brokers. Grass Root Level Training Programs on Microfinance is a series of 40 individual training programs expected to benefit 1000 participants from various microfinance providers. Development of New Insurance Law: SECP is considering embarking upon the initiative of revamping of insurance laws in Pakistan. insurance industry’s risk-focused surveillance mechanisms. Under this new regime. and others. The derived benefits will include a new regulatory and supervisory framework encompassing enhanced reserves and capital requirements. Insurance Sector The insurance industry in Pakistan is relatively small compared to its counterparts in the region. Voluntary Pension Schemes by Insurance companies: Although there are already nine (9) Pension Funds 2. regulations for alternate distribution channels. So far 12 training Programs have been organized. Box-4 Way Forward 1. 79 . 2. Improving Access to Financial Services Fund (IAFSF) The following interventions have been taken under IAFSF: a.10: Insurance Penetration in Pakistan modest as compared to other jurisdictions while the insurance sector remained underdeveloped relative to its potential.58 billion. certain new regulations will also be introduced where no such framework exists currently such as regulations for reinsurance. Nationwide Financial Literacy Program has been launched in January 2012 to disseminate basic education about financial concepts. including the access to financial services in rural areas. agriculture and livestock development departments/ agencies. It is a known fact that agricultural production can increase if the vagaries of nature and the risks associated with it can be better managed. State Bank of Pakistan. Development of Crop Insurance in Pakistan: The agriculture sector contributes approximately 21 percent to Pakistan's GDP and generates about 45 percent of employment. it is taking every precaution in how it moves forward to support growth and monitor inflation. The SECP intends to make the existing Rules more conducive and equally attractive for insurers by initiating a consultative process with the relevant stakeholders and encouraging the insurance companies to offer voluntary pension products. while augmenting the efforts of government whereby it formed a crop insurance scheme in year 2008 and the recent interest to develop a scheme available to all farmers of the country involved in the cultivation of the major crops. 3. With the proliferation of numerous initiatives launched by the public and private sector. it is the endeavor of SECP to develop and promote the agricultural insurance in order to ensure the well-being of the economy. Although Pakistan was not heavily affected by the financial crisis of 2007. there is a need of bringing all stakeholders. the majority of areas of our agricultural economy are exposed to adverse weather events such as floods and droughts. eliminating power shortages and providing a lower cost of doing business. 2005. 80 . mitigating heightened security risks. Efforts continue in avoiding high inflationary pressures. Conclusion Pakistan’s financial institutions are doing the utmost to continue to respond to the global economic and financial volatility. Also. insurance industry. crop diseases and other disasters. It also contributes to the economic growth of the country by supplying raw materials to the industry as well as for export purposes. While. SECP will be working to help in building a market-based approach in the design and pricing of crop insurance products. including SECP. in order to boost Pakistan’s economy. it has become imperative that measures be taken to mitigate risks to which farmers are exposed. the immediate need is to provide it with a carefully designed tool to mitigate such inherent risks. As the apex regulator of the insurance industry. the future roles of money and credit in Pakistan remain optimistic.Pakistan Economic Survey 2011-12 operating under the Voluntary Pension System Rules. none of the insurers have so far ventured in this area while registering itself under these rules. together to articulate the development of crop insurance in Pakistan. With evidence of its past resilience in rough economic times. 0 billion as of the first week of May. the financial requirements of business houses are met by the capital market. dynamic and vibrant capital market can contribute significantly in the speedy economic growth and development. The capital market provides an avenue for raising the long-term financing needs of business through equity and long term debt by attracting investors with a long term investment horizon. This helps in increasing capital formation. The establishment of the new policy for foreign investors and the privatization initiated in Pakistan has accelerated the development of the KSE. etc.Chapter 6 Capital Markets Introduction The capital market. 92 percent of the KSE total market 81 . The Karachi Stock Exchange trades the KSE-100 Index. Thus it provides an investment avenue for people who wish to invest resources for a longer period of time. Instruments such as bonds. It helps in research and development. international investors have given due considerations to the KSE in making decisions regarding foreign investment in equity markets. Capital market also helps in capital formation. the mobilized savings are made available to various segments such as agriculture. The capital market enhances production and productivity in the national economy. This helps in increasing production and productivity in the economy by generation of employment and development of infrastructure. The international magazine 'Business Week' declared the KSE as the best performing world stock market in 2002. A developed. insurance policies. Since then. Since 1991. units of mutual funds. industry. 2012. It mobilizes funds from people for further investments in the productive channels of an economy. It provides suitable interest rate return also to investors. Capital markets consist mainly of Stock (equity) and Debt markets. It raises resources for longer periods of time. 2012. like the money market plays a significant role in the national economy. A constantly revised index is a good indicator of the overall exchange performance over a period of time. As it makes funds available for long periods of time. which had 591 companies listed in 2012. Pakistan Equity Markets The Karachi Stock Exchange (KSE) is the biggest and most liquid exchange in Pakistan with an average daily turnover of 254 million shares and market capitalization of US $ 41. Thus the capital market definitely plays a constructive role in the overall development of an economy. The lack of an advanced and vibrant capital market can lead to underutilization of financial resources. In May. foreign investors have an equal opportunity together with local investors to operate in the secondary capital market on the Karachi Stock Exchange. activating idle monetary resources and puts them in proper investments. Through mobilization of ideal resources it generates savings. etc. The developed capital market also provides access to foreign capital for domestic industry. It is a highly-diversified index of 100 largest capitalization companies’ stocks from all sectors of Pakistan’s economy. equities. definitely provide diverse investment avenues for the public. Capital formation is net addition to the existing stock of capital in the economy. information system. 2010 has not only impacted the tax revenue (less than 10 percent of figure three years ago) but also reduced average traded value to the lowest level during the last ten years. ISE10 index monitors the performance of the ISE. Developments in 2011-12 The Pakistan stock markets remained range bound during the first half with a predominantly declining trend. The subject Ordinance was finally promulgated on the 24th April. the Islamabad Stock Exchange. determine. Further. NCCPL is a clearing company where all the amounts relating to the trading activity in the stock markets in Pakistan are settled. 2010. NCCPL will be depositing the tax with the FBR on an annual basis. Today. some mechanism was required to provide relief to the investors who were subjected to 100 percent documentation of the gains and increase in the tax revenue. accessibility and a fair and orderly market place. To address the distress condition of share trading in the stock market. determine. The NCCPL will compute tax for all type of investors except the few financial intermediaries. collect and deposit the CGT on listed securities. The Lahore Stock Exchange Twenty Five company index. 82 . Therefore the NCCPL can capture and tax all the transaction in which capital gain arises under the income tax law. securities trading remained exempt from CGT for 36 years till June 30. the LSE25. after the imposition of CGT. the KSE-100 index resumed its momentum during the 3rd quarter of 2011-12 owing to certain encouraging measures like considerable reduction in discount rate by the SBP during latter period of the first half of Current Financial Year and increase in foreign exchange reserves. The tax rate for CGT will be 8 percent and 10 percent for investment holding up to six months and 12 months respectively till June 30. The imposition of CGT on securities from July 1. the market sentiment was boosted by the proposed promulgation of the Capital Gain Tax Ordinance under which the National Clearing Company of Pakistan Limited (NCCPL) has been appointed as an intermediary entity to compute. In 2010. The institution was established to facilitate the investors of Punjab and Northern areas by providing them an access to the capital market and enabling them to take part in the progress of the corporate sector of the country. skilled resources. the LSE is the only domestic exchange to have more than one trading floor and is also the only exchange in the region to have established a unified order book with another domestic stock exchange in the country. was incorporated as a guarantee limited company in 1989 in Islamabad with the main object of setting up a trading and settlement infrastructure. the Pak rupee depreciation and increasing fiscal deficit of the government. The Lahore Stock Exchange is the second stock exchange established in Pakistan in 1971. 2014. The purpose for establishment of the stock exchange in Islamabad was to cater to the needs of less developed areas of the northern part of Pakistan. However. the investors kept making gains from the securities trading which remained undocumented due to exemption from requirement of filing of income tax returns relating to exempt income. During the period of exemption.Pakistan Economic Survey 2011-12 capitalization was represented by the KSE-100 Index. collect and deposit the Capital Gain Tax (CGT) on listed securities. investors were required to file the income tax returns along with declaring the source/evidence of investments for which they did not have the documented details. calculates the performance of stocks of major companies. Due to this the investors reduced investments in the stock markets and the average daily turnover reduced along with the reduction in the share prices. This has now been done with the promulgation of the CGT Ordinance under which NCCPL has been appointed as an intermediary entity to compute. uncertainty due to worsening law and order situation as well as rumours on the economic front pertaining to reduction in military and civil aid from international donors. foreign institutional investors and any other person specified by FBR. The obscure movement of the stock market statistics was consequent to various challenges faced by the country including escalating political upheaval. In Pakistan. 2012. The third stock exchange. 2011 when the index stood at 12.200.88 2008-2009 651 8 44. Market performance in terms of volumes also remained sluggish during the first half of the 2011-12 but volumes gathered pace in the 3rd Table 6. Fig-1: Net Inflow of Foreign Investment 600.528.29 1.000) (600.018. fiscal year 2012. 2012 stood at Rs. US 000 $ 83 .000) (1.000 0 (200. The investment by foreign investors in the capital markets during the period from July 2011 to March 2012 depicted a net outflow of USD 176.000) (400.000 200. The average daily volume for the nine months was 108.53 2010-2011 639 1 31.704.000) 2007-08 2008-09 2009-10 2010-11 2011-12 (Jul-Mar) Total Listed Capital 706.058.617. 3.97 points registering a growth of 17.842.67 2.650.63 2011-12 (end March 2012) 591 3 107.87 28.959.84 23. 2012 and lowest level of 10.75 quarter.17 points.64 2009-2010 652 8 111. in million) Total Market Capitalization 3.059.14 111. 2014) before and after the promulgation of CGT Ordinance with a condition that the investor files with FBR a statement of investment.000) (800. in billion) 652 7 62.332.617. 2012) and 120 days (till June 30. The aggregate market capitalization as on May 04.087 billion.793.97 points on May 07.95 781.32 28.000 400. in million) Total Shares Volume 63.89 (Rs.288.732.373.489 billion which remained below 18.34 (million) Source: Karachi Stock Exchange The closing value of KSE 100-index as on May 07.419. no question relating to the source/nature of money will be asked by the tax authorities if the money remains invested in the stock market for a period of 45 days (till June 30.633.303 million.12 (million) Average Daily Share volume 256.78 115.893.85 3.730.1: Profile of Karachi Stock Exchange Description 2007-2008 Total listed companies New companies listed Fund mobilized (Rs. Further the automated system of the NCCPL will be audited on a quarterly basis and the NCCPL will submit quarterly statements to FBR relating to the CGT.000) (1. 2012 with a total listed capital of Rs1.143. Performance of Karachi Stock Exchange A total of 591 companies were listed at the Karachi Stock Exchange (KSE) as of May 04. 2011. 2012 stood at 14.26 points on August 23.81 2. wealth statement.28 127.120.777.657.316. It also touched its highest level of 14.1 percent of the provisional estimates of GDP.26 3.04 percent as compared to July 01.21 million shares.04 943.Capital Markets In addition. income tax returns and statement that the due tax has been paid.83 909.000.61 42.455.732.98 (Rs.484.12 172. 2 11.23 3.8 April. Billion) (billion) (Rs.9 1.0 1.9 1.070.064.868.9 11.88 3.315.40 2.1 January 12.317.324.37 3.88 3.347.877.Pakistan Economic Survey 2011-12 Table 6.125.4 1.2: Leading Stock Market Indicators on KSE (KSE-100 Index: November (1991=1000) Months 2010-11 2011-12 KSE Index Market Turnover KSE Index Market (end month) Capitalization Of shares (end month) Capitalization (Rs.022.960.54 3.8 1.501.9 7.89 3.83 3.8 12. Billion) July 10.2 11.6 June 12.598.813.057.119.8 1.6 Fig-2: KSE Index 15000 14000 13000 12000 11000 10000 9000 Fig-3: Market Capitalization 3900 3700 3500 3300 3100 2900 2700 2500 84 .781.2 13. 12.7 March 11.6 3.392.3 11.4 2.3 1.874.38 3.496.46 3.809.1 2.2 1.54 3.3 1. 10.15 3.97 3.943.5 1.190.8 1.249.58 2.992.0 September 10.6 3.761.2241.76 3.36 3.7 Source: Karachi Stock Exchange Turnover Of shares (billion) 1.03 3.8 2.181.022.359.519.123.0 February 11.761.109.6 December 12.532.0 6.6 13.02 2.9 May 12.5 12.76 3.6 11.31 2.2 11.990.113.1 2.810.00 2.247.938.234.1 November 11.289.548.8 0.013.66 2.8 October.4 August 9.9 0. 43. year 2010 the profit after tax was Rs. An initial public offering (IPO) summit has also been organized to identify potential IPOs and to attract them to list their companies on the stock exchanges.186. 77.225 million. Pakistan’s oil and gas sector has also shown good profits. 104. devising a procedure for allocation of capital to various categories of applications during IPOs.807. 95. Construction and Materials This sector comprises of 36 companies. Various regulatory bodies such as PTA.80 million.116. The sector posted total profit of Rs. 26.537. Fatima Fertilizer Company. In addition to the oil and gas exploration companies. In 2011 the total loss after tax has come down to Rs. 6. OGRA. Fauji Fetilizer Company and Fauji Fetilizer Bin Qasim etc. introduction of venture/SME board for listing of small capital based companies and venture companies. 2012 the total market capitalization of this sector was Rs.496. 393. As on March 31. Formation of a technical committee. These include the following: ` The management of unlisted public companies is being approached through stock exchanges to motivate them for listing at the stock exchanges. The profit after tax of this sector was Rs. Automobile and Parts The sector comprises of 16 companies with the total paid up capital of Rs. 49. In the year 2011 the total profit before tax was Rs. Due to global increase in prices and higher consumption.480. 51. 1.366.500. 54. Fixed Line Communication The sector comprises of 5 companies which includes PTCL with capital of Rs.97 million.25 million in year 2010.7 million.107. In the . Chemicals Within this sector 32 companies are listed. Personal Goods This is the largest sector with 188 companies (mostly related to the textile sector) with a listed capital of Rs. Such steps include review of the existing regulatory framework for new listing.Capital Markets Various steps are being taken by the SECP to encourage new listings.113. SBP and BOI have been approached so that their regulated entities can be motivated for listing. Oil and Gas In this sector 12 companies are listed at the Karachi Stock Exchange.275 million as against total loss of Rs.96 million.519. Automobile sales also picked up in spite of increase in prices of locally manufactured cars.82 million.87 million.857. 196. 85 ` ` Sector wise Performance Oil and gas Sector.003.515.366. amendments in the listing regulations for reviewing the minimum allocation of capital to the general public. comprising members from all the three stock exchanges and the commission to take necessary steps for encouragement of new listing. DGPC.23 million and the market capitalization was Rs.536. 4. Performance of some of the major sectors is mentioned below. 54. On the back of higher cement prices and increase in local demand the sector also showed growth which translated into good financial results compared to last year. chemicals.940.000 million. with total paid up capital of Rs. with total listed capital of Rs. These include Engro Chemicals. Six fertilizer manufacturing companies are included in this sector which has earned good profits during the year. The total profit after tax of this sector was Rs.23 million and market capitalization of Rs. and continued to be the major market player.404. 74. food producers. whereas profit after tax was Rs. 6. PPIB. and bringing uniformity in the listing regulations of all the three stock exchanges of Pakistan.80 million and the total market capitalization was Rs.29 million.56. construction and materials were the outperforming sectors during the current year.86 million in year 2011.96 million and the market capitalization of Rs.015 million as against total paid up capital of Rs.249.23 million. 134. oil marketing companies and refineries are also listed in this sector. Hub Power Company Limited and Pakistan Telecommunication Limited) was Rs.72 41. 68. Pakistan Oilfields Limited. billion) 2012 14.03 8. the share of OGDCL and PPL was Rs. 382.66 11.20 4.52 3. 383.23 45.36 6.00 124. National Bank of Pakistan.98 billion representing 38.92 23.638.473 million in year 2011. Pharmaceuticals and Bio Tech The sector comprises of 9 listed pharmaceutical companies with paid up capital of Rs.476. The total profit after tax of this sector increased to Rs. Market Price PE ratio Market (Rs.69 1.19 billion in the fiscal year up to March 2012. the total paid up capital of fifteen big companies (Oil & Gas Development Company Limited.54 62.26 million.248. 2012.99 18. The total profit after tax of this sector was Rs.71 86.041. 774.68 63.98 10.36 2.77 million.30 93. Pakistan Petroleum Limited. 65.61 8.95 0.63 12.13 million. 4.45 4.67 105.16.83 43.46 86 .3 percent of the fifteen big companies.45 218. Nestle Pakistan Limited.82 4.67 22.25 million.509.82 23.060. These fifteen companies earned a profit after taxation of Rs.87 billion.60 15.74 19.46 in the case of PTCL to 307. earnings per share for the top rated companies ranged from a 1.15 million.49 20.77 167. 33.34 11.00 26.78 Table 6. billion) (Rs.43 201.31 6. 20. FATIMA Fertilizer Limited.57 51.94 26.48 11.45 8.14 4.09 17.95 43.42 10.31 102.09 182.37 0.42 7.99 47.24 5601. The profit after tax of this sector was Rs. 4.50 million in year 2011.12 10. Unilever Pakistan Limited. Out of the total profit after tax.47 12.55 7.Pakistan Economic Survey 2011-12 The total paid up capital of this sector is Rs.60 20.3).43 43.3: Price to Earnings Ratio of Top Fifteen Companies Name of Company Profit After Paid up EPS Tax in Capital (Rs. For the period ending March 31. 94. United Bank Limited.71 5.46 million from Rs.521. Fajui Fertilizer Bin Qasim limited.828.77 5. Habib Bank Limited. Commercial Banks The sector comprises of 23 listed banks with listed capital of Rs. 215.84 111.01 11.18 54. which constituted 20.24 8.79 2. whereas the market capitalization was Rs.37 175.42 11.88 122. Fauji Fertilizer Company Limited. Allied Bank Limited.66 11.50 10.79 4447.19 4.00 45.72 307.66 16.44 365.52 18.82 12.06 11.46 million.53 31.29 million and market capitalization of Rs.46 76.62 76. Performance of some Blue Chips During July-March 2011-2012.507 million and market capitalization of Rs.58 million in year 2010. Food Producers This sector comprises of 57 companies (mostly sugar related) with total paid up capital of Rs.858.955. 51. (Rs.35 721.98 in respect of Unilever Pakistan. 462.21 5.02 8.) Capitalization March 31.7 percent of the total listed capital at KSE. MCB Bank Limited.53 4. 104.44 38.406.74 146.86 million and the market capitalization of Rs.40 74.57 37. billion) Oil & Gas Development Company Limited Pakistan Petroleum Limited Nestle Pakistan Limited Fauji fertilizer Company Limited Habib Bank Limited MCB Bank Limited Pakistan Oilfields Limited Unilever Pakistan Limited National Bank of Pakistan United Bank Limited Allied Bank Limited FATIMA Fertilizer Limited Fajui Fertilizer Bin Qasim limited The Hub Power Company Limited Pakistan Telecommunication Limited Source: Karachi Stock Exchange 63. 2. This indicates that the business environment in the current fiscal year has improved considerably for the blue chip companies (Table 6.00 9. The total profit after tax was Rs.92 7.213. 2012. Corporatization and Demutualization of Stock Exchanges The Stock Exchanges (Corporatization.7 715.6 percent). ISE index however increased to 2.1 3. The LSE25 index which was at 3. 2011 to Table 6.1 3.587 billion shares compared to 0.166 billion in June.6 points in March. 2012.0 2011-12 (Jul-Mar) 460 2 5. 2012.4: Profile of Lahore Stock Exchange 2006-07 Total Number of Listed Companies New Companies Listed Fund Mobilized (Rs billion) Listed Capital (Rs billion) Turnover of Shares (billion) LSE 25 Index Aggregate Market Capitalization (Rs billion) * : Funds mobilized through Right issues.4 2008-09 261 15 24.8 727.97 was witnessed on March 05.01 2.14 million shares during 2010-11.6 8. Performance of Islamabad Stock Exchange The Islamabad Stock Exchange (ISE) witnessed a mixed trend during the first nine months of 201112.1 888. 66.6 0.707.872.849.9 2010-11 496 9 18.8 points on July 01.7 0.8 2.6 2.7 2.716 3.6 2.294. 2011.5* 981.1 billion in March.5 842. 2012 showing an increase of 99.4 3092.7 488. 2012.2 2009-10 510 25 67.5: Profile of Islamabad Stock Exchange 2006-07 Number of Listed Companies New Companies Listed Fund Mobilized (Rs.2 2008-09 511 9 32.6 3.6 index 2.9 points level at the end of March.705.821. 2011 and closed at 2.01 points on May 07. The total paid-up capital with the LSE increased from Rs.3 1.166. Source: Lahore Stock Exchange 520 10 38. 2012 as compared to the lowest level of 2.6 billion compared to Rs.16 billion shares during the last financial year.9 2.824.018. increased to 3.8 as on August 23.132.11 million shares as compared to 0.8 830. compared to 29.302.8 728. Demutualization and Integration) Act.8 3.514. 3.6 3.9 billion in the last fiscal year. The turnover of shares on the LSE during Jul-March. 2011-12 in the three stock exchanges amounted to Rs. 2011-12 was 0.9 3. 2011.859. The ISE-10 index started at 2.713 1. billion) Listed Capital (Rs.04 2.24 billion shares.8 2007-08 514 2 29.3 2.1 Rs. 2012.621.294. 2011 to Rs.5 3.7 664.868.060.707.722.3 2.7 0.6 0. The average daily turnover of shares in the ISE during Jul-March.6 551 0.051.8 608.2 1.2 billion in June.Capital Markets Performance of Lahore Stock Exchange The top market indicators witnessed an encouraging trend at the Lahore Stock Exchange (LSE). 2007-08 248 7 24. was 87 .821. 3. 2011-12 was 0.2 2.8 594.942.051.5 0.7 2010-11 236 17.5 6.1 2011-12 (Jul-Mar) 254 20.2 4.261.1 points level in June.2 2. 133.907.1 points (3.0 0.2 2. 888. The highest level of the Table 6. 981.749. The total turnover of shares in the three stock exchanges during the first three quarters of the current fiscal year was 24. billion) Turnover of Shares (billion) ISE 10 Index Aggregate Market Capitalization (Rs billion) Source: Islamabad Stock Exchange 246 12 30.1 2009-10 244 2 76.923 billion during the same period last year.4 The total funds mobilized during Jul-Mar.7 billion in March.6 3.722. Two new companies were listed with the LSE during Jul-Mar 2011-12 in addition to listing of seven Open End Funds and one TFC and Bond during the same period.7 2622.441. The market capitalization of the LSE has increased from Rs. the Pakistan stock exchanges are operating as non-profit companies with a mutualized structure wherein the members have the ownership as well as trading rights. The enactment of this law will bring the Pakistan capital market at par with other international jurisdictions such as India. The law requires the stock exchanges to be demutualized within 119 days of its promulgation in line with pre-defined timelines specified for completion of various milestones involved in the demutualization exercise. Demutualization is a well-established global trend and almost all stock exchanges worldwide operate in a demutualized set up. Demutualization will assist in expansion of market outreach. the UK. OGRA. Singapore. DGPC. 2012. the US. comprising members from all the three stock exchanges and the commission to take necessary steps for encouragement of new listing. Listing Guide Book In order to facilitate the issuers/offerers of securities and to create awareness among the general public about the process of initial public offerings (IPOs). An IPO Summit has been organized to identify potential IPOs and to attract them to list their companies on the stock exchanges Various regulatory bodies such as PTA. Hong Kong. and Turkey. Demutualization will also facilitate consolidation of brokers leading to financially strong entities. demutualization and integration of the stock exchanges and had been drafted by the SECP after consensus with all the stakeholders. Malaysia. Also. PPIB. Such steps include o o o revision of the existing regulatory framework for new listing introduction of SME board for listing of small capital based companies and venture companies amendments in the listing regulations for reviewing the minimum allocation of capital to the general public shareholders. A demutualized stock exchange will be in a better position to attract international strategic partners and good quality issuers. ` ` 88 . The demutualization law provides a framework for the corporatization. The demutualization bill was approved on March 27. improved liquidity and better price discovery. due to lack of resources our exchanges have not been able to grow to the expectations of investors. as trading activity is mostly concentrated of these exchanges with the dominant share going to the Karachi Stock Exchange. Demutualization would result in enhanced governance and transparency at the stock exchanges and greater balance between interests of various stakeholders by clear segregation of commercial and regulatory functions and separation of trading and ownership rights. This structure inherently creates conflict of interest as members predominantly control the affairs of the stock exchange which results in lack of transparency in the operations of the stock exchange and compromises investors’ interest. Corporatization and demutualisation of stock exchanges would entail converting the stock exchanges’ structure from non-profit. 2012. in a joint session of the Parliament. a listing guide book (LGB) has been published by the SECP. At present. Germany. mutually owned organizations to for-profit entities owned by Box-1 Measures to encourage New Equity Listings: Various steps are being taken to encourage new listings which include the following: ` The management of unlisted public companies is being approached through stock exchanges to motivate them for listing at the stock exchanges.Pakistan Economic Survey 2011-12 promulgated with the signing of the bill by the President of Pakistan on May 7. LGB not only contains general information about the purpose and benefits of listing but also contains all major legal requirements applicable to IPOs and listings. Australia. resulting in larger number of investors. SBP and BOI have been approached so that their regulatees can be motivated for listing Formation of a technical committee. 30 Debt Capital Markets The importance of a sound and diversified financial sector.04 10. the government effectively establishes the benchmark for the pricing of private sector debt instruments. The major drivers of financial assets in Pakistan are deposits and government bonds.65 1.73 4.26 7.262.933. However.00 3. on the other 89 .52 -8.46 20. equity markets have grown more significantly.95 82.12 2.65 percent). providing the benchmark yield curve for private issuances.408.70 4659.69 9816.21 0.32 -18.06 1.56 3.79 6. During the past few years the significance of debt markets and in particular. Some of the markets witnessed negative growth ranging from 18.59 2762.07 132064 3448. as in Pakistan. Table 6. In Pakistan.46 91.98 17.03 4291.26 87. and bringing uniformity in the listing regulations of all the three stock exchanges of Pakistan Global Stock Markets During fiscal year 2011-12.98 -1842.21 3888.23 -7.20 7.08 85.83 61.77 50. It may be noted that compared with the other world indices.73 1.78 44.00 2.014.72 -3.weighted China Shanghai Comp Source: Karachi Stock Exchange 12496.068.87 29.02 1. the leading stock markets indices of the world observed mixed trends. Philippines (19. Pakistan (10. which efficiently performs the function of financial intermediation.44 22398.22 0.50 4.Capital Markets o o devising a procedure for allocation of capital to various categories of applications during IPOs.33 1.59 -499.121.23 7.80 2100. As the primary issuer of sovereign bonds of various tenors.29 10.58 17. the bond markets has been realized as a complementary source of finance.13 percent).138.10 18845.53 6.509. Indonesia Jakarta composite (5.88 80.57 1579.761. can hardly be overemphasized. whereas corporate bonds remain a very small portion.87 8652.65 267.62 0.67 -719.79 1265. This was mainly due to the steps taken by the current government to boost the confidence of the equity market investors which included reforms in the Capital Gains Tax. etc.03 percent).20 -177.02 42.09 6.70 28.596.083.107.404.15 -4. 2011 to March 2012 Date Change June 2011-Mar Index 2012 30-Jun-2011 31-Mar-2012 Points % Local Currency V/s US$ 30-Jun-2011 31-Mar-2011 KSE 100 Index Philippines PSE Composite Jakarta Composite Kuala Lumpur KLSE Composite US S&P 500 New Zealand NZX 50 UK FTSE100 Australia AORD Seoul Composite Tokyo Nikkei225 Singaporer Strait times Hong Kong Hang Seng Bombay Sensex Taiwan T.99 1.20 -239.47 -109.73 816.09 3120. Whereas major stocks which observed positive growth include.55 5. the bond market is dominated by government bonds. Notably.13 19.80 -86.131.00 3.84 1. In most Asian countries. the Pakistan stock market performed well during the current fiscal year.6: Global Stock Indices during June 30. whereas the capital markets developed relatively slowly.72 percent).99 percent) and Tokyo Nikkei 225 (2. Pakistan Investment Bonds (PIBs) remain the longest tenor sovereign bonds.90 9. within the overall capital markets.93 1.76 5.33 8.97 1.62 0. the government has a ‘market-completion’ role in the development of the debt market.77 -2.00 2.03 5. it has been observed over the years that Pakistan’s economy relied mostly on the banking system to meet the financing needs of the economy.010.420.52 232.35 5945.65 -8.768.1 percent (China) to 3 percent (UK).55 1.555. US S&P 500 (6.52 -1441.08 13.95 43.47 3. The National Savings Schemes (NSS).570.98 -5. 9 below: .50 Source: Securities Exchange Commission of Pakistan Further. 000.Pakistan Economic Survey 2011-12 hand. 15. offering Rs. Engro crop. Rs.7 billion. Sukuk* 04 112. (2nd Issue) (2nd issue-Engro Rupiya Certificate) Summit Bank Limited June 01.7: Listing of Debt Instruments during July 2011 to March 2012 S. were offered to retail investors only whereas. offering a risk free investment to the bond holders at premium interest rates depending on the maturity of the bond. The TFCs by Engro Corporation Ltd. 1 billion by Engro Corporation Ltd and offering Rs. 5. 7. was oversubscribed. were offered to both institutional and retail investors. A well-developed corporate bond market is essential for the growth of the economy as it provides an additional avenue to the corporate sector for raising funds for meeting their financial requirements. October 27. 159. they present a low risk long term investment option. 10. in addition to the above. 1..August November 04. TFC Issue by Engro Corporation Ltd. They are highly liquid Statutory Liquidity Requirement (SLR) eligible securities that are actively traded in the secondary market. TFC Issue by Summit Bank Ltd. Details are presented in Table 6. Backed by the government.29 iii.291 billion and Rs.No. 2011 31. The details of these privately placed corporate debt issues are as follows: Table 6. During the period under review JulyDecember 2011 two listed debt instruments were offered to the general public i.2011 Listed at KSE LSE Issue Size: (In billion rupees) 2.00 ii. Ltd. Name of Security No.2011.433 billion.393 billion by Pakistan domestic Sukuk company Limited. 2012 a total of five debt securities issued through private placement were reported.51 *includes two Sukuk Issues of Rs.21 Total 06 113. of Issues Amount (In billion rupees) i. provide risk-free investment options to retail and institutional investors. 20 and 30 Years. Commercial Papers 01 0.50 3. Name of the Company Floated on Formal Listing Date i. 2012 a total of 131 corporate debt securities were outstanding with an amount of Rs.8: Debt Securities issued through Private Placement during July 2011 to March 2012 S. The government conducted fourteen auctions of PIBs in 2009-10. TFCs offered by Summit Bank Ltd.246 billion respectively. No.. 2011 01-Dec-11 KSE TOTAL 1.169. The minimum denomination of PIBs is Rs.e. Table 6. The Pakistan Investment Bonds offer a fixed semiannual coupon and repayment of principal at maturity. 2 billion Term Finance Certificates (TFC) with a Greenshoe Option of Rs. whereas. Private Placed Term Finance certificate) 01 1. 64. with tenors up to 10 years. Source: Securities Exchange Commission of Pakistan As of March 31.108. 90 500..00 ii. PIBs are issued with tenors of 3. These are long term Bonds issued by the Government of Pakistan.5 billion TFCs by Summit Bank Limited. during the period July 2011 to March. Government Securities Pakistan Investment Bonds (PIBs) are long term bonds issued by the Government of Pakistan and sold through the State Bank of Pakistan via periodic auctions.100.. was under subscribed. seven in 2010-11 and seven in 2011-12 (Jul-Mar) raising Rs. increased transparency. the Securities and Exchange Commission of Pakistan has recently approved notification of the Debt Securities Trustee regulations (DST Regulations).53 0. ii. The main objective of the DST Regulations is to protect the interests of debenture holders and to safeguard the breach of provisions of the Trust Deed. Name of Security i. Development of New Regulatory Regime for Brokers In order to ensure that standards and principles adopted in the markets conform to international best practices. No.43 Box-2 Measures for the development of debt markets: ` ` In order to encourage listing of debt securities on the exchanges. Capital Market Reforms and Development Activities During the period under review. 2005 Review of the proposals of CRAs regarding enhancement of the rating universe Diversification of capital structure of CRAs and their listing on the stock exchanges Regulatory framework for establishment of a Bond Pricing Agency (BPA) In order to rationalize the cost of issue of corporate bonds.9: Debt Securities Outstanding as on March 31. redemption of debentures and redress of complaints of debenture holders. monitor the working of debenture trustees by calling for details regarding compliance by the issuers of the terms of the trust deed. creation of security. Development of new regulatory framework In one of the major moves towards development of a vibrant debt market in Pakistan. a revised market participant regime is being proposed. In this regard a committee.Capital Markets Table 6. 2012 S. iv. the Bonds Automated Trading System (BATS) at the 91 . The highlights of reform measures introduced during the period under review are as follows: o For development of the debt market. payment of interest. iii. a separate set of regulations for debt securities are being framed Regulatory framework for the credit rating agencies (CRAs) are being revamped so that CRAs play a more effective role in the development of the debt market.21 500. of Issues 37 39 54 01 131 Amount outstanding (In billion rupees) 66.18 365. comprising of the representative of SECP and SBP and CRA has been constituted by the Commission which has been mandated with the tasks of: o o o o o o Review of the existing regulatory framework for CRAs in line with the international best practices Strengthening of the existing regulatory Framework for CRAs viz the credit rating companies rules. steps are being taken to reduce the rate of stamp duty applicable on issue and transfer of Term Finance certificates (TFCs) and commercial papers. Listed Term Finance Certificates (L-TFCs) Private placed term Finance certificates (PP-TFCs) Sukuk Commercial Papers Total Source: Securities Exchange Commission of Pakistan No. the Securities and Exchange Commission of Pakistan (SECP) continued with its reform agenda for strengthening the Pakistani capital market with the objectives of improved risk management.51 68. The proposed regime would address some of the most significant issues pertaining to the business of stock brokerage and is expected to increase the efficiency of our capital market. investor protection and new product/market development. 1995 and the code of conduct for CRAs dated February 17. wheat.10. Through the amended rules. silver (10 tola) and gold (10 ounces). CDNS is currently engaged in restructuring of the CDNS to better cater for the needs of the investors and introduce more profitable products. amendments were approved to the Securities (Leveraged Markets and Pledging) rules. To fulfill the hedging requirements of various groups of investors in the commodities market. the concept of market makers was introduced which will promote liquidity and investors’ confidence through enhanced profitability. The CDNS offers attractive saving products to various categories of people to suit their specific needs. Also. along with waiver of the mandatory condition of prescribing minimum liquidity requirement for selecting securities eligible for margin financing. Details of the investment made in the saving schemes are given in Table: 6. resulting in greater efficiency and transparency in the trading and settlement process. a centralized platform was developed at the NCCPL for mandatory reporting of trades executed in the unlisted TFCs. effective Know-Your-Customer (KYC) and Customer-Due-Diligence (CDD) policies and procedures were introduced for the capital market and its intermediaries. Further. Further. To add depth and diverse investment alternatives to the market. To strengthen monitoring and compliance by market intermediaries with the applicable regulatory provisions and to improve enforcement power of the regulators. To ensure easy access to financing and liquidity to the market. reduced volatility in prices and efficient execution of orders. silver (100 ounces). A brokerto-broker functionally was introduced in BATS which enables settlement of the inter-exchange trades directly with the National Clearing Company of Pakistan Limited (NCCPL). regulations governing system audit of the brokers of KSE were revamped with major changes in the brokers’ audit process and scope. to facilitate investors trading in Term Finance Certificates (TFCs) listed at different exchanges. cotton. new futures contracts were introduced at the Pakistan Mercantile Exchange Limited (PMEX) in sugar. 2011 thereby removing practical hindrances and creating flexibility for margin financing and margin trading products. which provides access to real-time trading information in unlisted TFCs thereby providing better price discovery and transparency. various new product/system development initiatives were undertaken. overall portfolio diversification and transparency. Focus is on introducing short term saving certificates and expansion of CDNS network not only across the country but also to overseas Pakistanis. o 92 .Pakistan Economic Survey 2011-12 stock exchange was revamped along the lines of the Bloomberg-based-E-Bond with various system enhancements for facilitating the price discovery process of debt instruments and price negotiation between the market participants. a regulatory framework was introduced for facilitating inter-exchange trades in listed TFCs. In line with international best practices. EFTs are a globally popular investment product which allow investment in a diversified portfolio of securities tracking a benchmark index and provide investors with benefits such as trading flexibility. internet trading regulations were approved for KSE which comprehensively cover various aspects while effectively addressing issues unique to this segment including risk management and privacy of investors’ accounts. o o o o o National Savings Schemes Central Directorate of National Savings (CDNS) is engaged in making innovative efforts to promote a saving culture in the country. crude oil (10 barrel). To ensure improved monitoring of internet trading activities offered by the brokers. Exchange Traded Funds (ETFs) were introduced at the Karachi Stock Exchange (KSE). To implement robust Anti-Money Laundering and combating the financing of Terrorism regime in the Pakistan capital market in light of the Financial Action Task Force (FATF) recommendations and international best practices. reduced cash margin requirements were prescribed and individual investors were allowed to participate as financiers in the margin trading market. 240. 400 billion.484.62) -43.30) 44. Though the equity markets have depicted a bull run in the current financial year.469.419. equity funds have not been very successful in attracting substantial inflows.46 2010-11 9. 290 billion to Rs.15) 21.537.943.375.73) 38.625.74 (10.69 18.99) -13. Name of Scheme 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Defence Savings certificates National Deposit Scheme Khaas Deposit Scheme Premium Saving Certificate Special Savings Certificates(R) Special Savings Certificates(B) Regular Income Certificates Bahbood Savings Certificates Pensioners’ Benefit Account Savings Accounts 2007-08 (4.53) 38. 2008.314.74) 46.695.01) (2.960.18) (273. the Securities Exchange Commission of Pakistan.64 (0.267.748.10: National Savings Schemes (Net Investment) S.731.656.460.411.128.56 17.220.85 1. 93 .79 (77. in its continuous efforts to curb money laundering.Capital Markets Table 6.05 (50.26) -(24.538.71) (1.556.800.70) 31.79 61.03 (8.799.81 Total Source: Central Directorate of National Savings Mutual Funds The period July 2011 to March 2012 marked a substantial rise in mutual funds with total assets of the industry surging by 24 percent from Rs.85 1.317.21 (0.989.60 (0. As of March 31.05 (6.40 -234.13) (3.899.43) 0. o Furthermore. The upward trend in the assets of the mutual funds industry is primarily attributed to soaring investment in money market and capital protected funds since the industry continues to be predominantly risk averse.27 59.10 (1.30) 14.53 (195.107.32 -107. During the period July-March.28) (2.93 8. the SECP also allowed equityoriented mutual funds to invest in all kinds of futures contracts to effectively achieve their investment objectives.53) 40.84) -61.03) 14.189.71 2009-10 (32. and Enhanced oversight by trustee of a mutual fund in line with best international practices.12 2008-09 (27.98 (Rs.37 Special Savings Accounts 5.714. SECP to facilitate the industry. Some of the important amendments made included the following: o o o Registration of trustee to bring it within the regulatory ambit Eliminating the seed capital requirement for new funds Empowering unit holders of a mutual fund to change its management rights in case redemption of units is suspended beyond fifteen days.96 22.32 (625.094. 2011-12.277.97 -267. issued a circular on reporting/submission of suspicious transaction/currency transaction by Non Banking Finance Companies (NBFCs) to the Financial Monitoring Unit under the Anti-Money Laundering Act 2010. Billion) 2011-12 (Jul-Mar) 4.48 Mahana Amdani Accounts (24.64) -128. brought about significant amendments in the Non-Banking Finance Companies and Notified Entities Regulations.627.166.856.521.No.15) (0.94) 41.99) (0.493.331.62 41.07 National Savings Bonds -89.16 225.26 61.51 11.30 31.28 78. the number of mutual funds in the industry stood at 146 compared to 137 in June 2011.215.566.68 3.57 (0.649.946.71) (0.74 38.97) Prize Bonds 8.09 3. Further. This measure was also taken in anticipation of its potential impact on growth and development of the futures market. Influx in income funds is expected to remain subdued so long as the debt market is revitalized.18 18.083.940.021. 2012. 40 registered modaraba companies are in existence and the total number of operational modarabas are 26. In order to improve the financial standing and image of modarabas in the financial sector of the country.9 billion. the joint session of the Parliament unanimously approved the Modaraba Companies and Modaraba (Floatation and Control) Ordinance. 2012. The total assets of the modaraba sector stood at Rs.11: Major highlights of mutual funds during February 2012 Total assets of Industry* Total number of funds* Total number of AMCS/IAs* Assets Size of AMCs/IAs* Discretionary /Non-discretionary portfolio Funds launched during the month Source: Securities Exchange Commission of Pakistan *include assets under management of Arif Habib and MCB amounting to Rs. 2011. code and guidelines etc. 2012. 43. corporate financial services. These will strengthen the Shariah compliance by modarbas and help them to be recognized as true Islamic financial institutions in the financial sector. Therefore. 399 billion* 128 24 Rs.392 billion in June. project financing. 26. focus on quasi banking . most of the modarabas continued to perform well and record profits. The investment banking sector showed a strong performance and continued to flourish till the mid1990s.757 billion against Rs. Modarabas have played a vital role in the development and growth of Islamic modes of financing in the country and the capital markets since their inception in 1980. so as to strengthen regulatory framework for the modaraba sector and enable the Commission to safeguard the interest of stakeholders in a more proactive and effective manner. In terms of the 94 said mechanism. the SECP. Similarly. trading or other services sectors. However.34. Significant reasons for the downfall of investment banking sector are small capital bases with limited ability to absorb significant shocks. as on February 29. Currently.136 billion Rs. Despite the prevailing financial and economic crises in the country. Rs. 8. A broad range of business services were envisaged that include money and capital market activities. they could not absorb the changing economic conditions of the country. modarabas create a distinctive value proposition that meets the needs of its customers. 26. the modarabas are required to appoint independent Shariah advisors who would provide necessary guidance to the management companies to carry out the business operations of modarabas in accordance with the Shariah principles. after detailed consultation with stakeholders and industry experts. 2009.560 billion during June. Most of the Modarabas in Pakistan are doing business in the financial sector while a few are engaged in the industrial. Like any other industry. 11. During the current financial year. Investment Banks and Leasing Companies Investment banking started to take root in Pakistan in the second half of the 1980s. (Ammendment) Bill. 44 billion - Modaraba The modaraba sector has an established legal framework that allows it flexibility to provide a wide range of financial products and services under the tenets of Islamic shariah which reflect the innovative and dynamic nature of the industry. and operations in the call and money market. there are only seven functional investment banks operating in Pakistan compared to 13 in 2005. The first report of the Shariah Advisors on the affairs of modarabas will be disseminated to the stakeholders with the annual audited accounts of modarabas for the year ending June 30. 2011.Pakistan Economic Survey 2011-12 Table 6.896 billion. introduced “Shariah compliance and Shariah audit Mechanism” for modarabas. At present. the aggregate paid-up fund of modarabas was Rs. due to non-diversification of their portfolio.486 billion (inclusive of revaluation reserves) compared to Rs. As per the quarterly financial statements of modarabas. The bill seeks to empower the Securities and Exchange Commission of Pakistan to make regulations and issue circulars. total equity of the modaraba sector was Rs. 11. this sector started facing severe problems and witnessed a declining trend. While reforms at the national level will take some time. The penetration of VPS is low at the moment because these are still new to Pakistan and nonbinding upon employers and individuals.040 Source: Securities Exchange Commission of Pakistan economic life. the government has been considering reforming the current pension system.e. failure to develop competencies for delivering non-fund based services. with the approval of the government. 2012. necessary amendments were made to the regulatory framework to allow investment banks to undertake brokerage business from their own platform instead of forming a separate company. However. The amendment is expected to increase in the business volumes of leasing companies as they will be able to entertain customers who desire a shorter lease period and finance assets with a shorter . high cost of funds. Table 6. to promote corporate brokerage houses culture.300 Total Deposits 7. the leasing sector in Pakistan has been facing a multitude of challenges like liquidity issues. Lately. high level of nonperforming assets and limited outreach. 11 pension funds have been launched under VPS. Presently. It is hoped that. So far. The objective was to encourage investment banks to focus on providing non-fund based services. During 2011. an important amendment was made in the Non Banking Finance Compinies & Notified Entities (NBFC & NE) Regulations. the possibility of introducing an appropriate regulatory regime for non-deposittaking and non-listed Non Banking Finance Companies and ensuring that only licensed entities engage in investment banking activities are being explored for reviving the investment banking sector. The government has given tax incentives to individuals under the current tax regime.566 Total Deposits 5.12: Financials of Investment Banks in February.242 Total Equity 4. In order to revive the investment banking sector. limited capacity to expand outreach. again the demographic change and affordability have been the driving force for reforms in these countries. the system would gain a foothold and acquire substance. Several important amendments to the applicable regulatory framework have been made over a period of time in order to promote this sector. maturity mismatch in their assets and liabilities. The pension fund promises a stream of income to its members after retirement. Luckily. The countries that were in the process of transition from a controlled economy to a market economy confronted the challenge of introducing a public pension system in place of social security available to their populace under the socialist system. 95 Leasing is a mature business model. the SECP has introduced Voluntary Pension System (VPS). deleting the condition that requires a leasing company to fix the period of finance lease for not less than three years.13: Financials of Leasing Companies in February. and the rise of universal banking. 2012 Amount Particulars (Rs in millions) Total Assets 18. 2012 Amount Particulars (Rs in millions) Total Assets 34. low capitalization. The total number of active leasing companies was 9 as of February 29. high cost of funds. 2008 i. the dependency ratio at this point of time is extremely favourable for Pakistan to shift from a defined benefit system to a defined contribution system. limited sources for resource mobilization.273 Total Equity 3. Table 6. In high-income countries. However. to play a crucial role in the capital market. the driving force has been the threat that the current pension system will become unaffordable as demographic developments presented a major risk. to address the corporate governance issues in the brokerage industry. It is anticipated that Pakistan shall also face similar challenges in the near future. and. with the passage of time and complementary reforms in defined benefit retirement schemes.Capital Markets activities. VPS envisages contributions by Pakistani nationals in a pension fund approved by the SECP.650 Source: Securities Exchange Commission of Pakistan Voluntary Pension System The last two decades witnessed pension reforms globally. provident fund. o In line with international best practices. work of the committee is in progress. the SECP may explore the possibility of allowing new commodity exchanges to function in the country. efficiency and transparency in capital market operations. and transfer of risk management to NCCPL. Demutualization would result in enhanced governance and transparency at the stock exchanges and greater balance between interests of various stakeholders by clear segregation of commercial and regulatory functions and separation of trading rights and ownership rights. Box-3 Future Road Map In consultation with relevant stakeholders. It also provides the investors with small capital base an opportunity to invest in the real estate assets. commodities and currencies markets. 500.829 29-FEB-12 11 1. Demutualization and Integration Bill has been approved in the joint session of Parliament in March 2012. This measure will also facilitate healthy competition and business generation in this segment while contributing towards greater market outreach to the investors resulting in growth in the size of the commodities market. Amongst these.301 30-JUN-11 9 1. improved liquidity and better price discovery at the stock exchanges. as presently the potential offered by this market segment is not being utilized to the maximum. To encourage funding of retirement schemes VPS needed to be made interchangeable with other retirement schemes. The bill provides a framework for the corporatization. The limit is still lower than that available to those employed in private or public sector institutions. The plan envisages introduction of key structural and regulatory reforms. these measures still proved inadequate in attracting high yield properties into REITs. The SECP. resulting in larger number of investors.000 of taxable income. However. A demutualized stock exchange will be in a better position to attract international strategic partners and good quality issuers. most important of which are given below: ` The Stock exchanges (Corporatization). This committee will review the REIT models in different jurisdictions and suggest an appropriate regulatory model for our market.Pakistan Economic Survey 2011-12 Table 6. It will also assist in expansion of market outreach. of pension Net assets in Rs. Efforts are underway for achieving the plan’s objectives within timelines provided. and measures for improving governance. amending the REIT regulations in 2010 was one notable initiative. the SECP has taken necessary measures to attract entrepreneurs to venture into the regulated real estate business. is in the process of ensuring that subsequent to the enactment of the law. Currently there are two REIT management companies. demutualization and integration of the stock exchanges. Currently. Significant amendments included reduction of fund size. efforts will be undertaken for NCCPL to function as Central Counter Party. establishment of a settlement guarantee fund. operating in Pakistan. 96 . derivative. the maximum limit for tax credit for savings through VPS to individuals was up to Rs. development of equity. risk management. development of Shariah-compliant investment alternatives. Demutualization will also facilitate consolidation of brokers leading to financially strong entities.14: Growth of Pension Funds since 2007 No. Before June 2011. a comprehensive three-year Capital Market Development Plan (2012-14) has been drafted. ` For developing the commodities market. introduction of hybrid REITs and reduction in share capital for the REIT management companies (RMCs). along with the stock exchanges. In the last budget the limit has been increased up to 20 percent of taxable income. the activities set out therein are completed in a timely manner.979 Source: Securities Exchange Commission of Pakistan REIT Real Estate Investment Trusts (REITs) provide property owners an opportunity to securitize their properties. This will encourage funded schemes leading to accumulation of assets and efficient deployment of retirement savings. debt. and gratuity and superannuation funds. Date funds million 30-JUN-07 4 420 30-JUN-08 7 766 30-JUN-09 7 870 30-JUN-10 9 1. To improve the regulatory framework a committee has been formed which includes the leading market players. Keeping in view the macroeconomic indicators.557 31-DEC-11 11 1. and shore up the strength of. determine. crude palm oil and maize. endeavors will be made for listing of government debt instrument at the stock exchanges and integration of National Savings Schemes instruments in to the mainstream capital market. increasing market depth. 2012. the SECP is contemplating the establishment of a Shariah Board comprising of eminent Islamic scholars and market professionals to ensure that all products/services offered under this umbrella are in conformity with the Shariah principles. However. Also. a Centralized KYC Agency will be established for registration and maintenance of investors’ KYC records in line with the international best practices pertaining to KYC and CDD policies. in coordination with relevant stakeholders including the federal government and the State Bank of Pakistan. reducing information asymmetry. dialogue will be initiated with foreign stock exchanges for cross listings of foreign indices at Pakistani stock exchanges. collect and deposit the Capital Gain Tax (CGT) on listed securities. Conclusions The performance of stock markets presented a mixed trend during the current fiscal year. the Pak rupee depreciation and increasing fiscal deficit of the government have all contributed to the underperformance of the capital market during first half of current fiscal year. the KSE-100 index resumed its momentum during the 3rd quarter of the 2011-12 owing to certain encouraging measures like considerable reduction in discount rate by the SBP during latter period of the first half of current fiscal year and increase in foreign exchange reserves. grading/certification capabilities for commodities market. increasing credibility of financial statements through accurate asset-liability valuation. is in the pipeline.Capital Markets ` For developing an Islamic capital market in line with global best practice. Also. natural disasters. the capital market. products and services in order to deepen the capital market. The BPA is expected to contribute towards stimulating activity in the primary and secondary debt markets. ` ` From the standpoint of risk management and transparency. and rolling currency contracts on foreign currency exchange rate pairs. work is underway for establishment of a collateral management company that would have a national network of approved warehouses with storage. efforts will be made for consideration of existing Islamic institutions and development of innovative Shariah compliant institutions. For investors in the commodities segment. To accelerate growth in the debt market. Regarding new product/system development. efforts will be made for introduction of new futures contracts in commodities like cotton seed. product development etc. Further. Various factors such as unstable law and order situation. the market sentiment was boosted by the proposed promulgation of the Capital Gain Tax Ordinance under which the National Clearing Company of Pakistan Limited (NCCPL) has been appointed as an intermediary entity to compute. Also. These KYC records will be available for access by all market intermediaries and this measure will assist in removing the duplication presently faced in the KYC process by bringing uniformity to the same. to promote transparency and price discovery of debt securities and minimize pricing issues of debt securities. oilcake. Also. The subject Ordinance was finally promulgated on the 24th April. 97 . rumours on the economic front pertaining to reduction in military and civil aid from international donors. to boost activity in index futures market. establishment of an independent Bond Pricing Agency (BPA) conforming to international standards. The government is committed to formulating timely and effective policy to spur activity in. the future SECP agenda includes introduction of trading in index option to provide investors with avenues to develop better investment and hedging strategies. inflation.0 0. The surge in food and commodity prices witnessed during 2008-09 pushed the consumer prices index (CPI) to a record level of 25. The World Bank has also rated high food prices as the biggest challenge facing most developing countries. trade and fiscal balances and ultimately resulted in slow down of GDP growth.0 10. CPI 20.consumption.1: Inflationary Trend 25.0 15. The financial crisis emanated in subprime mortgage loan portfolio and shocked the confidence of the international institutions and markets which in turn badly deteriorated the economic development and balance of payments across the world. In the developing countries. The financial meltdown led to a backlash on consumer Fig-7.0 Jan-09 Jan-10 Jan-11 Nov-08 Nov-09 Nov-10 May-09 May-10 May-11 Nov-11 Sep-08 Sep-09 Sep-10 Mar-09 Mar-10 Mar-11 Sep-11 Jan-12 Jul-08 Jul-09 Jul-10 Jul-11 Mar-12 The rising trend in domestic prices in tandem with global food and fuel prices affect several macroeconomic dynamics . with a large number of people already living close to the poverty line. investment. This coupled with spike in commodity and oil prices led to a decline in the aggregate demand and raised inflation the world over.0 5.Chapter 7 Inflation The global economy experienced significant financial crises in 2007-08.3 percent in August 2008. Regional inflation is 99 . Asian Development Bank (ADB) report of 19th March. This rising trend in inflation is not specific to Pakistan. the crisis was seen at the time when they were already experiencing severe terms of trade and slower economic growth. is one of the most vulnerable regions in the world to food price shocks. The report further pointed out that the region.0 Old Base 2000‐01=100 New Base 2007‐08=100 markets and broadly on the process of investment in the production of goods and services. 2012 titled “Food Price Escalation in South Asia” noted that the region suffers from a higher overall food inflation rate than the rest of developing Asia. In Pakistan the affect was felt much severely as the country was also experiencing internal security issues and compaign against terrorism. 5 3.9 4. iv.1 10.9 8.7 9.5 6.000).6 10.9 Nov-11 10. medium small cities (population 50.9 3. ii.3 12.4 8. 12000 Rs.5 11.6 9.6 12. 35000 . the income groups have been divided into five income quintiles as under: i.1 9.3 8.7 9.3 -0.7 2.1 8. 12001 to Rs. Availability and access. The Pakistan Bureau of Statistics (PBS) has changed the base year of the price indices from 2000-01 to 2007-08.0 11. 18001 to Rs.6 10.5 -2. 8000 Rs. and. 18000.1 5.3 3.2 11.9 Source: PBS. 5000 Rs.5 9.5 8.5 0.4 8. The old basket of commodities in the CPI has been revised and the commodities increased from 374 to 487 items and the commodity groups from 10 to 100 12. In such a situation controlling the inflation becomes unmanageable.7 4.8 percent and 21 items in the old basket have been dropped while 111 new items have been added. The food group weight has been reduced from 40.4 4. Up to Rs.5 11.4 Sep-11 10.1 3.7 9.000 to 500.0 9. the coverage in terms of income groups is as below: i.1 0. The other measures of inflation used in Pakistan are the Wholesale Price Index (WPI) and Sensitive Price Indicator (SPI). Ministry of Commerce & Industry India. The sub index of transport and communication in the old base year has been split into two separate sub groups as transport and communication group. 35000 Above Rs. 3000 Rs.9 2.0 10.000).1).1 10.2 2. 3001 to Rs. 12000.9 3.4 7.2 10.7 Feb-12 11.2 9.9 Oct-11 11.2 6.8 4.0 8.2 5.1 8. Bank of Thailand.000 to 100. In the CPI series with base 2000-01. Health and Restaurant two new sub indexes have been included. v. their weights derived from Family Budget Survey 200708.2 Mar-12 10.9 10.1 Jan-12 10. Food insecurity is a multi dimensional problem and deserves to be tackled through a multi pronged strategic approach where demand.4 6.1 7.8 6.6 12. ii. The most visible impact of rising food prices on the economy is acceleration of inflationary pressure.000 and above).3 10. and Above Rs.2 Aug-11 11.0 13. iv. The coverage of cities has also been increased from 35 to 40.3 7.4 7.2 9. Bangladesh and Thailand (Table 7.2 Table: 7.6 13. Pakistan is experiencing double-digit inflation over the last several years mainly due to increase in prices of food. supply and distribution factors need to be taken into account.8 9.9 10. iii. Rent being an important component of CPI is now computed on the basis of real rental value rather than using wage rates and prices of construction materials.1 4.8 4.2 Dec-11 9.0 13. two important components of food security needs to be addressed simultaneously. 5001 to Rs. Food carries the largest weight in three price indices and hence influences the movement of these indices even with slight variation in prices.2 8.3 percent to 34.1 8.4 3. which by comparison with the previous base has undergone considerable change in terms of revision to commodity groups. Proper representation has been given to large cities (population of 500.4 9.0 9. Sri Lanka CPI Food 7. and Rs. 8001 to Rs. medium cities (population 100.5 9.1 2.8 -0.7 10.7 -4.4 10. coverage of items to capture the changing pattern of consumption of the people.6 10.2 11.7 4.8 9.Pakistan Economic Survey 2011-12 estimated to have also risen in India.5 6.6 11.6 5. BBS.000) and small cities (population below 50.4 17. iii. Inflation is generally measured by the Consumer Price Index (CPI).5 4.1 9. 12000 In the new series with base 2007-08.1 Apr-12 11.4 7.1 Regional Countries Food Price Inflation Pakistan India Bangladesh Thailand CPI Food CPI Food CPI Food CPI Food Jul-11 12. Up to Rs. Combined Upto Rs. items are categorized into five commodity groups namely: (i) food products.7 percent. Thereafter it increased steadily and reached 11. 101 . apparel and leather products (ii) agriculture forestry and fishery products (iii) ores and minerals. created disruption in the supply chain which resulted in surging inflation.8000 8001-12000 Source: Pakistan Bureau of Statistics (PBS) accommodate changes in the production and sales of commodities in the wholesale market in 21 major cities instead of 18.4 percent. 18001-35000 Above Rs. A set of 463 items have been selected instead of 425 items to Table:7. of commodity groups 2366 No. textiles. The SPI indicates the weekly change of prices of 53 selected items of daily use prevailing in 17 major cities as consumed by six groups (Table 7. electricity gas and water (iv) other transportable goods except metal products.000 per month and an overall households (“combined”) category.2 percent and highest at 11. Upto Rs. beverages and tobacco.35000 The key changes in the computation of the various indices are summarized in Table 7.216 53 53 11236 WPI 18 18 425 106 5 1. Inflation on year to year basis reveals that the CPI was highest in July 2011 at 12. 12001-18000 Upto Rs. gas and fuel prices.2) whose monthly income ranges from Rs. of commodity groups No.4).6 percent in April 2012. of price quotations Base Year 2000-01=100 CPI SPI 35 17 71 374 92 10 106.2 percent. In the current series of WPI. However.2 Inflation by Consumer Income Groups Upto Rs. with coverage of 112 commodities.3 percent in April 2012. Core inflation during the last nine months of the year remained almost at double digit levels except in July 2011 when it dropped to single digit at 9. 8. 35.550 Reporting Frequency Monthly Weekly Monthly Reporting Frequency Income Groups (in base Income Groups (in base Six Quintile Six Quintile year) with separate basket year) with separate basket Source: Pakistan Bureau of Statistics (PBS) Monthly Weekly Monthly Four Four - Inflationary Trends The year 2011-12 (Jul-Apr) witnessed both demand pull and cost push inflation when viewed in the backdrop of the affects of the floods of 2010 and heavy rains in 2011.Inflation The basket of goods that makes up the WPI has also been revised for the base year 2007-08 due to change of consumption patterns. machinery and equipment (v) metal product machinery and equipment. The global spikes in commodities and fuel prices also exerted pressure on domestic inflation.000 to Rs. The main factor contributing to the rise of non-food inflation was the upward adjustment of energy. which almost wiped out the major and minor standing crops in Sindh province. Food inflation on a year to year basis was highest in July 2011 and lowest in January 2012 at 9.3 Price Indices in Pakistan Features Cities covered Markets covered Items covered Commodities covered No. Nonfood inflation was lowest in July 2011 at 9.5 percent (Table 7. in December 2011 it declined to single digit at 9.3 below: Table:7. of price quotations Base Year 2007-08=10 CPI 40 76 487 89 12 148048 SPI 17 53 53 11236 WPI Features 21 Cities covered 21 Markets covered 463 Items covered 112 Commodities covered 5 No. 7 10.5 3.7 SPI The Consumer Price Index (CPI) on average basis recorded as 10.0 10.0 8.5 10.9 10.1 10.2 9.6 10.4 9.5 11.5 percent and 19. food and non-food inflation recorded an increase of 11.3 18.0 20. (Average percent) 2011-12(Jul-Apr) 10.2: CPI (Food.3 9.8 WPI 12.4 Inflation on year on year (Y-o-Y) Basis %Change Commodity Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 12. Non-food).2 5.3 CPI 17.0 15.1 13.9 23.2 4.4 11.5 5.0 10.0 10.8 11.2 percent as against 21 percent last year. The two broad component of CPI.7 7.8 10.1 11.6 Non-Food 9.7 11.1 10.5 11.2 10.3 percent during current period whereas it was recorded to be 23.4 10.2 10.7 11.7 percent respectively during the period under review compared to 18.7 10.8 11. While the Wholesale Price Index (WPI).8 21.7 percent and 13.4 10.1 6.2 9.7 Food 9.8 11.0 2010-11(Jul-Apr) 6.1 percent and 10.8 10.0 CPI inflation during the period (Jul-Apr) 2011-12 increased by 10.7 11.4 10.5 13.5 19. Non-food) and SPI (Percent) Sensitive Price Indicator Non-Food Food Wholesale Price Index Non-Food Food Consumer Price Index 2011-12(Jul-Apr) 0.8 percent on average and that of food increased by 11.8 percent and 10.3 8.8 percent during Jul-Apr 2011-12 as compared to 13.5 9.5 9.3 8.5 Rate of Inflation on the basis of various price indices Items 2010-11(Jul-Apr) A Consumer Price Index Food Non-Food B Wholesale Price Index Food Non-Food C Sensitive Price Indicator 13.0 23.0 9.8 Core 20.2 6.8 21.7 10.1 10.9 18. 102 .8 18.8 18. A slight variation in food prices has a large impact on inflation (Table 7.7 17.9 8.9 11. Food and non-food under WPI was noted as 6.4 12.3 18.7 11. The following table and graph represent the trends in the CPI.Pakistan Economic Survey 2011-12 Table 7. during Jul-Apr 2011-12 recorded as 11.7 8.1 percent.4 10.5 11.2 10.0 15.9 5.0 25.3 8.1 19.1 Fig-7. The food group with 34.0 8.8 13.8 percent weight in the CPI basket has a considerable effect on overall prices. WPI (Food.7 13.0 10.9 percent during the same period last year.9 10.8 10.6 10.8 8. WPI and SPI.6).2 10.8 percent during the same period last year.6 10.5 Table:7.8 percent during Jul-Apr 2010-11. 8 18. the price hike is the consequence of the inflationary gap measured as the difference between monetary expansion and growth of overall national productivity.0 6. Among the non–food items.8 6.8 10.6 3.1 7. nature of items and impact of seasonal variation and availability etc.2 to the scarcity of water in certain regions. supply short fall in the global food markets and oil supply shocks resulting from geopolitical instability in the Middle East etc.7 (%) Point Contribution July -Apr July –Apr 2010-11 2011-12 13. On Average Basis July –Apr July –Apr 2010-11 2011-12 13.4 percent during Jul-Apr 2011-12.1 11. gas. lower agricultural productivity due Table-7. Core inflation which is nonfood .8 11.8 9.8 18.Inflation Table:7.8 7. These included supply disruption on account of the natural calamities during the year as well as the increase in transportation cost due to high fuel prices.5 10.8 10. on the demand side.8 10. CNG and power tariff rates pushed the production and transportation cost up thereby accelerating inflation.3 Inflation by Groups Core Non-food Group Food Group) CPI 2011-12(Jul-Apr) 0 2010-11(Jul-Apr) Percentage points 2 4 6 8 10 12 14 16 18 20 Both supply and demand side factors are responsible for food price escalation.3 Source: Pakistan Bureau of Statistics 2011-12(Jul-Apr) 10.0 34. These include rapid economic growth in emerging countries leading to the increase in international food demand. & Non Alcoholic Beverages Alcoholic Beverages& Tobacco Non-Food Weights 100. the hike in fuel related items such as diesel. The reasons for the rising food prices are manifold.9 103 .6 Rate of Inflation on the basis of Food and Non-Food Groups Items A B C D Consumer Price Index (CPI) Food Group) Non-food Group Core 2010-11(Jul-Apr) 13. The demand and supply side factors responsible for the food price hike in 2007-08 also seem to continue in the current food price hike.7: (Percent) Change In Price Indices Commodity General (CPI) Food.7 percent than food prices.nonenergy is estimated at 10.8 10.9 0. such as items coverage.4 Fig: 7.7 10.8 11.8 1.1 10. The non-food prices increased at a slower pace of 10.2 0.4 65. The divergent trend is due to different factors influencing these two broad components of CPI differently. petrol. 2 14.8 14.6 16.2 2.5 10.4 11.8 14.1 0.8000 8001-12000 12001-18000 35000 Spliced with Base Year 2007-08 = 100 2008-09 17.2 7. Table 7.9 1.8 reflects the highest incidence of inflation (11. Water .5 9.2 2.2 2.0 5.35000 Rs.6 10.0 9.3 6.3 13.2 3.6 13.1 On Average Basis July –Apr July –Apr 2010-11 2011-12 9.4 8.0 15.0 14.3 10.3 11.2 0.6 5.0 17.7: (Percent) Change In Price Indices Commodity Non-Food Non Energy Clothing & Foot wear Housing.2 1.1 15.5 0.6 11.1 10.0 12.1 0.1 0.0 14. Fig-3: Monthly % Change of CPI.1 17.2 0.0 17.5 7.8 percent) in consumer items. Upto Rs.3 10.8 0.5 0.7 12.3 0.6 16.Above Rs. This reveals the fact that a greater portion of expenditure of an average household is spent on food whereas the prices have recently increased significantly.8 10.3 0.0 11.4 4.2 2.4 2011-12 10.7 14.4 Source: Pakistan Bureau of Statistics (PBS) 104 . 18001.9 13.4 0.4 percent) in the highest income earning group.0 7.9 11.0 18.7 0.0 13.02 0.8 2009-10 10. 8.3 9.2 13.4 Inflation by Income Groups Inflation by income groups affects the consumption pattern of various income groups.8 18. As already stated food carries the highest weight (34.2 17.0 10.4 14.3 13.1 11. Food and Non-Food 18. Upto Rs.2 0.7 13. Gas & other Fuel Furnishing &Household Equip.4 0.9 1.8 9.000 per month.Elec.5 13.000 to Rs.0 16. Maintenance Health Transport Communication Recreation & culture Education Restaurant & Hotels Miscellaneous Source: Pakistan Bureau of Statistics (PBS) Weights 53.8 5.Pakistan Economic Survey 2011-12 Table-7.1 3.5 14.9 (%) Point Contribution July -Apr July –Apr 2010-11 2011-12 5.6 0.8 Inflation by Consumer Income Groups Fiscal Year Combined Upto Upto Rs.6 29.5 10.2 0.3 Jul-Apr 2010-11 13.0 3. 35.2 10. The current CPI covers the consumption of those households whose monthly income ranges from Rs.8 2010-11 13.0 Oct-11 Sep-11 Aug-11 Nov-11 Dec-11 Feb-12 Jan-12 Jul-11 Mar-12 Apr-12 CPI Food Non-Food Table:7.7 19. gram (whole).5 35.5 23. Table: 7. 8001-12000 Upto Rs.9 Furnace Oil 3.8000 Upto Rs.9).7 percent and 13.1 0.4 0.9 15. 12001-18000 Upto Rs. The largest increase in wholesale prices was recorded for fertilizer at 55. The 14 major commodities covered under various sub groups of WPI contributed about 8 percent point to the overall increase in WPI.8 Cement 1.2 Vegetable Ghee 1.6 Meat 3.3 18.4 Tea 0. Further analysis of the acceleration in wholesale prices reveals the considerable spike in prices of cotton.4 Jul-Apr 2011-12 Impact 1.4 Rice 2.4 0. 18001-35000 Above Rs.1 18.2 0.2 Fresh Milk 4.3 Gram (Whole) 0.3 8. meat.8 24. fresh vegetable.0 105 . diesel and kerosene oil at 27 percent each (Table 7.8: Inflation By Income Groups 19 18 17 16 15 14 13 12 11 10 9 2008-09 2009-10 2010-11 Jul-Apr 2010-11 Combined Upto Rs.5 percent.8 0.2 17.9 27.5 Vegetables 1.5 Diesel Oil 5.5 0.3 Kerosene Oils 0. rice and tea are the major contributory factors in the increase in WPI.6 1. cement. The increase in the food and non-food group averaged 6.3 0.2 percent during (Jul-Apr) 2011-12.1 0.8 0.3 percent respectively.2 0.6 27. followed by furnace oil 36 percent.5 22.3 26.4 15. milk.1 0.7 Cotton 1.Inflation Fig-7. vegetable ghee.4 23.9 Percentage point contribution of major WPI items Weight Fertilizer 2.8 Total 30 Source: Pakistan Bureau of Statistics (PBS) %Change 55.35000 Percent Wholesale Price Index The wholesale price index on annual average basis has increased by 11.1 1.2 Soaps 0. 1 11.2 4. indicates that the majority of the Table:7.2 percent.2 30.1 21.6 0.4 percent.8 8.9 (% Change) April 12/ July 11 40.5 percent.4 0.2 percent.4 1.2 0.3 2.11).2 and vegetable ghee 0. gram pulse 0.Pakistan Economic Survey 2011-12 Fig: 7.1 1. KG KG KG increase came from the increase in the prices of 11 basic items. SPI Weight 1.0 11.6 percent.4 20.4 11. mutton 0.9 General(WPI) Agriculture Forestry & Fishery Non-Food Ores & Minerals Food Products.4 23. These few items account for 40 percent of the weight in the SPI and contributed around 4.1 57.5 0.3 2.8 1.10 (Percent) Change In Price Indices Commodity Weights On Average Basis (%) Point Contribution July –Apr July -Apr July –Apr July –Apr 2010-11 2011-12 2010-11 2011-12 21.8 13.0 42. beef 0.7 1. tea 0.3 11.5 36.2 0. An item wise review of these 53 items which can be further categorized into food.1 percent (Table7.4 8.0 percent to the overall increase in the SPI.7 15.2 2. non-food.7 7.6 12.9 Percent Change of major commodities in WPI 60 50 %Change 40 30 20 10 0 Furnace Oil Vegetables Fresh Milk Vegetable Ghee Cotton Rice Fertilizer Gram (Whole) Soaps Diesel Oil Kerosene Oils Cement Meat Tea Table: 7.5 7.3 2.11 Essential items point contribution in SPI Items Onions Gram Pulse Tomatoes Tea (Packet ) Beef Mutton Rice Basmati Broken Unit KG KG KG 200 GM.2 1.9 12.7 19.2 106 .1 17.2 0.6 1.6 28. Beverages Other Transportable Goods Metal Products Machinery Source: Pakistan Bureau of Statistics 100. During the current fiscal year (July—April) 2011-12.0 11.1 22. utility and transport groups.9 0.0 31.4 0. the increase in SPI is estimated at 8.4 6. The contribution of onion is estimated at 0.1 1.2 percent.7 Sensitive Price Indicator (SPI) The SPI measures the changes in weekly prices of 53 essential items.1 11.6 6.3 13.5 percent over the corresponding increase of 18 percent last year.7 10. tomatoes 0.4 Contribution 0.2 21. rice 0. 8 2.7 Domestic Prices of Major Commodities 84 74 Wheat (Rs/Kg) Rice Basmati (Rs/Kg) Sugar (Rs/Kg) Cooking Oil (Rs/2. Pakistan. Ghee (Loose) Chicken Farm Cooking Oil (Tin) Total Unit LTR KG KG KG SPI Weight 16.5 Kg) 515 510 505 500 495 490 485 Sep-11 Aug-11 Nov-11 Feb-12 Oct-11 Jan-12 Jul-11 Mar-12 Dec-11 Apr-12 1180 64 Rice Basmati Broken Gram Pulse Cooking Oil (Tin) Mutton Beef Milk Fresh Veg.3 40.8 4.Inflation Table:7.1 4. Palm oil prices in international market increased from $1. being part of the global economy.5 Contribution 1.11 Change in prices of essential items in SPI 45 40 35 30 25 20 15 10 5 0 (% CHANGE) April 12/ July 11 %Change Chicken Farm Tea (Packet ) The current increase in the prices of edible oil and rice represents the global price trend in the prices of these commodities and the domestic demandsupply situation.6 2.152 per ton in March 2012. an increase of 6 percent. International Prices of Major Commodities 690 590 490 1130 390 1080 290 190 90 Dec-11 Oct-11 Sep-11 Aug-11 Nov-11 Feb-12 Jan-12 Jul-11 Mar-12 Apr-12 1030 980 Wheat ($/Ton) Rice ($/Ton) Sugar ($/Ton) Crude ($/Brl) Palm Oil ($/Ton) 1230 the overall price is bound to show an increase too.7 3.088 per ton in July 2011 to $1. Ghee (Loose) Onions Tomatoes Palm OIl 54 44 34 24 107 Cooking Oil .11 Essential items point contribution in SPI Items Milk Fresh Veg. The price of rice has increased by 17.1 0. cannot remain immune to such global developments on the price front.5 3. These are then reflected in the local markets.0 Fig: 7. When the prices of basic inputs increase.8 3.1 0.0 (% Change) April 12/ July 11 7. Fig7.2 percent in the international market.3 0. This was due to the prolonged winter season and unfavourable climate resulted in delay of its supply as a result gram pulse was imported while the prices in international market were also rising. a declined trend in its prices was noted in May 2012.87 0.1 59.7 Tomato Kg 41.6 512.8 122.14 7.4 -8.4 141.6 101.5 257.0 11.9 59.5 90.6 Onion Kg 18.8 98.3 18.5 27.3 42.1 127.0 106.5 161.41 7.02 8.0 495.6 131.6 18.3 20.55 Combined SPI 183.3 98.9 26.9 -6.5 Source: Pakistan Bureau of Statistics (PBS) Items Unit variety of reasons.1 8. week corr.3 139. experienced larger increase during the period July 2011 to April 2012.1 259.6 134.47 0.5 Veg.1 131.89 12/04/2012 175.6 49.5 137.0 495.4 72.4 Sugar Kg 71.7 59.6 71.1 458.6 283.00 -0.9 Wheat Flour Kg 29.06 7.3 101.5 71.9 477.3 45.1 463.3 50.1 131.6 29.6 31.1 75.2 53.4 27.9 56.3 58.2 4.3 162.4 28.28 Percentage Change over prev. Prices of vegetable. The increase in price of chicken (farm).4 252.7 57.5 -25.5 140.4 161.1 62.9 59. its prices remained high during April 2012.8 36.12 9.2 156.6 31.1 479.2 7.1 Moong Pulse Kg 140. this was due to seasonal affect as major crops of tomatoes in Sindh was destroyed.0 495. The gram pulse presents an increase of 36 percent.Pakistan Economic Survey 2011-12 A review of the price trend of essential commodities during the period (Jul-Apr) 2011-12 suggests that the current price hike is the outcome of rising food prices which influenced overall inflation.4 27.1 59.90 10/05/2012 174.0 129.0 495.2 24. fresh milk. Details of the commodity wise movement of prices are given below: (Table7.4 7.2 45.03 03/05/2012 174.3 Chicken Farm Kg 160.8 160.9 75.4 70.4 143.3 27.8 485.5Kg 495.3 Masoor Pulse Kg 107.36 183.12).1 56.7 36.7 72.7 51.4 43.5 308.7 27. The prices of essential items have increased for a Table:7.5 122.5 318.1 61.7 30.53 183.4 Rice Basmati Kg 57.1 57.88 19/04/2012 175.4 25.10 9.4 116. Now with the arrival of this vegetable from Punjab.2 30.95 7.6 100.31 183.7 Tea pack 200 Gms 121.30 -0.5 132.6 124.2 36.66 184.7 88.0 79.8 -8.8 164. beef and mutton is attributable to supply shortage of these items in the market.0 495.0 Milk Fresh Liter 55. The increase in prices of tomatoes and onion is owing to damage to the crops by the floods as well as seasonal volatility.6 40.2 253.0 45.0 59.9 161.0 495.7 307.7 Mutton Kg 451.0 141.4 37.9 23.6 Mash Pulse Kg 154.0 495.8 244.6 499.2 Gram Pulse Kg 72.24 -0.0 491.6 -12.1 17. and at one point in time it showed an increase of 67 percent.1 313.4 Rice Irri-6 Kg 43.9 30.4 29.7 53.9 498.0 32.1 105.1 134.7 30.0 495. fruit.8 58.12 Prices of Essential Items July Aug Sep Oct Nov Dec Jan Feb Mar Apr %Change 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 Wheat Kg 25.7 45.0 495.8 103.7 239.2 26.0 56.8 148. Week 2011-12 2010-11 1.5Ltr.2 252.5 57. 495.46 7.2 98.3 Red chillies Kg 253.1 252.14 7.4 143.3 75.0 31.3 174. week corr.6 469.9 7.1 121.8 25.6 147.0 4.1 33.76 0. Table 7.7 28.7 76.5 153.9 10.7 50.4 70.45 9.Ghee (loose) Kg 166.4 45.8 47.6 512.8 18.3 Beef Kg 233.0 495.5 100.9 118.6 249.9 166.9 160.2 166.4 72.0 495.6 131.2 45.9 55.4 21.8 81.4 165.7 44.6 -22.3 54.48 -0.29 26/04/2012 174.4 3.7 29. Tomato being a heavy weight item.0 60.5 78.0 65.8 Cooking oil 2. The prices of pulses show a mixed trend.0 142.0 43.0 495.9 72.6 131.7 Veg.1 143. Week on income group 2011-12 2010-11 05/04/2012 174.5 3.13: SPI (53 Items) 2007-08=100 Percentage Change over Week ended SPI for lowest prev.41 -0. meat and chicken (farm) etc.9 31. The SPI of the last two weeks of April and first two weeks of May 2012 suggests a negative trend as given in the table below.6 131.5 106.6 170.8 319.0 497.0 46.0 60.54 184.5 21.4 3.17 -0.4 25.7 104.4 311.3 145.4 46.05 9.0 495.8 Eggs Dozen 79.97 108 .8 30.8 160.2 97.48 10.2 316.22 -0.5 Potato Kg 31.8 82.Ghee 2.9 58.6 261.3 150.3 120.07 -0.0 497.0 495. 8 88.1 208.8 135.0 Price Stabilization Measures The government is focused to restrict inflation to 12 percent during the current fiscal year 2012.0 318.6 106.5 Masoor Pulse Kg 118. The State Bank of Pakistan continued to keep money supply on a tight leash. chicken (farm).9 22.7 56.3 92.0 133. The NPMC has so far held twelve meetings to monitor the price and supply situation.0 78.0 1133.Not available.2 76.3 37.0 259.4 16.2 202.8 27.9 127. Economic Affairs.8 424. * : Price of chicken is without feather Value in Pak Rupees Tehran Kabul 15/4/2012 12/4/2012 -54.0 283.1 141.0 502.6 311.0 222.9 23.6 544.5 122. The recent inflationary pressure has necessitated a tight monetary policy to suppress aggregate demand.1 83.2 220. beef.0 -190.3 Mutton Kg 556.5 309.8 111.84 percent and in view of the international food and fuel price trend the government is keeping a close watch on the movement of price trend through weekly ECC and Cabinet Meetings.2 Mash Pulse Kg 156. Prices of 08 items i.3 227. sugar and red chilies were lower in Pakistan than in the other regional countries.1 160.0 216. Table 7.0 Rice Basmati Kg 100.2 87.1 -Wheat Flour Kg 30. Statistics and Planning Division has 109 .8 28.9 Potato Kg 35. Different policy measures have been taken to deal with food and fuel price hikes and to contain the inflation through monetary policy. The SBP controls inflation through the policy rate under the monetary policy.9 321. augmenting supply. Bangladesh. 2012 in Pakistan as compared with neighboring countries including India. Given that the average inflation for (Jul-Apr) 2011-12 was 10. red chilies and garlic are lower in Pakistan as compared to India.0 -58. The Senate Standing Committee on Finance Revenue.9 143. the National Price Monitoring Committee (NPMC) also monitors the prices of essential commodities in consultation with the Provincial governments and the concerned Federal Ministries/ Divisions and Organizations.0 183.2 127.2 Moong Pulse Kg 131.0 259.2 39.1 63.9 -Edible Oil(Dalda) Ltr 206.1 106.1 Veg.0 459.4 Sugar Kg 58. mutton. Iran and Afghanistan indicate that prices of rice.4 181.0 -469. sugar.6 54.9 38.2 Beef Kg 280.8 59.3 28. the government has also focused on prudent expenditure management.8 127.8 398.2 Chicken Farm Kg 148.14: Prices of Selected Essential Items in Neighboring Countries Items Unit Islamabad New Delhi Dhaka Colombo 10/5/2012 10/5/2012 2/5/2012 2/5/2012 Wheat Kg 27.0 178.8 106.6* Eggs Dozn 85.7 Tomato Kg 36.Inflation Regional Prices Prices of essential consumer items prevailing on 10th May.5 69.6 652. Expenditures are being contained through austerity measures and administrative mechanisms.e.0 290.0 222.2 Gram Pulse Kg 113.8 Onion Kg 36.4 78.0 459.8 106.0 1851.6 Tea Kg 710.3 708.0 --Garlic Kg 126.9 119.0 147.0 122. streamlining distribution and interventions to stimulate productivity.7 Red Chilies Kg 321.9 567.0 117. rice basmati.3 496.8 20.2 147.2 54.3 378. In addition to the above. Ghee (loose) Kg 206. Sri Lanka.9 Source: Planning & Development Division -.0 362.0 888. beef.7 127.1 91.2 368.3 70. tomatoes.9 468.5 150.6 145.0 244. To maintain fiscal discipline.0 171. chicken (farm).0 -276.0 162.0 85. it is estimated that approximately 9.40 101. The increase in wheat procurement prices from Rs. 12 billion. The floods impacted the richer districts on the left bank of Indus. The overall damage from 2011 floods is estimated at Rs 324.24 Total 881. There is a high possibility that wheat planting in Sindh may face substantial constraints. with direct damages amounting to 1. In Sindh 95 percent of the land was allocated to wheat in Rabi 2010. with almost 96 percent of the damage occurred in Sindh. The damage just in agriculture is estimated to be Rs. as better crops production and better management of supply chain may bring price stability in the country. long term solutions lie increase in agricultural investment. especially in Sindh was more devastating and caused an estimated damage of Rs 311 billion (6. damage to watercourses and tube wells.03 496.3 percent of GDP and indirect losses of 0.42 1.17 13.78 Sindh 859. and. may affect yields. the agricultural heartland of the province. 950 per maund to Rs. provided the necessary support system for land clearing and input supplies are put in place for the planting season.40 99.61 494. According to report of ADB.6 percent of GDP). strong market integration. On the other hand. regional cooperation to secure food supplies for the country’s growing population. damages in Balochistan in 2011. The flood in terms of their economic impact. 1. are Rs. Another factor that may contribute to decrease in the area under wheat will be the delayed start of sugarcane crushing but a recovery in the gap may be filled by the early clearing of the damaged cotton areas.88 3.36 Other 3.85 88.94 163. 110 . However. Flood Impact Severe monsoon rains have triggered floods in Southern Pakistan of unprecedented scale. These damages of crops may affect the supply position and as a result prices may rise.6 million people have been affected in Sindh and Balochistan as a result of the floods. Future Outlook The government is focusing on restricting inflation to 12 percent during the current fiscal year 201112. wheat planting may not be substantially affected.88 The floods have had a large and direct impact on the Kharif cropping season.5 billion (1. water have receded except for some low lying areas and.Pakistan Economic Survey 2011-12 recently approved the report of the sub committee on the control of price of essential commodities which is primarily aimed at finding ways and means to control prices.30 1. The current trend of inflation reported during the first 10 months Jul-Apr 2011-12 suggests that inflation has been stabilized on account of pursuing tight monetary policy and declining trend in global commodity prices. Inflation is likely to further decelerate gradually over the next few months. However.03 Fruit 0.1 percent of provincial GDP) in the province.4 percent of provincial GDP). The main Rabi crop in Pakistan is wheat which is grown on some 8.14 88. which are a critical source of supplementary water. (1.29 14. 151 billion.434 ha) of the affected Kharif crop area will not be available for cultivation in Rabi and 5 percent in the Kharif 2012. It has been estimated by the World Bank and Asian Development Bank.5 million tons loss of wheat production in Sindh due to non availability of land.5 million ha.050 per maund may add to price increase. mainly due to fact that the flood waters have not fully receded.2 percent of GDP. Table 7. The floods remained confined to Sindh and Balochistan. The decline in inflation may continue further by falling global commodity prices and steps towards fiscal consolidation to contain inflation. both in terms of volume and spatial coverage. In Balochistan.22 178.19 13.15: 2011 Kharif Area Affected by Flood Crop Area Area Damaged (000 Ha) Damaged Province Cotton Rice Sugarcane Maize Vegetables (000‟ ha) Balochistan 21. SUPARCO estimates 0. that about 10 percent (142. Chapter 8 Trade and Payments The unfavorable global environment has slowed down the world output and trade volume during 2011.83 billion over the last year. The global economic slowdown and consequential decline in the growth of world trade has also depressed the international commodity prices. Amid the difficult global economic environment. and.0 million during JulyApril 2011-12 over the same period last year and stood at $ 20.8 percent in 2011. During the period JulyApril 2011-12. Against the strong pick up of nearly 13.0 percent in 2010 the growth of world trade dropped to 5. This slowing down of the global economic activity has caused a sharp decline in the growth of world trade. are projected to grow negatively by 10. In fiscal year 2011-12. the drop in international commodity prices.3 percent in 2012.5 percent and trade volume will increase by 4. It is projected that world output will grow by 3. The growth in world output and trade volume is projected1 to decelerate further during 2012 due to the downside risks of deepening of the sovereign debt crisis and worsening financial stress. the growth of imports at 14. continued support from current transfers in the form of workers’ remittances helped in containing further increase in the current account deficit during the period under review. increase in oil prices. workers’ remittances grew by $ 1. These developments can be attributed to the ongoing European Sovereign Debt Crisis. The major factor behind the widening of the trade deficit was the sharp rise in the import bill during July-April 2011-12 which increased due to the higher international prices of crude oil : World Economic Outlook April 2012.474 million.5 percent remained more or less the same as the corresponding period’s growth in the previous period.2 percent during the period. the exports from Pakistan remained higher by US$ 14.8 percent in 2011. and geo-political risks. the turmoil in the Arab Countries and the natural disasters that hit Thailand and Japan which caused disruptions in the supply chain. Pakistan’s exports growth would have been in much better position had there been normalization in international prospects during the period. Current Account Balance The current account deficit stood at $ 3. world output which grew by 5.394 million during July-April 2011-12. the slowing down of the world trade.9 percent in 2011.This deficit in the current account was largely caused by the widening of trade and services account deficit. However. and the energy 1 shortages domestically. thereby widening the trade deficit by 49. The prices of non-fuel commodities witnessed a deceleration from 26. So as exports declined imports continued to grow highlighting the dominant role of external developments. The trade deficit expanded mainly due to the 14.3 percent in 2010 to 17.5 percent growth in imports and the 0.3 percent in 2010 decelerated to 3.1 percent increase in exports. IMF 111 .0 percent during the period. monthly imports remained higher in all the remaining periods of the current fiscal year 2011- 12.542 Analysis on a comparative month to month basis shows that the current account balance remained under pressure during the months of September 2011.687 11.356 35.101 6.097 2.0 percent increase in imports also contributed to the deterioration in 112 . compared to the corresponding months of the previous year. The month-wise imports averaged $ 3.316 million during July-April 2011-12 and remained higher than the average import of $ 2.157 -1.635 338 172 16 2.655 14.562 8. the 5.959 33.940 5.122 million.229 6.266 2010-11 214 -10.768 7.151 -65 3.6 percent fall in services exports.200 668 -126 721 -515 -2. The month of September 2011 witnessed the highest deficit in current account in the entire July-April 2011-12 period due to the fall in remittances and the increase in the trade deficit during the month.101 1.877 1. The monthly average exports increased by 0.655 563 668 3028 3323 12.460 20. With the exception of March 2012.047 million per month as against the average of $ 2046 million per month during the comparable period last year.394 -8. In addition to this.1 percent during July-April 2011-12 and stood at $ 2.087 -60 1.1: Monthly Current Account Balance 800 400 US$ Million 0 ‐400 ‐800 ‐1200 Jul‐10 Aug‐10 Sep‐10 Oct‐10 Nov‐10 Dec‐10 Jan‐11 Feb‐11 Mar‐11 Apr‐11 May‐11 Jun‐11 Jul‐11 Aug‐11 Sep‐11 Oct‐11 Nov‐11 Dec‐11 Jan‐12 Feb‐12 Mar‐12 Apr‐12 Source: State Bank of Pakistan During July-April 2011-12.872 -1.708 -3.142 6.499 -12. The current account deficit remained lower in the following months alongwith a surplus of $ 142 million in March 2012.282 561 3843 12.347 4.474 28.683 20.906 5.293 295 -846 -29 1.516 25.209 -1.046 772 82 690 1.201 2. This deterioration in the services account was primarily due to the 16.492 US$ Million July-April* 2010-11 2011-12 466 -3.272 175 5.209 10. the services account deficit recorded an expansion of $ 1.536 19.448 -2.291 9.017 716 3733 15.917 4. Fig-8.690 5.896 million in the same period last year.225 -2.465 -2.262 161 2.Pakistan Economic Survey 2011-12 Table 8.673 31.1: Summary Balance of Payments Items Current Account Balance Trade balance Goods: Exports Goods: Imports Services Balance Services: Credit Services: Debit Income Account Balance Income: Credit Income: Debit Current Transfers Net of which: Workers remittances Capital & Financial Account Capital Account Financial Account Direct Investment In Pakistan Portfolio Investment (Net) Other Investment Net Errors and Omissions Overall Balance Source: State Bank of Pakistan *: Provisional July-June 2009-10 -3.946 -11.919 -3. October 2011 and November 2011.367 167 1. Trade and Payments the services account during the period under review. PRI has taken a number of steps to enhance the flow of remittances through formal channels which 113 .A. government services witnessed a major decline of 34. worker’s remittances continued to provide strength to the current account. Workers’ Remittances According to World Bank estimates the remittances flows to developing countries in 2011 increased by 8. Pakistan has become the fifth largest remittances recipient developing country in 2011. following the impressive performance of the last year. On the other hand. Saudi Arabia (27.0 million and $ 21.E of 32.2:Remittances By Country of Source 3.100 US$ Million 1. remittances to Pakistan witnessed a strong growth of 25. the major service exports of insurance. Saudi Arabia U. other business services and communication services.2 percent followed by U.0 percent from $ 325 billion in 2010 and is forecast to grow at 7 to 8 percent annually till 2014.8 percent in 2011 over previous year.3 percent). The other major categories of services export which showed a fall during July-April 2011-12 remained transportation. the share of worker’s remittances coming through the banking channel has increased considerably.2 percent and stood at $ 10.000 2. This was the outcome of the absence of logistic support inflows during July-April 2011-12 as compared to $ 743 million in the corresponding period last year.0 million respectively over the July-April 201011.4 percent during July-April 2011-12 compared to the same period last year. EU countries (25. Government services and travel remains the major Fig-8.E.0 million.K.400 2.800 1. Other GCC Countries (15. (30.83 billion during July-April 2011-12 over July-April 2010-11 is largely attributed to the government’s efforts to divert remittances from the informal to the formal channel.5 percent) during the period 2007-08 to 2010-11. The general upward trend in remittances during the period under review was composed of a per annum average growth from U. worker’s remittances grew by 20.1 percent growth in South Asia. Other GCC Country EU Countries contributors to the overall increase in services imports during July-April 2011-12. During July-April 2011-12.1 percent). these services declined by $ 51. computer and information and travel witnessed a major increase during July-April 201112. Since the launch of the Pakistan Remittances Initiative (PRI). Compared to the 10. $ 68.9 billion. Within services export.700 2.200 900 600 300 0 USA U.A. from 75 percent in 2009-10 to 91 percent in 2011-12.K.3 percent). The cumulative increase of $ 1. FY 08 FY 09 FY 10 FY 11 More recently.500 1.1 percent) and USA (9. 5 43.0 Total Source: State Bank of Pakistan * Provisional ($ Million) % Change 14. It also crossed the one billion mark during these months. Other investment stood at $ 721 million during July-April 2011-12.2 % Share 17.8 2.2 100. 990.085.046. 114 .3 2.3 percent.3 Other GCC Countries 1. with UAE and USA having the second and third largest shares.4 U.9 1.8.Pakistan Economic Survey 2011-12 include: (a) preparation of national strategies on remittances (b) taking all necessary steps to implement the overall strategy (c) playing the advisory role for financial sector in terms of preparing a business case.677.386.6 10.8 304. Other countries like UK and Other GCC Countries also contributed to the increase in remittances during the period under review Fig.6 Other Countries 846.200 million during July-April 2011-12 against a surplus of $ 690 million in the corresponding period last year.091.5 21. financial business and power sector during the period.3: Monthly Workers' Remittances 1400 1200 US$ Million 1000 800 600 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 Source: State Bank of Pakistan Table:8. separate web site etc.6 27. The share of Saudi Arabia in overall remittances was the largest.3 2.5 1.4 785.1 15. Country/Region Wise Cash Workers' Remittances Country/ Region Jul-Apr 2010-11 2011-12* USA 1. Monthly analysis shows that with the exception of September and November 2011.05 billion in corresponding period last year.7 9.6 EU Countries 290.226.8 percent with 37.8 -7.9 1.922.0 Financial Account The financial account posted a surplus of $ 1.8 7.3 4.49 billion at the end-April 2012 compared to $ 17.K.2.7 Saudi Arabia 2. the growth in workers’ remittances remained higher during JulyApril 2011-12 compared to the corresponding years. However. This decline was primarily due to lower investment in the telecommunication. relationship building with overseas correspondents. Country-wise data shows that remittances from almost all major traditional sources increased.7 11.9 11.9 percentage points increase during the period. Pakistan’s foreign exchange reserves reached by $ 16.263.063.987. Foreign Direct Investment (FDI) declined by 48. Foreign Exchange Reserves In current fiscal year 2011-12.9 UAE 2.2 14.2 20.877. Foreign direct investment declined by $ 625 million and portfolio investment witnessed a fall of $ 126 million. During the period July-April 2011-12. creating separate efficient remittance payment highways and (d) becoming a national focal point for overseas Pakistanis through round the clock call centre. The fall in FDI in Pakistan appears to be the result of factors such as energy crises and circular debt. the Oil & Exploration remained the major attraction during current fiscal year as its share in overall FDI stood at 69.6 27. 7 percent.50/US$ during July-April 2010-11. whereas it averaged at Rs. the rising inflows of scheduled banks reserves on account of healthy rise in FE-25 deposits and trade NOSTROs helped increase reserves in scheduled banks by $ 1.51 percent in real terms during Jul-Dec 2011-12 against an appreciation of 0.4: Gross Foreign Exchange Reserves SBP 16. respectively.2 percent in July-April 2010-11 period due to the widening current account deficit and speculations on account of the repayment of IMF loan during the period.0 8.16 percent during Jul-Dec 2010-11.0 0. In absolute terms. the exchange rate averaged Rs. Despite the depreciation against the US dollar and other major currencies in nominal terms. Fig 8.0 FY07 FY08 FY09 FY10 FY11 Jul-Apr FY12 Source: State Bank of Pakistan Exchange Rate After witnessing the continuous decline in depreciation of average annual exchange rates during 2009-10 and 2010-11.6: REER. The Pak Rupee depreciated by 3.0 $ billion 12.8. 88. the domestic currency remained under pressure through most of fiscal year 2011-12. Given the weakness against the US dollar. Euro and Great Britain Pound. against Yen./US$ 85 80 75 70 Apr-09 Apr-10 Apr-11 Dec-08 Dec-09 Dec-10 Aug-08 Aug-09 Aug-10 Aug-11 Dec-11 Apr-12 70 68 Index (FY04=100) 150. Conceptually.0 Fig-8.55/US$ during July-April 201112.0 NEER (RHS) 120.0 66 64 62 60 58 90. the Pak Rupee depreciated by 8. The appreciation in real terms was due to the sharp and persistent rise in the relative price index (RPI).4 percent during July-April 2011-12 over the depreciation of 2. NEER and RPI REER RPI 180. On the other hand. the Pakistan currency appreciated by 0. the REER is defined as the weighted average of nominal exchange rates adjusted for relative price differential between the domestic and foreign countries.0 Banks Source: State Bank of Pakistan Real Effective Exchange Rates 4. Apart from the deficit in the current account balance during July-April 2011-12 other domestic factors as well as the speculative environment in the foreign exchange market added volatility to the exchange rate.10 billion. Figure 8.Trade and Payments This was mainly due to current account deficit and repayment of $ 400 million to the IMF.0 56 20. 5.0 Source: State Bank of Pakistan 115 . 85.7 and 3.5: Monthly Exchange Rate 95 90 Rs. As a result Pakistan’s currency vis-à-vis the US dollar depreciated during July-April 2011-12. This pressure is emerging from the deficit in the overall external account of the country during July-April 2011-12. 4 percent during July-April 2011-12 and on absolute term it fell by $ 1076 million during the period.9 percent during the period. the majority of the textile categories show a negative growth in the quantities exported.9 percent during July-April 2011-12 over the same period last year. This increase in cement export receipts is mainly the outcome of higher unit values. In contrast to the 32.0 percent during current fiscal year 2011-12. surgical goods & medical instruments. The export category of carpets. 116 .5 million during JulyApril 2011-12 over the same period last year.Pakistan Economic Survey 2011-12 Commodity-Wise Performance of Exports and Imports2 Exports Group-wise analysis of exports growth suggests that the exports of the “other manufacturers” witnessed an impressive growth of 19. The major reason behind this phenomenon is the energy crisis hitting the textile sector and the fall in international demand.6 million in the corresponding period last year.3 percent) during July-April 2011-12.6 percent) and cutlery (6. : The analysis of exports and imports is based on trade data released by Pakistan Bureau of Statistics (PBS) on Customs basis which differs from exchange record data by SBP. The value of exports from the food group stood at $ 3509. This fall in rice export is due to the overall quantum exports of rice by 9.1 percent growth in July-April 2010-11 textile exports declined by 9.6 percent and 8. In absolute terms this represents a fall of $ 87.0 percent to 17. respectively. leather garments (15. thereby showing a negative 2 growth of 2. Owing to this. In absolute terms these three items fell by $ 442. Further details reveal that the lower quantity of exports of most of the food items remains the major reason behind the overall decline. guar and guar products and engineering goods remained the prominent categories among the positive contributors to the overall increase in “other manufactures” group. chemicals and pharmaceutical products. The other reason for the fall in rice exports was the higher proportion of nonbasmati rice in the overall export quantum of rice.7 million during July-April 2011-12 compared to $ 3597. fruits exports witnessed a major increase during 2011-12.9 percent during July-April 2010-11. This fall in textile is mainly attributed to decline in quantity exports. Wheat exports declined due to the internationally lower demand and prices as quantity and unit value of wheat both witnessed a negative growth of 70.3 percent.3 percent during the period tampered the increase in cement export receipts. these five items collectively added $ 668. cement exports also increased by 3. However.6 million increase over the last year and its share in “other manufactures” group also increased from 10. which increased by 12. rice and vegetables.9 percent). rugs and mats declined due to increased competition from the neighboring countries of Pakistan.5 percent during July-April 2011-12 against the fall of 9.9 million during the period.2 percent during July-April 2011-12.6 percent during July-April 2011-12. the share of the textile sector in overall exports declined from 55.1 during the period. On the other hand. the overall increase in “other manufactures” group was offset to some extent by the negative growth of carpets (5. Moreover. Furthermore.3 million during the first ten months of the current fiscal year 2011-12. The major factors behind the overall fall in food exports remain wheat. Jewelry exports have witnessed a significant $ 335.9 percentage points and stood at 20. The decline in quantum exports of cement which witnessed a fall by 8.6 million in the overall exports during July-April 2011-12. Jewelry.4 percent.0 percent during July-April 2011-12. Rice exports followed last year’s trend and declined by 3.8 percent in July-April 2010-11 to 52. Its share in overall exports also increased by 3. The unit values of different food items remained largely positive during the period. in absolute terms fruit exports increased by $ 70. The major reason behind the fall in rice exports remained the higher availability of rice internationally. 5 196.7 -73.9 37.6 725.9 2.4 252.8 -305.5 110.2 1.0 24.4 -5.2 38.9 518. 117 .0 -37.5 -0. the quantum exports of high value added items such as knitwear.453.735.2 358.4 104.3 269.7 387. Textile Manufactures Raw Cotton Cotton Yarn Cotton Cloth Knitwear Bed Wear Towels Readymade Garments Made-up Articles C.6 105.4 -3.0 -0.5 -79.3 60.3 -111.3 -69.0 -7.686.0 2.1 1.3: Structure of Exports Particulars A.9 -36.1 The negative effects of the energy shortages domestically and the slowdown of global demand are especially visible in the decline in the quantity of exports despite the increase in the unit values of the majority of items during the period July-April 2011-12.2 106.1 -61.3 -461.4 25.3 17.9 262.8 450.3 249.0 183.0 129.3 -22.3 1.6 6.9 370.6 433.2 33.2 -12.8 -8.5 509.5 1.326.969.8 -428.1 1.624.081.0 211.792.1 -13.1 556.4 -5.7 14.0 230.Inst. Other Manufactures Carpets.2 -14.396.9 -51.0 607.7 418.3 1.4 314.6 28.2 234.1 374.3 212.3 322.4 131.6 16. Food Group Rice Fish & Fish Preparation Fruits Vegitables Wheat Spices Oil Seeds.9 -6.8 1.5 33.3 17.880. bed wear. Nuts & Kernels Meat & Meat Preparation B.4 -13.9 112.0 752.1 649.2 259.6 472.3 -3.7 1.7 435.1 8.6 23.7 335.7 291.4 141.5 ($ Millions) Absolute Change -57. towels and readymade garments have shown negative growth during the period under review.451.8 -5.2 10.9 388. Chemicals & Pharma.8 1.4 -245.2 % Change -3.Trade and Payments Table 8. Engineering Goods Jewellary Cement Source: PBS * Provisional July-April 2011-12* 2010-11* 1.6 909. Pro.9 70. Due to this phenomenon.870.5 122.5 1.8 19.0 32.9 3. Rugs & mats Sports Goods Leather Tanned Leather Manufactures Surgical Goods & Medical.6 -232.0 327. Petroleum Group Petroleum Products Petroleum Top Naptha D.6 13.7 38. 7: Textile Exports (July-April 2011-12) 100 75 50 25 0 -25 -50 -75 -100 RAW COTTON COTTON YARN COTTON CLOTH COTTON CARDED OR COMBED YARN OTHER THAN COTTON YARN KNITWEAR BED WEAR TOWELS Quantity Unit Value % Growth TENTS.0 percent of total exports during July-March 2011-12. 47. leather and rice) making up 61.4 8.CANVAS READYMADE & TARPULIN GARMENTS Source: PBS ART.E.6 5.2 30.5 11. the share of the other items category witnessed a 6. UK.6 4.2 118 percent of the country’s exports were concentrated in five markets (USA.5 percentage points increase during the period.9 4.4 33.8 100 09-10 50.7 67.0 100 100 08-09 52.2 61.8 percent.5 2.Pakistan Economic Survey 2011-12 Fig-8. This .5 Total 100 100 Source: Pakistan Bureau of Statistics *Provisional.) of the world and remaining share of all other countries was 52. a 10.8 Sub-Total of three Items 71.5 32.7 51. the petroleum group export receipts declined by 29.0 percent against the 28.4 11.1 4. Table 8. Germany. the major share of Pakistan’s export is still concentrated in a few items with only three items (cotton manufactures. Hong Kong and U. the share of the petroleum group also declined by 1.5 percent during 2006-07.2 percentage points increase during July-April 201112 compared to the same period last year.4 percent and 13.0 32.6 100 10-11 52.2 9.3 66.7 50. During 2005-06. Pakistan has witnessed some geographical diversification in exports.A. ** Leather & Leather Manufactured Direction of Exports Despite being concentrated in a few markets. Moreover.8 39.0 8.0 percent during the first ten months of the current fiscal year compared to the same period last year.9 Leather** 5.2 5. This decline in the petroleum group is due to the decline in quantum export as petroleum products and naptha fell by 68.0 million in net absolute terms in export receipts from petroleum group over the corresponding period last year.6 9.9 percent respectively causing a decline of $ 331.50 percentage points during the period under review. (Percentage Share) Jul-Mar* 10-11 11-12 53. In spite of this structural change in exports of the country.0 100 Cotton Manufacturers 59.SILK & SYNTHETIC TEXTILE Notwithstanding the higher international prices. Moreover.4:Pakistan’s Major Exports Commodity 06-07 07-08 Concentration of Exports The process of decrease in concentration of exports items continued in the current fiscal year (JulyApril 2011-12) as the share of other items in overall exports increased to 39.2 69. The circular debt problem in the country remained the major reason for the decline in the petroleum group exports during July-April 201112.7 66 34.8 Rice 6.5 67.5 Other Items 28. 9 37.7 10.9 8.4 5.2 2.4 53.4 percent growth in the corresponding period last year reflecting mainly the impact of higher international oil prices since per unit values of % age 119 .9 42.2 52.0 100.0 5.0 4.8 during July-March 2011-12 compared to 52.0 06-07 24.2 46.3 61. The import bill for edible oil increased by 16.1 8.4 4.0 09-10 17. respectively.4 35. 18.5 5.2 percent whereas the share of all other countries increased to 64.7 100. Within food group imports.9 62.8 100. Afghanistan and Bangladesh.2 64.2 1.E. In addition.0 47. Moreover.3 9. resulting in an increase in the palm oil import bill in absolute terms by $ 292 million.2 8.0 07-08 19. the import bill for tea during 2011-12 also increased by 4.0 35.1 2.0 4.5 percent and has added $ 273 million to this year’s import bill.8 2. The higher import bill of palm oil is the result of higher international prices and higher domestic demand during the period.6 64.1 8. Palm oil imports surged in quantity.2 4.7 5. This fall in sugar imports came on the back of improved sugar production domestically due to higher crop production of sugarcane during the fiscal year under review.9 5.0 diversification was mainly the result of the Strategic Trade Policy Framework (STPF-200912) introduced by the government and the resulting increase in exports to China.8 percent on the back of higher import prices during the period.1 3. This fall in the overall food import bill is the result of a decline in the quantity of imports of most of the food items despite the increase in the unit values of food group items.5 5.5: Major Exports Markets Country USA UK Germany Honk Kong U.5 percent.8 57.8: Sources of Change in Petroleum Imports (Jul-Apr 2011-12) 90 80 70 60 50 40 30 20 10 0 Price Effect Source: PBS Quantity Effect The Import of petroleum group products grew by 43.A.3 2.1 100.0 7. (Percentage Share) Jul-Mar 10-11 11-12* 15.1 percent.5 percent during July-April 2011-12 against the 8.0 10-11 16.0 Source: Pakistan Bureau of Statistics *Provisional Imports Structure of imports indicates that food group imports accounted for 11.6 7.3 35.2 100.4 4.0 million in absolute terms during July-April 2011-12 compared to the same period last year.3 4.1 2.3 percent and 12.7 percent during July-April 2011-12 compared to last year.7 100.8 100. the import bill of spices and pulses also witnessed a fall during the period. value and per unit value as it increased by 5.1 5.0 08-09 18.9 4.6 100.3 64.6 4.Trade and Payments concentration is on continuous decline since 200506 and recently the share of these five market stood at 35.6 5. the major contribution came from sugar as its import bill declined by $ 665. Fig-8. This improvement in geographical Table 8. Sub-Total Other Countries Total 05-06 25.9 4.2 38.4 percent of total imports and showed a negative growth rate of 1.9 14.8 percent share during 2005-06. the import of electric machinery and appliances also increased by 0. during July-April 2011-12. textile machinery.4 percent of this increase in the import bill is contributed by the price impact and 23.4 per barrel in July 2010 to $ 120. Moreover. decline in export prices.7 percent while quantum imports of crude oil declined by 19.Pakistan Economic Survey 2011-12 petroleum products and petroleum crude increased by 28.815.3 million over the last year due to the import of cars and buses.2 million.9 percent during the first ten months of the current fiscal year.9 percent and 36. This increase may be the result of increased availability of cheaper mobile phones in the country.4 percent and 14.5 percent during July-April 2011-12.9 million in the corresponding period last year. the quantity of petroleum product imports increased by 31. The increase in the petroleum import bill is also evident from the international monthly average prices of oil.4 percent respectively during July-April 2011-12. Among the different items of the machinery group. energy problems faced by textile sector.4 percent has been contributed by mobile phone imports which grew by 29.6 percent.3 million over the same period last year. Fig-8. the increase in road motor vehicle imports was the outcome of higher import of CBU (complete build-up unit) which increased by $ 234. Increase in the overall import bill of consumer durables is generally the outcome of the fall in duties on automobiles.8 percent during July-April 2011-12.8 million to the overall import bill for July-April 2011-12.4 million during the first ten months of the current fiscal year 2011-12 as against $ 3595. Moreover. the petroleum group import bill increased by $ 3. trucks and other heavy vehicles categories increasing by 161. motor cycles and buses.3 percent respectively during the current fiscal year period under review. Due to these developments. Within this category. deep freezers. $/Brl 80 60 40 20 0 Jul 10 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 11 Aug Sep Oct Nov Dec Jan Feb Mar Apr 12 The import of consumer durables added $ 229. and. air crafts.9: International Monthly Oil Prices (Average) 140 120 100 percent during the period. This phenomenon in quantum imports results from the effect of the circular debt problem in the country faced by refineries. 65.1 120 . the import quantum and value of rubber tyres and tubes witnessed an increase of 25. Out of the total increase in telecom imports. In absolute terms the import in the telecom sector witnessed an increase of $ 195.6 percent by the quantum impact. Telecom imports grew by 22. During July-April 201112. Moreover. The contribution to the increase in consumer durables imports remained road motor vehicles. Their import bill increased by $ 229. The decline in textile machinery import may be attributed to the fall in external demand. These surged from $ 76.0 percent and added $ 127. The machinery group imports decreased to $ 3148. air conditioners and beverages along with the cut in taxes announced by government.0 percent and 91. Moreover. the complete knocked down-down (CKD)/semi-knocked-down (SKD) category of road motor vehicles also increased by 6.7 million to the import bill during July-April 201112 as compared to the corresponding period last year. Nearly 76. ships and boats and other machinery witnessed a decline during the period under review. respectively. trucks and other heavy vehicles contributed positively during the period.5 per barrel in April 2012.3 million. 847.1 21.7 110.3 1.660.287.8 103.8 464.5 ($ Million) Absolute Change 4.4 -29.8 4.2 -60.4 1.4 million) is mainly the outcome of remarkable improvement in the agriculture sector.8 4.5 0.6: Structure of Imports Particulars A.2 74.354. Of 121 .049.6 -15.3 134. As a result the import bill stood at $ 877.3 91.2 -2.8 423. Consumer Durables Electric Mach.5 77. The higher demand for agricultural machinery imports ($ 25.6 1. The import of products in the raw material group surged by 7.9 -5.5 229.1 million over the last year.5 434. Machines Office Machines Textile Machinery Const.3 1.6 713.1 -11.3 116.3 22. & App.9 125.4 percent of total imports during the period of JulyApril 2011-12.6 674.1 12.5 -97. raw cotton declined in absolute terms by $ 483. & Mining Mach.263.0 72. Within raw material imports.6 22.9 3.5 -9. Machinery Group Power Gen.4 3.0 305.0 8. Telecom Source: Pakistan Bureau of Statisics July-April 2010-11 2011-12 129.9 854.2 239.0 111.3 679. Raw Materials Raw Cotton Synthetic fibre Silk yarn (Synth & Arti) Fertilizer Insecticides Plastic material Iron & steel and Scrap Iron & steel F.9 344.6 865.6 44.6 -57.0 1.4 12.4 288.6 195.2 582.1 13.8 380.7 22.1 1.228.8 339.6 14.3 0. office machines.4 320.6 4.8 1.312.1 195.6 122. Aircraft Ships and Boats Agriculture Machinery C.5 5.1 675.8 852.3 -483. This improvement can be attributed to the start of public projects and is also the result of the increase in remittances which went primarily into the construction sector.0 -2.4 98.2 -56.933.5 59.5 446.9 0.9 1.9 -7. Petroleum Group Petroleum Products Petroleum Crude D.082. Power generating machinery imports increased due to energy shortfalls in the country.3 11.8 1. As a result the import bill of fertilizer increased by $ 582.119.7 499.Trade and Payments Table 8.7 25.081.9 23.3 877. the items which grew positively continued to be the power generating machinery.7 69.5 -24. Road Motor Vehicles E.8 9.7 -6.7 273.1 369.2 444.4 12.3 302.2 % Change 3.6 503.7 -4.2 million during July-April 2011-12.4 -407.6 399.919.1 32.9 On the other hand.434.2 16. The increase in import of construction and mining machinery reflects the increase in construction activities in the country.4 million mainly due to increased availability of the crop domestically.3 1.9 993.9 5.3 -665. construction and mining machinery and agri machinery.0 86.8 1. Food Group Milk & milk food Wheat Unmilled Dry fruits Tea Spices Edible Oil (Soyabean & Palm Oil) Sugar Pulses B.4 percent and accounted for 22.8 -5. The prominent increase witnessed in the imports of fertilizer is due to decline in domestic production owing to gas shortages.4 13.7 -100. 4 6. through Amendments in the Import Policy and Export Policy Orders: ` ` 122 .. Trade Development Authority of Pakistan (TDAP) is undertaking various export promotional activities through trade exhibitions and delegations in the new markets viz China.7 30.S.4 2.2 6.3 10-11 10-11 4. The following measures have been taken during 2011-12 in the import / export regime. Government is trying its level best to get better market access for the local ` businesses in international markets by concluding Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with different countries. Japan.0 Jul-Mar 11-12* 4. Africa region. America and Eastern Europe etc.9 Germany 3. duty free imports of raw material under temporary importation scheme/Duty Tax Remission on Exports (DTRE).3 Source: Pakistan Bureau of Statistics *Provisional 5.3 32.7 percent in 2007-08 to 30.2 percent at present thereby showing a 6. Russia. Germany and U.0 68.2 11.7 Other Countries 63. Through active trade diplomacy.4 10. Pakistan’s import sources are witnessing a change in direction since 2007-08.7 30.3 65.K.7: Major Sources of Imports (Percentage Share) Country 07-08 08-09 09-10 U.5 4.4 4.3 1.5 Saudi Arabia 13.7 3.1 8. The combined share of Pakistan’s major imports markets (Saudi Arabia. Hong Kong.8 11.5 percentage points fall during the period under review.6 3. Malaysia.3 1.5 1.3 34. 1.7 69.4 percent due to higher prices.2 69. duty drawback scheme.2 Japan 4. U.) has been declining from the 36.6 30.1 3.S.6 Kuwait 7.2 2.6 percent was due to increase in quantity and the remaining 12.4 Sub-Total 36.6 2. development of export clusters.A. concessions in duty/taxes on import of machinery and raw material of priority export sectors. Incentives have been given to boost exports such as concessionary financing.9 9.8 Measures/steps taken by the government regarding exports and imports ` ` In July.6 1. 2009 the Federal Cabinet approved complete zero-rating of exports.6 6.1 U. 6.6 12.9 69. Table-8.8 3.A.10 Source of Change in Fertilizer Import (Jul-Apr 2011-12) 600 500 400 300 200 100 0 Price Effect Quantity Effect Source: PBS Despite being fairly concentrated in a few markets.3 4.7 4.K.2 8.3 4.6 2.Pakistan Economic Survey 2011-12 this total increase around 87. Direction of Imports US$ Million Fig-8. Kuwait. normal importers. for importing automotives engine/gear oil etc. Sr. Allowing export oriented textile and leather sector to import To facilitate export sector. 1. 5. The ban To check fast depletion of existing shall however not apply in the following cases: gas resources.Trade and Payments Amendments in Exports – Imports Policy orders during 2011-12 Gist of Amendment Rationale/Justification Allowing export of organic brown sugar. No. a) For which letters of credit established prior to 15-122011. Allowing units registered under DTRE scheme also to import To bring DTRE users at par with inputs given in restricted list of the Import Policy Order (IPO). To encourage local production of organic brown sugar. importable from India. Importer duly registered with Oil and Gas Regulatory Authority To safeguard consumers interest. only subject to a fool proof mechanism. relations with India. 10. 4. Restricting import of exhausted batteries to industrial consumers To safeguard environment. b) Public transport vehicle i. 123 . buses and vans. subject to fulfillment of conditions mentioned therein. 3. 8. 9. polypropylene. accessories on import cum export basis from India. Allowing raw material/inputs including polythene. 6. Restricting disposal of ambulances before ten years imported as a To avoid misuse of ambulances as donation in secondhand used condition by imposing duty taxes commercial vehicle after import. newsprint and pure terephtalic acid from India through Wagha via land route. 2. Banning import of CNG cylinders and conversion kits. Another 17 categories were included in the positive list of items To reduce cost of doing business. To reduce cost of doing business. applicable at the time of import. Positive List with India has now been replaced with a Negative To normalize Pakistan’s trade List of 1209 items.e. 7. com mpared to $18. country large su ubsidies spec cially food an nd energy. Such mea asures can also a lead to strengthening g a country’s capacity of f repayment. Fig-9.1 Introd Developin ng countries hinge in a delicate d balance.1: Public Deb bt (as percent of o GDP) 100% 90% 80% 70% 60% 50% 40% 30% 20% FY80 FY90 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12-Q3 125 . Low wer FDI and other non n-debt creating flows due to t energy shor rtages and security concern ns have contributed towards t neg gative balance e of paymen nt and draw wdown on of fficial foreign n currency reserves of th he country. the resultant liquidit ty crunch is exerting pressure on dom mestic interest t rates. Debt ma ay well act as a catalyst in n the course of o growth of an a economy. A myriad d of domestic issues and d the interna ational recession and cred dit crises ha ave impacted d the y’s debt position. narrow tax base and rising interna ational comm modity prices have result ted in large tw win account (i. The financ cing of the fiscal deficit t is a growin ng challenge in i the wake of o the shrinkin ng net foreign n assets of th he banking system s in Pak kistan owing to the curren nt account de eficit. ( fiscal an nd current acc count) deficits s.on the other o hand the t borrowing g should be allocated a effi iciently in view of their re epayment abi ility.e. This intricate scenario calls c for a co omprehensive e. Higher interest paym ments. gro owing security y spending ne eeds. addre esses financ cial constraint ts and ensure es intergener rational welfa fare impact. s debt dy ynamics hav ve undergo one Pakistan’s substantia al changes since s fiscal year 2007.24 $ billion as of end Jun ne 2011. dynamic and a rule based d policy whic ch ensures th he right choic ces among several opt tions. Total Liquid Foreign Ex xchange Rese erves were $16. they need d to borrow in order to facilitate th heir developm ment process .49 $ billion by end-Apr ril 2012.Chapter 9 Pub blic Debt D duction 9. Unsustainab ble levels of debt can plague econom mic growth by lowering the actual dev velopmental expenditure e d due to heavy debt servicing requiremen nt. but b only if it t is undertaken to facilita ate a very well w thought out o road map devised with h due diligen nce. 275 3.9 43.O.780 3.178 3. 2012.9 308 281 589 2008 2009 2010 2011 2012* (In billion Rs. and additional borrowings.859 4.Pakistan Economic Survey 2011-12 9.024 (In percent of GDP) 33.1 Public Debt 1990 Domestic Currency Debt Foreign Currency Debt Total Public Debt Rupee Debt Foreign Currency Debt Total Public Debt Rupee Debt Foreign Currency Debt Total Public Debt 374 428 801 42.2 59.709 12.736 4.S.8 89. Public debt as a percent of GDP stood at 58.3 percent as compared to fiscal year 2011.9 50. Budget Wing.7 (Rs. Domestic debt is a charge on the budget and must be serviced through government revenues and/or additional borrowings whereas external debt (both public and private) in addition to government Table-9.694 4.1 ($ Billion) Exchange Rate 21.871 Source: State Bank of Pakistan.6 percent in fiscal year 1990 to 59. and hinder economic development.8 45.1 59.4 34.9 26./U.0 90. Economic Adviser’s Wing & Debt Policy Coordination Office * End-March Historically.4 52. Billion) 159 323 513 900 1. The increased amount includes Rs.913 2. It includes all government and government guaranteed obligations denominated in rupee as well as foreign currency. 391 billion consolidated by the government into public debt against outstanding previous years subsidies related to the food and energy sectors.015 7.7 78. government has increasingly focused on the domestic part over the last few years owing to non-availability of sufficient external financing i.5 percent of GDP during the same period last year.654 6.243 12.1 245 270 515 2000 1.) 2.3 46.1 2005 revenues is also a charge on the balance of payment and must be serviced from foreign exchange earnings.4 59. 1.595 8.576 1.5 32.5 59.091 6.2 37.8 40.938 10. Billion) 874 1.7 235 269 505 1995 790 873 1.2 47.9 29.055 7.851 2.2 (In percent of Revenue) 242 218 208 224 266 251 213 185 202 206 208 168 455 404 410 430 474 419 (In percent of Total Debt) 53.1 54.724 14.9 46.8 Memo: Foreign Currency Debt 19. E. excessive reliance on public debt and inappropriate public debt management raise macroeconomic risks. 12.3 62.7 45.500 10.1 29. impede economic growth.8 48.4 27.2 Public Debt Total public debt is a measure of government indebtedness.1 50.9 59. 126 .9 91. Domestic and external debt should be treated separately.261 2.2 percent by endMarch 2012 compared to 55.5 86.5 32.P) GDP (in Rs.4 58.804 18.8 52.315 billion or 12. reserve drawdown.5 52.9 49. However.9 31.1 40.2 54.7 60.826 6.$.5 47. Rupee Debt 46.206 1.1 27. However.3 31. domestic borrowings inched up in share from 46.1 52. It is an important means of bridging government financing gaps.1 56. public debt stood at Rs.654 Total Revenue (in Rs.e.018 41.442 3.078 2.818 4.4 33.033 20.6 53.662 42.4 85. public debt stock accounted for almost the same burden from domestic and external sources.024 billion registering an increase of Rs.4 28.284 4.0 23.866 3.7 68. As at end of March 2012.5 28.9 percent at end March.0 30.6 47.3 81.499 1.2 Foreign Currency Debt 53. e. 146. extern nal debt to foreign exch hange earning gs. er. for ins stance. ex xport earning gs and capacit revenu ue generation n. 487 bi illion.1 Dynamics D of Public P Debt Burden B Borrow wing domestic cally or exter rnally is a no ormal. debt to rev venue.2. .e. particularly in case of Pakistan P whe ere the taxation systems are a inelastic and the tax xation nery is weak.6 billion or 0. external e debt to GDP or flow fl ratios i. Billion) ) Outstandin ng Guarantees s extended 487 7 to PSEs -Domest tic Currency 256 6 -Foreign n Currency 231 1 Memo: Foreign Cu urrency (US$ Million) M 2. de ebt to GDP. indeed. However. This may y also be expressed e as debt exceed ding sustainab ble levels. necessary part p of econo omic activity y. It is com mmon practic ce to measur re the public debt burden n as a perc centage of GDP. Table-9. explic cit and impli icit guarantee es issued to Public Sec ctor Enterpris ses (PSEs) an nd unfunded losses of state e owned entiti ies. Continge ent liabilities are not adde ed to the ove erall debt of the t country. The Go overnment of o Pakistan issued new guarantee es aggregating g Rs. The debt t burden ca an be express sed in terms of the stock k ratio i.2 Guarantees Outstanding O as of Marc ch 31.71 percent of o GDP.544 4 Source: De ebt Policy Coordination Offic ce 9.2 Sources of Public P Debt (p percent) 60 55 50 45 40 35 30 25 20 15 10 5 0 FY90 FY95 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Q3-FY12 FY 11 Domes stic Currency Debt t F Foreign Currency Debt D lic debt ma ay be under rstated witho out The publ reporting contingent liabilities s. it makes more sense e to measure e debt howeve burden n in terms of flow ratios s because ea arning potenti ial reflects more m accurate ely on repay yment capacit ty as GDP changes do not fully translat te into revenu ues.Public c Debt Fig-9. The mic rationale e for debt creation is that econom borrow wers can earn a higher eco onomic return n than the cos st of invested d funds and th hat these econ nomic returns s can then be translated t into o financial re eturns. 2012 (Rs. control of these incl lude. Debt problems p for r governmen nts arise if debtservicin ng capacity does d not keep p pace with gr rowth of deb bt. Total outstan nding stock of governme ent guarantees as of March h 2012 stood d at Rs. machin 127 . contingent liabilities are a possible obligations o th hat arises fro om past events and whose existence will w be confirm med only by the t occurrenc ce or non-oc ccurrence of f one or mo ore uncertain future even nts not who olly within the t f the governm ment.e. The level of debt depends on the t debt serv vicing ty of the eco onomy i. In the case of Pakistan. 5 percent in fiscal year 2008 as a result of fiscal consolidation and rationalization of expenditure. 2012 % 3.3 % 2.3 41.3 Dynamics of Public Debt Burden Public Debt to GDP Real Growth of Public Debt Real Growth of Revenues Real Growth of Public Debt Burden Real Growth of GDP 2007 60.2 2.3 -0.) 76. sustained food and energy subsidies and the great floods of 2010.4 2012* 58. Revenue Percent of Current Expenditure Percent Percent of of Govt. however. Pakistan saw a primary surplus in fiscal year 2004.5** 0. 2012 **Growth as compared to same period in 2011 If the primary balance (fiscal deficit before interest payments) is zero and the real growth in revenue is higher than the real growth in debt. and.6 5.3 1.3 45.9 2. 9. On the other hand a gradual decline in Table-9.5 578. the fiscal adjustment path was altered and the primary deficit reached 2.9 243.9 3.6 8.9 3. from a high of 11.1 4.3 21. owing to increased security expenditure. SBP and Debt Policy Coordination Office *End March.3 0.034.5 or lower.1 8.8 2011 59. since then it is running a primary deficit. The public debt stood at 4. However.4 128 .9 852.8 68.1 2.9 -9.1 percent of GDP from 2. A similar pattern was witnessed in terms of real growth of revenues.Pakistan Economic Survey 2011-12 Table-9.4 33.7 Source: Budget Wing.4 percent in fiscal year 2011.8 27.4 1.7 % 2.4 154. In fiscal year 2009 the government was able to bring the deficit down to 0.3 11.1 -8.7 5.4 5.4 26.2 714. an extra burden is placed on limited government resources and might have costs in the shape of foregone public investment or expenditure in other sectors of the economy.4 Debt Repayment of External 174.0 3.2 94.0 6.8 629.7 2009 59.4 1.7 times government revenues at the end of fiscal year 2011.0 % 2.2 Source: Debt Policy Coordination Office * July-March.6 719. 2011-2012 Budgeted Actual* Percent of Govt.9 33.2.7 Debt Servicing of Public Debt 872. the debt burden will ease.4 4.7 2010 60. Ideally the debt to revenue ratio should be 3.2 Servicing of Public Debt Increases in the outstanding stock of total public debt have implications for the economy in the shape of a greater amount of resource allocation towards debt servicing in the future.4 (In billion Rs. However since fiscal year 2010.8 2008 59.5 percent of GDP at the end of June 2011.3 4.5 2.7 6. this complemented by the primary deficit resulted in increase of the debt burden. In order to meet debt servicing obligations.7 1.) Servicing of External 76.7 29. the real growth of debt has been greater than the real growth of revenues.9 37.4 9. Current Revenue Expenditure (In billion Rs.9 percent in fiscal year 2007 it declined to -8.4 Public Debt Servicing 2010-2011 Budgeted Actual real growth of debt has been witnessed since fiscal year 2008.2 Loans Servicing of Domestic 621.2 2. Floating & Unfunded Debt 3700 3200 2700 Rs. while interest payments on foreign loans.e.7 billion has mostly been due to stable dollar rupee parity. 2012. 54.Public Debt During the year 2010-11.5 percent of the total domestic debt has the duration of 0.6 percent.4).3 Trends in Permanent.4 billion. An amount of Rs.9 percent by end March. the share of floating debt to total domestic debt has reached 54.31 years at end March 2012 which is fairly low owing to market appetite for shorter duration reflecting inflationary expectations and higher interest rates in the second half of the fiscal year 2012. 154. 629. reached Rs 68.8 billion. 9.2 billion as opposed to a target of Rs.2 billion. which were budgeted at Rs.5 percent by endMarch 2012 as compared with 31. As at the end of March 2012. 54. 1. The unfunded category comprising about 44. Undue reliance on short-term sources of financing raises the rollover or refinancing risk for the government. PIBs and Government Ijara Sukuk. 174.034. Failure to issue new debt in order to mature a large amount of outstanding short term debt may trigger a liquidity or debt rollover crisis. 852. 621.8 billion.4 billion by endJune 2011. servicing of the public debt stood at Rs. The increase in frequency of such operations (due to their short term nature) coupled with any adverse rise in interest rates may leave the government vulnerable to the high cost of debt. 76.2 billion as opposed to a budgeted amount of Rs. 20. The increase in domestic debt servicing is partly the result of a tight monetary stance taken in order to arrest the monetary overhang caused by previous policies. 872.5 percent and 23. Banks’ preference of risk-free sovereign credit in view of mushrooming nonperforming loans augured well for the government securities market and overwhelming participation was witnessed in the auctions of T-Bills.7 billion was spent on account of servicing of domestic debt against the budgeted estimate of Rs.4 percent in fiscal year 2002 indicating an over reliance on shorter duration instruments i. which reduced the amount used for interest and principal repayments of foreign loans in Rupee terms.6 percent of the aggregate domestic debt stock in fiscal year 2002 has declined to 23. The trends in domestic debt are discussed in the following graph: Fig-9. billion 2200 1700 1200 700 200 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12Q3 Permanent Debt Floating Debt Unfunded Debt 129 . Repayment of foreign loans stood at Rs. floating debt (shortterm) and unfunded debt (made up of the various instruments available under the National Savings Scheme) having shares of 21. Contrary to this. servicing of public debt amounted to Rs.9 percent respectively in total domestic debt. The saving of Rs.3 Domestic Debt Pakistan’s domestic debt comprises permanent debt (medium and long-term). The composition of major components shaping the domestic debt portfolio has undergone a transformation from a high dominance of unfunded debt to an increasing dependence on floating component of the domestic debt.9 billion (Table 9. 719 billion against the budget amount of Rs. 2012.6 percent at end March 2012. In relation to GDP the domestic debt stood at 34.7 percent in 2011 to 21. I.5 Trends in Domestic Debt 2002 Permanent Debt Floating Debt Unfunded Debt Total Permanent Debt Floating Debt Unfunded Debt Total 307.554.) 526.4 34. with semi-annual coupon payment.6 3274.0 40.0 13.6 130 billion as at end-March 2012 compared to Rs.1 6. Table-9.7 21. Floating Debt Floating debt consists of short term domestic borrowing instruments such as Treasury Bills and State Bank borrowing through the purchase of Market Related Treasury Bills (MRTBs).2 1637.9 39.0 5.7 28. 6 months (introduced in 1990) and 12 months .5 53.7 50. The focus on deficit financing through internal sources owing to lower external receipts has been the major cause.4 33. 1.5 billion through Pakistan Investment Bonds during JulyMarch.9 6016.4 27.7 Floating Debt 31.9 797.0 16.0 44.7 18. The total share of permanent debt in the government’s domestic debt stood at Rs.9 792. 20 and 30 ‐years maturity.9 percent which is higher than end-June 2011 level at 33.8 685.5 40.2 18.3 27.4 percent.0 15. 2003 2004 2005 424.8 9. 80.5 12.8 570. The domestic debt grew by 19.2 8.7 1125.8 54.0 9.5 2012. Permanent Debt Permanent Debt mainly consists of medium to long term instruments including Pakistan Investment Bonds (PIBs). Prize Bond etc.2 17. 15.8 percent in first nine months of current fiscal year. PIBs are issued in tenors of 3.3 10.8 516.7 12. 7.5 3858.2 7. The 3.7 18. Treasury Bills are zero coupon or discounted instruments issued in tenors of 3 months (introduced in 1997).1 31.) 4402 4823 Source: Budget Wing. representing an increase of Rs.3 9.0 16. 307.4 1269.1 Outstanding Domestic Debt The total domestic debt was positioned at Rs.7 4653.4 7206.7 3235.206.2 1020. 1. II.2 1774.5 23.2 1457.8 17.1 18. PIBs are non-callable instruments.6 48.9 6500 10243 12724 14804 18033 20654 The following section highlights the developments in the various components of domestic debt during first nine months of the outgoing fiscal year.4 5.9 35.1 9.2 616.5 32.5 899.9 24. Government Ijara Sukuk bond.3 31.4 1903.0 10.6 778.0 Memo: GDP (in billion of Rs.4 33. The share of permanent debt in total domestic debt inched up from 18. This increase stems from net issuance of market debt namely Treasury bills (Rs. 576.Pakistan Economic Survey 2011-12 9. Ministry of Finance * End-March 2008 2009 2010 2011 2012* (In billions Rs.3 51. Government mopped up net of retirement Rs.5 2398.2 9.4 6.9 31. 5 and 10 years tenor are most liquid while longer maturities are thinly traded.4 3926.0 49.7 10.7 5641 Permanent Debt 23.7 1894. 1.8 17.8 1725.1 909. The purpose of issuance was to raise money from Islamic banking which has grown substantially in Pakistan in recent years.0 557.3 billion. 10.9 (In percent of Total Debt) 24.4 10.5 billion through successful auctions of Ijara Sukuk bond and Rs.3 542.9 (In percent of GDP) 8. 429.6 35.0 30.4 billion) and PIBs (Rs.4 2177.9 billion at end-March 2012.2 32.3 billion in 2011 registering an increase of Rs.9 873.3.3 Unfunded Debt 44.3 27. Government Ijarah Sukuks are medium term Shariah compliant bonds currently issued in 3 years tenor.125.5 billion in the first nine months of the current fiscal year.5 billion).8 468.3 1554. 7.9 19. 5.6 15.190. Sizeable receipts from Government Ijara Sukuk bond and Pakistan Investment Bonds contributed to this expansion.5 1655. 182. Floating Debt share in overall public debt and domestic debt stood at 32.4 External Debt and Liabilities Pakistan’s external debt and liabilities (EDL) include all foreign currency debt contracted by the public and private sector. The explicit concessional terms of loans (low cost and long tenors) contracted with international financial institutions or donor countries have concealed the inherent capital loss associated with foreign currency debt to some extent. On the other hand.3 billion as of March 2012. 2012.2 Duration of Domestic Debt As at end March 2012. This estimate of duration may be a little inconsistent owing to the non-availability of actual maturity profile of NSS and manual operations of Central Directorate of National Savings (CDNS). 9. A behavioral analysis was undertaken to estimate the maturity of NSS instruments. 2011 to Rs. it would certainly help in reducing the associated liquidity and refinancing risks in the domestic debt portfolio. Pakistan External Debt and Liabilities (EDL) stock was recorded at $60.7 percent and 54. The auction of Treasury bills is arranged by the State Bank of Pakistan (SBP) twice a month.5 percent lower than the average domestic interest rates. 6 months and 12 months maturity in total T-Bills portfolio is 9 percent.4 percent. government borrowed Rs.2 percent in July-March. 59 billion during JulyMarch 2011. EDL has been dominated by Public and Publically Guaranteed Debt having share of 76 percent owing to current account deficit which is financed through loans from multilateral and bilateral donors. The stock of unfunded debt increased by Rs.725.61 years. 1.6 billion in June. In order to raise short term liquidity. Much of the proceeds accrued through Market Treasury Bills (MTBs) as Rs. 20 percent and 71 percent respectively as at end-Mar 2012. the floating debt grew by Rs. 576. 167.5 percent respectively as at end-March 2012.6 billion or 4. as well as foreign exchange liabilities of the State Bank. 691. Though this may result in additional debt servicing cost in the short term. The share of 3 months. 214 billion at end-March 2011. Treasury Bills having maturity of 6 months are also created by SBP on average rate of interest of previous auction on need basis.3 billion by issuing Market Related Treasury Bills (MRTBs) to SBP. It is important for the government to take necessary measures to lengthen the maturity profile of domestic debt. Unfunded Debt Unfunded Debt made up of the various instruments available under the National Savings Scheme (NSS).5 billion or 21.9 percent on end-March 2012.3. $179 million was added 131 . Around 58 percent of the total increase in government domestic debt stock was contributed by floating debt instruments during July-March. Rates of return on NSS instruments were revised downward in October 2011 and January 2012 in response to the decrease in the benchmark discount rate. 2011. governments desire to incur the lowest annual debt servicing cost while ignoring portfolio risks. 9. Generally. as the stock increased from Rs. Special NSS Schemes including Bahbood Savings Certificates and Pensioner’s Benefits Accounts registered a combined nominal increase of Rs. A number of different schemes are offered under NSS in the investment horizon of 3 years to 10 years. Net receipts in Regular Income Scheme were up by 17. However. the analysis of currency movement of last 20 years reveals that cost of foreign currency borrowing adjusted for exchange rates movement has been 1. 69. 2012.4 billion was added to the stock of June 30. 2012.3 billion compared to Rs. Duration including MRTBs stood at 1. 49.Public Debt (introduced in 1997). across the globe. During July-March 2012. III.2 percent compared with fiscal year 2011. During July-March.4 billion or 23. Borrowing from IMF contributed 13 percent in EDL Stock which was intended for Balance of Payment (BoP) support and is reflected in foreign currency reserves of the country. The total share of unfunded debt in the government’s domestic debt stood at Rs. duration of domestic debt stood at 2 years excluding SBP Market Related Treasury Bills (MRTBs). Debt obligations of the private sector are fairly limited and have been a minor proportion of EDL (6 percent). the government borrows from the domestic banks through auction in the form of Treasury Bills. 2012 Sched duled Ban nks' Borrow wing. Multilateral M deb bt. IM MF Debt At the e end-March h 2012. deb bt owed to IMF aggregated up to $8 8.5: Struc cture of EDL End March. As A a percenta age of GDP in to the ED dollar ter rms. Public c and Publicl ly Guarantee ed Debt (PPG G) At the end-March e 2012. 76% The follow wing section highlights th he developments in the var rious compon nents of EDL during the fi irst nine mont ths of the outg going fiscal year. 2012 2 Foreign Ot thers Exchange 6% 6 Liabilities 4% IMF 13% Priva ate Non nGuaran nteed Deb bt 6% % Other B Bilateral 4% Fig g-9. The projec ct-based nat ture of loa ans contracted d under this category c hinge es on Pakistan n’s ability to o instill proj ject efficienc cy. r II. J 2012 2 compare ed to fiscal ye ear 2011 and d approximat ted to 26. y I. . . Pu ublic and publ licly guarante eed debt is do ominated by the loans fro om bilateral and a multilater ral donors. 2 Public c and public cly guarantee ed debt accou unted for the largest share of 76 percen nt in EDL. Sin nce fiscal yea ar 2010. 2012 is s depicted thr rough followi ing graphs: Fig-9.5 percent. the outst tanding stock k of debt must t be analyzed d in relation to o the size of the t economy and its repay yment capaci ity (in terms of GDP an nd other macroeconom m mic indicator rs). It witnessed an n increase of f $137 million n during the period p under review. Debt fro om 132 bilatera al sources in ncludes loan n contracted with Paris Club C countrie es and other countries ou utside the Par ris Club.1 billion.Pakistan Economic E Sur rvey 2011-12 2 DL stock. Firs stly. Pa ayment amou unting to $793 million has s been made in the 3rd an nd 4th quarter r of fiscal yea ar 2012. which is the t largest co omponent of Pakistan’s ED DL witnessed da decrease of $730 mill lion during th he period und der review. but t decreased in n relation to GDP Howev ver. It is second larg gest compone ent of Pakista an’s EDL. the EDL L was down n by 200 ba asis points in July-March. 6% l Multilateral 42% Public and Publically d Guaranteed Debt. the absolut te change in n EDL negle ects classificat tion between an actual in ncrease in sto ock in and inc creases caused by fluctuations fl internation nal exchange rates. Secondly. 1% % Foreign e Exchange Liabilities s. EDL L has increased in absolu ute terms. Fig-9. focusing on the absolute a inc crease in the t outstandin ng stock of EDL E can be misleading for two main reasons.4 External Public Debt (as perce ent of GDP) 60% 50% 40% 30% 20% 10% 0% Q3-FY12 FY80 FY90 FY95 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 The co omposition an nd structure of f Pakistan Ex xternal Debt as a on March 31. 4% Paris Club 25% F. 13% IMF Priva ate Non nGuaran nteed Debt.6 : Components of f EDL End March h. Public and Publically Guaranteed debt A.8 28.6 60.0 0.8 2.5 28.7 2006 32.4 31.9 59. Programmeloans/Budgetary Support ($99 million) and relief ($448 million).3 163.2 29. total commitments amounted to $1.3 53.5 2007 35.660 million. IMF 4.5 127.3 24.0 35.5 2008 40.660 million were for different purposes like Project Aid ($1.5 8.5 68.3 44.5 24.654 85.8 33.S.1 54.5 1.3 8.2 GDP (in billions of U.1 19.02 1.9 28.3 Memo: 10243 62.3 1.1 31.1 21.4 39.5 stock of private non-guaranteed debt decreased by $147 million.7 1.02 0.3 34.3 0. Medium and long term(>1 year) B.4 2.3 1.4 45. Private Non-guaranteed Debt (>1 yr) 3.8 0.7 46. Commitments The commitments of foreign economic assistance were $4.8 0.2 1. EAD and Debt Policy Coordination Office 8673 60.0 2.1 25.5 2012Q3 46.1 0.3 1.1 30.8 GDP (in billion of Rs. Public and Publically Guaranteed debt A. The composition of this assistance is as follows: I.8 2.0 36.8 85.4 Source: State Bank of Pakistan.0 12724 78.7 24.3 0.5 60. The Table-9.5 176.1 30.48 billion in June 2011 to $3.9 1.0 0.9 32.3 28.5 1. dollars) 98.6 31.6 0.9 29.1 42.34 billion by end-March 2012.9 59.6 1.02 4.6 3.4 28.348 million in respect of maturing EDL stock where interest payments were US$ 963 million.3 5.6: Pakistan External Debt and Liabilities 2004 1.2 2009 42. external debt servicing summed to US$ 4.1 Composition of Foreign Economic Assistance The total amount of foreign economic assistance received in the first nine months of 2011-12 stood at $1.8 86.5 40.8 3.113 million).1 28.0 1.3 0.9 49.1 0.6 37.5 40.02 4.1 1.0 109.5 36.6 32.6 3. 9.8 25.3 2010 43.4.7 210. 133 . Foreign Exchange Liabilities Total External Debt & Liabilities (1 to 4) 29.5 2011 46.1 26.1 0.1 51.3 (In percent of GDP) 27.9 1.2 0.4 0.1 2. disbursements of $1.4 0.3 52.9 Exchange Rate (Rs.6 1.2 0. Out of total non-project aid.0 90.Public Debt III.0 1.3 31.1 1.4 162.5 3./US$.6 39. while during July-March 2012.8 0.0 60.4 20. A segregation of this aggregate number shows a payment of US$ 2.8 3.9 46.5 24./U.3 27. EOP) 57.0 0. Medium and long term(>1 year) B. Disbursements During July-March 2010-11.4 59.1 25. dollar.1 54.6 41.3 55.02 0.8 26.6 33.5 0. Foreign Exchange Liabilities Total External Debt & Liabilities (1 to 4) (of which) Public Debt Total External Debt (1 through 3) 1. Short Term (<1 year) 2.7 0.6 59.7 0.7 60. Private Non-guaranteed Debt (>1 yr) 3.8 0.3 35.2 32.6 143. Project aid accounted for 67 percent of the total disbursements.5 30.7 0.5 18033 20.5 81.0 0.1 2005 31.1 57.0 0.4 8.2 1.8 227.) 57.01 3.9 0.5 1.8 9.2 1.1 1.2 25.799 million that is 14. Short Term (<1 year) 2.6 34.8 32. US$ 1.7 24.6 30.488 million was rolled-over.01 1.3 46.2 External Debt Servicing During fiscal year 2011.967 million. 36.0 1.9 24.9 0. About 76 percent of total commitments during July-March 2012 were in the shape of project aid while the remaining comprised non-project aid.2 0. Period Avg.580 million during 2010-11.1 14804 83.8 0.02 1.) 5641 6500 7623 Exchange Rate (Rs.01 1. Private Non-Guaranteed Debt The share of private non-guaranteed debt in total EDL stood at 6 percent at end-March 2012. IMF Total External Debt (1 through 3) 4.6 90. II.1 22.0 1.3 percent lower than the previous year.8 35.4.S.6 28. from $3. share of BOP/budgetary support was 78 percent. and priv vate unrequi ited transfer rs.4 External E Debt Sustainabil lity Analys sis of the cu urrent accoun nt deficit pro ovides importa ant clues as to the futur re direction of o the externa al debt path.325 1.626 6 2007-08 2.311 1.567mil llion. any increa ase in interest t rates and exchange e rate e depreciation n will increas se the debt se ervicing cost of the countr ry and will af ffect the sove ereign debt portfolio. This in ndicator show wed a downw ward trend in fiscal year 20 012 by record ding a deficit t of 1.Pakistan Economic E Sur rvey 2011-12 2 Table-9. govern nment can ass sign threshold d levels to the e debt stock as a ratio of economi ic indicators s and compar rison with in nternational th hresholds pro ovides insight t into a countr ry’s debt posi ition.3 Imp Pakistan External Deb bt is contrac cted in multip ple currencies s.2 243 million was w rolled-ov ver. d Similarly y.200 3. outstanding o b balance of the ese loans is co onverted into o US$ for repo orting purpos ses.7 Currency Wise Externa al Debt Com mposition (as on o March 2012) rs Other 6% USD 26% EUR 12% JPY 30% SD DR 26 6% 134 .558 1. 2. but repay yment capacit ty is more accurately captured thr rough express sing the level ls of debt as a percentage of the econom my’s foreig gn exchange e earnings and reserve es. th he servicing will w increase.603 3 2010-11 3.986 1. The total tra anslational ga ain on accou unt of cross-c currency mov vement again nst US$ amo ounted to $1. exchang ge rate Apart from fluctua ations in US$ $ against the ese currencie es can also re esult in chang ge in External Debt Stoc ck i.799 9 2011-12* 2.2 perce ent of nomina al GDP com mpared to a surplus of 0. with h the IMF-SB BA repayments over next two years.e.600 5.4. however.4.8 percent t of nominal GDP on acc count of im mproved trade e balance (h higher cotton prices) and swelling s inflo ows in remitta ances.66 percent t of nominal l GDP during g the same period p last yea ar owing to high value of oil o imports. th he non interest current ac ccount showed d a surplus of o 0. EDL as a perce entage of Foreign F Exch hange gs (FEE) giv ves a measu ure of a coun ntry’s Earning debt re epayment cap pacity by co omparing leve els of externa al debt to the t sum of exports. appreci iation of US$ against oth her currencies s will result in i decrease in i External Debt D Stock or r vice versa. SDR by b 7.2 perc cent respectiv vely. When com mpared to a stock of appr roximately US$ U 60.129 million which can be attribute ed to appreci iation of US $ against ha ard currencies like Euro.300 3.0 percent t and 3. In orde er to ensu ure sustainab bility. 9. Higher curre ent account in i the absence of offsettin ng increases to t current tran nsfers and no on-debt creatin ng capital flo ows can add to t the stock of o external debt. $1. US$ 1.6 692 million was w paid again nst principal while w interest t payments we ere $633 mill lion. As at end March 2012. p Ex xternal Debt and a Liabilities s expressed as a a percenta age of GDP might m be a co ommon means s of measurin ng the indebte edness of an a economy y. 94 percent of o total Extern nal Debt is contracted in 4 major currencies as depicted in i the followin ng graph: Fig-9.7 Pakistan's Pu ublic External Debt Servicing Actual Amount Total Amount Rolled Years Paid Over (i in million of US$) U 2006-07 2. ser rvices receipt ts.243 3.567 7 Source: Sta ate Bank of Pa akistan *July-Marc ch 2012 f net fresh h disburseme ents.758 8 2008-09 3.1 billi ion at the en nd of fiscal year 2011. Out of the total.723 5.880 1. Notwithst tanding. pact of Excha ange Rate Flu uctuations 9.488 4.326 1. the t relatively smaller am mount of interest payments made dur ring the first three quarter rs of fiscal ye ear 2012 sign nal towards the concessi ional nature of most of the t foreign lo oans contracted by Pakistan.586 6 2009-10 3. A general lly acceptable e threshold re equires a coun ntry’s Servicing of external debt d and liabilities during the t first nine months of fi iscal year 2012 amounted d to $3.9 percen nt. Japanese J yen (JPY). During g 2010-11. Pakistan’s level of Short Term Debt (STD) as a percentage of EDL has historically been lower than most other developing countries.1 EDL/FEE (times) 1.0 1.3 31. The ratio did not improve in fiscal year 2011 mainly because of stagnation in reserves and lower growth in EDL stock. implying an increase in costs for tapping international debt 135 . thereby showing a decrease of 2.March 2012 FEE: Foreign Exchange Earnings. It was just 0. has depicted an increase over June 2011 levels. which was 1.1 percent in 2006-07.2 32. EDL: External Exchange Reserves 2009 -4.7against 1. the ratio declined to 3.4 10. STD: Short-term Debt. A generally acceptable threshold requires a country’s EDL servicing to remain below 20 percent of FEE. a benchmark index for measuring the total return performance of international government bonds issued by emerging market countries.8 -1.5 Pakistan’s Link with International Capital Market The first ten months of the current financial year witnessed a period of substantial volatility in the global markets. This improvement is mainly due to faster growth in nominal GDP in relation to slower growth in external debt owing to lower financing from external sources.3 18.5 percent in fiscal year 2011.3 during the same period last year.3 28.Public Debt EDL to remain below 2 times of FEE. EDL as a percent of GDP stood at 26. that require serious efforts to enhance the export earnings.9 Debt and Liabilities. By end-March 2012.6 11.5 11.3 by end June 2012 mainly because of drawdown on reserves owing to lower Foreign Direct Investments and other non-debt creating flows. By end-March 2012.2 1.7 STD/EDL 0.2 1. Fiscal year 2009-10 has seen an improvement in STD as a percentage of EDL to 1.5 in fiscal year 2010 at the back of strong workers’ remittances and a positive turn-around in export earnings.9 percent.5 1.5 percent.8 External Debt Sustainability External Debt Indicators 2007 2008 Non Interest Current Account/GDP -3.3 in 2009-10 as EDL growth slowed and foreign exchange reserves shored up. On the onset of SBA in 2008. The improvement of this ratio suggests that Pakistan’s stock of external debt and liabilities is growing at a slower rate than its foreign exchange earnings.3 in fiscal year 2011 compared to 1.4 1. the ratio stood at 0. largely as a consequence of fears relating to the Eurozone’s peripheral economies. Improvement was observed in the EDL-to-FEE ratio. The current levels of servicing are bound to increase as IMF-SBA repayments initiate in fiscal year 2012.2 EDL/FER 2.5 16. The Emerging Market Bond Index (“EMBI”).7 3.4 percent during fiscal year 2011 owing to strong workers’ remittances and a positive turn-around in export earnings.4 percent which decreased to 1 percent in fiscal year 2010-11.5 percent in fiscal year 2010 to 28. the ratio stood at 1.5 3. 9.4 Source: EAD.1 2. SBP & Debt Policy Coordination Office * July . Table-9.5 4.6 compared to 3. A major improvement has been witnessed in EDLto-GDP ratio as it improves from 31.3 1.5 4.6 28.8 -7.0 0.3 3.0 EDL/GDP 28. During July-March 2012. FER: Foreign A decrease in EDL in relations to Foreign Exchange Reserves reflects the consolidation of foreign exchange reserves and a general improvement of the country’s repayment capacity or vice versa.8 2010 -1. During July-March 2012.2 EDL Servicing/FEE 12.4 (in percent) 2011 2012* 0. External Debt Servicing as a percentage of Foreign Exchange Earnings has been declining since fiscal year 2010 and stood at 11.5 26.5 1. the ratio deteriorated slightly to 3.0 percentage points in first nine month of current fiscal year.0 2. However. Higher interest payments. The 2017 maturity bond. 9. large subsidies specially food and energy. External factors mainly contributed to the spread performance of Pakistan’s bonds over the past year. with an overall tightening witnessed since the beginning of 2012. since January 2012 the EMBI has shown a slight decrease indicating that the debt capital markets might be improving.312 13. Given the general risk awareness and volatility prevailing in the international markets.7 Conclusion Pakistan’s public debt position declined slightly in the current fiscal year. 2017 and 2036 Eurobonds in the first ten Table-9. levels remain high when compared to levels seen at the beginning of 2010.024 9. 2012 months of 2010-11. the situation for Pakistan is further affected by concerns over higher commodity prices.125 Pakistan B3/B6. flood etc. uncertainty with respect to the Euro area remains and continues to affect the credit risk appetite of global investors. narrow tax base and rising international commodity prices have resulted in large twin account (i. however. is trading currently at a spread of UST+1157 basis points.875 Pakistan B3/B7. is trading currently at a spread of UST+1002 basis points. Prudent government policy will be necessary to address the issue of public debt. In the backdrop of prevailing uncertainty in the global markets. The 2036 bond.e. The government plans to tap the global markets once the conditions become more favourable. 2012) trading at a spread of UST+1098 basis points. Maturity Spread over UST (bps) Mar 2016 1098 Jun 2017 1157 Mar 2036 1002 Yield (%) 11. as at May 9th. consequent energy shortages.6 Recent Performance of 2017 And 2036 Eurobonds Pakistan has witnessed an increase in spreads on its 2016.714 12. The Eurobond maturing in 2016 is currently (as of May 9th.9 Selected Secondary Market Benchmarks Ratings Issuer Coupon (%) (Moody’s/S&P) Pakistan B3/B7. compared to the issue spread of UST+302 basis points and a spread of 681 basis points last year. 136 . The following table contains the latest position of bond issued by Pakistan along with their current yields. growing security spending needs. A host of internal and external factors contributed to the decline. fiscal and current account) deficits.875 Source: Bloomberg. Pakistan has not issued any new debt instrument since 2008.Pakistan Economic Survey 2011-12 capital markets. that had an issue spread of UST+200 basis points. However. They are now responsible for the key areas of the education sector i.Chapter 10 Education Introduction The primary objective of government policy in the last few years has been to improve the level and quality of education in Pakistan. especially at the primary level because that level forms the core of the literate population. The last section presents a brief summary of the Annual Status of Education Report Survey. This chapter presents an overview of the National Education Policy. by increasing enrolments faster than the growth in population. Scarcity of resources and inadequate provision of facilities and training are the primary obstacles in imparting and expanding education. increasing enrolment. followed by a description of the activities and achievements of the Higher Education Commission. improving access to education and expanding the primary education system. improving the quality of education. Literacy and primary school enrolment rates in Pakistan have shown improvement during last five years but they are still lagging behind other countries of the region. The present government’s strategy for the sector includes improving the functioning and utilization of existing schools. All the provinces have shown their commitment to the National Education Policy 2009. 137 .e. followed by a discussion of literacy and enrolment statistics. standards of education up to intermediate level (Grade 12) and Islamic education. National Educational Policy 2009 The National Educational Policy (NEP) 2009 is a milestone which aims to address a number of issues including: ` ` ` ` ` ` ` ` quality and quantity in schools and college education universal primary education improved Early Children Education (ECE) improved facilities in primary schools converting primary schools to elementary schools detaching education classes XI-XII from college adopting a comprehensive definition of ‘free’ education achieving regional and gender parity especially at elementary level the share of resources for education in both public and private sectors ` provide demand based skills and increase in The policy also defines the role of government at the federal as well as the provincial level in the field of education. Educational budget and programmes and issues related to technical and vocational training are discussed next. Under the 18th constitutional amendment control and management of the education sector has been devolved to the provinces. Planning and policy and standards of education beyond Grade 12 are covered under Federal Legislative List. curriculum and syllabus. centers of excellence. The government vision is to expand primary education and this measure can be used to assess whether government schools have increased their coverage. 2. Khyber Pakhtunkhwa improved from 87 percent to 89 percent and Balochistan declined slightly from 75 percent to 74 percent in 2010-11. Punjab shows a marginal increase from 97 percent in 2008-09 to 98 percent in 2010-11. as compared to 57 percent in 2008-09. Literacy is one of the important indicators of education because its improvement is likely to have a longer run impact on other important indicators of national welfare. The details are given in Table 10. According to the latest Pakistan Social and Living Standards Measurement (PSLM) Survey 2010-11. Literacy remains much higher in urban areas than in rural areas and much higher for men than for women. The GER at the primary level excluding katchi (prep) for the age group 5-9 years at national level during 2010-11 increased to 92 percent from 91 percent in 2008-09. (Percent) 2010-11 Female 69 63 81 70 64 80 71 60 82 68 67 77 60 54 79 46 35 67 51 42 71 46 22 68 33 29 50 19 13 40 Total 58 49 74 60 53 76 59 42 75 50 48 63 41 35 61 Table 10. The provinces will allocate a minimum of 4 percent of education budget for literacy and nonformal education. The details are given in Table 10. Amongst the provinces.1: Literacy Rate (10 Years and Above)-Pakistan and Provinces 2008-09 Province/Area Male Female Total Male Pakistan 69 45 57 Rural 63 33 48 Urban 81 67 74 Punjab 69 50 59 Rural 63 39 51 Urban 82 71 76 Sindh Rural Urban KPK Rural Urban Balochistan Rural Urban 71 61 81 69 67 76 45 22 65 31 27 48 59 43 73 50 47 62 62 23 45 57 16 38 78 47 64 Source: Pakistan Social and Living Standards Measurement Survey. Existing school infrastructure wherever feasible shall be used for literary and non formal education. 138 . Khyber Pakhtunkhwa with 50 percent and Balochistan with 41 percent. Sindh remained stable with 84 percent. 2010-11 Primary Enrolment Rates Gross Enrolment Rates (GER) The GER or the participation rate is the number of children attending primary schools divided by the number of children who ought to be attending.Pakistan Economic Survey 2011-12 Literacy The National Education Policy 2009 proposes that the literacy rate be increased up to 86 percent by 2015 through up-scaling of ongoing programmes of adult literacy and non-formal education in the country and achieving universal primary education and ensuring zero-drop rates at the primary level. the literacy rate for the population (10 years and above) is 58 percent during 2010-11.1. Province wise data suggest that Punjab leads with 60 percent literacy followed by Sindh with 59 percent. 4].76 million) has been observed and it is estimated to increase by 4. for Pakistan. [Table 10. [Table 10.4]. An increase 139 . ii) Primary Education (Classes I – V) A total of 155. An increase in middle enrolment (5.495 Primary Schools with 440. [Table 10.77 million) was observed during 2010-11.41 million) in 2010-11 over 2009-10 (8.3 show the Net primary level enrolment rates at the national/provincial (excluding katchi abadies) level for the age group 5-9 years. iii) Middle Education (Classes VI-VIII) A total of 41. Punjab shows a decrease from 62 percent in 2008-09 to 61 percent in 2010-11. 2010-11 (Percent) Male 60 62 57 57 56 2010-11 Female 53 59 48 45 35 Total 56 61 53 51 47 Educational Institutions and Enrolment i) Pre-Primary Education Pre-Primary education is the basic component of Early Childhood Education (ECE). It is estimated to increase by 1. Table 10. Table 10. Sindh also shows decrease from 54 percent to 53 percent in 2010-2011.3: National and Provincial NER at Primary Level 2008-09 Province/Area Male Female Total Pakistan 61 54 57 Punjab 64 60 62 Sindh 57 49 54 Khyber Pakhtunkhwa 58 45 52 Balochistan 51 36 44 Source: Pakistan Social and Living Standards Measurement Survey. Khyber Pakhtunkhwa witnessed a decrease from 52 percent to 51 percent and Balochistan improved from 44 percent in 2008-09 to 47 percent in 2010-11.779 teachers were functional in 2010-11. It is estimated to increase by 2.16 million) over 2009-10 (18.984 teachers were functional in 2010-11.86 million in 2011-12.2: National and Provincial GER Province/Area Male Total Pakistan 99 83 91 Punjab 102 92 97 Sindh 93 75 84 Khyber Pakhtunkhwa 102 70 87 Balochistan 93 54 75 Source: Pakistan Social and Living Standards Measurement Survey.4 percent in Pre-Primary enrolment (9.50 million) has been observed during 2010-11.951 middle schools with 334.Education Table 10.72 million) in 2011-12.523 Teachers were functional in 2010-11. An increase of 7. the official primary NER is the number of children aged 5 to 9 years attending primary level divided by the total number of children aged 5 to 9 years.64 million) in 2010-11 over 2009-10 (5. The NER at the national level during 2010-11 slightly decreased to 56 percent from 57 percent in 200809.57 million in 2011-12.2 percent to 19. 2010-11 2008-09 Female Male 100 103 94 101 92 2010-11 Female 83 93 72 76 52 (Percent) Total 92 98 84 89 74 Net Enrolment Rates (NER) The NER at the primary level refers to the number of students of primary school age enrolled in primary schools divided by the number of children in the age group for that level of education. An increase in primary enrolment (19. iv) Secondary Education (Classes IX-X) A total of 25.3 percent (5. Prep or Katchi classes are for children between 3 to 4 years of age.8 percent to 9. In other words.4].209 secondary schools with 452. based on key indicators such as likely enrolments. v) Higher Secondary / Inter Colleges (Classes XI-XII) A total of 3. the number is estimated to increase to 228.6 million during 2011-12.2: Institution at each level 180 160 140 120 100 80 60 40 20 0 2009-10 2010-11 Primary Middle High vii) Universities Education (Classes XV onwards) An enrolment of 1.9 million as compared to 38.300 during 2011-12.45 million during the year 2011-12.17 million) has been observed.349 teachers were functional during 2010-11. The number of teachers during 2010-11were 1. It is estimated to increase by 8.291 million in 2011-12 [Table 10. The number of enrolments during 2010-11 was 39.19 million) in 2010-11 over 2009-10 (1. This shows a decrease of 0. vi) Degree Colleges Education (Classes XIIIXIV) An enrolment of 1. [Table 10.3: Teachers at each level 500 450 (In thousand) 400 350 300 250 200 150 100 50 0 Primary Middle High 2009-10 2010-11 2011-12 E . (In thousand) (In thousand) estimated to increase further to 1.2 million during the same period last year. [Table 10.3 percent.63 million) in 2010-11 over 2009-10 (2.41 million compared to 1.73 million in 2011-12. This number is 140 2011-12 E Fig-10.4]. There are 135 universities with 63.4].557 thousand teachers in both private and public sectors are functional during 2010-11. has shown a slight improvement.400 during the same period last year. The number of institutes stood at 227.183 teachers were functional in 2010-11.4]. Overall Assessment The overall educational situation.7 percent.4]. Fig-10. number of institutes and number of teachers. It is estimated to increase to 41.11 million in 2010-11. It is estimated to increase by 3.435 higher secondary schools and inter colleges with 81.Pakistan Economic Survey 2011-12 in secondary enrolment (2.1: Enrolment at each level 25000 20000 15000 10000 5000 0 2009-10 2010-11 2011-12 E Primary Middle High Fig-10.76 million in 2010-11.4]. [Table 10. An increase in secondary enrolment (1.02 million students is expected during 2011-12 in degree colleges against an enrolment of 0.41 million is estimated in 201112 in higher education (universities) over 1.6 percent to 2.558 degree colleges with 36.4 percent. [Table 10. A total of 1.7 percent to 1.39 million during the same period last year showing an increase of 1. However.58 million) has been observed during 2010-11.800 during 201011 as compared to 228. This shows an increase of 4. The achievements of provincial educational departments Punjab: Campaign for enhancement of literacy was launched specially for promotion of primary education for girls in rural areas.7 5717.Education Table 10.6 463.4 760.5: Province/Area wise provision of missing facilities in Schools Khyber Gilgit Sindh Balochistan AJK Pakhtunkhwa Baltistan 50 32 26 22 25 Note: Excluding Punjab Province as it had its own programme.6 25.4 2630. KPK Rs.8 1291.5 billion.0 157.5 228.4 Higher Sec. head teachers. The province/area wise details are given in Table 10.1 440.3 billion and Balochistan Rs.6 19157. Work continued on the 4 Polytechnic Institutes. The Academy of Educational Planning and Management (AEPAM) has provided training to 200 principals. Physical Achievement Expenditures for basic missing facilities were provided to 180 schools to develop and improve basic and college education. head teachers and master trainers.0 1187.0 Education Programme under PSDP 2010-11 Financial During the fiscal year 2010-11.9 85. The revamping of existing science laboratories of 1.5 9863.4 72. 9. B.Ed classes were introduced at the Provincial Institute of Teachers Education (PITE) at Benazir Abad. 4. Rs.5 Primary* 5504.4 227.2 High 1166.5 342.6 42.0 3.2 36.4 435.132 0.4 1.0 452. 1 billion was spent under the Canadian Debt Swap Projects on inservice training of 40.8 81. repair and maintenance of 25 teachers training institutions were also in progress.5 5643. Construction of library rooms was completed in 450 elementary schools. (Numbers) FATA 25 Total 180 Table 10. A total of 180 students from Balochistan and FATA were enrolled in quality institutions and provided scholarships.1 2725.8 57.3 41596. The provincial governments were allocated Rs.000 teachers.6 Degree Colleges 935. Early childhood education and early 141 .87 billion was provided in the Federal PSDP for expansion and development of basic and college education.Com. A number of scholarships were provided to needy and talented students at all levels. Sindh: In order to improve the quality of teachers.5 335. Introduction of M.2 1.8 25.9 1015.6 1409.5 9412.*: including Pre-primary and Mosque Schools 154.3 63.8 1386. Rs. classes at FG College of Commerce.1 77.4 billion.8 3.6 1445.3 42.7 1413.5 0. Provision of scholarships to 200 student-teachers.0 Middle 2583.3 441.7 331.4: Number of Mainstream Institutions.5 41. AEPAM. H-8/4.6 1.6 billion) for schools and college education. an amount of Rs.0 45./ Inter 478.8 Total Source: Ministry of Professional & Technical Training.5 155. Sindh Rs.3 3.2 30.0 39900. Islamabad and up-gradation of 5 primary schools to middle level remained in progress. district education officers and educational administrators for their capacity building.6 1107.5.000 schools was completed. 10. Enrolment and Teachers by Level (Thousands) Year Enrolment Institutions Teachers 2009-10 2010-11 2011-12 2009-10 2010-11 2011-12 2009-10 2010-11 2011-12 (E) (E) (E) 8762. 1.135 Universities 38202.6 19571.2 Pre-Primary 18771.7 228.1 24. 2. Islamabad E: Estimated. Work on construction of 14 Cadet Colleges also continued.5 447.26 billion (Punjab. Major Programmes 1. following steps have been taken: ` NAVTTC has developed 60 new curricula of different vocational trades and technologies.3 million has been made for provision of scholarships. The commission is establishing and promoting linkages among various stakeholders at the national as well as international level. ` . 4. 1. Rs. This includes Rs. Post-graduate courses have been introduced in degree colleges as well. Rs. 260. Gilgit-Baltistan and FATA Rs. 23. An allocation of Rs. 677. Khyber Pakhtunkhwa: A total of 100 Primary schools on need basis have been completed and 300 additional class rooms have been constructed. Islamabad.65 billion for the teacher training programme under CIDA. AJK. for KPK Rs.51 billion was made for the financial year 2011-12 for development projects for education. 2. 30. for Punjab Rs. strategy formulation. The academic activities in Degree College for Women at Sector I-14 are expected to start from September 2012.6 million and for Balochistan Rs. boundary walls and provision of water facilities have been completed in various degree colleges of the province. A scheme for provision of quality education to 200 students belonging to Balochistan and FATA for studying in quality institutions of other provinces has also been launched. 82. 3.7 million for scholarship schemes under Inter Provincial Coordination Division. A MoU has been signed between NAVTTC and the Sri-Lankan Tertiary and Vocational Education Commission to share copy rights of their 107 National Skill Standards and Training Learning Resource. which are being taught in public and private sector institutes across the country.4 million for projects under the Capital Administration and Development Division (CADD). The construction work on provision of computer labs in 119 schools is going on.8 million). 1. 705.9 million. The National Vocational and Technical Training Commission (NAVTTC) is an apex body and a national regulatory authority that has been set up to address the challenges of technical and vocational education and training (TVET) in the country.3 million for projects of education in cantonment and garrison areas under Ministry of Defense. It is involved in policy making.0 million. Rehabilitation of the Government Degree College and provision of residence facilities for lecturers remained in progress. and regulation and revamping of the TVET system.3 million for Kashmir Affairs and Baltistan Division and Rs. Construction of library blocks. Rs. for Sindh Rs. 315. 150. Since 2006. Buildings were provided for various shelter-less primary schools. An allocation of Rs. Balochistan: A total of 50 primary schools were upgraded to middle level. 81.7 million under the Cabinet Division for printing of a comprehensive biography of Faiz Ahmad Faiz in Urdu. the commission has given a high priority to unaddressed areas and challenges faced by TVET. three schemes under Inter-Provincial Coordination Division and one scheme under the Defense Division. 1. Establishment of degree colleges for boys at Shihala and for girls at Bhara Kahu. In order to combat these challenges during 2011-12. 2. Technical and Vocational Education There is a need to enhance and upgrade technical and vocational education in the country to cater to the labour demand in emerging sectors. Development Programme 2011-12 Financial An allocation of Rs. and Rs.Pakistan Economic Survey 2011-12 learning programmes have been introduced in the province.1 million.65 billion under Canadian Debt Swap has been made for capacity building of teacher training institutes 142 (For Islamabad. 181. In this context the government is endeavoring to focus on enhancing productivity and skill development industries particularly in the SME sector and in economic opportunities within and outside the country. Stipend to girl students was provided to reduce the drop-out rate. Japan International Cooperation Agency (JICA). While nine other institutes are in the process of accreditation. The reform components cover (i) TVET governance and institutional buildings (ii) national qualification framework and human resource development and (iii) effective and innovative training delivery and labour market information services. NAVTTC has formulated a framework for accreditation of TVET institutes (public and private) throughout the country. These organizations are: • • • • • • • United Nations Educational. NAVTTC has developed institutional linkages with a number of the world’s important organizations dealing with TVET sector. Scientific & Cultural Organization (UNESCO) United Nations Industrial Development Organization (UNIDO) British Council (BC) European Union (EU) Turkey International Cooperation Agency (TIKA) International Labor Organization (ILO) Colombo Plan Staff College for Technician Education (CPSC) for Human Resources Development in Asia and the Pacific Region. 2012. The advisory group is expected to play a major role in articulating the criteria for providing quality training to the required skilled force. ` NAVTTC has signed a memorandum of understanding with the well known Pakistani NGO-AKHUWAT for providing interest free loan of Rs. 50. NAVTTC has formulated a mechanism and has obtained consensus of the stakeholders in the provinces on this mechanism. These committees are comprised of notable and dedicated volunteers without any political affiliation. This is the first ever attempt in Pakistan to develop such a system involving the TVET Sector. In this connection a manual for accreditation in consultation with the concerned stakeholders has been developed and is under implementation. Islamabad has been accredited. Manila. Korean International Cooperation Agency. 143 ` ` ` ` ` ` ` ` ` • • . Philippines. The Code of Conduct and Professional Ethics for Technical and Vocational Training (TVT) was developed and printed for implementation. 117 new Vocational Training Centres were established in 72 tehsils of the country which were hither to without any TVET Centre.118 youth received vocational and technical training under the President’s Funni Maharat Programme and Prime Minister’s Hunermand Pakistan Programme.The programme is aimed at reforming the TVET sector as whole. NAVTTC is assigned by its Act to establish an internationally acceptable system of accreditation for TVET institutions. All NAVTTC trainees are expected to benefit from this scheme. the initial phase of accreditation of 12 institutes (both from public and private sectors) has started from March 30. NAVTTC has constituted 22 advisory groups of experts from different industries and chambers of commerce.40 million has been signed with the GIZ (German Development Agency).Education ` A total of 134. The code serves as an instrument and provides an important base for promoting good practices in teaching and learning of international standards. Under which one institute. Moreover. NAVTTC has constituted Project Monitoring Advisory Committees at the Tehsil level for monitoring the NAVTTC sponsored training programmes. An agreement for Technical and Vocational Education and Training (TVET) Reform Support Programme for a period of five years at a cost of €42. NAVTTC has acquired ISO 9001 Certification as a step towards a better managed and efficient system.000 to the successful trainees of NAVTTC. the Construction Technology Training Institute. NAVTTC has signed a MoU with Asia-Pacific Accreditation and Certification Commission (APACC). Table 10.6. governance and university faculty. The projects and programmes are given in Table-10.1 Overseas Scholarships Phase-II Fulbright Scholarship Programme Source: Higher Education Commission 144 . The details are given in Table 10. HEC has proposed its next Human Development five year plan viz. Source: Higher Education Commission HEC is also playing its role in running different scholarship programmes to enhance academic Table 10.7: Scholarships Project Name qualification at various levels on merit basis in line with requirements. After implementing Commission are as follows: the MTDF 2005-2010. This is an area in which vital and decade. scholarships schemes management are also open to individuals working in the private (iii) Universities building economies and or government sectors as well as Pakistani communities students. The few prime physical targets of the significant progress has been made. MS leading to PhD Faculty Development Programme of UESTP/UETs Universities. With the dual objective of increasing institutional capacity and proposed 5-year plan are: enhancing local research activities. its second MTDF – 2010-2015 to create the knowledge capital and technology Human resource development within the higher required to enable Pakistan to join the ranks of the education sector lies at the heart of the HEC’s industrially advanced countries within the next reform process. However.6: Projects/Programmes Project Name Scholarship Availed Scholars Completed Studies 28 935 148 819 (Numbers) Provision of HE Opportunities for Students 2000 of Balochistan/ and FATA Japanese Need Based Merit Scholarships 950 Program Financial Support for Meritorious Needy 165 Students Program Indigenous PhD Scholarship Schemes 1512 692 People are placed in HEIs under Interim Placement of Fresh PhDs Programmes. the Higher Education (v) Research. the major thrust (i) Promoting excellence in learning and research of the programmes in this area have been primarily aimed at improving the academic qualifications of (ii) Developing leadership.7. Scholarships Awarded 590 604 901 21 189 19 1439 233 Scholars Proceeded 477 604 901 21 117 19 1200 233 (Numbers) Scholars Completed Studies 449 N/A 659 1 2 383 132 24 Post-Doctoral Fellowship Programmes 1000 Cuban Scholarships for Studies in General Comprehensive Medicine US needs based Scholarship Programme for Pakistani University Students MS / M. Overseas scholarship scheme for PhD in selected fields Phase . innovation and entrepreneurship Commission (HEC) has been striving to encourage universities to play a greater role in the economic Key achievements of the Higher Education development of the country.Pakistan Economic Survey 2011-12 Higher Education Commission (iv) Financial management and sustainability Since its inception in 2002. Phil leading to PhD Scholarships for teachers of Weaker Universities. HEC has allocated a fun nds in accorda ance with th he needs of the t country in i the R&D arena a (see Fig g 10. res search output from Pakista an is now more m visible at a the 145 . The details of this initia ative are pres sented in Tabl le 10.Educ cation h and Develop pment Research Research and develop pment (R&D) ) is essential to be comp petitive in the t changing internation nal econom mic scenarios s. designed for building a high quality pool of academics a and managem ment staff at a learning institutions of Pakista an. allo owing freedom m of research h and teachin ng. Fig-10.4: Funds F Allocat ted for Promotion of Resear rch 900 800 700 650 680 726 80 00 800 Rs. The Tenure e Track Sys stem (TTS) of appointme ents has been n introduced in public sec ctor universitie es.8 8: Province-W Wise Distribution of Faculty Members/Ma anagement Sta aff Trained Programmes Total numb ber of Universi ities HE Faculty y Trained Manageme ent Staff Traine ed Grand Tota al Source: HE EC Federa al 21 9 970 94 10 064 Punjab 18 2146 6 103 3 2249 9 A Pr rogrammes Quality Assurance Quality assurance a is one o of the ob bjectives of the t HEC. Million 600 500 400 300 200 100 0 2002-03 2003-04 2004-05 2006-07 2007-08 2008-09 2010-11 2005 06 2005-06 2009-10 47 270 300 44 42 So ource: HEC g Innovation at HEC Learning Faculty training pr rogrammes. It aims at enhancing performance p a and efficien ncy of the faculty fa memb bers by creat ting a healthy y competitio on among them.3 378 faculty members m have e been appoin nted by 58 pu ublic sector universities/D u Degree Awarding Institutes (DAIs). Due D to contin nuous suppor rt to research journals by the HEC. To date e a total of 1. as well as a the financi ial independe ence to pursue these objec ctives. These programme es are des signed to make interna ational stand dard educati ion availabl le to student ts. (Num mbers) A AJ&K 02 114 7 121 To otal 74 6431 401 6832 Sindh 13 1279 87 1366 KPK 15 1347 71 1418 Ba alochistan 05 573 39 612 Table 10. I order to achieve it some qual In lity parameter rs have been developed an nd implement ted to fill th he gaps in quality prov vision betwe een national and interna ational syste ems of high her learning. are being g implement ted by the HEC.8.4). Impact of Plagiarism Policy The zero tolerance policy of the HEC towards plagiarism has had a positive impact on research activities being carried out in higher education institutions and R&D organization. “Thenticate” is one of the leading software used globally for this purpose. named as Turnitin. The software tool. literature referred during research activities has improved and researchers are more vigilant in citing information in their scholarly works. of Universities given access to Turnitin No. Plagiarism Eradication System The HEC's goal is to combat plagiarism effectively in an academic environment in all institutions of Pakistan while ensuring that the students and academicians know that stealing intellectual property is unethical and leads to serious consequences.9: Plagiarism Eradication System Facilities Key Indicators No. of Registered Students No. a master trainer program was also arranged through the Turnitin service provider for the focal persons nominated by the universities/institutes while selecting top ten (10) extensive users of Turnitin Service. ` ` ` ` Technical support and facilitation through emails. Because of increased awareness about proper documentation. the IT Division had sought a technological solution and acquired an online software tool to assist in identifying plagiarized material. who will be the resource person for faculty members. This online service is available at http://www.Pakistan Economic Survey 2011-12 international level. 146 . In addition. Almost 45 research journals are now in the Institute of Scientific Information (ISI) master list with 11 journals having an impact factor. all public sector universities have been provided with campus version of plagiarism detection solution.com and 1000 licenses for each of the public sector universities/ institutes have been acquired for teaching faculty. of Registered Instructors No. phone and personal visit Updating Turnitin guidelines for instructors and circulation of the same to universities Monitoring usage by the universities Involved focal persons for conducting training sessions at respective campuses For the past three years. For this. Some of the salient features of this strategy are as follows: ` Unlimited accounts have been acquired for a one year period and each university has been 2008 10 2885 2009 50 763 2094 10446 2010 13 2263 6855 69042 (Numbers) 2011 54 4144 15811 146297 given 1000 user accounts. This year HEC has provided ten (10) months trial access to Turnitin service to all the Private sector universities/ institutes. so that they can in turn extend trainings in-house to their respective universities/ institutes’ faculty and post graduate students. of Submission for Originality Report Source: HEC In person and remotely managed trainings are arranged for the focal persons of all the universities to rise to the level of master trainer. HEC is committed to eradicate plagiarism from higher education institutes. after having negotiations with I Paradigm (Turnitin parent company).turnitin. post graduate students and researchers in order to address the issue at the grass root level. All universities’ users are also encouraged to go through the training material available at the Turnitin site and webinars arranged by the service provider on a regular basis. Anti-Plagiarism Service “Turnitin” Plagiarism detection service ‘Turnitin’ has been provided to all public and private sector HEIs by the HEC in order to facilitate authentication of contents. Table 10. The service is provided to a focal person nominated by the university. 5. 70 percent of the original allocated funds have been released to development . Sindh Education Foundation and many other Civil Society Organizations (CSOs).874 children.00 20.642 government/private schools were surveyed. development funds were also released under the “Subsidy to Scholars under Cultural Exchange Programme”. Up till March 2012. In 2011. there are 174 ongoing projects. Million) 2007-08 12. and Fig-10.00 8. Peshawar and Karachi) 147 Planning & Development In the development portfolio of HEC. Rs.5 2008-09 15.11. In addition to recurring funds.00 0.42 15. The HEC expects to complete 48 development projects during the current financial year. The survey included 49. Table 10. Currently.00 11.00 16.500. billion projects.5: Development Expenditure 25. Rs. 2011 Fig 10. The year wise breakup is given in Table 10.96 To streamline and support institutional processes and operations. It is led by the Idara-eTaleem-o-Aagahi (ITA) in collaboration with the National Commission for Human Development (NCHD). Table 10.766. Millions) Year Subsidy Tendered 2008-09 21.7 2011-12 13.06 22. Billions) Financial Year Allocation Releases 2008-09 18.0 2010-11 29.42 2009-10 22.5 Total 187.76 14.502 villages.9 million have been allocated as annual recurring grant out of which 55 percent has been released so far. The detail of recurring funds released to higher education sector during last 4 years is given in Table 10. Table 10. ASER is conducted each year across Pakistan and will continue up to 2015.00 15.74 Source: HEC *The releases are till Dec. 2.0 2010-11 75.30 10.8 Source: HEC *2011-12 Source: HEC Education Survey Annual Status of Education Report (ASER) is a citizen led household based learning survey mostly in rural and selected urban areas.00 8.5 2009-10 77.06 *2011-12 14.00 16. 84 rural and 3 urban city districts. It measures learning levels of children 5-16 years the same age group as identified for compulsory education in Article 25 A of the Constitution of Pakistan.96 Total 70. 26. The HEC has introduced a tenure track system. The ASER 2011 Survey was conducted in 84 rural and 3 Urban districts (Lahore.12: Development Expenditure(Rs.26 50.257 tenure track teachers working in different public sector universities.30 2010-11 15. the HEC has successfully introduced/installed SAP Enterprise Resource Planning (ERP) application in its offices.536.00 2008-09 2009-10 2010-11 18.0 Source: HEC Note: For the year 2011-12.12.00 5.50 11.10.76 14. there are 1.057. Only 3 new projects were allowed to be included in the current year PSDP.4 2009-10 21.11: Subsidy to Scholars (Rs. HEC has developed a formula based funding mechanism that assigns appropriate weights to different need and performance indicators along with students and faculty strength. 97 urban blocks and 3.10: Recurring Grant Released (Rs.793 households and 146.Education Financial Scenario For efficient allocation and disbursement of public funds. The details are given in Table 10. which offers a market based competitive salary package to attract and retain intelligentsia in public sector institutions of higher learning.50 Allocation Releases 14. For urban areas this trend is highest in Karachi (68.1 percent to 41.1 percent.6 percent of class 5 students who could read sentences in the previous year. 148 .3 percent of class 5 students were reported as being able to read sentences compared to 40. Nationally there is a persistent gender gap in out of school children with more girls than boys being out of school except for the 14-16 age group where slightly more boys are out of school than girls (boys 3. Gilgit-Baltistan and Balochistan. Balochistan. has shown a visible improvement.6 percent) with FATA (40.9 percent) with majority of children in private schools throughout Pakistan.3 per cent in 2010 to 37. The highest enrolment in this age group was 51.9 percent) Pre-school enrollment (3-5 years) was 42.7 percent. girls 2.Pakistan Economic Survey 2011-12 of Pakistan by 5000 active citizen volunteers Box 1 ASER 2011 National Summary (RURAL) Enrolment Characteristics ` In 2011. Highest private school enrolment was seen in Gilgit-Baltistan (43. This is a drop from the 2010 attendance level of 81. nationally.3 percent had a functional toilet Facilities in government schools have improved most in Punjab followed by Khyber Pakhtunkhwa (KPK). highest Madrasah enrolment was found in Balochistan at 6.5 percent of the government primary schools surveyed had useable water while 45.7 percent. which is quite close to the overall EFA/National Plan of Action (NPA) target of 50 percent enrolment in pre-school by 2015. This number has held steady since 2010. non-state private school enrolment stood at 25.1 percent in 2011 According to provincial data.5 percent) and Punjab (33.2 percent) close behind ` ` Madrasah enrolment increased from 0. it was found that 57.5 percent. the proportion of class 5 children able to solve a 3 digit division problem has increased from 34. ` ` Children's Attendance has Declined ` Overall student attendance in government schools (rural) was recorded at 79.3 percent in Punjab and lowest in Gilgit-Baltistan (29.6 per cent in 2010 to 47. English Reading Levels: In ASER 2010. The proportion of children in class 5 able to read a class 2 level Urdu story text has increased from 26.9 percent of 6-16 year olds in rural Pakistan were enrolled in schools while 20.4 per cent in 2011. however.6 percent).3 per cent in 2011.8 percent. 42.5 percent while district wise data show that Bahawalpur had the highest Madrasah enrolment (6.1 percent were out of school. 79. For example. In Punjab 80 percent government schools have a useable water facility and 70 percent have a functional toilet whereas in KPK 59 percent government schools were found with a useable water facility and 52 percent with a functional toilet Arithmetic Competencies Improved but Basic Reading Levels show a Decline ` ` Like 2010 the ASER 2011 evidence is most worrying on learning levels across school systems Arithmetic levels have improved: Basic arithmetic levels estimated in ASER 2011 show a slight improvement.4 percent had useable water facility and 43 percent had a functional toilet ` ` In ASER 2010.5 percent) while the lowest was in Sindh (61.5 percent. Urdu reading levels are estimated to have declined slightly: The proportion of children in class 5 able to read a class 2 level Urdu story text has dropped from 51. Of the total government primary schools surveyed. The highest attendance level was found in Azad Jammu Kashmir (88. 55.4 percent) with majority enrolled in government schools. The improvement is most visible in the provinces of Punjab.9 percent in 2010 to 2.4 percent) No major changes in Drinking Water and Toilet Facilities ` National figures for 2011 do not show any significant improvement in the proportion of schools with useable water and toilet facilities. ` Private school enrolment is on the rise: ` Nationally. they have been improving over the past five years.2 percent) are by far the most intensive users of private tutors in the country.8 percent in FATA and highest being in Punjab (41. For example. Mothers’ Literacy: ` Mother’s literacy stood at 34. more resources will need to be allocated to providing training and high quality facilities 149 . While literacy and enrolment rates are lagging behind other countries in the region. 11 percent reported paying for private tutors.Education Class 2 sitting together with other Classes: ` Nationally. at the national level class 2 children were sitting with one or more other classes in 44 percent of the surveyed schools. Private Tuition Trends: ` Of the enroled children in the rural sample. This figure was 11. To achieve the goals of providing higher quality education and expanding the coverage of educational services.3 percent for class 8. for rural government schools.1 percent) as compared to children in private sector schools (24 percent). ` The incidence of attending private tutors was lower among children in public sector schools (7.5 percent. ` Children in Punjab (20.6 percent) Source: ASER-Pakistan 2011 Conclusion The government of Pakistan is committed to improving both the quality and the coverage of education through effective policy interventions and expenditure allocations. Lowest being 12. about half of all classes visited are multigrade. 1 National Health Policy 2009 Health Sector Indicators (Baseline.Case detection rate (SS+) 51 74 77 79 80 83 84 % VI TB . Benchmarks and Targets) Indicators Baseline Benchmarks and Targets 2006-07 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 I <5 mortality rate (per 1000 lb) 94 78 73 68 65 60 55 II Infant mortality rate (per 1000 lb) 78 66 62 58 55 48 43 III Maternal mortality ratio (per 276 240 220 200 175 165 150 100. reducing child and maternal mortality by 2015 is a high priority for the government of Pakistan. health promotion. The government’s efforts at augmenting food security and enhancing the availability and uptake of nutrients are examined before presenting conclusions.% 87 87 88 88. In order to achieve this vision. key issues that impact the health status of people ought to be addressed through a diverse set of policy tools comprising short and long term measures to secure better health outcomes. followed by an overview of the state of health indicators. greater coverage of immunization.5 89 90 91 Source: National Health Policy 2009 Note: lb refers to Live Births 151 .000 lb) IV % of children (12-23 months) 76 (47) 78 80 82 84 84 85 fully immunized (disaggregation by gender and income) V TB . family planning. The targets and accomplishments for the 2011-12 are then described. enjoying good quality of life through the practice of a healthy life style.Treatment success rate . and facilities in Pakistan. The chapter then focuses on the challenges of narcotics trafficking and the burdens of growing incidence of drug addiction in Pakistani society.Chapter 11 Health and Nutrition Access to good health can contribute positively to the economic and social development of a country. significant measures have been taken toward disease prevention. National Health Policy In light of the health related MDGs. Thus. The vision for the health sector comprises a healthy population with sound health. and provision of female health worker services. The people of Pakistan have grown healthier over the past three decades. followed by a discussion of the government’s special focus on cancer treatment and the response waged to counter dengue outbreaks. Health spending has increased progressively over the years as the National Health Policy adopted in 2009 focuses on making the population healthier. expenditures. Some of the important targets of the policy are summarized in the table below: Table:11. This chapter is structured as follows: the next section presents the National Health Policy and its primary objectives. 75 47. Considerable efforts and immense resources are required to achieve the desired health outcomes.54 1. Nepal and Bangladesh.7 China 74.90 152 . Maternal health problems are widespread and the current infant mortality at 63/1000 is the highest in South Asia.03 47.5 Thailand 73. the average life expectancy at 66 years compares well with India. water borne diseases.0 Philippines 71.34 16. The objectives of the health policy are being achieved through the following targeted interventions.57 1.60 16.93 15.73 1.4 Indonesia 71.58 44.2: Regional Human Development Indicator Country Life Expectancy Mortality Rate 2011 under 5 per 1000 2010 Pakistan 65.60 13.4 Source: World Development Report 2011 Infant Mortality Population Growth Rate per 1000 Rate (%) 2011 2011 63. Prioritizing vulnerable and disadvantaged groups in society as recipients of social uplift programmes.Pakistan Economic Survey 2011-12 (ii) Health status varies between urban-rural locations and by economic status.06 0.99 86. malnutrition and rapid population growth.73 16.95 1. Pakistan is committed towards achieving the MDGs.39 0. Special efforts and considerable resources are required to achieve the desired health outcomes. However.5 per 1000 live births).49 27. These indicators continue to remain high mainly on account of unhealthy dietary habits.66 29. Despite these positive efforts.34 1. Effectively engaging private health sector and civil society organizations to improve health outcomes iv. the health indicators have been slow to improve due to various external and natural factors. Malaria and other diseases.5 India 66. 5 and 6 relate to child mortality.33 35.3 Nepal 66.02 1.57 9. Analysis suggests that: (i) Infectious and nutritional deficiency related diseases dominate the causes of mortality in the country.3 Bangladesh 69. Communicable diseases still account for a major cause of death.79 6.68 18.26 2. maternal health and combating HIV & Aids. (iii) Health achievements in Pakistan contrast sharply with those of its neighbours. Table 11. Making the health system more responsive and accountable ii.80 62. Health Indicators The most recent data on health performance of other South Asian countries suggest that Pakistan lags behind in infant mortality rate (at 63 per 1000 live births) and the under 5 years mortality rate (at 86.16 49.5 Malaysia 73.57 19. Introducing reforms in the health sector to make pragmatic progress in meeting MDG targets and tackling effectively newly emerging and re-emerging health issues iii. The MDGs 4.70 0.07 50. i.8 Sri Lanka 75. 12 26. For 2011-12 these have been increased to Rs 55.61 22.54 2010-11 42.22 32. This has resulted in the establishment of a large network of health facilities with 108.57 2005-06 40.94 18.7 0.0 0.3: Health & Nutrition Expenditures (2000-01 to 2011-12) (Rs.72 billion has been provided in the federal PSDP for 2011-12.72 2001-02 25.81 6. 79 billion in 2009-10 to Rs 42 billion in 2010-11.8 0.57 2007-08 60. Billion) Fiscal Years Public Sector Expenditure (Federal and Provincial) Percentage Health Change Expenditure as % Total Health Development Current of GDP Expenditures Expenditure Expenditure 2000-01 24. comprising Rs 26.10 23.87 billion as non-development (current) expenditure.00 33.50 24. The current position of health personnel is as follows: 153 . 10.57 2008-09 74.00 30.58 2003-04 32.59 2002-03 28.00 16.1 Health & Nutrition Expenditures 75 65 Pak Rs (billion) 55 45 35 25 15 2000‐01 2001‐02 2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 Decline due to rationalization on account of Flood 2010 Health & Nutrition Expenditures Source: Planning and Development Division Year Health Facilities The health facilities and health related manpower have expanded substantially due to the greater focus on health sector programmes over the last three decades.8 0.0 0.72 4.00 27.00 41. the massive floods of 2010 caused a significant downwards rationalization of health and nutrition expenditures which had to be diverted to the relief and rehabilitation effort. Rs 15. Total health expenditures (federal and provincial) declined from Rs.69 18. Table 11.0 0.00 38.Health and Nutrition Health Expenditure To maintain the expansion of health facilities.0 0.31 13.56 2009-10 79.21 13.244 nurses by 2011.00 27.00 (-)47 0.51 2006-07 50.87 31.81 8.23 2011-12 55.00 24. the financial allocation for the health sector has been increasing steadily.00 19.00 23.00 41.67 20.00 11.4 0.27 Source: Planning & Development Division Fig: 11.00 7.25 billion as development expenditure and Rs 28.25 28.137 hospital beds. 149.958 dentist and 76.12 billion.00 25.201 doctors.3 0.34 9.00 5.00 15.57 2004-05 38.41 6.9 0.28 5. However.24 0.00 20. The manpower targets include the addition of 5. Under the preventive program. People sometime prefer private health services over public health care due to concerns about quality of care in public facilities. nurses. However.000 nurses. about 7. 450 Dentists. 50 basic health units (BHUs) and renovation of 20 existing RHCs and 50 BHUs. Employees Old Age Benefit and Workers Participation Fund are all forms of social security. An important consideration in social insurance relates to the extent of health cover to be provided.201 10. This sector provides varying levels of care and constitutes a diverse group of doctors.854 1.822 Registered Nurses 69.000 hospital beds. The majority of the private sector hospitals in Pakistan follow either a sole proprietorship or a partnership model organization. 5. 500 dentists. Targets and Achievements during 2011-12 The targets for the health sector during 2011-12 included establishment of 10 rural health centres (RHC). under the 18th amendment of the constitution of Pakistan. concerted efforts are required through inter154 sectoral collaboration focusing disadvantaged segment of population.222 16. The achievements in the health sector during 201112 included the establishment of 7 rural health centres (RHCs).244 1. Workers Welfare Fund. traditional healers and laboratory technicians.500 Lady Health Workers (LHWs).4: Healthcare Facilities Health Manpower 2009-10 Registered Doctors 139. pharmacists. The manpower development achievements include entry of 4. The public sector until recently was under the domain of the Ministry of Health.901 10. The health care system in Pakistan comprises both public and private health facilities. The potential pay off of investing in and improving the overall health services is enormous. The private sector has developed considerably by capitalizing on the existing demand. nurses and hospital beds. nursing homes. The provinces are now responsible for developing their own strategies. Given the complex nature of the healthcare delivery system in Pakistan and the limited resources available to the health care sector.555 Registered Dentists 9.300 new doctors.426 1. and maternity clinics. These funds provide assistance in a limited number of cases to cover medical treatment costs. The services they provide include hospitals. The private health system now stretches across the spectrum from primary to tertiary care and exists all over the country in both urban and rural areas. Zakat. 60 percent of the set target was . 3.000 doctors. the Ministry of Health has been devolved in June 2011 and the functions of the ministry have been transferred to provincial health departments.701 2011-12 149.206 16. 4.508 73.5 million children were targeted to be immunized and 22 million packets of oral rehydration salt (ORS) were to be distributed during 2011-12.000 nurses and completion of training for 9.244 1.958 76.000 paramedics and 550 traditional birth attendants. programmes and interventions based on their local needs.665 Insufficient health spending and rapid population growth have contributed to continuing low facilities to population ratios particularly in the case of dentists. 30 basic health units (BHUs) and renovation of 15 existing RHCs and 35 BHUs and addition of 4.313 Population per Doctor 1183 Population per Dentist 16914 Population per Bed 1592 Source: Planning & Development Division 2010-11 144.Pakistan Economic Survey 2011-12 Table 11. on the Health insurance is one of the complementary interventions for the safety net beneficiaries with the purpose of improving their access to health care services and reducing income loss due to catastrophic shocks. Bait-ul-Mal. Health Manpower Doctors Dentists Nurses Paramedics TBAs Training of LHWs D. pertussis. Expanded Program on Immunization The National EPI Program provides immunization against the seven killer diseases childhood tuberculosis. More than 60 percent of the total population and 76 percent of the target population is covered by LHWs. By reducing the cost of treating diseases. in high risk districts out of 5 million target women. However. 1.000 LHWs as of March 2012. Accordingly. Every year a nation wide National Immunization Day (NID) is carried out to give polio vaccine to all children below 5 years of age.5 22 Estimated achievements (Numbers) 30 7 35 15 4000 4300 450 3000 4500 500 9500 7 20 Achievement (%) 60 70 70 75 80 86 90 75 90 91 95 93 91 were immunized and 20 million packets of ORS were distributed till March. Health Programs In pursuance of the 18th amendment to the constitution of Pakistan. However. upon request of the provinces. about 16 million were immunized by LHWs during National Immunization Days (NIDS) Similarly. the Council of Common Interests (CCI) in its meeting held on 28th April 2011 decided that the federal government (Planning and Development Division) shall fund these programs till currency of the 7th NFC award at a predefined share. Preventive Programme Immunization ( Million Nos) Oral Rehydration Salt (ORS) (Million Packet) Source: Planning & Development Division Targets (Number) 50 10 50 20 5000 5000 500 4000 5000 550 10000 7. 2012. the health sector has been devolved to the provinces and the federal Ministry of Health has been abolished. 4. Hospital Beds C. 155 .5 million were vaccinated by LHWs.Health and Nutrition achieved in the case of BHUs and 95 percent in the case of training of Lady Health Workers. Initiated in 1978. National Program for Family Planning and Primary Health Care The program has recruited more than 103. the EPI programme is an effective public health intervention that has a great impact on the health of the population. Out of 30 million children. 2. national planning in the health sector and cooperation with the provinces and international development partners is vested with the Planning and Development Division. neonatal tetanus. The mass immunization campaign has gained a great deal of acceptance across the country. about 7 million children Table: 11. Under the preventive program. immunization offers opportunities for poverty reduction. measles and hepatitis B.5 Physical achievements 2011-12 Sub Sectors A. the following national health programmes continue to be financed by the federal government in the post devolution scenario till 2014-15. diphtheria. Rural Health Programme New BHUs New RHCs Strengthening/ Improvement of BHUs Strengthening/ Improvement of RHCs B. All the vertical health programs have also been devolved to the provinces. poliomyelitis. supply of safe blood and capacity building of various stakeholders. in the last five years NTP and partners have provided care to more than half a million TB patients in Pakistan. The National Strategy for Malaria Control is based on the following six key Roll Back Malaria (RBM) elements.500 HIV positive cases have been reported to the national and provincial AIDS Control Programmes. A total of 4. More than 90 percent of the disease in the country is in the 56 highly endemic districts. More than 40 percent of the reported cases from these districts are due to flaciparum malaria which is the more dangerous form of malaria. particularly the poor and the disadvantaged.000 community health and nutrition women workers. treatments and prevention 4. and family planning services in all health outlets. the 4) Developing viable partnership with national and international partners 5) National commitment 6) Intensive and comprehensive public education activities to enhance public awareness of malaria. 5. It aims to provide improved access to high quality mother and child health and family planning services. services to high-risk population groups. Around 1. The percentage of TB case-detection rate is 80 percent and cure rate is 74 percent. National TB Control Program Pakistan is sixth amongst the top 22 high disease burden country. at the community level. at all levels of the health care delivery system. National Programme for Prevention and Control of Blindness The National Programme for Prevention and Control of Blindness (NP-PCB) was launched by the federal Ministry of Health in 2005. National Maternal and Child Health Programme National Maternal and Child Health Programme has been launched in order to improve maternal and neonatal Health services for all. provide basic EMONC services in 550 health facilities. train 10. Malaria Control Program Malaria is the second most prevalent and devastating disease in the country and has been a major cause of morbidity in Pakistan. 7. Communication and Social Mobilization (ACSM). 1) Early diagnosis and prompt treatment. National Tuberculosis Control Programme (NTP) has achieved 100 percent Directly Observed Treatment System (DOTS) coverage in the public sector. Despite this the global target of 70 percent casedetection has not been achieved. quality bacteriology services.700 full blown AIDS. HIV/ AIDS Control Program The government is implementing an HIV/ AIDS Control Programme since 2003 at a cost of Rs 2. The major focus is on Behaviour Change Communication (BCC). provide Comprehensive Emergency Obstetric and National Care (EMONC) service in 275 hospitals/ health facilities. 6. There are certain areas where there is room for the NTP to further improve such as. These include 2. mostly located in Balochistan (17 districts). treatment of Sexually Transmitted Infections (STIs).000 of population whereas the absolute number of cases is 211. The Federally Administrated Tribal Areas (FATA) is the second highest malaria affected belt of the country accounting for 12-15 percent of the total case load of the country. research for evidence based planning and Advocacy. monitoring and supervision. The prevalence rate of TB is nearly 300 per 100. 2) Multiple prevention 3) Improved epidemic detection and response to partnership and inter-sectoral collaboration. FATA (7 agencies) and Sindh (12 districts).Pakistan Economic Survey 2011-12 3.500 and the treatment success rate is 91 percent. the NTP can strengthen engagement with all care providers through public private 156 . at the client level suspect management. The Program is in line with “VISION 2020”.030 patients are receiving free treatment through 12 AIDS Treatment Centers.9 billion for five years. contact management. These hospitals are manned by skilled teams of more than 2. Presently the PAEC is operating 14 modern cancer hospitals in the country while four others are in the final stages of completion and are expected to start functioning by June 2012. The major services provided at these hospitals are diagnostic and therapeutic nuclear medicine.Computed tomography (PET/ CT) facility at the PAEC Cancer Hospital Institute of Nuclear Medicine and Oncology (INMOL) in Lahore has been added and patients throughout Pakistan are benefitting from these facilities. molecular based diagnostics and cancer prevention and awareness programmes. histopathology. breast care clinics. 21.000 professionals. scientists. 352 of these cases were fatal. hematology. diagnosis and treatment of patients. color Doppler. About 527. the PAEC continued working on the following projects: ` 4 Hospitals (3 in KPK and 1 in Sindh province) have almost been completed and out patient departments have started working. technical and other supportive staff. indoor/wards facilities. started in 2007. Cancer Treatment The Pakistan Atomic Energy Commission (PAEC) is playing a vital role in the health sector by using nuclear and other advanced techniques. followed by outbreaks in 2005. No deaths have been reported so far in 2012. Heavy monsoon rains in Punjab provided ideal conditions for dengue-bearing mosquitoes to thrive in stagnant water. the following steps have been taken: • 157 . Although the disease spread in all provinces. Punjab was badly affected. including doctors.9 million was made for this program during 2011-12. Patients in remote areas also benefited with mobile breast care clinics being arranged on fortnightly and monthly basis for awareness. radiotherapy. Work continues in the following areas: • Research continued on various International Atomic Energy Agency (IAEA) TC/ Regional Cooperative Agreement (RCA) projects and others in collaboration with different international/ national organization.292 confirmed cases of dengue were reported in Punjab in 2011. and through print and electronic media and mobile breast care clinics. Karachi. In order to provide better treatment facilities to the patients at their door steps. These hospitals are expected to start functioning at full capacity by June 2012. paramedical. In order to prevent the dengue epidemic. and most recently in 2011. hormonal assays. The cancer awareness and prevention/control campaign was launched especially for early diagnosis of breast cancer and treatment leading to better prognosis through arranging lectures. seminar. • Provision of state of the art treatment (radiation therapy) facility at Atomic Energy Medical Centre (AEMC). ultrasonography.Health and Nutrition global initiative of WHO for elimination of preventable causes of blindness by the year 2020. chemotherapy. biochemistry. 246. is now in completion phase and is expected to be completed in August 2012. Addition of latest and advanced diagnostic and therapeutic facilities on par with international standards is also underway and Positron Emission Tomography. An allocation of Rs. and workshops in remote areas. as well as national cancer awareness and prevention programmes. diagnostic radiology. ` ` ` Dengue Epidemic and Control Programme In Pakistan. the outbreak of Dengue Hemorrhagic Fever (DHF) was first reported in Karachi in 1994. These hospitals bring facilities for early diagnosis and treatment of cancer within the reach of a very large proportion of the population of the country. PAEC Cancer Registry Programme (PCRP). for diagnosis and treatment of cancerous and allied diseases.633 patients were treated from July to March 2012. 2008. engineers. Pakistan Economic Survey 2011-12 ` The Punjab government has established a provincial task force headed by the Chief Minister of Punjab. Abbotabad. vector. insecticides. malaria and leishmaniasis Restructuring of vector control programme to fill existing planning Capacity building of care providers for clinical management of dengue cases using guidelines specific to Pakistan Development of coordination and collaboration with UN Agencies. cell separator machines with platelet kits were made available on an urgent basis at the Institute of Blood Transfusion Services. 18 of these cases were fatal. The creation of 718 positions of lady sanitary patrols is under process. All teaching hospitals have established isolation wards and high dependency units with all facilities. In Sindh. and social mobilization activities. However. disease management and surveillance. A provincial steering committee headed by the Chief Secretary of the province has been constituted. Environmental management measures have also been taken including proper disposal of waste water.326 were from Karachi and 221 were from the rest of Sindh. A system has been developed and put in place for online dengue case surveillance. Mardan. de-silting operations. 16 from Karachi and 2 from the rest of Sindh. Children’s Hospital Lahore and Lahore General Hospital.7 million has been approved. foggers.547 suspected cases were reported out of which 1. vector control and surveillance. The scheme will be implemented in all 25 districts of the province for three years. time repair of leaks in plumbing systems. On the average 200 extra beds were allocated for dengue patients in each teaching hospital. About 10. Haripur. social mobilization and communication. use of water filters. the government of Balochistan also 158 . advocacy. Delegates of dengue experts from Sri Lanka and Indonesia also visited Pakistan to review the strategies and provide guidance on larva surveillance and capacity building on vector control and case management. Rs 55 million was released for purchase of larvicides. while Global Positioning System (GPS) mapping of cases. supply of safe water. and cleanliness drives in eateries. To address future dengue outbreaks a scheme at a cost of Rs 265. In other hospitals centrifuge machines have been provided for platelet segregation. In Khyber Pakhtunkhwa a total of 386 confirmed cases with 7 deaths were reported from Peshawar. Provincial Strategic planning for sustained control of vector borne diseases involve: ` ` ` Adopting integrated diseases control for dengue.000 bed nets treated with insecticide were provided to each hospital for dengue isolation wards. Sindh’s response to this outbreak includes detailed situation analysis (need assessment and gap analysis) of epidemiology and entomology of transmitting vectors. management and regulation of used tyres. a total of 1. other line department and development partners for resource mobilization and technical assistance ` ` ` ` ` ` ` ` ` The incidence of dengue in Balochistan was much less compared to other provinces. and digital monitoring of dengue prevention and control activities are being carried out. For the arrangements of platelets. Mansehra. Emphasis is placed on utilizing latest technology for combatting dengue epidemics. 337 CDC supervisors. Swat and Nowshera. and research and development. District implementation committees headed by DCOs are operational. Job positions of 875 sanitary patrols. 292 LHW’s and 66 data entry operators were created. spray machines. Jinnah Hospital Lahore. Chief Minister (CM’s) Dengue Research and Development (R&D) cell was established to carryout applied and operations research on dengue. Main components of the scheme include institutionalization. It is therefore.430 per capita per day. A Drug Control Master Plan (2010-14) has been prepared to reduce the health. According to the recent National Nutrition Survey (NNS) 2011.6: 1 Planning and Development Division 2012 159 . Food security is a national priority.Health and Nutrition took necessary measures to overcome any emergency situation related to dengue.014 iv Hashish 65.000 iii Heroin 1. there are 16 ongoing development projects being implemented at a total cost of Rs. critical to move towards a system which will address health challenges and prevent households from falling into poverty due to poor health.67 billion including local cost of Rs. medium and long term initiatives for implementation of the National AntiNarcotics Policy 2010. The overall food availability trend of essential food items for the last five years is given in the following table.850 Source: Narcotic Control Division Pakistan is one of the top three countries where the confiscation rate. Drug abuse has also affected Pakistan in many ways. vegetable ghee and oil 8 percent. meat 5 percent. reflecting the poor nutritional status of mothers. fruits and vegetables 11 percent. Currently. health sector investments are viewed as part of the government’s poverty alleviation endeavors. has been satisfactory for major food items during the fiscal year 2011-12. rice 12 percent.No. The average calories estimated based on food availability has been 2. The change in food consumption between 2007-08 and 2010-11 has mainly been through increase in cereals: wheat 3 percent. Drug Abuse Illicit drug consumption. Kind of Narcotics Food and Nutrition The links between malnutrition. drugs and precursor chemicals is high.2. Good health is a first step towards prosperity and reduction of poverty.4. ill health and poverty are well known.445.650 to 1. is taking measures to effectively implement the policy. Proliferation of drugs and psychotropic substances within Pakistani society and the subsequent increase in number of drug addicts are emerging challenges.006 ii Morphine 1. Table: 11. About 30 percent babies have low birth weight. The consumption of essential food items shows slight improvement in calorie intake from 1.13 billion and foreign aid of Rs. The national food availability estimated through food balance sheets.641. Food consumption remained lower than food available and the minimum food basket1 Quantity of Drugs Seized (in Kgs) i Opium 8. pulses 30 percent. social and economic cost associated with drug trafficking and substance abuse in Pakistan. Consumption decreased for sugar (1 percent) and milk (3 percent). The seizures of narcotics by the Anti-Narcotics Force (ANF) during the period July 2011 – 15th February. seizure of narcotics.725. about 32 percent children under the age of five years and 15 percent mothers are underweight.700 and protein from 44 to 46gm per capita per day in 2010-11 compared to data from the HIES 2007-08. In Pakistan. Disease contributes to poverty due to the costs of illness and reduces earning capacity during and after illness. The Ministry of Narcotics Control in collaboration and cooperation with the provincial governments and other stakeholders.6 Drug Seizures S.52 billion.2. 2012 are given in the table 11.249. The plan includes short. production and trafficking have emerged as a serious global issue. Pakistan Economic Survey 2011-12 Table:11.0 5. and vitamin-A deficiency in children under five and women of child bearing age continued along with growth monitoring.6 12.0 165.5 12. followed by a discussion of the state of health indicators.8 25.8 158.0 6.4 20.2 30.6 12. The emphasis during the fiscal year remained on improving the quality of fortified products.8 6.6 13. Food quality control is also an important food security concern. ` ` 160 .0 2415 2420 2430 71.March) fluctuated and a cumulative increase of about 1 percent from Rs.5 20.3 Milk Ltr 164.7 Food Availability per capita Items Year/ units 2006-07 Cereals Kg 151. counseling of breastfeeding and weaning practices and raising awareness through 98.4 Edible Oil Ltr 12.5 5. The targets and accomplishments for the 2011-12 are described.8 170. Islamabad was completed during the year and is currently operational.9 21.767 was noted. ` Micronutrient Deficiency Control Program to address major micronutrient deficiencies of iodine.2 20.0 6.5 2009-10 2010-11 (E) 2011-12 (T) 158. A reference food laboratory for strengthening of food quality control system at the Nutrition Division of the National Institute of Health (NIH).0 Source: Planning & Development Division E: estimated T: targets 2007-08 158.7 Meat Kg 19. An overview of the National Health Policy and its primary objectives are presented.7 7.1 169.8 6.3 5.5 29. Finally the chapter documents the government’s efforts at augmenting food security and enhancing the availability and uptake of nutrients. The change in cost among provinces has been highest in Khyber Pakhtunkhwa with a 5 percent increase owing to lower availability with respect to demand and lowest in Punjab where there was a 2 percent decrease.0 26.5 2425 72.0 20.5 169. The nutrition related activities/programmes are summarized below: ` Food security and social safety net measures especially for poor households continued to be in place to combat the impact of food inflation. and facilities in Pakistan. The chapter highlights the challenges of narcotics trafficking and growing incidence of drug addiction in Pakistani society.2 Eggs Dozen 5.7 Sugar Kg 30. Nutrition improvement through micronutrient supplementation to address anemia.5 The cost of the food basket for the fiscal year 2011-12 (July.000 Lady Health Workers in primary health care (PHC) continued across the country to cover more than 60 percent of the total population.1 Pulses Kg 7.6 167.1 7. The Benazir Income Support Program (BISP) and Pakistan Bait-ul-Mal’s Food Support Program for poorest of the poor households continued to provide cash incentive support during the year throughout the country.0 12. expenditures.0 72.1. followed by a special focus on cancer treatment and the government’s response to dengue outbreaks.1 26.745 to Rs.1.5 72.0 5.0 2008-09 160.8 Calories per day 2398 Protein per day (gm) 69.8 2410 72. iron and vitamin-A& D are being addressed through food fortification in the public and private sector.7 160. Conclusion This chapter discussed the state of health and nutrition in Pakistan. including unemployment statistics and details of government projects and programmes aimed at boosting employment opportunities. Bangladesh. Since its creation Pakistan has exhibited a continuously high rate of population growth. However despite these improvements Pakistan is still lagging behind in comparison to its neighboring countries. A crude birth rate of more than 30 per thousand is considered high and a rate of less than 18 per thousand is considered low. According to World Bank projection it will become the fifth largest country by 2050. Nevertheless. These are briefly explained below: Crude Birth Rate: The average annual number of births during a year per thousand persons in the population at midyear is known as the crude birth rate. Due to rapid population growth and lack of welldeveloped human resources. it is imperative to put further efforts for development of better human resources. labour force and employment and to estimate the quantity of goods and services that will be needed to meet future demand. This rapid increase in population leads to greater demand for food. Sri Lanka.Chapter 12 Population Labour Force and Employment Balanced growth in population is crucial for the welfare of the country or improving the productive capacity of the economy. the situation has started to improve. with continuous efforts of the government. and unemployment. Due to improved health facilities and promotion of population welfare activities through the Ministry of Population Welfare the crude birth and fertility rates have been reduced considerably which has led to a reduction in the average growth rate of the population. It depends on both the level of fertility and the age structure of the population. followed by a thorough overview of the structure of labour force. This chapter presents a discussion of the structure of Pakistan’s population and the evolution of demographic indicators. The population of a country plays a vital role not only in the economic development but also for the social well-being of the people. For example. infrastructure. Nepal and China. The birth rate is the main factor in determining the rate of population growth. When measured by population size it has moved from the thirteenth largest country in 1950 to the sixth largest country in 2011. The CBR in Pakistan is 161 . Overview of Population and Demographic Indicators The structure and growth pattern of population can be evaluated through certain key indicators. It is important to know the size of a country’s population. Therefore. Pakistan is faced with socioeconomic crises including food insecurity. the fertility rate in Pakistan is still higher than neighboring countries like India. The global crude birth rate in 2011 was 20 per thousand. As a result population growth rate is not reducing considerably and at the same time dependency ratio is increasing. its growth rate and other demographic attributes in order to analyze the dynamics of the population. The Crude Birth Rate (CBR) does not take into account the age or sex differences among the population. This has been accompanied by an increased labor participation rate. However. and services and puts an enormous strain on food security and provision of basic services. poor management of human resources can lead to social distress and reduced economic performance. This decline is the result of the strengthening of the four pillars of safe motherhood including family planning.05 65. In Pakistan it was 7. The maternal death rate decreased from 400 per 100. the crude death rate measures the rate of deaths per one thousand people in a given population per year.2 per thousand in mid-year 2012. this decline is not significant. The status of maternal health is improving in Pakistan. which reduced to 69.2 2.4 27.3 2. It is worth mentioning that the crude death rate decreased from 7. Infant mortality was 70.8 63. Nevertheless. The major reason for this decline is provision of improved health facilities to control diarrhea and pneumonia which can be fatal for infants.1: Population Overview 30 Crude Birth & Death Rate 25 20 15 10 5 0 2008 2009 2010 2011 2012 Source: National Institute of Population Studies (NIPS) Population Census Organization Crude birth rate Crude death rate Population (mln) 185 180 175 170 165 160 155 Some of the selected demographic indicators for the period (2010-11 and 2011-12) are posted in Table 12.1. According to the World Population Data Sheet 2011.3 births. The demographic indicators reflect improvement in the structure of the population and point to future trends.000 live births in 2010. in 2008 it was 25.16 3.0 per thousand.2 7.9 2011-12 (1st July) 180. Fig-12. There is improvement in life expectancy and a fall in the population growth rate.1 64. This indicates a marginally improving trend.2 per thousand in 2011-12.55 113. 162 .1 65.3 111.03 66. antenatal care.Females .5 27. clean safe delivery and essential obstetrical care.8 3. which shows an improving trend (Fig.7 per thousand in mid-year 2008 to 7.00 per thousand live births in mid year 2012.71 67. Increase in life expectancy indicates the provision of a better living environment and health facilities in the country. A crude death rate of less than ten per thousand is considered as low while above twenty per thousand is considered as high. The decline in fertility and the resultant decline in population growth lead to a lower dependency ratio which may help in improving living standards in the country.1).5 7.000 live births in 2005-06 to 276 per 100. Infant mortality in Pakistan has also improved as the country experienced a considerable decline in maternal and infant mortality.3 per thousand in 2011. the global crude death rate in 2010 was 8 persons per thousand. National Institute of Population Studies 177.1: Selected Demographic Indicators 2010-11 (1st July) Total Population (Million) Urban Population (Million) Rural Population (Million) Total Fertility Rate (TFR) Crude Birth Rate (Per thousand) Crude Death Rate (Per thousand) Population Growth Rate (Percent) Life Expectancy (Year) .20 per thousand in mid year 2008. However the population growth rate is still higher than other neighboring countries and is still a challenge for the government. Similarly.Pakistan Economic Survey 2011-12 estimated at 27.Males Source: P&D Division. given the repeated pregnancies and Table 12. 88 5.25 12.72 15. 2015 22.18 22.49 12.2 2. Labour Force and Employment Age Composition of Population The age composition of a population gives insight to the size of the future productive human resource.04 14.84 9.32 6. CPR and the Population Growth Rate (PGR). In Pakistan an important reason for the slower decline is the low Contraceptive Prevalence Rate (CPR) due to the lack of awareness because of which people hesitate in practicing contraception. It also highlights changes in the dependency levels.39 227.83 3.72 12.26 6.33 20.82 191.8 17.9 1. education and decent jobs.1 2.4 10. Table 12. these youth can become a powerful force for economic development.94 14. whereas 104 million were between the ages 15-59 years. the under-15 population was 62 million.86 2.76 8.36 8.93 6. though improving.88 9.98 19. This will worsen both the economic and social situation.88 22.59 20. do not compare favorably with other countries.44 22.93 242.76 21.62 12.81 14.28 21.95 7.94 20.35 21.32 5.57 5.3 1. It is evident from the data that the performance of Pakistan when compared with these countries is modest.53 4.45 13.01 20. Table 12.06 Source: National Institute of Population Studies.01 9.35 22.14 11.60 7.5 163 . Iran and Egypt have experienced a considerable decline in the Total Fertility Rate (TFR). June 2010 Regional Demographics The Pakistan family planning indicators. if they are not trained properly.24 20. having a very young age structure are more likely Table 12.13 14.2 8. The available projections of the population by age categories indicate that those below 30 years of age will constitute more than 53 percent of the total population by 2030.31 7. During 2011.02 20.2: Population by Age Groups Age Group 1998 00-04 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ Total 19.62 16.14 19.19 19.81 177.40 19.27 10.89 19.95 19. Many Muslim countries such as Turkey.95 22.72 17. This higher percentage has a dual impact on the country’s future economic and social wellbeing.3 67 56 31 Population Growth Rate% 0.3: Family Planning Indicators of Regional Countries-2011 Contraceptive Prevalence Country Total Fertility Rate Rate % Asia Bangladesh Bhutan 2.91 19.12 2025 22.31 11.07 20.13 9.14 13.89 4.53 16.95 10.28 22.73 11.72 4.4 present a comparison of the family planning indicators with neighboring and some brotherly Islamic countries.49 6.05 19.64 132. Planning & Development Division.83 8.68 4. Countries.90 7.39 210. Conversely with effective government policies for their education and training. The following table provides a comparison with regional countries on TFR.72 2011 22.24 6.26 Million 2030 20.26 2.3 and 12.Population. The growing youth population will only add marginally to the productive resources of the country but will put a large burden on health.43 to have large dependent population which puts a considerable stress on the economy.24 21.12 19.78 6.01 4. like Pakistan.27 17.03 2020 23.71 17. Fig-12.5 2006 2007 2008 2009 2010 2011 2012 Source: Sub group II on population projection for the 10th Five Year People Plan 2010‐15 (Planning and Development Division) 164 .2 3.03 Source: i) State of the world population 2011.4 percent in 2012 from 4.0 Turkey 2.1 61 1.6 Morocco 2.6 2.03 percent. According to the Demographic and Health Survey of Pakistan 2006-07 by the Ministry of Population Welfare.3: Family Planning Indicators of Regional Countries-2011 Contraceptive Prevalence Country Total Fertility Rate Rate % India Maldives Nepal Sri Lanka Pakistan 2. vigorous efforts are needed to control population growth and reduce the TFR. Awareness of contraception is increasing in the country.7 2.9 2.7 2. it is expected that Pakistan’s population will double in 2046.4 27 2. 2010 ii) Sub Group II on Population Projections for the 10th Five Year People’s Plan 2010-15 Table 12.7 0.6 73 1. If this trend prevails.1 Iran 1.0 Malaysia 2. The fertility rate per woman has been reduced to 3.3 3.1 3. The results are still not encouraging when compared with other developing countries of the region.1 2.6 Pakistan 3. 2010 ii) Sub Group II on Population Projections for the 10th Five Year People’s Plan 2010-15 Fertility in Pakistan The Total Fertility Rate (TFR) of a population is the average number of children that are born to a woman over her life time.4 56 35 48 68 27 Population Growth Rate% 1.03 Source: i) State of the world population 2011.3 1.5 1.2 63 1.0 percent in 2006 and the population growth rate has come down to 2.The survey also shows that less than 30 percent of married women were using contraception.4: Family Planning Indicators of Muslim Countries-2011 Country Total Fertility Rate Contraceptive Prevalence Population Growth Rate % Rate% Egypt 1.3 1. and other things remaining the same Pakistan’s rank in terms of the selected social and economic indicators in comparison with other developing Asian countries may deteriorate further.8 2.0 73 1.5 3.9 3. Therefore.7 60 2.3 4.6 55 1.7 3. United Nation Fund for Population Activities (UNFPA) Population Projection by Planning Commission’s Working Group on Population Sector.5 4.Pakistan Economic Survey 2011-12 Table 12. The TFR is closely tied to the population growth rates of a country and can be a good indicator of future population trends.2: Trend in Fertility Rate (%) 4. United Nation Fund for Population Activities (UNFPA) Population Projection by Planning Commission’s Working Group on Population Sector.0 Indonesia 2. 96 percent of women who have ever been married are aware of at least one family planning method compared to 78 percent in 1991. Pakistan has the highest birth as well as total fertility rate among the Asian developing countries. Population Welfare Programme Since 2002 the service delivery of the Population Welfare Programme has been under the administrative control of the provinces. plays an extremely important role in making sure that her children are physically healthy. The Rights of Women and Children The future of a country depends largely on the quality of maternal guidance to the children and Box 1 Measures for Empowering Women • • • • • • • Equal access to education. Now the provincial governments are responsible for implementing the Population Welfare Programme. seventeen percent seats have been reserved in the Senate. The population welfare department played an impressive role in the promotion of health and family planning related services throughout the country. Labour Force and Employment Reproductive Health Reproductive health is a state of complete physical. Major achievements are listed as below: ` The population welfare program has established 2. in all matters relating to the reproductive system. Contrary to its importance. training and science and technology The government has signed national and international commitments like Convention On Elimination of all Forms of Discrimination Against Women(CEDAW) and Millennium Development Goals(MDGs) Increase of women quota up to 10% for recruitment in public sector Reservation of thirty three percent seats for women in all local bodies. Provincial Assembly and in National Assembly Protection of women against harassment at workplace Benazir Income Support Programme (BISP) for enhancing the confidence of women Establishment of working women hostel.891 family welfare centres 165 . nations of the world agreed that progress in addressing population issues could be better achieved through empowering women and girls to participate in their societies and economies on equal footing with men and boys and to make fundamental decisions about their lives. balanced diet and clean and safe environment. The prevailing social mindset of son preference and the limited role of women in decision making for the welfare of the family hinder the effective implementation of any reproductive health program in many parts of the country. The provision of comprehensive. A healthy and educated mother. and to its functions and processes. voluntary family planning and reproductive health services is a fundamental human right. including decisions related to the timing and spacing of pregnancies and births.Population. The federal government will be funding the programme for a four year period. The first focus of population welfare. intellectually developed and academically active. provision of transport facilities to female employees and establishment of day care centre are part of the government initiatives to resolve the problems faced by employed women the social and academic environment available to them. therefore. At the International Summit on Population and Development in 1994. therefore. safe drinking water. has to be on the education and health of a country’s female population which has direct relevance to children’s future. Similarly every child has the right to avail good quality health care. the general public is not sensitive about realizing and understanding the importance of reproductive health and as a result a large proportion of the population is reluctant to use contraception. mental and social well-being (and not merely the absence of disease or infirmity). Pakistan Economic Survey 2011-12 (FWC) during 2010-11. The FWC is one of the main service delivery networks of the program established in rural and urban areas for the provision of Mother Child Health Services (MCH), contraceptives and the treatment of minor ailments. ` Reproductive Health Services-A Centres (RHSA) are hospital based units which provide the full range of family planning methods including contraceptive surgery services. These centres also assist in public health education campaigns and raising awareness about personal hygiene. There are 207 RHS-A centres functioning throughout the country. ` At present 292 Mobile Service Units (MSU) are functioning in the country. The MSU extends reproductive health and family planning services to villages through regular (twice a week) camping services. The hospitals registered as RHS-B Centres are providing training for doctors and paramedics. During 2010-11, the government launched 133 RHS-B Centers. Registered Medical Practitioners, Hakims and Homeopaths are a significant source of health care provision in both the urban and rural areas of the country. 2010-11 (Achievement) 2891 207 292 2.734 133 9297 8071 2011-12 (Target) 3427 269 300 10.241 184 27576 14009 ` ` Table-12.5: Physical and Contraceptive Users Targets (Cumulative Number) Name of Service 2010-11 Outlet / Unit (Target) Public Sector Family Welfare Centers (FWCs) 3084 Reproductive Health-A Centers 258 Mobile Service Units (MSUs) 293 Contraceptive users (million) 9.953 Private Sector RHS-B Centers 145 Registered Medical Practitioners 24273 (RMPs) Hakeems and Homeopaths 13925 Source: Planning and Development Division Urbanization Urbanization is a process which involves the absolute and relative growth of towns and cities within defined areas. Major reasons for urbanization are better economic opportunities and living conditions as compared to rural areas. Due to the growing needs and limited work opportunities people are rapidly moving towards urban centers. Resultantly urbanization has been accelerated worldwide. This is the first time in human history that the majority of the world's population has been shifted to urban areas. At present 3.3 billion people (more than one half of world population) are living in urban areas. It is predicted that by 2030 at least 60 percent of the population will be living in cities. In developing countries, about 60 million people move from rural to urban areas each year and this rate of movement is expected to continue. In Pakistan cities are growing rapidly as a result of the movement of people from rural areas in search of jobs, opportunities to improve their lives and make a better future for their children. Moreover the lack of basic facilities in rural areas like electricity, sanitation, safe drinking water and schooling are some of the reasons for rapid urbanization. The population in urban areas increased from 65.28 million in 2011 to 67.55 million in 2012. This means that within a year, two million people shifted from rural to urban areas in Pakistan. The annual population growth in urban areas is expected to increase further in coming years which may cause socio economic problems in future. In order to cope with the situation, the government is not only trying to create a better economic and healthy environment in urban areas but also provide basic facilities in slum areas. Some of the reforms to manage urbanization are: 166 Population, Labour Force and Employment ` Provision of adequate infrastructure, such as roads, houses, electricity, water and sanitation services, public transportation, schools and health clinics. Transforming slums into legitimate communities. Government supportive policies for agricultural sector. country. Pakistan has a very large labour force due to its large population size. Since independence, six labour policies have been announced by the government. These were announced in 1955, 1959, 1969, 1972, 2002 and 2010. These policies laid down the parameters for the growth of trade unionism; protection of workers’ rights; the settlement of industrial disputes and the redress of workers grievances. The policy of 1972 was the most progressive one in terms of reforming the labour laws. The present government, recognizes that there should be a cordial relationship between workers and employers and at the same time both must enjoy reasonable benefits without inflicting any set back on the economy. This is only possible if there is a mutual awareness and understanding between workers and employers of the rights and obligations. The labour policy 2010 has been developed within a framework of objectives and initiatives; some of which are summarized in Box-2 ` ` Table 12.6: Urban and Rural Population (Million) Mid-Year Urban Population Rural Population 2008 57.32 2009 60.87 2010 63.05 2011 65.28 2012 67.55 Source: Planning and Development Division 105.06 109.07 110.46 111.82 113.16 Labour Force and Employment The labour force can be defined as that part of the economically active population which can supply labour for production of goods and services in the Box 2 Labour Policy 2010 Objectives ` ` ` ` ` ` Promotion of employee’s social security and social insurance programme Adequate security of jobs should be available to the workers Conditions should be created so that workers and employers are committed to enhancing labour productivity Promotion of higher jobs be ensured at all levels based on suitability and merit Forced labour in all its forms to be eliminated Just and humane conditions of work be guaranteed to all workers Initiatives ` ` ` ` ` ` ` The government has increased the minimum wages from Rs.7,000 to Rs.8,000 per month (announced by Prime Minister on 1st May, 2012). Consolidation of labour laws is underway Mine workers, whether contracted or permanent, will be provided with the same protection as other workers The government has started the process to regularize/confirm contract employees Elimination of gender discrimination Special emphasis on education of workers children Regulate and control child labour 167 Pakistan Economic Survey 2011-12 previous year. The total number of people employed during 2010-11 was 53.84 million, 0.63 million more than the preceding year. 2009-10 56.33 53.21 3.12 (Million) 2010-11 57.24 53.84 3.40 According to the Labour Force Survey (LFS) 2010-11, Pakistan has a labour force of 57.24 million people which is 0.91million more than the Table-12.7: Civilian Labour Force, Employed and Unemployed for Pakistan YEAR 2003-04 2005-06 2006-07 2007-08 2008-09 Labour Force 45.5 50.05 50.33 51.78 53.72 Employed 42 46.95 47.65 49.09 50.79 Unemployed 3.5 3.1 2.68 2.69 2.93 Source: Various Issues of Labour Force Survey, 2010-11 Labour Force Participation Rates The Labour force participation is estimated on the basis of the Crude Activity Rate (CAR) and Refined Activity Rate (RAR).The CAR is the percentage of the labour force in the total population while RAR is the percentage of the labour force in the population of persons 10 years of age and above. The RAR gives a relatively better picture of change in the labour force participation in the country because it is comprised of the active labour force. Between 2008-09 and 2010-11, the CAR showed a mixed trend in the rural areas. The male CAR decreased from 49.2 percent to 48.6 percent whereas at the same time the female CAR increased from 18.5 percent to Table-12.8: Labour Force Participation Rates Indicators 2008-09 2009-10 2010-11 Crude Activity (Participation) Rates (%) Pakistan Total 32.8 33.0 32.8 Male 49.6 49.5 49.3 Female 14.9 15.5 15.6 Augmented Total 38.8 38.8 38.4 Female 27.0 27.2 27.0 Rural Total 34.3 34.5 34.3 Male 49.2 49.0 48.6 Female 18.5 19.3 19.4 Augmented Total 42.7 42.6 42.2 Female 35.6 35.8 35.4 Urban Total 29.9 30.0 30.0 Male 50.4 50.6 50.6 Female 7.6 7.8 8.1 Augmented Total 31.0 31.1 31.0 Female 9.9 10.1 10.1 Source: Labour Force Survey 2010-11 19.4 percent. Therefore the net effect on participation in rural areas was zero. In the case of the urban areas the female CAR increased more than the male CAR and there was an increase in the overall participation rate. The RAR for the rural areas shows a marginal decrease during the 2009- 2011 period. There is a marginal increase in the female RAR and a decrease in the male RAR. However in the urban areas both male and female RAR increased which on aggregate eliminated the effect of reduction in the rural RAR. Therefore as a whole, no change has been seen in RAR at the country level. An important insight in this change is that female participation is increasing in urban areas. This is a good sign of female empowerment. Indicators 2008-09 2009-10 2010-11 Refined Activity (Participation) Rates (%) Pakistan Total 45.7 45.9 45.7 Male 69.3 68.8 68.7 Female 20.7 21.5 21.7 Augmented Total 53.9 53.9 53.5 Female 37.5 37.9 37.4 Rural Total 49.2 49.4 49.1 Male 71.0 70.2 70.0 Female 26.4 27.6 27.6 Augmented Total 61.2 61.0 60.4 Female 50.7 51.2 50.3 Urban Total 39.3 39.5 39.5 Male 66.3 66.4 66.4 Female 10.1 10.3 10.7 Augmented Total 40.8 41.0 40.8 Female 13.1 13.3 13.3 168 Population, Labour Force and Employment Table 12.9: Employment Trend and Changes from 1999-00 to 2010-11 (Million) Pakistan Rural Urban Year Employed Change Employed Change Employed Change 36.32 2.19 25.55 1.68 10.77 -0.01 1999-00 38.88 2.56 26.66 1.11 12.22 1.45 2001-02 42.00 3.12 28.81 2.15 13.19 0.97 2003-04 46.95 4.95 32.49 3.68 14.46 1.27 2005-06 47.65 0.70 33.11 0.62 14.54 0.08 2006-07 49.09 1.44 34.48 1.37 14.61 0.07 2007-08 50.79 1.70 35.54 1.06 15.25 0.64 2008-09 53.21 1.08 37.25 0.79 15.96 0.29 2009-10 53.84 0.63 37.85 0.60 15.99 0.03 2010-11 Source: Various issues of Labour Force Survey (2010-11) Pakistan Bureau of Statistics Age Specific Labour force Participation rates There is an unambiguous disparity between the male and female participation rates in Pakistan in age groups of 15 to 29 and 60+. The total labour force participation rate increased from 32.81 percent in 2008 to 32.83 percent in 2010-11. The participation rate in the 10-14 age groups decreased for both males and females. There was a declining trend (1.10 percent) for males in the 15- 19 age groups whereas an increasing trend (0.70 percent) was found in females of the same age group. In case of the 20-24, 25-34 and 35-44 age groups both male and female participation has increased. In the 45-54 and the 55-59 age groups the participation rate has decreased compared to last year. In the 60+ category the male participation rate has decreased while an increasing trend is observed in the female group in this cohort. 2010-11 Male 14.3 51.6 84.3 96.8 98.2 98.4 98.3 97.8 96.6 92.2 55.0 Table-12.10: Age Specific Labour Force Participation Rate (%) Age 2008-09 2009-10 Groups Total Male Female Total Male 10-14 13.1 16.2 9.5 12.6 15.4 15-19 37.0 52.7 18.9 37.1 52.7 20-24 53.8 85.4 22.7 54.7 84.5 25-29 57.5 96.6 22.8 58.0 96.3 30-34 58.8 97.9 24.6 59.1 97.6 35-39 62.2 98.5 27.7 62.2 97.4 40-44 62.7 98.2 27.6 62.4 97.7 45-49 62.6 97.3 26.8 65.0 97.4 50-54 63.1 95.9 24.5 64.7 96.4 55-59 62.8 93.7 26.4 62.6 93.3 60+ 38.6 56.4 15.2 37.6 55.5 Source: Labour Force Survey 2010-11 Female 9.2 19.2 23.9 24.7 26.4 29.0 26.6 29.5 29.3 28.0 13.5 Total 11.8 36.4 53.8 58.9 59.5 62.5 64.2 64.8 63.5 61.5 37.3 Female 8.8 19.6 24.2 25.0 25.9 29.0 30.0 28.6 28.1 26.3 11.9 Employment by Sectors Most of the labour force in Pakistan works in the rural areas where agriculture is the dominant activity. The total labour force working in the agricultural sector remained unchanged during the 2008- 2011 period. However, female participation has shown an increase of 1.4 percent during this period. Contrary to that the male participation shows a declining trend. The manufacturing and construction sectors are also playing an important role in the provision of employment. The employment share by manufacturing sector has increased from 13.2 percent in 2009-10 to 13.7 percent in 2010-11 and the share of construction sector has increased from 6.7 percent in 2009-10 to 7.0 percent in 2010-11. The Share of wholesale and retail trade has decreased from 16.3 percent to 16.2 percent while, the share of community / social and personel service sector has decreased from 11.2 percent to 10.8 percent in 2010-11. 169 Pakistan Economic E Sur rvey 2011-12 2 Table-12.1 11: Employme ent Shares by Industry (%) ) Major Indu ustry Divisions s 2008-09 2009-10 Total Male Fem male Total Male Female Total 100 100 10 00 100 100 1 100 Agriculture e/ forestry/ 45.1 37.3 74 4.0 45.0 36.6 7 74.9 hunting & fishing Manufactu uring 13.0 13.3 11 1.9 13.2 13.9 11.0 Constructio on 6.6 8.3 0 0.4 6.7 8.5 0 0.3 Wholesale & retail trade 16.5 20.5 1.6 16.3 20.2 2 2.1 Transport/ storage & 5.2 6.6 0 0.2 5.2 6.6 0 0.3 communication Communit ty/social & 11.2 11.1 11 1.6 11.2 11.2 11.2 personal se ervice *Others 2.4 2.9 0 0.3 2.4 3.0 0 0.2 Source: Pa akistan Bureau of Statistics, Labour L Force Survey S 2010-11 1 Total 100 45.1 13.7 7.0 16.2 5.1 10.8 2.1 2010-11 Male Fe emale 100 100 36.2 7 75.4 14.5 8.9 20.4 6.6 10.8 2.6 10.9 1 0.2 1.6 0.1 1 11.5 0.3 Fig-12.4: In ndustry-wise Employment E S Share 11% 5% 2% 45% Agriculture / forestry / hunting g & fishing Manufacturi ing Construction n Wholesale & retail trade 16% Transport / s storage & commun nication Community y / social & persona al service 7% 14% Others Employm ment Status The struc cture of empl loyment as shown s in Tab ble 12.12 su uggests that the emplo oyee and se elfemployed d category acc count for 36 percent p and 39 9.9 percent of the to otal employ yed workfor rce respective ely. This is followed by unpaid fam mily helpers at a 27.7 perc cent and em mployers at 1.4 percent. 0f the unpa aid family helpers, fema ales Table12.12 2: Employmen nt Status by Sex S (%) 20 008-09 Total M Male Fema ale Employers s 1.2 1.5 0 0.1 Self emplo oyed 33.3 38.7 13 3.1 Unpaid fam mily Helpers 29.7 20.2 65 Employees s 35.8 39.6 21 1.8 Total 100 100 100 Source: La abour Force Su urvey 2010-11 decreas sed from 65 5 percent to 63.4 percen nt and males from 20.2 pe ercent to17.3 percent. The e data indicat tes that unpaid d family helpers have decr reased from 15.10 million in 2008-10 to t 14.91 milli ion in 2010-11. In the ru ural populatio on the numb ber of unpaid d family help pers is much h larger than n the urban areas. This s indicates that there is a possibi ility that th he services are not pro operly counted d in the rural areas. 2009-10 Male Fem male 1.6 0.1 40 13.6 18.7 66.3 39.7 20 100 100 2010-11 Male Fe emale 1.8 0.1 40.5 15.6 17.3 63.4 40.4 20.9 100 100 Total 1.3 34.2 29.1 35.4 100 Total 1.4 4 39.9 9 27.7 7 36.0 0 100 0 170 4 percent to 28.5 percent) and urban areas (from 70.0 100.8 27.6 26.32 18. currently available and seeking work.26 15.0 100.08 10.6 27.3 percent to 76.8 22.5 23.Informal 73.59 12.71 million with a labour force participation rate of 32.4 31.0 100.2 72.82 Employees 18.1 Unemployment Unemployment is the situation in which people.0 .67 10.0 21.4 72.50 0.91 4.9 71.2 25. On the basis of the existing population of 180.91 19.Informal 70.18 8.0 100. Table 12.3 73.0 36.39 53.0 100.0 100.2 percent in 2008-09 to 63.84 2010-11 Urban 0. However in urban areas there was a significant reduction from 29.62 15.85 Formal and Informal Sectors The informal sector covers a wide range of labour market activities and plays an important and sometimes controversial role.8 .8 74.Formal 23.Informal 76.0 100.14: Formal and informal Sector-Distribution of non-Agriculture Workers (%) Sector 2008-09 2009-10 2010-11 Total Male Female Total Male Female Total Male Total 100. Table 12.3 73.2 Urban 100.99 Rural 0.8 76. The formal sector did not show any significant changes with respect to employment level during the 2008-2011 period.24 13.0 100.0 100.30 13.46 0.7 26.9 26.2 77.24 million.9 .4 percent to 71.0 100.2 23.5 76.83 percent.6 70.5 percent) is higher compared to that in the urban areas (71.2 percent).83 8.0 100.9 67.0 100.Population.8 percent during this period.60 0.3 76. It provides jobs and reduces unemployment but in many cases jobs are low paid.54 53.4 73.6 29.3 23.Formal 26.12 37.77 18.53 5.0 100.48 1.3 73.26 Total 0.01 1.0 .0 100. Pakistan Bureau of Statistics (Million) Rural 0.14 0.21 4.7 23.77 14.4 70.90 Unpaid family Helpers 15.2 percent.4 percent during this period. Labour Force and Employment Table 12. In Pakistan the labour force is classified to include all persons who are ten years of age and above and during the period are without work.0 100.7percent to 26.4 29.67 Self employed 16.0 77.6 percent to 72.0 .7 76.4 71. The total employment in this sector reduced marginally from 26. The overall percentage of persons working in the informal sector shows an increase in both the rural (from 76. in the urban informal sector employment has increased from 70.9 63.7 26.2 76. the employment rate has decreased (from 67.0 100.10 1.84 13.36 9. 171 .85 8.0 28. the total labour force is approximately 57. However.0 100.Formal 29.6 28.0 100.17 13.73 Total 50.21 15. The employment ratio in rural informal sector (76.6 .14 illustrates that the female employment rate in the rural informal sector is showing an increasing trend while in the urban informal sector.13: Employment Status by Region 2008-09 2009-10 Total Urban Rural Total Urban Employers 0.79 15.0 22.1 73.1 32.76 13.0 79.2 percent which remained constant in 2010-11.77 37.0 100.1percent in 2010-11). This sector employs 73.0 100.6 68.0 100.7 26.0 100.8 29. willing and able to work at the prevailing wage rate are unable to find jobs.4 Source: Labour Force Survey 2010-11 Pakistan Bureau of Statistics.2 70. the male employment rate in the rural informal sector stood at 76. Female 100.95 Source: Labour Force Survey 2010-11. According to the Labour Force Survey (LFS) 2008-09.8 24.1 Rural 100.25 35.82 18.1 100.2 percent).8 percent of Pakistan’s total labour force. 5 5 4.55 2.8 8 percent in n 2010-11.17 0.36 1.70 0. Often n it is perceiv ved that the unemployment rate of ru ural areas is greater g becau use in rural areas a there is s a lower chance of emp ployment co ompared to the t urban are eas where em mployment op pportunities are a relatively better due to o greater eco onomic activi ity.70 1.89 1.17 2009-10 3. Fig-12.22 1.79 0.94 1.Pakistan Economic E Sur rvey 2011-12 2 Table 12.14 1.07 million n in 2010-11.25 Fem male 1.1 15: Unemployment rate by area a Area/sex Unemployed labo our force (in million) m Tot tal R Rural Urban 2008-09 2. The number of unemployed people e in Sindh has h increased from 0.48 M Million 2010-11 Male 2. .40 1.87 1. Contrary to this percep ption.5: Un nemployment Rates R over the e Years 10 9 8 7 6 5 4 2003 2004 2005 2006 2007 2 2008 Tota al Rural Urban 2009 2010 2 2011 Table-12.77 Urban 1.14 0.08 1.8 7.31 0.79 0.12 0.10 1.23 2010-11 3.8 percen nt in 2009-10 to 4.76 1. . l The comparison among a provinc ces shows th hat the unem mployment ra ate in Punjab b is high (a as shown in Table 12. It is i not only af ffecting econ nomic develo opment but is s also hamper ring social life.16) as compar red to other r provinces.2 6. the situ uation seems to be the opp posite.18 0.2 2 percent in 2009-10 to 8.6 5 The unem percent in n 2009-10 to o 6. In rural area as unemploym ment rate has decreased fro om 4. the unemp ployment rate e in urban are eas has increa ased from 7. .8 mployment ra ate has incre eased from 5.21 Rural 1.66 1.40 1.93 1. .44 1. .7 8.1 5.06 0.47 0.0 0 4.71 0.12 1.85 1.7 perc cent in 2010-11 due to su upportive poli ices of gover rnment.70 million m in 2010-11 while in Khyber-P Pakhtunkhwa (KPK) a fall fa in unemployment has been observ ved.55 Source: Pa akistan Bureau of Statistics.49 172 .6 6 4.81 0.85 1.7 7.93 1.16 0. Howeve er.91 1.76 1.87 1.23 0.68 0. As is evident from m the data in the t above tab ble.76 Rural 1.76 Total 3.44 million m in 2008 8-09 to 0.44 4 Punjab 1. Labour L Force Survey S 2010-11 1 Total Un nemployment rate (%) Rural Urban 5.18 0.89 1.06 3.0 06 million in n 2008-09 to o 0.1 16: Unemploy yed – Pakistan n and Province es Province /A Area Unempl loyment 2008-09 2009 9-10 Total l Male Female T Total Male e Female Pakistan 2. in Baluch histan numb ber of une employed people p increas sed from 0.12 1.21 0.0 percent in 2010-11. The T apparent t reason of this t eality is that the t industrial sector is faci ing an hard re acute shortage s of energy e resour rces and ther refore there is a reduction n in job oppo ortunities. 29 0.22 0.08 0. both directly or indirectly.08 0.02 0.53 0.44 0. The specific policies are as follows: Micro Credit Facilities: The Khushali Bank was established to provide loans of up to Rs.41 0. Under this scheme.33 0.23 0. the SME Bank was established to provide financial assistance and business support to small and medium enterprises.07 0.22 Rural 0.20 Rural 0.16 0.14 0.06 0.22 0.44 0.15 0.Population.16 0.12 0. In 2011 the total number of registered Pakistani workers in different countries was 456. President’s Rozgar Scheme by National Bank of Pakistan (NBP): The National Bank of Pakistan has developed a full range of products under the President’s Rozgar Scheme with the brand name of “NBP KAROBAR”.73 0.36 0.000 per month is paid to the participants Skill Development Councils: Five Skill Development Councils (SDCs) one each at Islamabad. National Vocational and Technical Education Commission: The National Vocational and Technical Education Commission (NAVTEC) was established with a view to overcoming skill gaps.02 Total 0.70 0.28 Sindh 0.85 0. telecom engineering.05 0.07 0.04 0.16: Unemployed – Pakistan and Provinces Province /Area Unemployment 2008-09 2009-10 Total Male Female Total Male Female Urban 0.30 0.000 is given for a maximum period of five years with a grace period of three months for establishing the business. These Councils are fulfilling the diversified training needs of the industrial and commercial sectors.12 Urban 0. Peshawar and Quetta has been established.35 0.01 0.03 0.10 0. 173 .06 0.25 0.28 0. a loan up to size of Rs. for educated unemployed in a wide range of areas like call centres.01 0.20 0. The Bureau Emigration and overseas employment is making concerted efforts to boost overseas employment. Lahore.55 0.78 0.06 0.50 0. This is one of the fastest growing sectors of the economy.10 KPK 0.21 0.55 0.02 0.56 0.30.01 Source: Labour Force Survey 2010-11 Million 2010-11 Male 0.02 Urban 0. finance and accounting etc.02 0.30 0.04 0.16 0. A stipend of Rs 2.04 0.45 0. 100.01 Employment Expansion policies Employment expansion policies are based on accelerating the rate of growth of the economy along with a special emphasis on the development of the relatively more labour intensive sectors.02 0.12 0.51 0.10 0.15 0.16 Urban 0.05 0. The SDCs assess the training needs of their geographical areas.05 0. and the non‐ availability and lack of standardization of proper curricula.03 0.54 0. Overseas Employment: Overseas employment also provides an opportunity to developing countries to reduce poverty and to improve income distribution through growth in employment linkages.01 0.29 0. Labour Force and Employment Table-12. telecom sales.01 0. customer services. These programs remained focused on young men and women throughout the country to provide them quality technical training.35 0.07 0.893.44 0. 000 per person to unemployed people to set up their own business. Moreover.02 0. Karachi.03 0. prioritize them on the basis of market demand and facilitate the training of workers through the public and private sector.05 0.12 0.03 Female 0.04 Balochistan 0.04 0. Information Technology: The development of the IT and telecom sector has created considerable employment opportunities.32 0. NAVTEC initiated two major training programs (President’s Funnee Maharat Program and the Prime Minister’s Hunarmand Pakistan Program) in the country under the President and the Prime Minister’s directives.24 0.57 0.03 Rural 0.01 0.55 0.06 0.11 0. MoUs have been signed with several labour importing countries like Malaysia.43 million in 2008 which increased to 0.138 applications have been verified by HEC and NADRA and are being placed in ministries. Oman and Kuwait. The number of emigrants in Saudi Arabia has increased from 0.# Countries 2008 2009 2010 2011 1 UAE 221765 140889 113312 156353 Kuwait 6250 1542 153 173 3 Malaysia 1756 2435 3287 2092 4 Oman 37441 34089 37878 53525 5 Qatar 10171 4061 3039 5121 6 Saudi Arabia 138283 201816 189888 222247 7 UK 756 556 430 308 Source: Bureau of Emigration and Overseas Employment Saudi Arabia being a Muslim state is attractive for millions of Pakistani workers seeking jobs abroad.46 million in 2011. Investing in Increasing Water Resources: Agriculture is the largest sector of Pakistan’s economy and provides employment to nearly 45 percent of the country’s work force.826 applicants were offered internship at the Federal. The Zakat fund provides a monthly subsistence allowance and a rehabilitation grant is given to all the needy Muslims.Pakistan Economic Survey 2011-12 National Internship Program: The first phase of the National Internship Program (NIP) has been completed. equitable and rightsbased labour market that provides mechanisms to allow productivity growth in the economy and result in real wage increases. The major constraint in Pakistan’s agriculture has been the lack of availability of water resources. So far 21. In this regard.915 applications were received. semi-skilled and unskilled labour.18 presents labour export statistics during the 2008-2011 period. 174 .14 million in 2008 to 0. The second phase of the NIP was launched in February 2008. Due to this fact Saudi Arabia has become the largest market for Pakistani workers in the world besides the Gulf States such as United Arab Emirate (UAE). The Public Sector Benevolent Fund and Group Insurance provide benefits to government employees especially in the form of education scholarships to their children and other financial aid at the time of emergency. The number of emigrants was 0. Employee Projection Policies: Efforts are being made to establish an efficient. Kuwait. Provincial and District government levels.22 million in 2011. Presently Pakistan is exporting skilled. and Qatar. as shown in Table 12.17: Number of Pakistani workers registered for overseas employment through Bureau of Emigration & Overseas Employment during the period 2008-2011 S. More than two‐ thirds of the county’s population lives in the rural areas and depends directly or indirectly on the agriculture sector for their livelihood. A total of 71. divisions. departments and provincial governments and at district level. The Bait-ul-Mall Fund has different projects such as Individual Financial Assistance. Export of Manpower The government of Pakistan is making sincere efforts to boost overseas employment which will not only reduce the unemployment burden in the country but will also increase remittances and thereby help to improve the economy of Pakistan. Free Skill Development and the Food Support Programme for helping the needy people. 25. GDP growth originating in agriculture is more effective in raising the income of the poor and increasing overall employment than other sectors of the economy. The government is making a heavy investment to develop water resources which will not only be helpful in increasing water availability and electricity but will also expand the employment opportunities in the country. Table 12.18 Table 12. Under the first phase. high population growth rate has been a major factor in Pakistan’s overall economic development. it is imperative to put further efforts for development of better human resources. thereby leading to a reduction in the average growth rate of the population.Population. Labour Force and Employment Table 12.18: Workers Registered For Overseas Employment Year Highly Qualified Highly Skilled Skilled Semi-Skilled Un-Skilled Total 2008 9713 33173 177791 4209 205428 430314 2009 4954 3260 182657 2465 210192 403528 2010 7081 31650 165726 5181 153266 362904 2011 6974 3018 171672 73247 201982 456893 Total 28722 71101 697846 85102 770868 1653639 Source: Bureau of Emigration and Overseas Employment Conclusion Historically. 175 . Despite these improvements Pakistan is still lagging behind neighboring countries. Improvements in health facilities and promotion of population welfare activities through the Ministry of Population Welfare have contributed to a significant decline in the crude birth and fertility rates. The government is committed to allocating funds and developing innovative policy measures to address the issue of managing population growth and the labour force. Therefore. This has been accompanied by an increased labor participation rate. With these rapid developments. integrating markets. fees on ownership and operation of vehicles and licensing of modern communications facilities. Sustainable economic development is dependent on a robust and low cost transport system. The Province wise distribution of roads is given in the following Table: GB & AJK 1552 505 1047 1552 491 1061 1565 480 Table 13. The current road network is about 260. The government is committed to implementing a comprehensive and modernizing transport and logistic sector through continuous reforms in all of its sub sectors. The transport system consists broadly of roads. railways. Enhanced export competitiveness is also contingent upon the efficient performance of the sector. 13.000 kms catering to eleven million vehicles of all types. The transport and communications sector generates a large number of employment opportunities. regions with adequate means of communications and transportation have grown economically and those lacking in these fields have lagged behind. Besides human capital (skill and education) a strong efficient and affordable means of transport and communications of the country contributes to the national economic growth by lowering domestic production cost. promoting economic opportunities and establishing links among the people.1: Estimated Length of Roads in Provinces (kms) KPK 42369 13781 28588 42369 13409 28960 42765 13095 Balochistan 29451 9579 19872 29452 9321 20131 29727 9103 TOTAL 258350 84030 174320 258350 81761 176589 260760 79850 2008-09 2009-10 177 .1: Road Transport Roads are the most important segment of Pakistan’s transport sector. particularly in the areas of trade and tourism for attracting foreign investment and realizing the potential gains from an outward oriented trade strategy. Roads carry over 96 percent of inland freight and 92 percent of passenger traffic and are undoubtedly the backbone of the economy. The availability of an efficient transport and communications network is a prerequisite for a meaningful economic cooperation amongst nations. air transport and ports shipping services. The sector is also a major contributor to government’s revenue through taxes and duties on its production and imports. and acts as a significant Years 2007-08 Category Total Low Type High Type Total Low Type High Type Total Low Type Punjab 104115 33864 70251 104114 32949 71165 105085 32179 Sindh 80863 26301 54562 80863 25591 55272 81618 24993 tool in the fight against poverty.Chapter 13 Transport and Communications Introduction The technological advances in global communications and transportation have significantly catalysed the emergence of the global economy leading to integration of fragmented national markets of goods and services into a single global market. on river Chenab 4.1-a: National Highway Authority The NHA road network is around 12.3 c. NHA is simultaneously constructing 12 bridges across the rivers. interchanges. railways. of NHA projects is summarized below: a. which is merely 4. Province wise break up of these projects is given below: 14 13 12 7 46 Road length (Km) 315 714 738 1218 2985 Cost (Rs. Ongoing Projects At present. coupled with the damages of 2010 floods that were still in the recovery phase.468 million. 46 development projects on roads covering 2. river bridges. Report Jointly Prepared by the Asian Development Bank and the World Bank.5 245. Billion) 48. 26. NHA has launched/ awarded 16 new development projects covering a length of above 500 kms including construction of a number of bridges. on river Swan 1 and on river Indus 5. bridges.000 kms. flyovers and interchanges costing Rs. flyovers.1 64. b. interchanges and road up gradation during the last one year at a cost of Rs 19. and 178 . Pakistan experienced severe flooding after torrential monsoon rains hit southern Sindh and the adjoining areas of Punjab and north-eastern Balochistan in August 2011. These projects include construction of roads. This performance in terms. New Development Projects During the financial year. Floods caused severe damage to infrastructure in the affected areas. Box–1 2011 Pakistan Floods Preliminary Damages and Needs Assessment Survey. on rivers Sutlej 2.985 kms are ongoing at a cost Rs 245 billion in different sections/packages. These are.6 billion.2 59.2: Province wise break up of NHA Projects Province Projects 1 Punjab 2 Sindh 3 KPK. Transport and Communications The damages in the transport and communications sector involve various categories of roads. GB & AJK 4 Balochistan Total Source: NHA bridges. tunnels.Pakistan Economic Survey 2011-12 Table 13. Table 13.5 73. the losses in transport and communication sector are estimated at Rs.6 percent of the overall road network but it takes 80 percent of Pakistan’s commercial traffic.1: Estimated Length of Roads in Provinces (kms) Years 2010-11 Category Punjab Sindh KPK 29670 42550 13000 29550 42975 13140 29835 Balochistan 20624 29500 9000 20500 29625 9125 20500 GB & AJK 1085 1535 450 1085 1580 465 1115 TOTAL 180910 259463 78597 180866 261595 79655 181940 High Type 72906 56625 Total 105253 80625 Low Type 32147 24000 High Type 73106 56625 2011-12 Total 106455 80960 Low Type 32590 24335 High Type 73865 56625 Source: National Transport Research Centre (NTRC) 13. and the effects of heavy floods in 2010 and law and order challenges NHA performed well.951 million. 70. Despite overall budgetary constraints during the fiscal year. Completed Projects NHA has completed 12 projects of flyovers. 9 million. An asset management company is being established for optimum utilization of PR’s assets. The Ministry of Railways is also in process of allowing private sector to operate on Pakistan Railways network under Public Private Partnership (PPP) frame work. All reconstruction costs for railways and 10 percent of the road reconstruction costs are included in the short-term recovery phase for works to be completed within 12 months. Preliminary estimates indicate that approximately 8. Restructuring of Pakistan Railways The Cabinet Committee of Restructuring (CCOR) has approved a restructuring framework for Pakistan Railways. The Ministry of Railways has also adopted a “Track Access Policy” for private sector participation to operate freight and passenger trains on Pakistan Railways infrastructure. Emergency repairs on railway lines have been undertaken. The recovery strategy varies across each subsector based on the nature of the responsible agency and the importance of the infrastructure.2 Pakistan Railways An effective railway system of the country facilitates commerce and trade. The floods have impaired the road conditions which will continue to deteriorate faster if repairs. reduces transportation cost and promotes rural development and national integration. For telecommunications. power system and supporting civil works amounting to $1. the road subsector sustained the highest damage and losses of $299 million. the private sector operations have mobilized and repairs carried out and telecom services restored. are being corporatized for eventual privatization subject to approval of the government. followed by the railway subsector losses amounting to $3 million. The telecommunication infrastructure losses includes damages to cellular sites. Financial viability is being ensured through improving revenue and support by GOP. 179 . For roads. six factories including Locomotive Factory Risalpur.Transport and Communications telecommunications infrastructure. Recovery and Reconstruction Needs The reconstruction needs of the sector have been estimated at $ 388 million. rehabilitation and restoration works remain deferred for a longer period. The company will manage to commercialize the surplus lands of Pakistan Railways in order to overcome its financial challenges. equipment. Out of the estimated total damage and losses. 13. Private Sector involvement is the focus moving forward. Pakistan Railways has entered into the Public-Private Partnership business in. As a short term measure. Repair of locomotives has been given a priority for restoration of Railway services and freight operations are also being prioritized for revenue generation. The process for recruitment of a professional Chief Executive Officer and other technocrats is being undertaken. New Board of Directors of PR has been constituted by including academia. Management Operation of Terminal Facilities including Dry Ports. diversion routes were created and services restored. The remaining road reconstruction will require careful prioritization to ensure efficient utilization of available resources since most of the restoration works are not complex and thinly spread across wider geographic area. Khanewal. rail experts and executive functionaries. It has been decided that adjustment of fares and freight pricing will be determined according to market conditions and cost of doing business.385 km of the road network and 190 km of railway lines were damaged by the flood including bridges and allied structures. Most of the damages are on provincial highways and district roads in Sindh. and four Concrete Sleeper Factories in Kohat. Passenger Trains. The indirect losses due to damage in the road sector would cause an increase in the road user cost during a phased recovery period. Most of the reconstruction needs are in the road subsector amounting $ 383 million. Carriage Factory Islamabad. including $ 5 million for railways and excluding $ 2 million required in the telecommunication subsector as these were private assets with insurance coverage. management professionals. Rehabilitation of Locomotives. exchange centers. The Ministry of Railways has also created a “Real Estate Development and Marketing Company” as subsidiary of Ministry of Railways. the National Highways Authority (NHA) has tasked the regional maintenance units to undertake the emergent works through pre-qualified contractors and using proceeds of the annual road maintenance funds. Sukkur and Kotri. In addition to the above. Freight Tones Km (Rs. Raiwind and Kanganpur railway stations was carried out at a cost of Rs.0 18464. Million) 23522.3 7791.3 Pakistan International Airlines (PIA) A restructuring plan of PIA has been finalized which addresses corporate governance.1 billion.9 (Million) 2. effective measures have been put in place to mitigate the effect. financial and operational restructuring. 494.8 4.3: Railways Passenger Traffic and Freight S.612 -15.0 Table 13.0 17698.5 3. use of reliability tools and standardized data exchange on maintenance. Increased fuel cost has been a major downside risk to the financial strength of PIA. In addition. Subject 2009-2010 1.6 1757. Dispatch reliability will be improved through various initiatives including expansion of reliability system. Lahore has been engaged for their freight transportation from Karachi to Lahore.0 2009-10 21. Passenger Traffic KM (Rs. Route Km 7791.0 7. 24. Table 13. 22 passenger coaches have been rehabilitated at the Pakistan Railway Carriage Factory Islamabad during last year. engineering improvement. Usmanwala. Renovation of Khudian Khas. Number of Passenger carried 74. Million) 21. Gross Earning (Rs.0 6.973 2008-09 23.9 5.0 (July-Feb) Source: Ministry of Railways 13. Route rationalization. Rolling Stock: During February of the current fiscal year.2 0. Freight Wagons 16499.3 7791. Rationalization of employment in PIA is being addressed through attrition and no new 180 .9 Source: Ministry of Railways Achievements during the Fiscal Year Track: During the last financial year.0 16810. 2013. Fleet renewal and addition is being planned.886 -5. 52 new design passenger coaches were imported from China at a cost of Rs. Lahore through Public Private Partnership at a cost of Rs.160 16.5 2010-11 18.0 18.8 million which has facilitated the local population to a large extent. code sharing and alliances are being pursued for moving to a new business model.0 2011-12 9359.9 279. 4. 16 kms of track was rehabilitated on the Pakistan Railways network besides doubling of more than 15 kms of track.4: Earning of Pakistan Railways (Rs. 2010-2011 64. airport services and dispatch reliability among others.0 9359. human resource rationalization. Strategic Business Units (SBUs) are being established for outsourcing of non-core functions of PIA. marketing and fleet.9 July-Feb 2012 25. No. 39. Million) Fiscal Year Earning % Change 2007-08 19. Various other cost minimization and revenue enhancement measures have been put in place to reduce the revenueexpenditure gap in the medium term. Service Buildings: Construction of D Class railway station at new Multan city was carried out at a cost of Rs.886. Establishment of new Dry Port: A new dry port was set up at Prem Nagar near Raiwind industrial area.8 2. Signaling: Signaling system of four railway stations damaged during the riots of 2007 was rehabilitated during the period. procurement and logistics. Commercial management of rail operations and outsourcing of noncore functions is being initiated with an aim to improve efficiency of rail operations.739.0 million. and.9 20618. Million) 4846. Freight carried Tones (Rs. Million) 5.0 million to improve facilities for the passengers. Remaining 150 passenger coaches will be manufactured at Pakistan Railway Carriage Factory Islamabad by June 30.Pakistan Economic Survey 2011-12 Chamber of Commerce and Industries. Dammam.356 132. Following new destinations have been introduced during the year 2011: Karachi – Madina (Twice weekly with B747/A310 w.420 41. New destinations including Zahedan and Madina also added in increasing the revenue.45 117.843 8.41 6.02 billion in year 2011 as compared to 107 billion last year.365 13. 2011. Chairman PIAC inaugurated the state of the art PIA Boeing-777 Flight Simulator installed at the PIA Training Centre. This is the focus of the government. 7.589 19. A purchase agreement of five Boeings 777 has been signed.76 million. a depth of 12 meters and a turning basin of 600 meters.725 72.8 million tones of cargo during the first 9 months of the current fiscal year. rollover of loan and government guaranteed loans among others.676 13. Table 13. Passenger revenue increased upto Rs. The KPT consists of two wharves.432 27. Each of the Wharves has two dedicated container terminals and oil piers to handle liquid cargo.953 15. aviation policy and strategic needs.000 metric tones deadweight. bn) Passenger Yield (2010: 6.193 38. better coordinated crew scheduling and planning.517 25. With a 11.898 5.732 41. The KPT handled 27.67 13. A financial restructuring plan has been finalized which includes equity injection.Transport and Communications hiring is being undertaken except for operational staff.f Jan 2011) Following new routes were introduced during the year 2011. of Planes) Passenger Revenue (Rs.6: Cargo Handled at Karachi Port Period 2007-08 2008-09 2009-10 2010-11 2011-12 (Jul-Mar) Source: Karachi Port Trust Imports 25.12) Source: PIA * : PIA Data is on calendar year basis 2011* 141. the East and West Wharf.664 21.678 2.972 56.892 28.4 Ports and Shipping 13. 116. The acquisition of this full flight simulator has resulted in improved training standards.Kuala Lumpur Sialkot – Riyadh & Sialkot . the Karachi Port provides safe navigation for vessels up to 75. The East wharf has 17 multipurpose berths and the West Wharf has 13 berths.e. Peshawar .586 (000 M/Tones) Total 37.5 kilometers long approach channel.e.196 Exports 11.5: PIA Performance Description Revenue Hours Flown Route KMS Revenue KMS Flown (000) Revenue Passenger carried (000) Revenue Passenger Kms (mil) Available Seats Kms (mil) Passenger Load Factor % Revenue Tonne Kms (mil) Available Tonne Kms (mil) Revenue Load Factor (%) Operating Revenue (mil) Operating Expense (mil) PIA Fleet (No.782 Table 13.4 (a) Karachi Port Trust (KPT) The Karachi Port Trust (KPT) came into being under the 1886 Act. Pakistan International Airlines Corporation earned increased revenue amounting to Rs.719 84.f July 2011) Quetta – Zahedan (Twice weekly with ATR w.528 12.970 39 104. The data on cargo handled during the last five years is given in the following table: 181 .10 1. A holistic view needs to be developed for revitalization of PIA entailing industry dynamics.367 27.727 460. Karachi on October 30. 673 Source: PNSC Table 13.445 5. The Commercial and Financial performance of the PNSC (un-audited) from July-March 2011-12 is given in the following tables.971 Fleet Expenses 5. while the exports handled during the same period was 4.064 Other Income 327.5 462.722 4.4 (c) Gwadar Port The Gwadar Port was inaugurated on the 20th of March. Port Qasim caters around 40 percent shipping requirements of the country. Acquisition of two vessels is in process. 6640 million.464 Profit before tax 252.7: Commercial Performance (In Metric Tons) Cargo Lifted Jul-Mar 2011-12 Liquid Cargo 5.4 (d) Port Qasim Authority Port Qasim Authority was established in 1973 as a second deep sea port of Pakistan.4 (b) Pakistan National Shipping Corporation Shipping is a highly competitive market driven industry.9 2011 462. The economic downturn has affected every sector of the maritime industry and the PNSC was no exception. One dry Combi vessel was sold for demolition as it had completed its useful commercial life.804. 53.942 19.821 2009 11 477. Despite this PNSC remained profitable during the period under review.1 million tones.626 2010-11 19. Gwadar Port has earned total revenue since its start of operation amounting to Rs.7 million tones.639.8: Financial Performance (Rs.13.009. in 000) Jul-Mar 2011-12 Revenue 6. The government has decided to import all bulk cargo comprising of Urea. 2007 and started commercial operations from March 2008. Table 13.907 Gross Profit 1.9 705.1 2010 705.2 541.584 25.379 Total (Dry + Liquid) 6.2 Source: Gwadar Port Authority Table.012 Source: PNSC Table 13.168 2011-12 14.273 2011 11 646.666 2012 10 628. The volume of import cargo during July-March 201112 stood at 14. PQA handled a cargo volume of 19.294 Dry Cargo 205. of ships Total DWT 2007 14 536.821 2008 14 536.511 6. its profitability is dependent on optimum utilization of vessels.9: PNSC-Fleet Deadweight Tonnage (In MT) Year No.11: Cargo Handled at Port Qasim (00 Tones) Period Import Export Total 2007-08 21.030 2009-10 19.238 2010 10 633. strict cost controls and maximization in cargo lifting.922 26.657 26.Pakistan Economic Survey 2011-12 13. 13.466.412 Expenses 1.6 2009 1218.9 million tones.226 6. The Commercial performance of the PNSC translated into financial gains. The PNSC remained profitable during the first nine months of fiscal year 2011-12.664 (Jul-Mar) Source: Port Qasim Authority 182 .409 Source: PNSC The Corporation intends to acquire four vessels on commercial loan / joint venture-basis.5 2012 541.1 1218. 13. The total cargo handled at the port up till now is 4. while two more will be acquired in next financial year. The consolidated revenue of the PNSC Group during July-March 2011-12 were Rs. Wheat and Coal through Gwadar Port.173.4 million.380 25.424 2008-09 19.502 4.7 million tones during July-March 2011-12.6 231.10: Cargo Handled at Gwadar Port (000 Tones) Year Imports Exports Total 2008 231.541. Table 13. Transport and Communications Box Item–2 Draft National Transport Policy (NTP) To address the Transport Sector issues and implement government’s policies and strategies for sustainable growth. China. businesses and organization. affordable. Progress on Studies in 2011-12 ` ` ` ` ` ` Study on Aviation Safety Audit by Civil Aviation Authority/Ministry of Defence has been completed Work is underway for preparing a Ports Master Plan by the Ministry of Ports & Shipping with the help of international consultants. road and shipping sub-sectors. The Information Technology (IT) revolution is probably the most important force shaping communities today. Afghanistan and India. poverty reduction and infrastructure and development while being environmentally and economically sustainable and energy efficient. (ii) Railways. Study on Financial Restructuring of Pakistan Railways is ongoing while consultancy firm is being hired for preparation of Pre-Feasibility of Peshawar-Jalalabad Railway Link Pakistan Railways Revitalization Strategy (PRRS) has been prepared for the approval of Cabinet The Trucking Policy approved in October 2007 is being updated Procurement of consultants is on fast track for preparing an “Implementation Strategy” for the Trucking Policy. With the development of the North-South and East West trade links. roads.e. accessible. reliable. Iran.5 Communications The 21st century can safely be named the IT Century as no institution can run without the help of IT in the future. (i) Roads. and a frame work to develop and improve the North South corridor has been formulated. Ministry of Communications has prepared a draft National Transport Policy in consultation with all stakeholders. Modernization and development of telecom infrastructure has been correlated with increase in economic activities. and social improvement. National Trade Corridor Improvement Programme “National Trade Corridor Improvement Programme (NTCIP)” has been launched in the country to revamp the whole transport sector including ports. The advancement of IT has brought enormous benefits to individuals. The strategy also takes into account the regional and domestic scenarios. It covers all modes of transport sectors i. 13. sustainable and fully integrated transport system that will best meet the needs of freight & passenger access and mobility requirements and will be aimed at improving levels of service and cost effectiveness in a fashion that supports governments goal of increasing public welfare through economic growth. energy and industrial corridors with these states would also be developed. 183 . enhancing regional connectivity to improve links with the Central Asian States. particularly with respect to rail. efficient. NTP also includes the National Transport Corridor Improvement Program (NTCIP) to make it more productive and environment friendly. effective. Rapid development of Information and Communication Technology (ICT) infrastructure and its adoption is now a prerequisite for making national progress in the economy and in daily life as well. aviation etc. The framework takes a holistic and integrated approach to reduce the cost of doing business in Pakistan by improving the trade and transport logistics chain and bringing it up to key standards. The world has developed into an information economy and the application of new technologies has become the centerpiece of activities. (iii) Ports & Shipping and (iv) Aviation. railway. The broad objective of the draft National Transport Policy are: To Provide safe. Pakistan Economic E Sur rvey 2011-12 2 13.5-a Te elecom Sector r At the end d of fiscal yea ar 2011-12, te eledensity in the t country st tood at 68.3 percent show wing 6.7 perce ent growth as s compared to o the previous s year. Since the t mobile se ector contribu utes over 95 percent to the t total teledensity of th he country, an increase in mobile pe enetration from m 60.4 percen nt in 2010-11 1 to 64.9 perc cent in 2011-12 resulted in i improveme ent of 4.3 per rcentage poin nts in total tel ledensity. Fix xed Local Loo op teledensity y has been de eclining over the t years due to mobile su ubstitution and d today it stan nds at 1.93 percent p in 20 011-12 as co ompared to 2.1 2 percent last l year sho owing a dec crease of 0. .17 percent. Wireless W Local Loop su ubscribers ha ave been increasing but the proport tionate rise in population n keeps the teledensity t of f WLL servic ces at 1.6 perc cent over the last three con nsecutive year rs. Fig-13.1: Teledensit ty 80.00 70.00 60.00 Percentage Fi ig-13.2: Cellul lar Subscriber rs 12 20.0 10 00.0 8 80.0 Million 6 60.0 4 40.0 2 20.0 33.9 63.2 2 88.0 94.3 9 99.2 108.89 32 118.3 Source: P PTA Cellula ar Market Sh hare The mobile m marke et over the years y has be ecome more stable s due to o intense competition. Market M shares are now more m balanced d among the e five operato ors with alm most insignific cant changes s over the yea ar. At the end d of March 20 012, Mobilin nk had a mark ket share of f 30.25 perc cent followe ed by Teleno or with 24.80 percent and Ufone with 19.54 percent t. Fig-1 13.3: Cellular Subscribers S Mar rket Share M March 12 Zong 13.24% Warid 12.17% Mobilink 30.25% (71.66) Local Loop L C Cellular Mobile (64.1 10) (68.3) W Wireless Local Loop p (61.99) 1.81 (58.80) 1.93 2.1 2.17 2.70 (45.02) 3.04 (26.23) 3.37 22.20 0.66 1.08 1.4 40 1.60 1.6 1.6 1.65 54.70 40.90 58.22 60.4 64.7 68.20 50.00 40.00 30.00 20.00 10.00 0.00 20 005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Mar-12 Source: PTA Cellular Mobile M Secto or Pakistan’s s cellular sec ctor faced a tough t econom mic and busin ness environm ment during the last fiscal year due to taxes, pow wer crisis, sec curity situatio on, extensive subscriber and natur ral calamiti ies. Despite all a these fac ctors, the ce ellular indus stry managed to double its growth rate from the t orld previous fiscal year. According to the Wo Economic c Forum’s s Global Informati ion Technolog gy Report 20 010-11, Pakis stan ranks no o. 1 in the Int ternet and Telephony T Co ompetition. The T total of mobile m subscrib bers reached 118.3 million n at the end of f March 2012 2. Telenor 80% 24.8 Ufo one 19.5 54% Source: PTA Network Coverage e ndicators of a successful and One of the key in ced cellular market is the geograp phical advanc coverag ge of land area by the e cellular mobile m operato ors in the co ountry. Pakis stan has a unique u topogra aphy ranging from steep mountains m to raging r deserts s. Despite such difficult ter rrain, more th han 92 percent t of the land d area is unde er the umbre ella of cellular r mobile serv vices – a laud dable effort by b the 184 Transport and d Communica ations mobile co ompanies. At A the end of o March 2012, there are 33,027 3 cell si ites across Pak kistan. Fig-13.4: Total Cel ll Sites 35,000 30,000 25,000 20,000 13,725 15,000 10,000 5,000 0 2 2006-07 2007-08 2008-09 2 2009-10 2010-11 Mar-12 Source: PT TA 21,518 28,159 30,126 31,303 33,027 D Inte ernational Long Distance Long Distance D and International (LDI) is an nother pillar of o Pakistan telecom t secto or, responsibl le for carryin ng internation nal traffic to and a from Pak kistan. LDI licensees l ar re responsible for rece eiving interna ational traffic c from oth her countries s and handin ng these over r to their resp pective LL/m mobile operato or for nation-wide lon ng distance and interna ational teleph hony service. PTA awarde ed 14 license es for Long g Distance and Interna ational service es and curren ntly 13 of the em are operat tional. PTCL is the largest LDI operato or in the coun ntry as it also owns the inte ernational bac ckhaul of Pak kistan. The other o major players incl lude Link Direct, D Wateen n, WorldCall l and Teleca ard. Interna ational traffic in Pakistan is s increasing ev very year owing to lower tariffs and availability of interna ational connec ctivity through h fiber optic and satellite links. During g 2011 total in nternational traffic t (Incom ming + Outgoi ing) stood at 5,126 5 million n minutes. Fig-1 13.6: LDI Intern national Incoming and Outgoin ng Traffic 6000 5000 4000 (2,409) 2,628 1,609 800 872 1,8 3,092 3000 2000 1000 0 Oct-Dec 10 Jan-Mar r 11 Apr-Jun 11 Jul-Sep 11 Oct - Dec 11 Basic Ser rvices Basic Ser rvices compr rising of Loc cal Loop (fix xed and wire eless) and Long L Distanc ce Internation nal services form the basis b of tele ecommunicati ion infrastruct ture of Pa akistan. The technological revolution n, mainly wir reless service es, had a maj ajor impact on o Fixed Lo ocal Loop business sin nce mobility, coverage, quality q of se ervice and lo ow maintenan nce requirem ment shifted consumer c foc cus from fixed to wireless services. Th he figure belo ow shows the e declining tre end in local lo oop subscribe ers, especially y FLL service es over the ye ears. By the end e of Dec, 2011, Local Loop (F FLL & WL LL) subscriber rs reached 5.93 million al ll over Pakistan. Out of to otal 5.93 million subscribe ers 3.10 milli ion belong to FLL and 2.83 3million to WLL. W Fig-13.5 5: Local Loop Subscribers 7.00 6.00 Million 5.00 4.00 3.00 2.00 1.00 0.00 2007-08 2008-09 2009-10 2010-11 Dec - 11 Source: PTA Internation nal incoming Traffic Internation nal Outgoing Traffic (4,323) (3,751) (2 2,871) ) (5,126) Million Minutes 3,934 999 1,123 1,231 1,192 Source: : PTA WLL FLL (5.93) Broadb band The gr rowth of Bro oadband sub bscribers has been more th han 150 perc cent on averag ge for the las st four years. Such an asto ounding grow wth rate high hlights mendous pot tential in Pak kistan’s broad dband the trem market t. Broadband d subscribers have crosse ed the one million m mark in 2011 wit th the highes st net additio ons in a year. According to o the latest market m data, Broadband B sub bscribers reac ched 1.9 million at the end d of February y 2012 with the t penetratio on 1.1 percent t. (5.60) 1.16 (6.14) (6.08) (5.72 5 ) .70 2. 2.62 2 2.66 2.83 4.44 3.53 3.42 3. .02 3.10 185 Pakistan Economic E Sur rvey 2011-12 2 Fig-13.7: Broadband d Subscribe Penetration n 2,200,000 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 1.10 Teleco om Revenue 1.20 0 1.00 0 0.80 0 Subsc cribers Penet tration 0. .88 0.55 1,912,152 0.60 0 0.40 0 0.25 45,153 0.03 0.11 168,082 1,491 900,648 1,491 0 0.20 413,809 4 2006-07 2007-08 2008-09 2009-10 2010 11 2010-11 Feb-12 Source: PTA A Telecom Economy Telecom Contribution n to Exchequ uer tant contribu utor The Telecom sector is an import depositing g over Rs. 100 billion on n average ea ach year to the t National l Exchequer. The Teleco om sector ma ade its highe est ever cont tribution to the t national exchequer in n 2011 as almost a Rs. 117 1 billion we ere deposited d by the telec com compan nies showing 7 percent growth during 2011. During the t first two quarters of 2012, 2 Rs. 58 8.1 billion ha ave been depo osited to the national n exche equer. Fig-13.8 8: Telecom Contribution to Exchequer Others 120.0 100.0 37.0 80.0 Rs. billion 60.0 40.0 20.0 0.0 2006-07 2007-08 2008-09 2009-10 2010-11 Revenu ue of the tele ecom sector reached r an all l time high du uring the 201 12, standing at Rs. 363 bi illion. Telecom revenue showed an increase of f 5.4 percent t as compare ed to the prev vious year. In n line with th he teledensity, the cellular sector also has the highest t share in te elecom reven nue. During 2011, cellular r revenue inc creased by 11 percent to reach Rs. 262,761 million n as compare ed to Rs. 236,047 million n in the pre evious year. The rise in total telecom m revenue is mainly attributed to o the increas se in revenue e of mobile services s only since the rest of the servi ices except WLL W have rep ported decreas se in their tot tal revenue. During D the firs st two quarter rs of 2012, Rs. R 197,686 million wor rth of revenu ue has been ge enerated by th he telecom sec ctor. Fig g-13.9: Telecom m Revenue (Rs s. Million) 400,000 0 350,000 0 300,000 0 235,613 194,562 686 197,6 278,550 333,809 3 344,212 362,935 Subscribers Rs. Million 250,000 0 200,000 0 150,000 0 100,000 0 50,000 0 - 2005-06 2006-07 2007-08 2008-09 2009 9-10 2010-11 Jul-Dec 2012 Source: PTA PTA Deposits D (111.6) ) Activa ation Tax (117. 0) GST (100.1) (112.1) (109.1) ) Teleco om Investmen nt Advanc cement in technology and d new innova ations require e a continued investment stream into the telecom m sector. Alth hough compa anies have inv vested over US$ U 12 billio on in building g of infrastru ucture and oth her projects in i the last six x years, there is no denyin ng the fact tha at there are un ntouched land ds and grey areas that need new w or improved ructure. Most t of the teleco om companies s have infrastr establis shed their in nfrastructure and expand ded to every nook n and corner of the country. c How wever, due to the terrain/se ecurity situati ion, companie es are A recognizing g this reluctant to invest further. PTA fact has worked out with bo oth operators s and Univer rsal Service e Fund (U USF) to make investm ments in area as where the ere is no tel lecom service e. In 2011, th he telecom se ector invested d US$ 495.8 million; m with the cellular mobile m sector being 39.3 9.2 14.2 45.2 44.9 12.0 7.2 27.9 52.6 2.2 3.9 24.1 Jul - Dec 11 37.0 10.9 9.7 17.6 44.6 49.4 19.2 (58.1) 13.6 6.6 44.0 36.3 Source: PTA Note: PTA's contributions compr rise of all its receipts including Initial and a Annual Licen nse Fee, Annual Spect trum Administrative Fee, F USF and R&D Fu und Contribution ns, Numbering Ch harges, License Application A Fee, etc. Others includ de custom duties, WH H Tax and other taxes. 186 Transport and Communications the major contributor. In addition USF invested Rs. 3.5 billion during the 2011. Foreign Direct Investment by the telecom companies is more than 30 percent of the total FDI in the country during the last six years. As in the investment scenario explained above, telecom companies reduced FDI because they have already laid down the required infrastructure. In 2011, telecom sector attracted over US$ 79 million FDI in the country which is about 5 percent of the total FDI in Pakistan in 2011. Analysis of investment and FDI clearly reveals that the telecom sector of Pakistan needs an influx of new investment in the near future to boost these figures. The auction of 3G licenses is expected, that will bring more FDI into the country. An Table 13.12: Telecom Investment 2005-06 2006-07 Cellular 1,420.9 2,584.5 LDI 50.5 602.8 LL 0.3 40.6 WLL 259.4 747.0 Total 1,731.1 3,974.8 Source: PTA improved economic condition of the country will further encourage investors to bring capital into Pakistan. Fig-13.10: Foreign Direct Investment 6,000 5140 5,000 US$ Million 4,000 3,000 1,905 2,000 1,000 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Source: PTA 2199 1,824 1,439 815 374 79 1574 3521 3720 5410 FDI in Telecom Total FDI 2007-08 2,337.7 403.9 342.1 52.8 3,136.4 2008-09 1,229.75 276.75 57.37 82.11 1,645.9 2009-10 908.8 183.1 22.5 23.0 1,137.5 US$ (Million) 2010-11 358.6 108.8 18.2 10.2 495.8 Regulatory Intervention by PTA • Spectrum Auction for 3G & Defunct Instaphone License • WLL Spectrum Auction in 1.9 GHz and 3.5 GHz Frequency Band The Government of Pakistan announced spectrum auction for 3G and Instaphone license on 24th November 2011. The Ministry of Information Technology issued a policy directive to PTA with the objective of redefining the policy framework and setting guiding principles for the auction of 3G frequency leading to introduction of relevant services. It was announced by the Federal government that the auction would be transparent and competitive; the allocation will be neutral; and, usable for any available or upcoming technology. Similarly the auction of three blocks of 10 Mhz each, out of currently available 3G spectrum (1.9 GHz/2.1Ghz band), shall be announced by PTA. The license of defunct Instaphone along with allocated frequency will also be auctioned. During the de-regulation of the telecom sector in 2004-05, significant portion of the frequency spectrum in 1.9 GHz and 3.5 GHz bands was auctioned for WLL licensees. However, with unprecedented growth of wireless broadband services and introduction of new players in the market, it became imperative for the government to allocate more spectrum resources to WLL operators. In this regard, PTA has been entrusted with the task of carrying out the auction of the WLL spectrum as per guidelines provided in the Policy Directive issued by Ministry of IT on 16th December 2011 for spectrum auction of available frequency in 1.9 GHz and 3.5 GHz. The Information Memorandum for WLL auction is available on the PTA website. The base price for 3.5 GHz band is set at USD 28.2 million (covering all telecom regions) and the base price for 1.9 GHz 187 Pakistan Economic Survey 2011-12 band is set at USD 88.75 million (covering all telecom regions). commitment in stimulating the mobile banking services in the country. The SBP and PTA would act as facilitators for third party service providers for mobile banking in Pakistan. • Cellular Mobile Network Quality of Services Regulations, 2011 • Mobile Banking Introduction of efficient mobile banking services in the country can utilize the strengths of mobile networks to provide financial services to the large unbanked (rural, poor) population as well as increase the overall efficiency of the banking sector in Pakistan. The State Bank of Pakistan introduced the Branchless Banking Regulations in March 2008. Subsequently, the Ministry of IT issued the Policy Directive (May 2008) to support the technical implementation of mobile banking in the country. The government under the Policy Directive states that a relevant telecom sector policy framework is required to complement SBP Branchless Banking Regulations. For implementation of this Policy Directive, PTA drafted the Third Party Service Providers (Branchless Banking) Regulations 2011. In order to provide an enabling regulatory environment and develop cooperation for a simplified mobile banking framework that can allow license holders to take on branchless banking activity and harness the full potential of such services, the Pakistan Telecommunication Authority and the State Bank of Pakistan (SBP) signed a Memorandum of Understanding (MoU) on 11th January, 2012. With this MoU, both the institutions have shown their interest and To ensure that mobile operators maintain quality of service the PTA has prepared the Cellular Mobile Network Quality of Services (QoS) Regulations, 2011. These regulations apply to all cellular mobile operators and identify the minimum quality of service standards and associated measurement, reporting and record keeping tasks (except packet switched or GPRS/EDGE services). The Regulations have been gazette notified. • GPRS/EDGE Service Quality of Service Regulations, 2010 In order to maintain Mobile cellular Quality of Service, Pakistan Telecom Authority prepared GPRS/EDGE Key Performance Indicators (KPIs) following the international standards and consulting the industry. Further these KPI’s have been incorporated in the regulations. These regulations are applicable to all cellular mobile communication service licensees for the purpose of laying down quality of service parameters for GPRS/EDGE services, to ensure consumer satisfaction in line with the criterion determined by the Authority from time to time. (Nos.) Broadband Subscribers 168,082 413,809 688,373 1,491,491 1,912,152 Table 13.13: Pakistan Telecommunication – Subscribers Category Years FLL Subscribers WLL Subscribers Mobile Phones 2007-08 2008-09 2009-10 2010-11 Jul-March 2011-12 Source: PTA 4,548,350 3,526,634 3,419,271 3,016,852 3,098,117 1,155,188 2,617,616 2,659,824 2,704,873 2,968,813 88,019,812 94,342,030 99,185,843 108,894,518 118,316,916 13.6 Electronic Media 13.6 (a) Pakistan Electronic Media Regulatory Authority The electronic media in Pakistan, remained dominated, since independence, by the state-run Pakistan Broadcasting Corporation and Pakistan 188 Television. Pakistan Television was launched in November 1964. As access to diverse sources of information was limited and people could not keep abreast of the rapidly growing developments around them, the government in 2002 opened up the electronic media to the private sector in the country. Pakistan Electronic Media Regulatory RBS at Besham and Kohat are ready for inauguration. FM radio and distribution services like Cable TV. The massive growth which has taken place in the electronic media in the private sector in the last one decade is as follow: Satellite TV Channels Landing Rights Permission to TV Channels FM Radio licenses Cable TV Licenses Multimedia. iii. Athmaqam.000 people of diversified skills and qualifications have been provided.14: PEMRA Performance Sr. Prime Minister inaugurated the Rebroadcast Station at Bhimber on 12-03-2012 RBS in NeelaBut. New jobs to more than 200. Kel and Mirpur. DTH (Direct To Home). Jura. Multi Channels Distribution System (MMDS) vi. Prime Minister inaugurated TV Centre at Multan on 30-12-2011. over 7 million people have been accommodated through indirect employment.6-(b) Pakistan Television Corporation Limited (PTV) PTV has launched Sports Channel on 11-01-2012. Internet Protocol Television (IPTV) vii. Karan. RBS at Badin is in progress and National News Bureau at Larkana is almost completed. Economic Contribution Investment friendly policies of the government have been conducive to the development of the electronic media industry in the private sector. dollar 2.5 billion in the electronic media industry in Pakistan. To eliminate the disparity and uplift the socioeconomic conditions PTV is gradually extending its signals in remote and economically backward areas. PEMRA is mandated for regulating the establishment and operation of all broadcast media that is satellite TV. Gahkuch. In addition. 189 . in the country. Dhudhnial. According to estimates there has been a cumulative investment of approximately U. With the current growth rate of more than seven percent per annum. iv.252 million in the country. ii. v. Present Status of Private Electronic Media During the last decade the country has witnessed a massive spurt in the number of TV channels and FM Radio stations in the private sector which is unmatched in the South Asian region. Mobile TV etc. Category Licenses Issued in 2011-12 06 10 06 600 --04 02 Total Licenses Issued 89 26 157 3. i. Sharda . RBS Chilas. expanding work of media production houses. it is estimated that the cumulative Table 13. Shigar are ready for inauguration and RBS at Aliabad/Karimabad. RBCs at Buneer.000 6 01 04 02 investment in the electronic media industry will reach above $ 3. Mobile TV license viii. This expansion in investment would in turn have a multiplier effect on increasing job opportunities for skilled media personnel and journalists. The unprecedented growth of TV channels.S.0 billion by the end of the current financial year. Cable TV and FM Radio stations has indeed contributed remarkably in raising the standards of public awareness and literacy. Palandri are in progress. advertising agencies and proliferation of the performing arts. Jaglot/Bunji and Astore are in progress. In fiscal year 2011-12 TV sets were 12. Mobile Audio Licenses Source: PEMRA 13. IPTV (Internet Protocol TV). RBCs at Kharan. Kund Bangla and Pooran are in progress. PTV will launch English channel shortly. Khaplu.Transport and Communications Authority (PEMRA) as a statutory body was set up with a view to facilitate through licensing and to regulate the growth of the electronic media in the private sector. and Bar Khan are in progress.No. documentaries and programmes for special occasions.I. External and Local News bulletins besides resume of National Assembly and Senate.Pakistan Economic Survey 2011-12 13. efficient and time sensitive services to the customers. During the 1st nine months of the current ` ` 190 . special news bulletins from PBC Hyderabad on rain/ flood situation and ongoing rescue and relief activities in Urdu and Sindhi languages.238 rural) post offices across the country. Up-gradation of PBC Larkana from 10 KW Medium Wave to 100 KW MW transmitter. Bangladesh. Its mission is to entertain and educate people through music programmes. 4 5 6 7 8 ` ` ` 9 ` 10 Installation of 100 KW MW transmitter and BH at Turbat. These include National. PBC World Service broadcasts daily Urdu programmes of 8 hours and 30 minutes duration for the audience living abroad. Replacement of 10 KW MW with 100 KW MW transmitters D. Following are the prominent services of PBC:` National Broadcasting Services was launched on 28th August. Some salient achievements of the Post Office department are given below: Benazir Income Support Programme (BISP) Complete web-based tracking and monitoring system for disbursement of funds for Benazir Income Support Programme (BISP) has evolved that includes continuous processing. Pakistan Post has offered full blend of Express Mail and Financial Services. The programmes are originated from Islamabad and provincial capitals. 2008. Khan under USAID programme and shifting of Broadcasting House.797 urban and 10. CPU has over 2 million minutes recording in its archives which are being digitized. 13. ` PBC has nine approved development projects in hand for which an amount of Rs. Iran. 100 KW MW transmitter at Gwadar.035 (1. Establishment of 47 FM Radio Stations all over Pakistan. These stations are broadcasting programmes in their respective local/regional languages and in Urdu with a ratio of 70/30 respectively. Replacement of 100 KW MW transmitters at Multan. broadcast programmes for 8 hrs daily in 11 foreign languages covering Afghanistan. PBC News is putting on air 117 News bulletins daily. Establishment of PBA and IT Centre at Lehtrar Road. Islamabad. NBS has seventeen hours daily transmission from 7 am to 12 midnight. Total broadcast hours of these FM Stations are 260 hours daily. In addition PBC news launched the broadcast of FATA News. features and plays. Pakistan Broadcasting Corporation has established different FM Stations to cater to the infotainment and educational needs of listeners in their respective languages all over the country. China.6-(c) Pakistan Broadcasting Corporation Pakistan Broadcasting Corporation is the largest radio network in the country with a listenership larger than all private radio channels in the country. Hyderabad & Muzaffarabad.7 million has been allocated in 2012. features. Replacement of 100 KW MW with 400 KW Medium Wave transmitter Peshawar under USAID programme.7 The Pakistan Post To provide trust worthy. Central Production Units (CPU) produce music. India. 217. monitoring and reconciliation of the specialized money orders scheme. The details of these projects are given below:1 2 3 Balancing and Modernization of equipment. 2 X 100 KW SW transmitters and HF aerial system Landhi Karachi. It provides services through a network of 12. Regional. PBC External Services. Nepal and Sri Lanka. drama. During the period JulyMarch 2011-12 an amount of Rs.3 million during this period. These Express Centers are fully computerized and automated and cater the requirements of the public. for a sum assured Rs. Payment of incoming foreign remittances through Western Union. 1.507. These canters facilitate the customers. Postal Life Insurance Total Policies are 382.266. Western Union Money Remittances Business During the first nine months of current fiscal year (July-March). Overall. The services offer in these centers include: Urgent Mail Service. Pakistan Post is also disbursing pension to over 40.9 million and a Premium Income is Rs.9 million. 801.4 million Civil and Military pensioners are being served by Pakistan Post about 1. Acceptance of Utility Bills. This area is expected to grow at an accelerated pace due to demand.993. 160.000 PTCL pensioners.242.0 million have been paid within prescribed period of time. 191 . out of which 97 percent Money Orders amounting to Rs. Computerization Counter Automations System Over one hundred General Post Offices including renovated post offices through out Pakistan have been provided with counter computerization facilities for the better service quality to the customers through a LAN based system. Communications infrastructure has widened despite challenges with security.621.3 million pensioners has been disbursing pension from Pakistan Post. expanding and seeking to meet with the needs of Pakistan’s citizen. Conclusion With the continuing expansion of the transportation and communication sector throughout the country. Pakistan Post has received the foreign remittances amounting of Rs. Achievements of Saving Bank Pakistan Post has been doing Saving Bank work as an agency function on behalf of the Ministry of Finance under the government Savings Bank Act1873 on commission basis. Expedited Mail Service. Despite such challenges in areas of natural disaster recovery and difficult terrain to develop upon. The pensioners are receiving the pension in a hassle free environment. commerce and business. and expect to expand. Traditional Services. 9. 55 Small and Smart Express Centers have been set up in the urban areas. urgent Money Order Service.17.642. is changing. Fax Mail. power outages and rough terrain in which to build upon. Fax Money orders. Booking of Inland and Foreign Parcels.019. transportation developments have continued.16. Establishment of “Small & Smart” Express Centers To provide quality services to the customers.4 million were received from BISP authorities. The cellular mobile sector has been a major contributor to the expanding market for telecommunication and the various technologies that come with it. bringing the country to high standards of telecommunication structures on par with the rest of the world. Pakistan Post has also developed a separate system for PTCL pension disbursement. particularly in trade. however it is important that capital and investments come with it.Transport and Communications fiscal year (July-March) total 8.8 million. the transportation and communication arena remains strong. 49. Pakistan is preparing for the future in various areas from creating vast transport networks to building up a sustainable information technology infrastructure with the objective of setting the foundations for continued growth and success. Computerized Pension Payment System Over 1.247.193 BISP Money Orders along with required funds for Rs.9 million has been collected through National Savings Schemes and earned commission amounting to Rs. which makes up over 80 percent of total Hydro/Geo supplies 2040 50 0 2010 2010 2040 2010 2040 2010 2040 Source: The Outlook for Energy: Aview to 2040 Pakistan’s economy has been growing at an average growth rate of almost 3 percent for the last four years and demand of energy both at production and consumer end is increasing rapidly. accounting for about 60 percent of global demand. the government is making all possible efforts to address the challenges of rising energy demand (Box-1).1.1: Global energy demand by fuel type (Quadrillion BTUs) 250 Quadrillions British Thermal Units 2010 200 150 100 2040 2040 2010 From its peak in 2025. Other Renewable Nuclear Biomass /Waste Oil Coal Gas Hydro 193 . oil and natural gas will continue to be the world’s top two energy sources through 2040.6 percent per year from 2010 to 2040 as estimated by “The Outlook for Energy: A View to 2040” is given in Figure-14. coal will decline by more than 10 percent of total Hydro/Geo 2010 2040 Latin America and China are the biggest users of hydro power. For a developing economy with a high population growth rate.Chapter 14 Energy Energy is considered to be the lifeline of economic development. The answer lies in the attainment of optimal energy mix through fuel substitution by promoting energy efficiency and renewable energy and interregional co-operation. Figure 14. generation and efficient allocation. Gas being the fastest growing major fuel source over this period is expected to grow at 1. The rise in global energy demand has raised questions regarding energy security and increased the focus on diversification. it is important to keep a balance between energy supply and emerging needs. Knowing that there is a strong relationship between economic growth and energy demand. If corrective measures are not effectively anticipated significant constraints start emerging for development activities. However. UAE and M/s China National Machinery Import & Export Corporation of China (CMC) for coal mining and installing coal-fired power plant Power Sector Reforms Government of Pakistan (GoP) initiated structural reforms in the power sector under the Power Sector Reform Plan (2010) finalized by Cabinet Committee on Restructuring (CCOR). Monthly financial planning is being implemented for smooth financial flow. The plans are based on the following key pillars: Improved governance structure: b) Supportive legal framework c) Financial sustainability. 10 billion budgeted by GoP for 2012). (e) Demand side management and f) Promote private sector participation in the sector.) Limited.f. Jet Propellant 1 (JP1). GoP started 2012 with no outstanding claims of TDS against any power sector company. Independent Power Producers (IPPs) and Water and Power Development Authority (WAPDA). Refineries and Oil Marketing Companies (OMCs) are allowed to fix and announce their ex-refinery price and ex-depot prices of above mentioned products on monthly basis.56 billion) have been disbursed. As part of promotional activity to increase the share of coal. General Sales Tax (GST) exemption withdrawn for lifeline and agriculture consumers (Rs. Implementation of Power Sector Reform Plan 2010 has been expedited and upgraded under the Power Sector Recovery Plan 2011. Light Diesel Oil (LDO). Resolution of Circular Debt Circular debt refers to the unpaid bills by Pakistan Electric Power Company (PEPCO) to key players especially Oil companies. High Octane Blending Component (HOBC). All subsidy claims till December 2011 (Rs. (d) Supply side management. the Government of Sindh has leased out a coal block for an integrated mining project to many companies like M/s Engro Powergen (Pvt. Gas Sector Reforms To mitigate the gas shortage. 2011. GoP aims to phase out subsidies to power sector which have cost rupees one trillion in last 4 years.1 Reforms of Present Government addressing Energy Crises Oil Sector Reforms The Federal Government.e. Power Sector Subsidy The timely payment of tariff differential subsidy (TDS) is being ensured along with subsidies for KESC and FATA on monthly basis. overall subsidy is estimated to be Rs. Under the deregulation framework POL prices have been linked with Pakistan State Oil (PSO) actual import price. 194 . For 2012. Jet Propellant 4(JP4) and Jet Propellant 8 (JP8) w. has deregulated prices of Motor Spirit (MS). UK. M/s Bin Daen Group. in pursuance of its deregulation policy. M/s Cougar Energy UK limited. Gas companies.91 – 125 billion. M/s Oracle Coalfield Plc. Coal Sector Reforms Federal and Provincial Governments are endeavoring to harness the huge coal resources of Thar by utilizing it as a source of energy for power generation through international investment. government has designed different policies not only for exploration of new local gas reserves but also for import of gas like Liquefied Natural Gas (LNG) most mentionable are Liquefied Petroleum Gas (LPG) Policy 2011 and Liquefied Natural Gas (LNG) Policy 2011. the refineries will fix their ex-refinery price as per existing Import Parity Pricing (IPP) formula. June 1st. In case of non availability of PSO import prices.Pakistan Economic Survey 2011-12 Box. electricity and gas shortages are considered to be the primary cause of constrained production activities in a number of industries.380 billion per year. • • • • • During 2011-12. Refund of General Sales Tax (GST) on uncollected bills of more than 180 days has been approved • • • • Supply Side Management • • • • • • • • 3. Two months security deposit shall be paid by new and defaulting consumers to get a reconnection. Yet. (Rs. the estimated cost of power crises to the economy is approximately Rs.Energy Stock Issue • Recovery of receivables of Distribution Companies (DISCOs) of Rs. 90 percent of distribution transformers to the petroleum and gas fields). Engineering Industries and Electrical) shaved off 0. Loss mapping in each Distribution Companies (DISCOs) is in progress to exactly pin-point the losses and their sources to achieve the target of 18. Stock of Rs. Also. By 2011-12.7 percent losses in FY12.6 percent (FY11). Promote Private Sector Participation in the Sector Expression of Interest (EOI) for private bidders issued for O&M contracting for Generation Companies (GENCOs).. Iron and Steel. around 2 percent of GDP. Mangla raising project is completed and the project is also inaugurated. while the cost of subsidies given to the power sector to the exchequer in the last four years (2008-2012) is almost 2.5 percent of GDP.2 billion (US$ 14. Debt swap of Rs. It has also affected investment in power sector. “2011 Pakistan Floods. energy outages in Pakistan continued to be the dominant constraint in its growth.120bn of outstanding tariff differential subsidy (TDS) for FY10 was picked up by the Federal Government in May 2011. Work on coal fired plants has been expedited.500MW generation capacity inaugurated 1400MW Tarbela 4th extension initiated.400 MW has been added since 2008.2 percentage points from real GDP growth in 2010-11 and in 2011-12. Change Combined Cycle plants to coal (24 months). 301billon) until 30 June 2009 picked up by GoP through Power Holding Private Limited (PHPL) company. Load Management conservation measures to save about 1000MW put in place. Lower accumulation of water reserves in dams along with high international prices of oil has compounded the pressure on 195 . the energy sector (especially its sub sector electricity) received greater attention because of the faster rate of growth in its demand. Flood was one of the factors which caused electricity and gas shortage as it damaged the distribution network (i. Flow Issue • Efforts for 100 percent recovery of current bills are underway along with disconnection of defaulters after 45 days (reduced from 90 days) without any exemption/discrimination. 1100 billion).301 disconnections carried out during July-Feb 2012. Further in the early 2000s. Energy intensive industries (Petroleum. 354 billion (Feb 2012) is essential to clear the circular debt against payables of Rs. The liquidity crunch in the power sector has resulted in under utilization of installed capacity of up to 4000MW. Diamer Bhasha Dam of 4. GoP in the process of finalizing Operations and maintenance (O&M) contracting wherever required for Distribution Companies (DISCOs).e.2 million) according to Asian Development Bank Report. Economic dispatch to conserve fuel is being implemented. Till the 1980s less than two-third of the energy requirements were met through its own domestic resources. Demand Side Management • Lines losses reduced from 20. Gas Supply to Karachi Electric Supply Corporation (KESC) has been increased to improve fuel mix and ensure maximum supply. In the 1990s Pakistan was still engaged in various efforts to bridge the wide gap between increasing demand and limited energy supply.4 percent (FY10) to 19. A total of 210. Preliminary Damage and Needs Assessment”. traces of energy supply shortages can be traced to the independence of the country. Unpaid power tariff differential subsidy (Rs. Most efficient plants are being dispatched to maintain to conserve fuel. 150 billion has been done which covers sizeable proportion of circular debt. 398 billion (April 2012). “The total damage to the energy sector was of Rs 1. Pakistan Economic Survey 2011-12 electricity as there is still significant share of oil (furnace) in electricity generation (about 35. Waste-toEnergy.1 percent) which is vulnerable to the international prices. in consultation with the provinces and other stakeholders.8 million TOE) Diversions (−7. However. 630 Kilowatt Hours =39. the government has notified the Liquefied Natural Gas (LNG) Policy 2011 which encourages private parties to develop LNG projects and sets them free to participate in any segment of the LNG value chain.868 GJ = 11. Pakistan’s Energy Sector1 Figure 14.is the most mentionable achievement.8 million TOE) by Share of Sources Oil Products (29 %) Gas (43.4 %) Energy Consumption (38.2 %) LPG (1.2 %) Coal (10. therefore. the geographical location of the country makes it a favourable potential market for the import of natural gas from its neighboring countries like Iran.683 million Btu] 2 1 196 . Further the oil refineries have also been running below capacity. providing extremely attractive financial and fiscal incentives to both local and foreign investors while offering them a level playing field. In order to solve issues in power sector. Likewise. in the gas sector. the situation will improve significantly in near future.7%) Electricity (13. 2006. The initial projects in this regard are Iran-Pakistan Pipeline and Turkmenistan-Afghanistan-PakistanIndia gas pipeline. India and Turkmenistan. thus constraining the supply of oil and other fuels.0%) Coal (6.2: Pakistan’s Energy Sector Consumption and Supply 2010-112 Energy Consumption (38. Solar. The government has. Hydro. The Alternative Energy Development Board (AEDB) has updated the Renewable Energy (RE) Policy. To ensure energy security and sustainable development in the country. This was due mainly to the depletion of existing resources. the government has decided to construct five multi-purpose water storages in the country during the next 10 -12 years. The policy includes all (Alternative Renewable Energy (ARE) technologies including Wind.1%) Crude Oil (15.5 million TOE) by Share of Sources Natural Gas (47. unfavorable law and order situation and lukewarm interest of exploration and production companies etc. [1 TOE = 41.3%) Data on variables of energy is given on calendar year instead of fiscal year TOE (tonne of oil equivalent) is a unit of energy.5 million TOE) Energy Supply (64. It is expected that with the approval of the policy and government’s keen interest in energy sector. To mitigate the energy crisis. taken the initiative to import gas from these countries.7%) Petroleum Products (16. the government is also taking all possible measures to diversify its energy mix. and Geothermal. The Diamer Basha Dam Project . Biogas.6%) LPG (0.5%) Oil (32. It is considered as an amount of energy released by burning one tonne of crude oil approximately equal to 42 GJ. Pakistan faced severe shortages that exceeded approximately 2 billion cubic feet per day as local production was unable to keep pace with the requirements of the country.8 million TOE) by Share of Sectors Transformation (−17. Cogeneration.the world's highest Roller Compacted Concrete Dam . In this the regard government has given due attention to fast track the development of Alternative / Renewable Energy (ARE) resources in the country. Also Pakistan is one of the beneficiaries of Tetra-partner power import project under the head of Central Asia-South Asia (CASA1000) electricity trade.4 million TOE) Statistical Differ (−0.3%) Electricity (16. 080 7.491 61. However due to positive changes in years 2004-05.111 28.0 8.1 5.3 43.275. This is due to the substitution effect to a cheaper source from an expensive source.212 1.385 1.890 10.3 17.9 19.894 2.0 10.8 20.T* Change (%) (000) 4.264 1.66 197 .0 9.0 4.7 percent per annum for last ten years as shown in Table 14.8 percent and 7.0 43.3 14.4 14.0 percentage points during the period under review.409 9.418 1.994 1.1 Energy Consumption Pakistan’s total energy consumption stood at 38.065 24.3.371 74.327 67.223.0 29.960 -3.452 -3.1 8.3: Energy Consumption by Sources in %: A Comparison between 2005-06.0 13.5 10.712 73.4 32.0 Share in percentage 30. The share of gas consumption stood at the highest equal to 43.0 Change (%) 7.433 1.603 72.139 -3.2 15.5 0. electricity and coal has increased at an average of 5.604 872.0 40.627 -0. the overall average for last ten years became positive 1.821 annual energy consumption is shifting from petroleum products to other energy sources due to volatile prices of oil.2 7.7 43.348 Change (%) 4.400 70.2 39.0 5.269. 14.1: Annual Energy Consumption Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Petroleum Products Tonnes Change (%) (000) 16.4 -0.1 percent per annum. Thus consumption of gas.2 7.911 -0.8 million tonnes of oil equivalent in 2010-11.2 1.4 10.9 -4.0 2005-06 2008-09 2010-11 Oil 32.1 4.894 30.8 LPG 1.4 16.4 5.161.221. As shown in Fig14.3 10.2 Coal 10.6 0.671 9. Electricity (Gwh) 50. The longer term trend suggests that composition of Table:14.132 6.2 6. Since oil is the more expensive fuel because of Pakistan’s imports at the high international prices the share of oil consumption declined by 3.714 -2.2 4. 2007-08 and 2009-10.051.0 percent).Energy followed by oil (29.2 percent of the total energy mix of the country.3 Electricity 16.0 35. electricity and coal has been broadly similar since 2005-06.2 18.8 1.7 Coal M. The relative importance of the various sources of energy consumption of Liquid Petroleum Gas (LPG).3 Source: Hydrocarbon Development Institute of Pakistan The consumption of petroleum products showed a continuous declining trend since 2001-02.277.6 10. the major consumption source of natural gas witnessed an increase in share by almost 4 percentage points during 2010-11 compared to 2005-06.1.0 29.5 1.0 15.2 10.6 10.043 1. 4.421 -18.3 1. 2008-09 & 20010-11 50.9 6.9 16.4 -0.1 percent.0 7.0 45.656 57.622 52.3 16.0 0.847 15.0 20.0 25. Figure 14.4 5.7 10.0 29.2 16.390 -17.3 7.0 Gas 39.3 16.8 Gas (mmcft) 824. 3 7.7 16.595 -2.837 -5.9 -8.608.950 − 56. Table 14.7 Avg.464 4.802 2011-12* 61. mainly due to recovery in economic activity.2 7.1 .240.T* Change (%) (000) 7.275 1.4 .1 -20.2 percent and -8.8 6.740 -54.2 359 13. Agriculture sector represents only Light Diesel Oil (LDO) *: Oil/POL product consumption for the month March 2012 is missing The share of Punjab in consumption has declined from 59.8 7.814 16.5 969 -9.025 6.6 -2.080 2008-09 97 -19.6 957. The industry sector had shown positive growth of 24.2 13.099 3.3 8.596 -5.9 3.2 8.019 -1.7 16.2-a Petroleum Product During the first three quarters of current fiscal year the overall consumption of petroleum products increased to 13.8 6.879 0.141 24.730(e) Source: Hydrocarbon Development Institute of Pakistan *: Million Ton −: Not Available e: Estimated **: Consumption of electricity for AJK and KESC for the months Jan to Mar 2012 is not available 14.9 109 12.2 213.750 6.1 4.91 77.3 1.2 17.6 14.3 142 -22.7 1.7 − -19.1: Annual Energy Consumption Fiscal Year Petroleum Products Tonnes Change (%) (000) 18.5 16.8 6.861 0.982 -2.2 21.3 percent).4 267.3 8.887 Avg.802 − 939.887 -1.1 2010-11 1.2 -40.1 Gas (mmcft) Change (%) Electricity (Gwh) Change (%) Coal M.1 6.5. The transport sector usually consumes high quantity of petroleum products but surprisingly this sector showed a relative small growth of 3. 10 -14.3 919.7 1.913.802 million tonnes in corresponding period of 2010-11 thus posting a positive growth of 0.5 197 -12.421 2004-05 193 -16.0 1.7 9.Pakistan Economic Survey 2011-12 Table:14.6 3.2 226 -11.1 311 -4.2 35.4 323 -12.8 -5.8 8.847 2007-08 121 14.2 14.305 -2.2 1.627 2006-07 106 -17.071 -32.8 years July-Mar 2010-11(e) 13.194 − 5.3 percent during the last fiscal year to 57 198 percent in 2010-11.139 -7.7 2.6 8.9 367 18. Although petroleum products considered as necessary inputs of the power sector.671 2005-06 129 -33.5 1.2: Consumption of Petroleum Products (000 tones) Year House Change Industry Change Agriculture Change Transport Change Power Change Other Change Total holds (%) (000 (%) (000 (%) (000 (%) (000 (%) Govt (%) 000 (000 tonnes) tonnes) (a) tonnes) tonnes) (000 tonnes) tonnes) tonnes) 2001-02 335 -25.6 1.911 2009-10 90 -7.13.4 8.892 0.612 -16.1 6.355 37.7 374 15.7 6.8 18.1 1.2 years July-Mar 2010-11 67.219 22. 10 5.0 19.3 13.879 Source: Hydrocarbon Development Institute of Pakistan (a) High Speed Diesel (HSD) consumption in agriculture is not available separately and is included under transport sector.850 2011-12** 13.131 2010-11 85 -5.384 17.9 8.8 464 24.879 million tonnes in the period July-March 2011-12 compared to 13.960 2002-03 283 -15.8 percent) followed by the government sector (20.082 0.452 2003-04 231 -18.671 -2.3 8. The major decline was in the agriculture sector (40.8 54.542 3.5 1.8 4.157 -9.493 -6.0 -14.5 5.5 985 1.8 1.5 70 -36.5 18.604 -0.6 4.9 184 -6.5 266 -42.0 percent respectively.020 -4.6 41 -29.832. Similarly the power sector and household sector had also shown negative growth in the consumption of petroleum products for the period under discussion posting -5.6 percent.8 9.741 59. There was an increase in the share of Sindh to 24 percent this year as compared .4 1.1 97 18.084 5.6 7.2 percent in the consumption of petroleum products during the period of JulyMarch 2011-12 when compared with July-March 2010-11.3 8.8 325 -9.682 9.1 82 -42. yet the negative growth in power as well as household sector can be attributed to changes in demand behavior toward relatively cheaper alternatives.717 -5.5 309 16.6 58 -16.5 percent during the period under consideration.599.452 26 317 2.7 2. 4 263.8 2.7 34 9.5 2003-04 155 0.4 2006-07 186 8.5 9.269 1.9 36 4.9 -3.6 billion in the corresponding period during 2010-11 thus posting a positive growth of 133 percent during the period under review.8 percent during July-March 2011-12 as compared with the same period during 2010-11.6 -73.5 3.7 years July-Mar 2010185.5 15.4 10.Energy to 21.6 9.2 -2.7 4.8 2009-10 219 2.2 10.6 2.5 10.4 billion cubic feet compared to 0.3 199 .4 3.0 -57. posting a positive growth in gas consumption of 14.4: Share of Provinces in Consumption of Petroleum Products Percentage Share in Total Consumption 70.7 39.0 3.2 11(P) 2011-12 205.1 -1.0 -6.222 1.6 53.2 percent during 2010-11 as compared with 2009-10 and a positive growth of 10.2 27.3 Avg. The transport sectors is the most significant sector.9 23 4.0 -4.3.0 20.8 151 165 193 226 279 307 323 319 334 292 8.7 315 336 470 507 492 434 430 404 367 337 12.0 50. This sector also showed negative growth of 6.8 2002-03 154 6.6 208.5 -6. Kashmir 2010 2011 Source: Directorate General of Petroleum Concessions (DGPC) Years 14.8 31 6.4 133.1 7 11 16 24 39 56 72 88 99 113 66.9 36 -1.6 29 7. the consumption of gas in the cement sector was 1.6 22.5 -12.0 17.5 8.5 29. The share of Balochistan and Khyberpakhtunkhwa (KPK) remained constant over the last four years with Balochistan having a relatively higher share than KPK in the consumption of petroleum products as is evident from the figure below Figure 14.5 12.1 -42.4 -27.7 1.8 -1.9 159.9 27.3 2004-05 172 11.5 825 872 1. 10 5.7 2.3 17.2 39.0 Punjab Sindh Balochistan KPK 2008 2009 A.1 4.0 957.275 1.0 10.223 1.1 23.4 37 4.3 166.1 166.161 1.0 -15.8 940.0 40. The industrial sector experienced a decline in consumption of gas and posted a negative growth of 12.1 (P) Source: Hydrocarbon Development Institute of Pakistan P: Provisional 7 3 8 13 15 15 13 7 2 1 0.0 5.0 -11.2 14.4 percent last year.J.5 2005-06 171 -0.3: Consumption of Gas (Billion Cft) Year Household Change (%) Commercia Change l (%) Cement Change (%) Fertilizer Change (%) Power Change (%) Industrial Change (%) Transport (CNG) Change (%) Total 2001-02 144 2.0 -9.0 27 12.0 30.2 2.0 2.278 1.4 0.6 40.241 0. The analysis of the sectoral consumption of gas indicates that during July-March 2011-12.9 7.7 62.6 24 4.4 90.6 1.4 8.1 59.9 2007-08 204 9.8 254.0 60.051 1.4 2008-09 214 4.2-b Natural Gas The consumption pattern of gas by different users since 2001-02 is presented in Table 14. Table 14.5 percent during 2010-11.1 0.6 223.1 6.9 178 181 185 190 198 194 200 201 220 228 1.1 45.2 -8.1 2010-11 232 5.0 0.2 5.8 percent during July-March 2011-12 when compared to the same period during 2010-11.1 22 4.8 81.1 54. 1 14.6 19.5 4.7 14.0 20.2 7.0 4.348 8 GWh in 200 0910.2 5.2 15.4 54.7 8. c Figure 14.5 0.0 3.2 Sou urce: Directorate General of Petro oleum Concession ns (DG GPC) Table 14.8 2. industrial and d sector also sh how negative growth of -13 3.6 3.0 percent resp pectively (Ta able 14. 35.1 6.5 3.4 10.5 7 7.7 10.7 20.7 4. KPK 11.9 5.3 3.0 40.099 GW Wh as compa ared to 74. Kashmi ir' 2 2007 2008 2009 Balochis stan' 2010 2011 S Source: Directorate e General of Petrol leum Concessions s (DGPC) Years 200 .0 -7.9 5.8 8 8.3 6 6. .7 77099 Avg.6 21.7 7. commercial.4 14.5: Share of f Provinces in Con nsumption of Natural Gas Sin ndh's Share e. 4.4 3.0 50.7 19.7 262 7.4 1 percent and Baloch histan 5.5 2.4 Balochistan's Share.1 3. -10 0.2 7.0 10.2-c Ele ectricity The elect tricity consum mption during g 2010-11 was w 77.2 4.2 %) follow wed by Sindh (35.9 7 7.0 30.6 6.3 -6.2 458 6.9.2 pe ercent.0 5.7 74348 2010-11 1 35.5 pe ercent share in n electricity consumption.8 6 6.0 5.4 6 6.7 415 7.7 1. 7. 10 years 4.4).9 4.1 15. the share of o Punjab in the consumpti ion of natural gas in 2010-11 is higher (53.2 5.3 -4.7 -11.1 and -7.5 5.1 244 15.2 5.8 3.7 11.6 14.4: Co onsumption of Elect tricity by Sectors Year T Traction Househ hold Comme ercial Indu ustrial Agr riculture Street Light Other Govt.4 8.2 8.J.9 353 15.3 212 -0.7 91.1 6.1 10. Dur a 2011-12 agriculture.6: Share of Prov vinces in Cons sumption of E Electricity Percentage Share in Total Consumption 70.7 3.2 3.4 -2.6 1.3 -4.7 11.8 9. Punjab's s Share.3 July-March 2010-11 (e) − 25.5 16.7 15.6 323 0.Pakistan Economic E Sur rvey 2011-12 2 Like petro oleum product ts.8 6.0 7.0 0.5 305 16.8 3.6 9 9.6 7. howev ver during the e period July-March 2011-12 its consum mption decrea ased to 54.4 4.8 4.6 4.3 8.3%).0 -7.9 12.194 2011-12* 1 24.0 72712 2007-08 8 33. 53.5 3.595 5 GWh from 56.9 52656 2003-04 9 25.4 percen Figure e 14.8 3.9 14.2 -10.6 321 3.9 8 8.5 4.8 2.6 17.4 70371 2009-10 2 34.8 18.8 57491 2004-05 12 27.3 67603 2006-07 12 33. household -11. Total (GWh) ( Change GWh Change C GWh Change GWh Change GWh Change GW Wh Change GWh G (0 000) (%) (000) (%) (000) (%) (000) (%) (000) (%) (%) 2001-02 11 23.8 6.4 3. Baloc chistan and KP PK respectively have smaller shares of 7.3 -5.1 5.8 387 9. It shows that this shar re has remain ned almost constant in all provinces over time e.1 5.6.7 61327 2005-06 13 30.7 -13.5 56.9 21.3 73400 2008-09 5 32.4 7.0 4.6 5.6 5.6 6.1 9 9.0 7.1 3.6 8 8.0 006 20 Pu unjab S Sindh K' KPK A.0 60.2 456 -0.3 KP PK's Shar re.5 430 3.1 percent and a nt. Sindh S 20.595 Source: Hydroc carbon Development Institute of Pakistan n (e): Estimated *: * The electricity con nsumption data of AJ JK and KESC for the e month January to March M 2012 is not ava ailable The sha are of the provinces in electric city consumpt tion for the la ast four year is shown in the t figure bel low. 194 GWh in correspond ding period 20 010-11 posting a ring July-Mar rch decrease of almost 3 percent.7 -1.0 50622 2002-03 10 23. 4.4 19.2 1. On average e Punjab has 62 percent.2 4.6 4. 8 0.06 4. −: Not Available estimated 201 .9 4.372 TOE compared to 0.2 6.0 162 1. The reason for the high share of consumption of coal in the cement industry is due to switching over to coal from furnace oil which has increased the utilization of indigenous as well as imported coal (Table 14.2 2.36 0.6).0 204 4.25 2004-05 55.1 0.4 7.002 59.078 42.275 39.37 2.5 4.6: Primary Energy Supply and Per Capita Availability Year Energy Supply Per Capita Million TOE Change (%) Availability (TOE) Change (%) 2001-02 45.0 -4.Energy was consumed by the brick kiln industry during the period 2010-11.139 − − 97 1.6 2.7 2.274.25 2002-03 47.850. 10 years Jul-Mar 2010-11 − − 44.26 2010-11 64.3 0.3 percent during current year when compared with last year.717 0.0 25. Due to population growth rate of almost 2 percent.607 53.305.36 -5.894 1 0.0 185 3.39 2.500.289 54.5 1. The longer term trend analysis shows that for the last ten years.85 8.38 -2.4 0.0 249 5.0 113 1. about 60 percent of total coal was consumed by cement while 39 percent Table 14.0 2.0 Source: Ministry of Petroleum Natural Resource & Hydrocarbon Development Institute of Pakistan −: Not available P: Provisional Household Power Brick Kilns Cement Total (000 (000 metric Share (%) (000 metric Share (%) (000 metric Share (%) (000 metric Share (%) metric tonnes) tonnes) tonnes) tonnes) tonnes) 1 0.00 2003-04 50.55 -0.278 41.5 3.34 6.451 56. The major user of coal are the cement sector and brick kilns. Pakistan’s coal generally ranks from lignite to subbituminous.581 35.6 8.065 − − 180 2. the cement sector and brick kilns have been the highest consumers of coal.52 2.06 4.4 0.343 43.8 7.222 54.578 58.2-d Coal Pakistan has huge coal resources estimated at over 185 billion tonnes.111 1 0.32 -1.0 -31.2 52.617 59.371 TOE in 2010 posting a positive growth rate of 0.7 3.6 0.00 Source: Hydrocarbon Development Institute of Pakistan.2 6.2 2. identified at Thar coalfields in the Sindh province. the balance between energy supply and emerging needs was outset.5: Consumption of Coal by Sectors Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(P) Avg.0 2011-12(P) − − 56. on average.58 9.5).3 2.0 14.88 2005-06 58.3 0.3 5.9 4.6 3.9 4.16 percent (Table 14.5 3.3 3.894 − − 149 1.004 38.0 5.714 1 0.6 3.1 3.2 7.3 Supply of Energy Primary energy supply has increased by 2.0 4. The availability of energy per capita in 2011 remained 0.07 1.9 5.70 2007-08 62.63 2008-09 62.761 37.62 4.0 2.5 2.3 3.7 3.907 49.5 8. Table 14.32 0.390 − − 126 1.5 0.3 3.807 48.890 1 0.36 5.3 7.008 61.400.09 0.78 2006-07 60.38 2.187 61.005 36.56 2009-10 63.5 4.92 3. including 175 billion tonnes.2 10. 14.5 0.0 164 2.589 42.730.5 45.409 1 0.9 0. 7 -2.4 2003-04 80.4 2010-11 75.2 2.4 -16.2 80.0 5.110.2 2.4 4.9 7.7 -20.3 Source: Hydrocarbon Development Institute of Pakistan (HDIP) (a): Billion cubic feet.1 Avg.6 2007-08 90. The power sector was allowed to transfer the cost of power to the consumers through the ` ` 202 .9 21. 20 billion is in process for payment of overdue of Independent Power Producers (IPPs) / Gas Companies/ Pakistan State Oil (PSO) etc to overcome/reduce the Circular Debt.2 1.8 19.8 -6.9 7.9 6.9 14.1 5. The government has made all possible attempts to address this issue. (e): Estimated *: Coal and electricity data is estimated on the basis of six months **: Hydel generation for the month of March 2012 is missing.9 1.2 -2.5 Year July-Mar 2010-11(e) 56.7 4.6 16.400.7 -0.0 billion have been raised from the banks in March 2012 and paid to Independent Power Producers (IPPs) by PEPCO.5 1. With the approval of the Cabinet.6 12.9 2. respectively.9 20. electricity.1 8.4 7.3 8.460.4 6.0 69.3 6.1 93.7 14.4 2.7 21.7: Composition of Final Energy Supplies Year Crude Oil Petroleum Gas Electricity Coal Products Million Change (Mln.3 5.5 -2.3 4.482. weak governance and costly fuel mix putting an extra financial burden on meeting the cost of fuel oil due to constant increase in the oil prices. The major problems which cause accumulation of circular debt were the partial transfer of tariff as determined by National Electric Power Regulatory Authority (NEPRA).9 4.6 923.1 27.1 18.7 0.5 2.9 11.164.5 2006-07 85.344. The government has transferred bank loan liabilities of Rs 216.9 -14.0 1.6 -0.4 2004-05 85.7 2005-06 87.0 4.0 98.6 4.1 17. funds amounting to Rs.1 percent and 0.9 7.1 1.Pakistan Economic Survey 2011-12 Analysis of the composition of final energy supplies in the country suggests that the supply of coal during last ten years grew at an average rate of 7.9 1.5 18.0 .9 992.1 1.5 2.8 85.) Change (bcf)(a) Change (000Gwh) Change (Million Change Barrels (%) (%) (%) (b) (%) Tonnes) (%) 2001-02 75.8 7.9 -2.9 64.1 1. heavy line losses (present level of line losses are almost 20 percent).8 94.2 1.114 billion from the books of power companies and placed these amounts with the Power Holding (Pvt) Ltd (PHPL) in November.1 4.0 billion (as of 30-06-2009) and Rs.3 1.9 2011-12 (e) 53.6 4.7 3.7 5.2 8.3 -2.6 7. 85.9 6 22.8 -10.3 -1.7 percent.4 percent.8 2008-09 86.5 6. 120 billion as tariff subsidy to Pakistan Electric Power Company (Pvt) Ltd (PEPCO) over and above the budgetary allocation to overcome its operational shortfall and relax the Circular Debt. Thermal Generation from WAPDA for the months of Feb to Mar 2012 is missing The main hurdle in the supply of energy was accumulation of the massive circular debt. incomplete corporatization. ` During 2010-11 the Finance Division released Rs. 142.413.6 16.8 0.471.8 -4. petroleum products and crude oil with average growth rates of 5.4 75. etc.2 16.4 7.5 95. Table 14. 2011.8 2009-10 76.8 1.4 percent. 65 billion as well as Rs. (b): Giga Watt hour .5 percent per annum followed by gas. 10 0. Another transaction for raising funds to the tune of Rs. 3.1 -4.9 95.9 -4.9 31.454.T.9 1.8 1.8 -7.7 72.9 11.6 1.5 10.8 9. The government has repaid these loans to the bank along with markup.202.5 7.3 5.1. 2.3 2002-03 76.7 -6.1 19.8 6.4 91. During the period under review.28 (53 percent) barrels and 31234.841 Source: Corporate Finance Wing 2010-11 346. the following Tariff Differential Subsidies have been released during the period: Table 14. 2011 have been estimated at 247.1 million TOE.9 percent was locally extracted. The company wise detail of production of crude oil during July-March 201112 and corresponding period of the last fiscal year is as given below: 203 .000 100.000 300. out of which 68.7: Inter Corporate Circular Debt for period July-March 2011-12 350. in billion) 2008-09 2009-10 109.3-a Crude Oil The total supply of crude oil for the fiscal year 2010-11 was 75.8: Tariff Differential Subsidies (Rs.250 Because of the policy implementation by the government the inter circular debt has shown a declining trend over the period July-Mar 2011-12 as shown in figure below: Figure 14.1 percent was imported and 31.3 million barrels. equal to 10.53 million barrels in the country.000 50.05 percent. The balance recoverable reserves of crude oil in the country as on December 31st. showing an increase of 0.173 178. production of crude oil has increased by 14.000 250.000 Rs in Million 200.11 percent from northern region whereas production decreased in southern region by 16 percent. as compared to same period last year overalls 0.000 150. During July 2011 to March 2012.33 percent) barrels produced per day respectively in the same period last year. as against 34762.096 2011-12 (upto Mar-12) 93.05 percent oil production increased in the country.22 (47. The average crude oil production during July 2011 to Mar 2012 remained 66032 barrels per day as against 65997 barrels per day during the corresponding period of last year.000 0 Jul Aug Sept Oct Nov Dec Jan Feb Mar Source: Corporate Finance Wing Intercircular Debt July-March 2011-12 14. ` To enable the Power Sector to meet its cash shortfall.Energy tariff increases of 6%. 1st April and 1st October 2010. 12% and 6% at the start of the three quarters on 1st Jan. 39669 (60 percent) barrels per day were produced in northern region and 26364 (40 percent) barrels per day in southern region. 234.44 18.22 18.09 52. Balochistan’s share remained very small and constant at around 0.8: Share of Provinces in Production of Crude Oil 70 Percentage Share in Total Production 60 50 40 30 20 10 0 2006 2007 2008 2009 Years 2010 2011 Sindh Punjab KPK Balochistan Source: Directorate General of Petroleum Concessions (DGPC) 204 .26 2.09 Change (%) -1.58 886.83 0.526.34 165.996.12 5.228.38 3.00 4.90 1.6 percent which is the second highest amongst the provinces in 2010-11.52 7.38 18.130.327.47 − 31.89 63.26 54.844.22 -4. The share of KPK in crude oil production increased from 5.29 66.866.15 -2.50 16.30 49.23 327.18 3.06 6.21 8.34 7.66 2.15 65.615.363.30 114.98 17.20 The share of Sindh in the total production was 46 percent during 2010-11 with a declining trend seen over the last four years.16 332.72 -58.16 7.34 8.498.55 107.28 211.48 21.59 193.668.47 680.84 26.85 -1.306.401.74 207.1 percent during the last four years as shown in the figure below: Figure 14.86 65.41 1.28 355. Initially the share of Punjab in the production of crude oil declined in 2009 after which it has became almost static.57 -3.87 − 30.315.31 2.59 8.14 8.97 6.487.330.036.27 658.925.646.18 July-Mar 2010-11 34.16 2.140.10 − 2.46 69.236.27 6.82 402.169.032.89 1.762.9: Production of Crude Oil (BOPD) Region Northern Region Dewan Petroleum (Pvt) Ltd Oil & Gas Development Company Limited (OGDCL) Orient Petroleum International Inc (Opii) Pakistan Oilfields Limited (POL) Pakistan Petroleum Limited (PPL) MOL Pakistan Oil & Gas Co Mari Gas Company Limited (MGCL) Southern Region Oil & Gas Development Company Limited (OGDCL) BP Pakistan Exploration & Production Inc (BP) Pakistan Petroleum Limited (PPL) BHP Petroleum Pakistan (BHP) OMV (Pakistan) Exploration (OMV) eni Pakistan Limited (eni) Mari Gas Company Limited (MGCL) Petroliam Nasional Berhad (PETRONAS) Total: Source: Ministry of Petroleum & Natural Resources 2010-11 35.73 4.24 2.40 5.Pakistan Economic Survey 2011-12 Table 14.362.21 18.50 July-Mar 2011-12 39.64 3.233.3 percent in 2005-06 to 32.138.411.71 1.367.19 2.625.498. 12 0.9 percent followed by Furnace Oil (FO) having 25. 8.8 percent.19 Fig-14.00 Non-Energy Products 0. Directorate General of Petroleum Concession. Energy products include Motor Spirit.9 percent respectively.07 Non-Energy Products Energy Products 0.00 2.00 Non-Energy Products Energy Products 1.50 2.7 percent in the import of petroleum products. Out of 9.37 million tonnes while total export of petroleum products were 1. thus posting a negative growth of 1. Light Diesel Oil (LDO).42 Energy Products 0.40 million tonnes compared to 9.00 0.00 Non-Energy Products Refineries Attock Refinery BYCO Petroleum Dhodak Refinery National Refinery Ltd Pakistan Ltd Ltd Ltd Pak-Arab Refinery Ltd Pakistan Refinery ENAR Petroleum Ltd Refining Facility (EPRF) Source: Oil Refineries.00 Percentage Share total production of petroleum products (energy and non-energy) remained 9.80 Naphtha High Speed Deisel (HSD) 3.57 Table 14.50 1. Motor Spirit and High Octane Blending Component (HOBC) together have 13. Asphalt. Benzyne Toulene Xylene (BTX). (Million Tonnes) Quantity in million Tones 0.53 million tonnes during 2009-10. Naphtha and Liquefied Petroleum Gas (LPG) hold 8.004 0. During the period July- March 2011-12 there was a negative growth of 27 percent in the export of petroleum products and a positive growth of 37.60 Jet Propellant (Aviation Fuel) JP-1 Low Sulphur Furnance Oil 1.91 million tonnes are energy products while 0. Kerosene.00 1. High Speed Diesel Oil (HSD).02 Non-Energy Products Energy Products 0.37 Total Source: Hydrocarbon Development Institute of Pakistan 205 .50 3.10: Imports and Exports of Petroleum Products Imports Exports Quantity in Products Products million Tones 100 Octane Aviation Fuel (100LL) 0.02 1. 3. During 2011 the 3.58 0.3 percent while Aviation Fuels.70 0.49 million tonnes are nonenergy products.78 High Speed Deisel (HSD) High Sulphur Furnance Oil 5. This is shown in Table 14.6 percent and 1.02 Non-Energy Products 0. These products are further classified into Energy and Non-Energy products.57 million tonnes in 2010-11.36 percent.3-b Petroleum Products Petroleum products are produced from the processing of crude oil at petroleum refineries and the extraction of liquid hydrocarbons at natural gas processing plants.39 Non-Energy Products Energy Products 1. while NonEnergy products include Lube Oil. Directorate General of Oil and Directorate General of Gas The total import of petroleum products were 12. Process Oil. Furnace Oil (FO).79 0.01 Energy Products 0. In these products diesel has the highest share of 34. Solvent Oil.06 Furnance Oil Motor Spirit 1.13 Motor Spirit Total 12. Mineral Turpentine (MTT). Wax and Sulphur etc. Aviation Fuels.50 0.3 percent share in the total production of petroleum products.9 percent.Energy 14.92 0. Naphtha and Liquefied Petroleum Gas (LPG).10. Jute Batch Oil (JBO).9: Share of Refineries in Petroleum Products Productions during 2011 1. High Octane Blending Component (HOBC).64 0. Non-Energy products together have 5.40 million tonnes 8.10 Energy Products 0. Natural gas is used in general industry to prepare consumer items.08 468. (i).59 786.88 27.14.60 Change (%) 11. Currently 27 private and public sector companies are engaged in oil and gas exploration & production activities.17 -4.13 478.20 − 10.85 4. it is used in transport sector and most importantly to manufacture fertilizer to boost the agricultural sector.43 130. the allocation of gas to the public sector plants were allocated on as-and-whenavailable basis. Inc Mari Gas Company Limited (MGCL) Oil & Gas Development Company Limited (OGDCL) OMV (Pakistan) Exploration (OMV) Orient Petroleum International Inc (Opii) Pakistan Oilfields Limited (POL) Pakistan Petroleum Limited (PPL) Tullow Oil Plc (Tullow) Petroleum Exploration (Pvt) Limited (PEL) BP Pakistan Exploration & Production Inc (BP) Petroliam Nasional Berhad (PETRONAS) MOL Pakistan Oil & Gas Co Total: Source: Ministry of Petroleum & Natural Resources 2010-11 392.32 17. out of 27 million households. natural gas became a scarce resource because of major use in the domestic.24 28.52 301.20 -9. to produce cement and to generate electricity. 87 percent of its demand is met through local production.36 0.95 4.52 13. The rest is imported. Company wise total natural gas production is as under: Historically.89 28.09 6.44 20.235. With the significant increase in international prices of furnace oil. However. in Pakistan. showing an Table. However. the gas companies did not sign longterm agreements with the public sector utilities and subsequently.88 − 502.71 − -11. initially the power sector retained the lion's share in the allocation of natural gas.026.57 189.64 (Mmcfd) during the corresponding period of last year.38 26.58 0. biomass etc. kerosene.Pakistan Economic Survey 2011-12 14.001 Trillion Cubic Feet.57 percent.38 21.76 July-Mar 2010-11 399.12 443.23 760.3-c Natural Gas The consumption of increasing natural gas is rapidly.24 305. Liquefied Petroleum Gas (LPG): LPG currently contributes only 0.56 increase of 4.01 21.04 4.56 − 509.39 -31. In the form of CNG.50 12. firewood.74 446.78 4.11: Production of Natural Gas (Mmcfd) Company BHP Petroleum Pakistan (BHP) eni Pakistan Limited (eni) Dewan Petroleum (Pvt) Ltd Hycarbex-American Energy.18 402.86 862. This pattern continued for a considerable period up to the mid eighties.88 34. the balance recoverable natural gas reserves have been estimated at 24.50 27.33 − 24.050. As on December 31st 2011. approximately 6 million are connected to the natural gas network while the rest are relying on LPG and conventional fuels such as coal.09 20.05 2. with the passage of time.83 13.5 percent to the total primary energy supply in the country.61 13.77 486.06 million cubic feet per day (Mmcfd) as against 4050.031. indigenous natural gas is one of the types of fuel used by thermal power plants while the other type of fuel being imported is furnace oil.87 176.83 July-Mar 2011-12 446.94 313.68 1. This lower share is mainly due to local supply constraints and the higher price of LPG in relation to competing fuels like fuel wood.43 13. The average production of natural gas during JulyMarch 2011-12 was 4236. LPG has thus 206 . However. Thus the allocation of natural gas for the power sector has declined significantly. dung etc.70 -6.05 -4.02 853. fertilizer and transport sectors.58 -3.29 3. Currently.36 552.46 765. 3-d Electricity During 2010-11. out of this 46 percent is produced in the private sector while 54 percent is produced in the public sector.3 0. It is expected that RLNG volume of 1400 MMsfcd will be added to the system.4 90.653 GWh. The three main sources of LPG are. 14. electricity generation was 94.Compressed Natural Gas (CNG): CNG as an alternative fuel for automobiles was introduced in 1992 to reduce the dependency on expensive imported fuel and to protect the environment. 281 tonnes were produced daily during 2012.6 14.1 7. 1.4 10.9 45. sales and marketing of Regassified liquid natural gas (RLNG) / Liquid natural gas LNG. operation.Liquefied Natural Gas (LNG): Realizing the widening gap between demand and supply of natural gas the government is encouraging LNG import through the private sector.7 5. In Pakistan import of LNG is considered to be beneficial for power companies as these companies are importing considerably more expensive furnace oil as input for power.7 9. the government has signed a Memorandum of Understanding (MoU) with Qatar for the import of 500 mmcfd and is exploring other avenues with Algeria and Malaysia which are prospective suppliers of LNG. refineries 32 percent. (iii).3 9. a tremendous growth in this sector was witnessed on account of the price differential between CNG and petrol which led to increase in conversion of vehicles into CNG. According to an estimate presently there are 3. Various investors have shown an interest. Directorate General of Oil (DGO) and Directorate General of Gas (DGG) (ii). During the past few years.476 tonnes. gas producing fields 55 percents and imports 13 percent.6 percent in 2010-11 as 207 . The details are given in the figure below: Fig-14.10: LPG Supplies by Source during 2011 140 120 Annual (000 Tonnes) 100 80 60 40 20 0 National Refinery Ltd BPP (Naimat Basal) OGDC (Chanda) OPL (Ratana) PPL (Adhi) PPL (Hala) JJVL POL Attock Refinery Ltd BYCO Petroleum Pakistan Ltd Pak-Arab Refinery Ltd Pakistan Refinery Ltd OGDC (Dhodak) OGDC (Kunnar) OGDC (Dakhni) OGDC (Bobi) Imports Imports 117. Directorate General of Petroleum Concessions (DGPC). In this context. In this regard OGRA has issued provisional licenses for construction of a LNG terminal.2 60.1 38.6 20.6 20.331 CNG stations operating in the country. The annual total supply of LPG remained 467.7 5.4 Sector Sources of LPG Fields Source: Oil Refineries.3 5.3 6.Energy become a popular domestic fuel for those who live in areas where the natural gas infrastructure does not exist. The contribution of Hydel in electricity generation increased to 33. As a result to meet the growing demand a significant increase in CNG stations was witnessed. Pakistan Economic E Sur rvey 2011-12 2 d to 29.4 per rcent in 2009-10. Since oil compared became an expensive input, its sha are in electric city generation n declined to 35.1 percent as compared d to almost 38 8 percent last year. The sam me was the ca ase for gas. It ts share was 27.3 percent as compared d to 29.4 perc cent of last year. The share of co oal remained stagnant at 0.1 percent. The electric city generation n by source e and comp pany is show wn below: 1 Electricty Generation G by So ource Figure 14.11: mported, Im Nuclear, 3. 0.3% 1% Coal, 0.1 6% Gas, 27.3% Hydel, 33.6 6 % Power Company (K KAPCO) and d the Hub Power P Compa any (HUBCO O) have 8.3, 3.6, 6.2 an nd 9.1 Inde percent t, respectively. ependent P Power Produc cers (IPPs) have contributed almos st 25 percent t as shown in the figure be elow: Fig-14.12: Electricity E Gen neration By Companies Rouch, 3.2 % Uch, 4.5 5% HUBC CO, 9.1% % KAPC CO, 6.2% % Liberty, 1.4% O Other IPPs 15.0% WAPDA A, 48.7% % Sou urce: Hydrocarbon n Development Ins stitute of Pakistan Oil, 35.1% % Source: : Hydrocarbon Dev velopment Institut te of Pakistan PAEC, 3.6% KESC, K 8.3% eneration is provided by y three sourc ces Power ge thermal, hydel and nuclear. There T are 13 ctric facilitie es with inst talled capac city hydroelec 6,481 MW W are owned d and operate ed by the Wa ater and Dev velopment Authority A (W WAPDA) wh hile thermal power plants are a owned by both public and a ompanies. Th he public sec ctor operates 13 private co thermal plants p with installed cap pacity of 4,9 900 MW. Abo out one third of power ge eneration (5,9 987 MW) is provided by y private sec ctor compan nies (Independ dent Power Producers IPPs). Also, KESC operates plants p with to otal capacity of 1,955 MW W. Out of the t total 19,252 MW of o the nation nal installed n capacity, , dependab ble generation generation n is about 17, ,523 MW in the t summer and a about 14,640 in the winter, dep pending on the t annual hy ydrology. During 2010-11, the t Water and Pow wer Developm ment Authorit ty (WAPDA A) remained the t main cont tributor to ele ectricity gener ration with 48 8.7 percent coming fro om this so ource. Karac chi Electricity y Supply Co orporation (K KESC), Pakist tan Atomic Energy E Comm mission (PAE EC), Kot Ad ddu 208 Accord ding to National Transmis ssion and Dis spatch Compa any Ltd, during d July-March 201 11-12, demand d was 18,86 60 MW and supply rem mained 12,755 MW thus cre eating a defic cit of almost 6, 6 000 MW. The T solution to t electricity or o power crisis can be addr ressed in shor rt-term, mediu um-term and longterm. In short-te erm various s technical and admini istrative meas sures must be b implement ted to improv ve operational and manage erial efficienc cy. In this co ontext for rec coveries and theft contro ol, the govern nment has adopted a stric ct measures like legislat tion of high penalties on n electricity theft, requisitioning of ra angers/ frontiers corps to assist in theft ft control and d recoveries, prepaid p mete ers for govern nment departm ments, curbing g of bogus bi ills by Distrib bution Comp panies (DISCOs) audit and vigilan nce and mon nitoring of load manage ement activity y. Likewise, in order to better utilize u hydrop power resourc ces in the co ountry, Wate er and Power Developme ent Authorit ty (Wapda) has awarde ed a Rs164 million cont tract to consu ulting firms MWH M (USA) and Nespak (Pakistan) to carry out a feasibility f stu udy to upgra ade the 1,000 0-MW (megaw watts) Mangl la Power Sta ation. Beside es upgradati ion of Mangla a Power Hous se, 22-MW Ja abban Power House is also o being rehab bilitated at a cost c of Rs. 3. .7 billion. In I addition, the contrac ct for rehabil litation and up-gradatio on of 243 3-MW Warsak k Power Hous se will also be finalized sh hortly. Energy Also Laraib Energy Limited (“Laraib”) is the owner and developer of 84 MW hydroelectric powers generating complex known as the New Bong Escape Hydroelectric Power Complex (the “Project”) on the Jhelum River in Azad Jammu and Kashmir (AJ&K). The Project has the distinction of being Pakistan and AJ&K’s first hydropower IPP. By developing a bankable framework this trendsetting project has paved the way for rapid and full scale development of Pakistan and AJ&K’s hydropower potential. Finally, the United States and Pakistan signed implementation agreements to upgrade three Pakistani thermal power stations at Jamshoro, Muzaffargarh, and Guddu. The rehabilitation, commissioned by the Pakistani companies, will restore approximately 305 MW of lost power generation capacity and bring a measure of relief to the people of Pakistan over the course of the next 12 months. 14.3-e Nuclear Energy Pakistan Atomic Energy Commission (PAEC) is responsible for planning, construction and operation of nuclear power plants in the country. PAEC is currently operating three nuclear power plants i.e. Karachi Nuclear Power Plant (KANUPP) and Chashma Nuclear Power Plant Unit-1 and 2 (C-1 & C-2). The construction of two more units C-3 and C-4 of being 340 MW each is in progress. KANUPP, located at Karachi, completed its design life of 30 years in 2002. After refurbishments and safety retrofits, it is now operating on extended life. C-1 located at Chashma is performing very well since its commercial operation. Third nuclear power plant that is also located at Chashma being an improved version of C-1 had also started commercial operation on 18 May 2011, three months ahead of its schedule. Performance of the operating nuclear power plants of Pakistan is shown in the Table 14.12: The under construction nuclear power plants C-3 and C-4 are of 340 MWe each. The first concrete of these plants has been poured and commercial operation of C-3 and C-4 is expected in 2016 and 2017, respectively. The government has mandated to Pakistan Atomic Energy Commission (PAEC) for the installation of 8,800 MW nuclear power capacities by the year 2030. Technical and engineering infrastructure is in place to provide technical support to existing, under construction and future nuclear power plants. It also has a network of in-house educational and training institutions that encompass all major facets of nuclear science and technology. Table 14.12: Performance of the Operating Nuclear Power Plants in Pakistan Electricity sent to Grid Gross Capacity Commercial Plants Grid Data July-March 2012 Lifetime (billion (MW) Data (million KWh) KWh) KANUPP 137* 18-Oct-71 7-Dec-72 329.1 12.07 C-1 325 13-Jun-00 15-Sep-00 1477.3 22.17 C-2 325 14-Mar-11 18-May-11 1790.7 2.22 Source: Pakistan Atomic Energy Commission * KANUPP re-licensed at 98 MW (gross) after completing design life 14.3-f Coal Pakistan has huge coal reserves which are estimated at over 185 billion tonnes; including 175 billion tonnes identified at Thar coalfields in Sindh province. Pakistan’s coal generally ranks from lignite to sub-bituminous. The total production of coal during 2010-11 was 7.7 million tonnes as compared to 8.1 million tonnes in 2009-10; showing a negative growth of 5.1 percent. In 201011 the import of coal was 4,267 million tonnes compared to 4,658 million tonnes in 2009-10; a decline of 8.4 percent. The long trend shows that there was an increase of production of coal; an average 7.7 percent change occurred in last ten years. 209 Pakistan Economic Survey 2011-12 Table 14.13: Production of Coal, Share and Percentage Change Imports Domestic Production Total Fiscal Year Tones (000) % Share Tones (000) % Share Tones (000) % Change 2001-02 1,081 24.5 3,328 75.48 4,409 9.0 2002-03 1,578 32.3 3,312 67.73 4,890 10.9 2003-04 2,789 46.0 3,275 54.01 6,064 24.0 2004-05 3,307 41.9 4,587 58.11 7,894 30.2 2005-06 2,843 36.9 4,871 63.14 7,714 -2.3 2006-07 4,251 53.9 3,643 46.15 7,894 2.3 2007-08 5,987 59.2 4,124 40.79 10,111 28.1 2008-09 4,652 55.4 3,738 44.55 8,390 -17.0 2009-10 4,658 57.2 3,481 42.77 8,139 -3.0 2010-11 4,267 55.3 3,450 44.71 7,717 -5.2 Avg. 10 years 46.3 53.7 7.7 July-Mar 2010-11 3,500e 59.8 2,350e 40.2 5,850e − 2011-12 2,700c 57.1 2,030c 42.9 4,730c -19.15 Source: Hydrocarbon Development Institute of Pakistan e: Coal data is estimated on the basis of six months c: Coal import is estimated on the bais of six months data while the production from FATA is not available The Federal and Provincial governments are endeavoring to harness the huge coal resources of Thar by utilizing these as a source of energy for power generation through international investment. As part of the promotional activity to increase the share of coal, the Government of Sindh has leased out a coal block for an integrated mining project. The details are as under:1. Government of Sindh has entered into a joint venture with M/s Engro Powergen (Pvt.) Limited for Coal Mining in Block-II and established a Company under Companies Act, 1984 viz. “ Sindh Engro Coal Mining Company” for development of coal mines and installing 600-1000 MW Power Plant 2. M/s Cougar Energy UK limited has been allocated Block-III in Thar coalfield for extraction of under ground Coal Gasification and establishing a 400 MW power plant 3. M/s Bin Daen Group, UAE has been allocated Block-IV in Thar coalfield for coal mine and installing 1000 MW Power Plant 4. One block has been allocated to Planning Commission of Pakistan for a Pilot Project of 50 MW based on Underground Gasification Project in Block-V Coal 5. M/s Oracle Coalfield Plc, UK has been allocated Block-VI in Thar coalfield for developing coal mine and installing power plant of 300 MW extendable up to 1000 MW 6. M/s China National Machinery Import and Export Corporation of China (CMC) conducted a feasibility study for 400 MW integrated coal mining and coal fired power plant at Sonda-Jerrick in district Thatta 7. The Government of Sindh is entering into a Joint Venture with M/s Al-Abbas Group company and allocated an area in Badin coalfield for developing coal mine and installing Coal-fired Power Plant of 300-600 MW 14.4 Performance of Major Oil and Gas Companies ` During 1st July 2011 to 31st March 2012, so far eight (8) oil and gas discoveries have been made in the country. Details are as under: 210 Energy Table 14.14: Oil and Gas Discoveries during July-March 2011-12 Discovery Discovery Date Status Company Mulaki-1 Maru South-1 July-11 August-11 Oil & Gas Gas United Energy Pakistan (UEP) Oil and Gas Development Company Limited (OGDCL) Mari Gas Company Limited (MGCL) Oil and Gas Development Company Limited (OGDCL) United Energy Pakistan (UEP) United Energy Pakistan (UEP) Oil and Gas Development Company Limited (OGDCL) United Energy Pakistan (UEP) Total Depth in Meters 2,080.0 720.0 Current Production Oil Gas (Mmcfd) (BOPD) 92.26 14.68 − − Halini-1 Zin X-1 October-11 December-11 Oil Gas 5,350.0 2,300.0 649.29 − − − Gharo-1 Mohano-1 Suleman-1 February-12 February-12 March-12 Oil Oil Gas 1,334.7 1,727 4,575 501.74 187.65 − 0.04 0.07 − Pir Apan-1 March-12 Gas 2,155 327.28 10.6 25.39 Total 1758.22 Source: Ministry of Petroleum & Natural Resources ` The Councils of Common Interest (CCI) approved Tight Gas (Exploration & Production) Policy, 2011 that offers 40 percent higher price than the price announced in Exploration & Production Policy, 2009, with an incentive of additional 10 percent price if the discoveries are made within a period of 2 years to attract exploration companies to invest in tight gas fields. Tight gas reserves are estimated at 24 trillion cubic feet. Initially 100150 Mmcfd would be added depending on its success rate. Economic Coordination Committee (ECC) has approved Low BTU Gas Pricing Policy, 2012. Petroleum Policy 2009 is reviewed and Petroleum (Exploration & Production) Policy, 2012 is being promulgated shortly. The Ministry of Petroleum & Natural Resources is also working on Shale Gas Policy to encourage the investors to exploit these reservoirs. 14.4-a Oil and Gas Development Company Limited (OGDCL): OGDCL is the local market leader in terms of reserves, production and acreage. It is the first Pakistani Exploration and Production Company to list its shares on the London Stock Exchange. Equipped with a forward looking professionally developed Business and Strategic Plan, competent professionals to implement the same and robust balance sheet OGDCL is ready to take on the challenges of an internationally listed company. OGDCL had spaded 7 wells (1 Exploratory / Appraisal & 6 Development wells) during the period July to December 2011. In the previous year during the corresponding period 7 wells (2 Exploratory / Appraisal & 5 Development wells) were spaded. The details of the Oil, Gas, LPG and sulphur’s production is given below: ` ` ` 211 Pakistan Economic Survey 2011-12 Table 14.15: Physical Performance of OGDCL S. # Name of Activity 1 July-Dec 2010 7 2 5 July-Dec 2011 7 1 6 Change (%) − Total i Exploratory Wells ii Development / Appraisal Wells 2 Production i Oil (Barrels) 6,656,408 (36,176) 6,611,728 (35,933) -0.7 ii Gas (MMcft) 152,934 (831) 158,933 (864) 3.8 iii LPG (MT) 21,646 (118) 17,613 (96) -22.9 iv Sulphur (MT) 12,435 (67.5) 12,750 (69.2) 2.5 Source: Ministry of Petroleum &Natural Resources (MP&NR), Oil & Gas Development Company Ltd (OGDCL) Figures in braces show daily average production 14.4-b Oil & Gas Regulatory Authority (OGRA): The Oil and Gas Regulatory Authority (OGRA) is mandated by the government to regulate the oil and gas sector to promote competition and attract investment. In March 2006, it was also given the task to compute and notify prices of petroleum products as per the Federal Government approved formula. OGRA computes and notifies ex-refinery price of High Speed Diesel (HSD) and Superior Kerosene Oil (SKO) including ex-depot prices of SKO and IFEM (In land Freight Equalization Margin) on monthly basis. Furthermore, OGRA has been assigned to monitor the pricing of petroleum products. OGRA has also been assigned to submit quarterly reports on pricing of petroleum products indicating the trend in international markets and petroleum products pricing announced by Oil Marketing Companies (OMCs)/refineries along with analysis/findings and suggestions, if any, on regular basis to ECC. 14.4-c Sui Northern Gas Pipelines Limited (SNGPL): During 2010-11 SNGPL earned a profit after tax of Rs. 2,361 million and paid an amount of Rs. 1,228 million in corporate taxes. During the current year SNGPL extended its transmission network to a length of 7,613 Km. 14.4-d Sui Southern Gas Company Limited (SSGCL): SSGCL earned a profit after tax of Rs. 4,795 million during 2010-11. During the current year SSGCL extended its transmission network to a length of 3,337 Km. 2010-11 SNGPL 2010-11 SSGCL 218 66 2 80 202 28 231 827 120,159 179 844 121,182 Table 14.16: Physical Performance of SNGPL and SSGCL S. No Name of Activity 1 Sector-Wise Gas Consumption (mmcf) Power 321 Fertilizer 116 Cement 2 CNG/Transport 231 General Industry 302 Commercial 72 Domestic 416 Total 1,460 2 New Connections (Nos.) Domestic 256,172 Industrial 231 Commercial 1,246 Total 257,649 Source: Sui Northern Gas Pipeline Ltd (SNGPL), Sui Southern Gas Pipeline Ltd (SSGC) 212 The status of complaints during July-December 2011 has been summarized below: Table 14.XIV of 2010 dated April 20. As a regulator NEPRA extends advice/recommendations to the concerned entities. including the government. Besides these. charges and other terms and conditions for supply of electric power. 2009 and Ordinance No. through promulgation of Ordinance No.17: Physical Performance of NEPRA (July – December 2011) DISCOS Complaint Sent to DISCOS (1) Redressed by DISCOS (2) Under Process (3) Consumer advised to Total Disposed approach DISCOS off (4) 31 29 6 22 62 116 56 3 52 69 446 (5) = (2) + (4) 95 58 16 45 96 278 159 4 111 83 945 Total Complaints (6) = (1) + (4) 111 58 17 46 99 283 161 4 111 84 974 PESCO 80 64 16 IESCO 29 29 0 GEPCO 11 10 1 FESCO 24 23 1 LESCO 37 34 3 MEPCO 167 162 5 HESCO 105 103 2 QESCO 1 1 0 KESCO 59 59 0 SEPCO 15 14 1 Total 528 499 29 Source: National Electric Power Regulatory Authority (NEPRA) 213 . Since NEPRA determines electricity tariffs in accordance with the Tariff Standards and Procedure Rules. tariff determination on an annual basis and adjustment on account of variation in fuel cost component of consumer-end-tariff is being determined by NEPRA on a monthly basis in pursuance of the Finance Bill 2008. to make the power more efficient and sustainable. Thereafter.5 Performance of Power Sector Authorities 14. During the period July-December 2011.5-a National Electric Power Regulatory Authority (NEPRA) The National Electric Power Regulatory Authority is exclusively responsible for regulating the electric power services and safeguarding the interests of investors and consumers. prescribes and enforces performance standards and addresses the complaints of electricity consumers.XXIX of 2009 dated November 26. The ordinance lapsed in August 2010. NEPRA announced the Upfront Tariff for Wind Power Producers. 13 tariff determinations and 149 tariff adjustments were issued relating to different Generation Distribution Companies. 1998 during the period July-December 2011. NEPRA was mandated to determine the overall electricity tariff on a quarterly basis and intimate the same to the Federal Government for notification in the official Gazette. Upfront tariff for coal based technologies is also in the pipeline and will be announced after consultations with the Private Power and Infrastructure Board (PPIB).2010. transmission and distribution of electric power. out of which 15 were granted generation licenses while the others were at an advanced stage of processing and expected to be finalized soon. NEPRA processed 25 applications for grant of generation licenses for power plants with a cumulative capacity of approximately 600 MW.Energy 14. 2009. one distribution license was also granted.XVIII of 2009 dated July 31. determines tariff rates. Pursuant to amendment in Section 31 of NEPRA Act (XL of 1997). Ordinance No. NEPRA grants licenses for generation. 4320 MW-Dasu.359 MW.500. The . Almost 96 percent work on the main dam at Mangla. Reduction of dependence on thermal power.Pakistan Economic Survey 2011-12 14.5-b Water and Power Development Authority (WAPDA) The installed capacity in the PEPCO system is 20. 7100 MW-Bunji. Some salient features of the dam are given in Box-2: • • • Total installed capacity 4500 MW Availability of about 6.000 acre feet (9. The proposed dam would have a maximum height of 270 m. Of this 4829 MW is owned by ex-WAPDA GENCOs. In an attempt to reduce the energy crises.6 percent compared to 31.7 percent work on Satpara and 72. 1410 MW-Tarbela 4th Extension.000 acre feet (7. thus saving foreign exchange. The dam is being built about 40 kilometres from Chilas on the Indus River and will have a capacity of producing 4. 165 km downstream of Gilgit and 40 km downstream of Chilas. The hydropower capacity accounts for 31. Salient Features • • projects.000 acre feet (7. on priority basis. spillway and allied facilities had been completed and resettlement work is in progress. The hydro generation accounted for 31. Creation of massive infrastructure leading to overall socio-economic uplift of the area and standard of living of people. about 315 km upstream of Tarbela Dam. There is 55-MW of isolated generation capacity in Pasni and Punjgoor areas. Unfortunately the composition of electricity generation shows that the hydro 214 potential has not been utilized fully. with live storage of more than 6.6 percent. 2011. Electricity Generation & Power Transmission Due to alarming increase in fuel prices. 650 by PAEC and rest by IPPs. Minimum operation level having expected length equal to 1060 m. to cope with the increasing demand of power. with hydro 6627 MW and thermal 14. Prime Minister Yousaf Raza Gilani laid the foundation stone of the Diamer Bhasha Dam in GilgitBaltistan on October 18. Likewise 99. The hydro potential which is located in the north is still largely untapped.000 acre feet (6.2×1010 m3).986 MW as of June 2011.1 percent. Mean annual discharge of Indus River at the site is 50.9 percent during 2009-10.000.1 percent on Gomal Zam dam had been completed. the projects such as 969 MW-Neelum Jhelum.89×109 m3) annual surface face water storage for supplementing irrigation supplies during low flow periods.25×109 m3).400. the need for cheaper hydro power has gained more importance.400.500 megawatts of electricity.3 percent and Nuclear 3. 740-MW Munda Dam and most mentionable 4500 MW-Diamer Bhasha Dam Box-2 (Diamer Basha Dam Project) Project The project is located on Indus River. thermal 65.9 percent during July-March 2011-12 accounted 33 percent in total electricity generation while during 2011-11 it came up to 35. 448 MW by rental. WAPDA is executing. and impound a reservoir of about 7.89×109 m3). i). 19: Number of Consumers Year Domestic Commercial Industrial Agriculture Others 2006-07 14.238 5. Of course this can mean such components have been balanced artificially.157.746 68.763 32.229.8 2010-11 32.554 17.603 12.711 2.452 July-March 2010-11 17.368 2. 3 215 .6 87.151.798 2007-08 15.481.Energy trend of hydro-thermal energy generation for the last five years is given in the following table.8 2007-08 28.067 280.354 2011-12 17. It has further gone up 17671 MVA by the end of December 2011 showing an increase of 1177 MVA over June 2011.837 6.122 2010-11 17.268 12. Not only the length of network-lines is important but the transformation capacity of the grid-stations is also of equal value.955. The length of transmission lines was 7367 KM for 220kV and 23995 KM for 132-kV level at the end of June 2010. ii).808. the role of transmission and primary lines network is very essential.259 35. showing a combined increase of 2386 KM.444 Table 14.986.105 36.4 90.667 33.534 67.256.575 1. Similarly. Water & Power Development Authority MVA is MegaVolt Ampere.614 67.221 273.559 19.309.895 63.582.8 86.015 2. Table 14. which as 16494 MVA by the end of June 2011 showing an increase of 1480 MVA.049 282.0 42. National Transmission & Distribution Company Limited (NTDC) Total energy includes import from Iran. if the PF is unity then MVA = MW.9 56.1 89.401 245.837 250.021 12.211 2008-09 15.255.162 236. The transformation capacity of 220 kV substations was 15014 MVA3 at the end of June 2010.445 279. the 132 kV transformation capacity which was 26569 in June 2010 has gone up to 30137 MVA by June 2011 and up to 31016 MVA by the end of December 2011 thus showing an appreciable increase of 4447 MVA over June 2010 figures.928 − 2011-12 22.322.1 84.639 12.404. This has gone up to 7427 KM for 220 kV and 26321 KM for 132 level at the end of June 2011.891 11. However.854.466.5 July-Mar 2010-11 24. During July-March 2011-12 the number of consumers has been increased to 20.255 10.136 270.483 20.942 36.8 2008-09 27.0 45.4 55.12 million in the comparable period of last year.541 2.504 2009-10 16.18: Electricty Generation Year Hydro (Gwh) % age Thermal (Gwh) % age Total (Gwh) % Change 2006-07 31.492 31.123.354.269 -1.962 2.421.362.224 20.5 Source: Pakistan Electric Power Company (Pvt) Limited (PEPCO).377 -2.0 67.945 1. Growth in Consumers.366 18.640 11. The trend of increase in number of consumers during the last five years is given in the following table: Total 16.403 242.140 2. The number of consumers has been increasing due to rapid expansion of electric network to villages and other un-electrified areas. A PF of UNITY suggests that the load is purely resistive with neither capacitive nor inductive components in the load or source.823 64. Gwh : Giga watt hours To carry power from power generation station to the consumers’ network.85 million as compared to 20.316 64.6 58.734 2.312 263.9 60.745 Source: National Transmission & Dispatch Company Ltd.049 284.593 254.2 57.0 66.226.497 20.411 33.2 2009-10 28.673. To convert it into MW one should know the power factor of the system because MVA = PF x MW.507 271.602 66.971 233. 976 52. remained the same with domestic share of 43 percent.283 160.110 2010-11 6.449 74.290 17.203 16. consumption of electricity has increased in every economic group including domestic.298 280 2. During July-March 2011-12.441 127.358 17.0 4.22: Transmission & Distribution Losses of Net System Energy Year Transmission & Distribution (T & D) Losses (%) 2006-07 21.299 8.284 2009-10 29.Pakistan Economic Survey 2011-12 iii).9 2011-12 Source: Water and Power Development Authority Between the period 30th June 2011 to March 2012. industrial 26 percent and agricultural about 12 percent.990 4.20: iv).023 6.700 8. Water & Power Development Authority 216 .695 347 3. Water & Power Development Authority v).558 was the progressive number of electrified villages.8 2011-12 19.255 6.705 164.3 2008-09 21.644 3.208 68.332 8.203 117. Even during the current year 2011-12.035 8. industrial and public lighting which is a positive indication.973 4.371 9.319 54.558 171.485 261 2.0 4.1 2009-10 20.683 17. The measures have given positive signs resulting in the reduction of power losses and increase in revenue.585 372 3.5 3.532 7.691 3.7 2008-09 15. Table 14.680 0. Certain measures such as renovation.827 10. 6.062 152. raise the productive capacity and socio-economic standards of the population living in rural areas.380 340 3. capacitor installation and strengthening the distribution system network are a continuous process for controlling/reducing wastage of power/energy.644 2.9 2009-10 11.716 0.3 5.450 13.137 3.5 2007-08 21.267 12.897 8.765 7.868 137.8 July-Mar 2010-11 19. commercial.483 14.787 4.799 2011-12 23.507 4.942 July-Mar 2010-11 22. the consumption pattern.9 2007-08 9.5 4. Power Losses The National Transmission & Dispatch Company Limited (NTDC) and Distribution Companies (DISCOs) have invoked various technical and administrative measures to improve operational and managerial efficiency to reduce power losses.466 16.456 2006-07 10.072 66.7 2010-11 July-Mar 7. The consumption trend of electricity by economic group for the past 05-years is given below: Table 14.847 3.540 2008-09 27.367 2.198 5.21: Consumption of Electricity by Economic Group (Million Kwh) Year Domestic Comm.014 65.878 2010-11 30.5 Source: National Transmission & Dispatch Company Ltd.0 5. more or less.9 2010-11 20. The trend of village electrification during past 05-years period is provided in Table 14.480 2007-08 28.097 316 3. Electricity Consumption by Economic Group The consumption of electricity by economic group identifies the domestic sector as the largest user for the past many years.090 6. rehabilitation. The Transmission and Distribution losses for the past five years are given below which indicate steady trend of efficiency increase: Table 14.603 8.20: Village Electrification Year Addition Progressive Growth During the Total (%) Year 14.257 Source: National Transmission & Dispatch Company Ltd.Industrial AgriPublic Bulk Traction Supply Total ercial culture Lighting Supply to KESC 2006-07 28.905 67.0 5. Village Electrification The village electrification program is an integral part of the total power sector development program in order to provide basic necessity of life to all the people of Pakistan.751 4. In this regard: ` New wind corridors in areas outside Sindh have also been identified. The main function of PCRET is to develop. Out of these thirty eight projects.457 MW.682 2018 4. Gas.5-d Karachi Electric Supply Company Limited (KESC) The Karachi Electric Supply Company Power Utility has posted earnings before Interest. a total of twelve (12) new IPPs having a cumulative capacity of over 2400 MW have been commissioned since March 2009. Grid Integration Plan 2010 -2015 for wind power projects is developed by AEDB to support National Transmission and Dispatch Company (NTDC). This was also made possible with the improvement in efficiency of the generation fleet through investment in state of the art new plants. Depreciation and Amortization (EBITDA) of Rs. 5. National Grid Code for wind power projects has been amended.0 billion compared to Rs. Along with the AEDB. Cogeneration and Hydel) Independent Power Producer (IPP) projects with a cumulative capacity of around 10. which have come down to 29. With this very objective in view the Government of Pakistan in May 2010 gave the Alternative Energy Development Board (AEDB) the mandate to implement Alternative / Renewable Energy (ARE) commercial projects on its own or through joint venture or partnership with public or private sector entities in addition to its mandates under the ordinance. PPIB is currently processing thirty eight (38) multiple fuel (Oil. This growth has largely been driven by the improvement in Transmission and Distribution (T&D) losses.152 2019 548 Total 10.9 percent on Quarter on Quarter basis. 14. Regional Environmental Study has been conducted by AEDB to support wind power 14. while other companies are aggressively working to achieve the financial close/ commissioning of their respective projects. Tax. the Pakistan Council of Renewable Energy Technologies (PCRET) has also been acquiring and updating know how for the promotion and mass propagation of Renewable Energy Technologies in the field of Solar. all the three Gas Turbines each of 116 MW of the Bin Qasim Power Station- ` ` 217 . adapt.6 percent .5-c Private Power and Infrastructure Board (PPIB) The Private Power and infrastructure Board (PPIB) is a ‘One Window” facilitator to the private investors in the fields of power generation on behalf of the Government of Pakistan (GoP).23 Actual/expected capacity additions of IPPs upto year 2019 Year (MW) Project already 2.6 Alternative Sources of Energy The government in its bid to diversify its energy mix.409 commissioned 2013 459 2014 126 2015 529 2016 552 2017 1.a reduction of 1. Coal.Energy 14.6 percent Year on Year and 2.7 billion during the same period last year. Measures taken by AEDB during this fiscal year AEDB initiated a number of supportive measures that were required to be taken for laying a strong foundations of the ARE sector in Pakistan.457 Source: Private Power and Infrastructure Board II (BQPS-II) 560 MW combined cycle plant have been successfully commissioned and the steam turbine will be successfully operative shortly which will further boost up the profitability of the Company and take the overall KESC generation fleet efficiency to 40 percent. Wind etc. During the 3rd Quarter of 2012. The year wise actual/expected capacity additions of IPPs upto year 2019 are as follows: Table 15. 2. Resource assessment of these corridors is underway and a number of wind measuring masts are being installed in all four provinces. acquire. has been giving due attention to fast track the development of Alternative / Renewable Energy (ARE) resources in the country. promote and disseminate Renewable Energy Technologies in the country. Micro-hydel. (ii) Biodiesel Main achievements in this fiscal year are: 218 ` ` ` Pilot Energy plantations for Biodiesel cultivated on 650 acres under study. Type Present Status Micro-hydel Plants (MHP) in Gilgit 485 units generating 8 MW (electrifying 70. ` ` . AEDB also issued Letters of Intent (LoIs) to 43 IPPs pursuing development of wind power projects. The turbine towers for the first project are being manufactured in Pakistan.000 units 100. Designed & Developed 03 different models of 20. Producing 18000 M3/day 2.000 units. Target 2011-15 5 MW (electrifying 25000 houses) Target 2016-20 20 MW (electrifying 100.000 units. Measures taken by Pakistan Council of Renewable Energy Technologies (PCERT) during this fiscal year The Council had also strived to strengthen its developmental efforts by introducing various projects in the public sector for the development and promotion of suitable technologies to produce materials and devices in the field of Renewable Energy despite the number of hurdles in the development and promotion of renewable energy technologies.000 units 20 MW 1000 Nos. Source: Pakistan Council of Renewable Energy Technology (PCERT) (i) Mega Wind Power Projects In addition to the above mentioned projects.000 houses 4.000 units 5 MW 1000 units 10 MW electrifying 50.000 1.Pakistan Economic Survey 2011-12 projects.000 Tons / annum Capacity has been set up at Karachi.5-10 KW capacity electrifying 1600 houses. 10 MW electrifying 50.000 units (125-260 25000 units 125-260 liters each) liters/day 50. are offering financing to wind power projects in Pakistan. Local manufacturing of micro wind turbine has been started. Some of the notable projects and their status are as under: ` ` Table 15. Issues related to financing of projects have been resolved and now leading financing agencies like International Finance Corporation (IFC). Baltistan. Amendments in OGRA Ordinance for Bio fuels pricing approved. lighting 4000 units.000 Houses) 50.300 Producing 0. Solar Water Heaters Manufacturing through private sector with PCRET Technical services Solar Dryers Manufacturing through private sector with PCRET Technical services Solar Cooker Manufacturing through private sector with PCRET Technical services PV Modules Production Manufacturing through private sector with PCRET Technical services Wind Turbines 100% subsidy Designed & developed 05 different models of SWH for commercialization.24: Projects by Pakistan Council of Renewable Energy Technologies (PCERT) No. First Biodiesel refinery with the capacity of 18. AJK & Khyber Pakhtonkhwa houses) and Canal-falls Biogas Plants Cooking. Manufacturing for large wind turbines is also being initiated. 155 units of 0. SRO 474(1)12008 exempts custom duties and sales tax on Biodiesel production equipment and material. Guidelines for environmental assessment have also been developed. Projects with a cumulative capacity of approx. Land was allocated to 19 IPPs for 50 MW wind power projects each in Gharo Keti Bander Wind Corridor. ` Asian Development Bank has been taken onboard to provide guarantee to the wind power project developers in order to mitigate the country risk.100 & 500 Kg capacities Designed & developed box and dish type solar cookers for commercialization Developed Solar Cell production capacities up to pilot scale. Asian Development Bank (ADB). Biodiesel production initiated with PSO.000 houses 100. Irrigation and power generation 3. Organization of the Petroleum Exporting Countries (OPIC) and Economic Cooperation Organization (ECO) Trade Bank etc. Producing 0.000 units 200. 950 MW are at various stages of development on these lands. 5.300 3 million M3/day million M /day 10. 50. (iv) Small Hydro Productive Use of Renewable Energy (PURE) Project is being implemented to install 103 hydro power plants in Khyber Pakhtonkhwa (KPK) and Gilgit Baltistan (GB). AEDB has issued a letter of intent to M/s Pak Ethanol (Pvt) Ltd. under this program prefeasibility study for 25 hydro sites in AJK.6MW and 2. and Sindh. with the total cost of US$ 19. 6 LOIs for cumulative capacity of 148 MW On-Grid Solar PV power plants have been issued by AEDB. Another 51 villages 219 ` ` (iii) Biogas Projects Pakistan produces a huge amount of municipal waste (up to 50. Public sector Hydro power projects are initiated in (a) KPK (worth U$ 150. Additionally 3 LoIs of 70 MW capacities have been issued by Punjab Power Development Board (PPDB).S Trade and Development Agency (USTDA) is being carried out for Karachi to generate 5-10MW power.5 million. to set up a 12MW power plant at Jhang based on agricultural waste like cotton stalk.000 tons / day) and agricultural waste in the form of Biogas.64MW) and (c) Gilgit Baltistan (worth U$ 71. Solar Village Electrification Program was initiated under the Prime Minister’s directive. funded by U. (b) Punjab (worth U$ 138. 4. Pakistan offers lucrative opportunities in this sector in which a number of projects are already being implemented. Another 2 small hydro power projects have been initiated under REDSIP.99 Million. Matli. and Rice Husk etc.941 Million cubic meter gas.14MW has been completed. Another Waste to Energy Study. So far Pakistan Council of Renewable Energy Technologies (PRET) has installed 4015 biogas plants (with net generation capacity of 17980 M3/day) on cost sharing basis throughout the country. The Government of Punjab has issued LOIs to private investors for establishment of 10 small hydro projects with a cumulative capacity of 142MW at different locations in Punjab. AEDB has issued a LoI to set up a 12MW Biomass to Energy power project in Sindh.04MW. of 26MW and 4MW (v) Solar In Solar Energy.Energy ` Proposal for undertaking a feasibility study to set up 10. A World Bank funded project for carrying out a detailed study for Biomass / Waste-to-Energy projects in 20 cities of Pakistan has been initiated. 1. Task force for barrier removal established.12 Million. Registration of Jatropha seeds under process rice husk.38MW.82MW. Another project for 250 plants is under preparation for the same areas.7 Million kg of carbon dioxide abatement.567 Million kg of manure and 4.000 tons per annum Biodiesel production facility is in search of funding. AEDB has initiated a program with the assistance of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) support to assist the provinces to solicit private investments in small hydro sector. biogas. of 17. 2. of 5. Barriers to implementing Biodiesel Policy identified at the National Stakeholders Conference. 36. based exclusively on Biogas / Agricultural Waste. The project is jointly sponsored by investors from US and local entrepreneurs. Converting this waste into energy can generate up to 5. 234 biogas plants have been installed. .0MW. Punjab and KPK with the cumulative capacity of 284.74 Million. sugarcane trash.000MW of power. Eight hydro projects have been initiated under the Renewable Energy Development Sector Investment Program (REDSIP) with the support of the Asian Development Bank (ADB). Cotton Sticks. the SSJD Bio Energy. In addition the Council has installed 30 commercial size biogas plants ranging from 50-250 M3 by executing technological support for irrigation and power generation. During the period in reference.16 MW and 7. PCRET has installed 1000 biogas plants of 5 cubic meters each with annual production of 1. The sponsors are preparing feasibility studies. Sindh. These projects are being implemented in KPK and Punjab with an estimated cost of US $ 290 million. Sindh. 4. to set up a 9 MW biogas power project at Pak Ethanol (Pvt) Ltd. wheat chaff and other crops as multi-fuel sources. Three thousand Solar Home Systems have been installed in 49 villages of district Tharparkar. Another LoI has been issued to M/s Lumen Energia Pvt Ltd.6 MW). the government is working tirelessly to ensure such problems are remedied. coal. In this context the government held two National Energy Conferences in 2011 and 2012. AEDB is also doing the Parliamentarian Sponsored Village Electrification Program and has so far prepared and submitted 27 feasibilities for approval.Pakistan Economic Survey 2011-12 in Sindh and 300 villages in Balochistan have been approved for electrification using solar energy and will be implemented shortly. These government’s policies aim to meet the demand fully with an emphasis on exploration of indigenous resources including hydel. Sectoral deficiencies are being improved. Home Secretary at the provincial and the District Coordination Officer (DCO) at the district level for expeditious disposal of electricity theft cases. With energy shortages as a main challenge. With a growing economy and the desire for vast production and consumption across the country. Also cases related to power thefts will be registered and immediate action against the culprits will be taken. Pakistanis have been in increasing in demand across the various areas of energy sources. These hope to continue and expand in coming years ` ` ` 220 . To ensure the smooth supply of power the government will allocate additional gas to power companies. Upfront tariff for all types of fuels by NEPRA and tariff increase of 12 percent Expedite conversion IPPs/GENCOs to coal of steam based ` ` ` ` Conclusion Energy needs are indelibly linked to Pakistan’s economic and sustainable growth capabilities.. prepaid meters in all federal and provincial government buildings will be installed. Reduction in number of working days for government offices along with implementation of street-light conservation plan as recommended by the Ministry of Water and Power. For saving energy the government has decided to have different office hours during winter and summer time. Provinces to help in prompt registration of FIRs. Given the need for energy. Allocation of additional gas to the power sector (ideally 207mmcfd giving 1000MW) Subsidy for solar agri tube wells through easy financing ` The government will also cut power supply to advertisement billboards and would replace all the regular bulbs with energy-savers. e. To address the present energy crises the following recommendations were made: ` ` Equitable load shedding among all provinces. Closing down of all commercial centers throughout the country at 8pm except for weekends. domestic gas and renewable and imported energy in a timely manner. designating special magistrates and nominating focal persons. the Government of Pakistan is doing the utmost to promote renewable energies. the energy demands remain high. various energy sources and energy efficiency. To limit the use of energy by government offices. Institutions are strengthened and private sectors’ involvement is being enhanced to promote the culture of public private partnership leading to lessen the burden on public resources. There are various projects that speak to the endless possibilities of building up Pakistan’s renewable energy sources.g. Funds for three schemes have so far been released under People Work Programs-II PWP-II and the schemes are being implemented. the unstable law and order situation in the country and struggle against extremism put severe strains on the government’s finances. potatoes. affecting approximately 20 million people directly and a much larger proportion indirectly. The rise in price indices was mainly driven by food inflation. tight monetary policy and regularly monitoring of the price and supply position of all essential items by taking all the provincial governments on board. While a sharp increase in world food prices and international oil prices since 2007 were mainly responsible for the escalation of prices. vegetable and cooking oil rose sharply during 2008-10. Moreover.Chapter 15 Social Safety Nets Background Since 2007-08 the economy has been under considerable pressure due to both domestic and external developments.2 percent for food. which rose rapidly during this period. which though of lower intensity compounded the negative impact on the economy and added to the pressures on prices and the welfare of the people. Inflation which had increased rapidly during 2007-08 by 17. better supply chain arrangements. eggs. Prices of basic food commodities like wheat.7 percent for food items respectively has started to come down. rice. The floods of 2010 were followed by the rains of 2011. This supply shock resulted in high inflation. The global financial crisis hit the country hard when it was already facing a balance of payments crisis stemming from high food and fuel prices in the world markets. This chapter describes the impact of prices on household expenditures and welfare of the people in Pakistan and the steps taken by the government to mitigate some of the adverse effects through the series of safety nets that have been put in place to protect the poor and vulnerable. These adverse developments led to the signing of an IMF Standby Arrangement Programme. The combined effects of the global food and fuel crises adversely affected the economy resulting in unsustainable current account and fiscal deficits and unprecedented high inflation. The government has brought down inflation in the current fiscal year due to a stringent demand management policy. The catastrophic floods of 2010 and 2011 further exacerbated the situation. The floods led to a huge loss of life in 2010. 221 . the huge damage to crops and infrastructure also severely affected the economy at large. According to Pakistan Bureau of Statistics during the period July-March 2011-12 it was 10. chicken. The Effect of Prices on the Welfare of the Poor The inflationary pressure on the economy has increased during the last four years due to a combination of the external and domestic shocks described above. fresh fruits. a number of domestic factors also contributed to the price hike. which disrupted the supply chain and business activities in the affected areas.8 percent for the consumer Price Index overall and 11.0 percent for the consumer price index overall and 23. Moreover. wheat flour. 1: Impact of food price increases on Poverty for South Asia vs.24 0.01 0.0 9.25-a-day Poverty Line) Change in percentage of poor Change in number of poor (in percentage points) with an (in millions) with an increase in food increase in food prices by: prices by: 10% 20% 30% 10% 20% 30% Bangladesh 2.6 3.02 0.71 South Asia average 2.8 10.8 193.5 2.6 75.7 5.4 128. which measures the percentage increase in poverty when food prices increased by 1 percent using the latest POVACL (World Bank) database.4 Sri Lanka 1. 20 percent and 30 percent on the change in percentage of poor and the total headcounts of poor in South Asia.1: Consumer Price Index and Food Inflation 30 27 17.9 6.6 6.2 4.1 6.1 12.4 3.1 29.4% 58.3 0.47 6.8 64.1 4. February 2012 The progress on poverty alleviations its correlates and Millennium Development Goals is presented in Box-1 222 .0 88.1 2.5 59.4 8.5 Bhutan 1.47 0.1 0.9 4. Table 15.0 4.9 3.1 shows the impact of the food prices on poverty for South Asian countries vs.8 7.6 0.8 3.4% poor in developing Asia by South Asia Developing Asia 1.4 3.Pakistan Economic Survey 2011-12 Fig-15.7 18.6 13.2 Source: Food price escalation in south Asia .0 18 15 12 4.3 7.7 11.2 2.4% 58.2 Source: Pakistan Bureau of Statistics 7.6 24 21 12.1 6.9 5.9 It has been observed that South Asia’s poor are particularly vulnerable to food price rises while its economies suffer from higher than average overall inflation when compared to the remainder of developing Asia.8 11.7 Pakistan 2.1 1.9 10. Asian Development Bank. Developing Asia ($1.7 3.2 112.5 5.5 6.3 10.5 3. ADB estimated the price elasticity of poverty with respect to food prices.03 India 2.A serious and growing concerns.0 7.2 37. Developing Asia Table 15.0 CPI 23.6 1.3 17.5 12. The analysis simulates the effect of rising food prices by 10 percent.8 Percentage of increase in total 58.4 9 6 3 0 2011‐12 (Jul‐ Mar) 2000‐01 2001‐02 2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 3.7 Food 10.5 Nepal 2.5 5. The PSLM also reported trends in terms of the water supply and sanitation indicators. slippage on the primary and secondary Net Enrollment Rate is an area of concern for policy makers. Literacy rate (10+) has improved from 57 percent in 2008-09 to 58 percent and adult literacy improved from 54 percent to 55 percent in the same period.11 4. The average per capita expenditure is almost the same for poor in rural and urban areas whereas for the rich class it is higher in urban areas than in the rural areas. Table-15. The Inequality Adjusted Poverty Index is 0. However. Other composite indices place Pakistan at a lower rank. Source: Planning & Development Division Profile of Consumption Expenditure The trends in household consumption expenditure provide an effective insight into understanding the dynamics of poverty in the country. The share of food expenditure is relatively higher compared to the other 223 . with an average of 87 percent in 2011.503 in 2010 and 0.3 compares the percentage of monthly consumption expenditure by commodity groups. The report shows gradual increase in the value of HDI from 0. Whereas the sanitation situation at household level has registered an improvement (in terms of 66 percent of population using flush toilets compared to 63 percent in 2008-09). Immunization of children also improved during 2011. the access to drinking water to urban and rural population of Pakistan is 94 percent and 84 percent respectively.2 reveals the per capita consumption expenditure in urban/rural areas and by quintiles. indicating that more wealth is concentrated in urban areas compared to rural areas.56 4. The committee is working on its task in a professional ways considering all dimensions of poverty and report of the committee will be available shortly.25 Table 15. through Pakistan’s rank has slipped a little during 2011. These indices weight inequality and non-income dimensions of poverty more. A committee of poverty experts has been constituted in Planning and Development Division to estimate Poverty Headcount as well as poverty correlates.2 Per Capita Monthly Household Consumption Expenditure by Quintiles & Region Per Capita Monthly Household Consumption Expenditure Quintiles 2007-08 2010-11 Urban Rural Total Urban Rural 1st 906 868 874 1441 1426 2nd 1216 1208 1210 1985 1966 3rd 1547 1522 1529 2469 2468 4th 2032 1998 2011 3217 3195 5th 4334 3566 3984 6679 5312 Ratio of highest to lowest 4. particularly after devolution of the subject to the provinces. Table-15.346 and multi-dimensional poverty index for Pakistan is 0.264.499 in 2009.Social Safety Nets Box-1 Poverty Alleviation and Millennium Development Goals The UNDP’s Human Development Report.78 4. Pakistan Social and Living Standards Measurement Survey 2010-11 shows mixed results in terms of the education enrolment indicators. The consumption expenditure pattern for different commodity groups shows consistent trend from 2007-08 to 2010-11. while Primary and Middle school Gross Enrollment Rate also registered a one percentage point improvement.504. The average per capita expenditures for the richest class in the urban areas are more than four and half times those of the poor class.73 quintiles Source: Federal Bureau of Statistics Total 1428 1970 2468 3203 6073 4. 2011 ranks Pakistan at 145th with HDI value of 0. Analysis along similar lines for rural areas indicates that these averages are more than three and half times those of the poor class.63 3. Commodity Groups Food.98 2.76 9.66 6.85 4.01 3.22 Mutton 2.12 Chicken 4.45 5.47 Butter 0.17 Milk (fresh) 19.04 entertainment Education 5.74 0.67 2.20 2.05 percent in 2005-06 to 44.61 0.82 21.32 2. For food items the major share of consumption expenditure is incurred on wheat.47 3.33 19.49 0.06 2.95 7.93 12.06 10.90 3. textile.13 19.91 percent in 2010-11.54 0.90 wear Transport & 7. fuel.Pakistan Economic Survey 2011-12 commodity groups.94 9.10 8.92 3.11 6.35 1.58 0.70 3.41 14. Since the international food price hike of 2008 and the domestic shocks following the floods it increased further to 48. lighting etc.87 20.56 3.55 3.71 0.59 Tea 1. Food price inflation and slow growth over a number of years resulting from the combination of international and domestic shocks has led to a greater share of expenditures going to the essential food.93 7.78 Table 15.60 Vegetable ghee 6.33 19.04 7.94 8.91 Total 15.39 1. as expected.91 Source: Federal Bureau of Statistics Urban 35.71 5.3: Percentage of Monthly Consumption Expenditure by Commodity Groups Total 43.42 2.56 6.77 1.05 5.27 3.54 Recreation & 1.47 8.58 2. It had increased from 43. textile.12 1.32 Total 48.01 11.81 7. 2010-11 2007-08 2010-11 Food Items Urban Rural Total Urban Rural Wheat 12.02 Urban 37.09 0.77 4. foot4.29 1.82 16.41 8.09 14.75 8.17 3.22 5.55 14.73 2.52 percent. 2007-08 Rural 48.65 3.49 1.81 8.28 4.99 8.20 Housing (rent & 22.53 2.51 8.57 7.21 4.19 2.35 2.69 3.09 5.12 communication Cleaning & laundry 3. Further analysis reveals that consumption expenditure in apparel.26 22.41 2. milk.13 Table 15. cleaning and laundry has shown a slightly increasing trend as compared to 2007-08.62 0.25 Rice 4.61 percent in rural areas and 78.91 5.64 3.39 Miscellaneous 12.80 3.67 8.95 0.87 2.10 Beef 3.49 6. These items contribute 84.48 3.55 1.51 3.07 16.58 20.95 14.02 3.74 Pulses 2.74 other costs) Fuel & lighting 7. Out of the total food expenditure 17 food items contributed 82.4: Percentage of Monthly Expenditure on 17 major Food Items.17 2005-06 Rural 49.18 3.79 4.90 8.49 13.25 3.54 3. housing.71 3. communication and recreation and entertainment has.55 13. Table 15.10 7.32 1. transport.45 3.04 1.51 3.92 15.82 4.80 percent in urban areas.22 percent in 2007-08.62 224 . Wheat continues to be the major expenditure item in both rural and urban areas and its percentage share in aggregate has increased between 2007-08 and 2010-11.44 3.11 6.23 Urban 41. education.06 5.44 Fruits 4.73 6.87 6.71 5.90 3. Comparison of the same 17 food items with the year 2007-08 shows that the overall expenditure level has slightly increased in both urban and rural areas.4 shows the percentage share of expenditure on major food items.42 0.39 3.52 percent.60 10.83 0.60 0.85 Total 44. drinks & tobacco Apparel.94 shown a decreasing trend since 2007-08 while consumption expenditure on fuel and lighting. vegetables and sugar comprising 58 percent out of 82. and footwear.71 6.30 3.23 2010-11 Rural 54.69 0.82 11.25 2.67 15.08 4.19 7.32 Fish 0.55 0.42 5.01 Vegetable 7. vegetable ghee. Social Safety Nets Table 15.4: Percentage of Monthly Expenditure on 17 major Food Items, 2010-11 2007-08 2010-11 Food Items Urban Rural Total Urban Rural Salt 0.22 0.20 0.20 0.16 0.16 Spices 2.07 1.76 1.88 2.63 2.20 Sugar 4.09 5.14 4.76 5.91 7.74 Gur 0.09 0.43 0.31 0.13 0.57 Total 78.11 83.92 81.83 78.80 84.61 Source: Federal Bureau of Statistics Total 0.15 2.35 7.09 0.41 82.52 Pro-Poor Expenditures The government’s commitment to follow a sustained poverty reduction strategy and a minimum of 4.5 percent of GDP to social and poverty related expenditures is clearly reflected in the allocations to the pro-poor sectors shown in Table 15.5. The government prioritized 17 propoor sectors through the Medium Term Expenditure Framework (MTEF) in the PRSP-II, which provides a link between the policy priorities and the budget realties. Expenditure on pro-poor sectors in 2007-08 stood at 5.57 percent of GDP. In 2008-09, these were 7.46 percent of GDP and in 2009-10, 7.57 percent of GDP. These expenditures were well above the requirement under the law. During 2010-11, total expenditures for these sectors were increased further and amounted to Rs 1245.541 billion, which is 6.9 percent of GDP. Already Rs. 919.564 billion expenditures have been made in these sectors during July-December of the current fiscal year. Box-2 present an overview of social protections programs in Pakistan. (Rs. Million) 2010-11 2011-12* 99,567 30,367 28,506 11,788 322,334 156,990 106,017 46,842 4,861 2,247 55,171 24,934 49,115 27,510 115,511 41,732 3,669 1,616 19,109 12,724 230,945 463,091 0 0 5,049 2,222 21,300 2,902 373 101 14,223 7,151 169,791 87,347 1,245,541 919,564 6.9 - Table 15.5: Budgetary Poverty Related Expenditures by Sectors Sectors 2007-08 2008/09 Roads, Highways & Bridges 84,825 99,613 Water Supply and Sanitation 19,817 22,204 Education 182,646 240,378 Health 61,127 83,714 Population Planning 13,322 5,345 Social Security & Welfare 18,942 29,129 Natural Calamities 7,728 10,083 Agriculture 83,493 88,912 Land Reclamation 3,130 2,738 Rural Development 23,334 16,362 Subsidies 54,872 220,567 Food Support Programme 4,370 12,420 People’s Works Programme-I 1,420 3,329 People’s Works Programme-II 2,748 28,000 Low Cost Housing 597 583 Justice Administration 7820 9,193 Law and Order 2,429 104,658 Total 572,620 977,228 Total as % age of GDP 5.57 7.46 Source: Ministry of Finance * July-December 2009-10 98,456 25,459 259,525 94,399 7,048 54,571 12,548 104,815 1,990 20,391 234,926 0 8,417 31,754 1,828 10,996 143,639 1,110,762 7.57 An overview of social protection programmes of the country is presented in Box-2, which also indicates targeted group of beneficiaries and financing arrangements for these programmes. 225 Pakistan Economic Survey 2011-12 Box-2 Social Protection Programs in Pakistan S. No. 1. 2. Pakistan Bait-ul-Mal 3. People’s Works Program 4. 5. 6. 7. 8 People’s Rozgar Scheme Commercial Bank Financed Subsidy on Wheat, Sugar & Public Funds Fertilizer Utility Stores Public Funds Zakat & Ushr Special levy on bank balances & agricultural output Child Labour and Children Public Funds in Bondage Public Funds Public Funds Program Benazir Income Support Program (BISP) Microfinance Financing Public Funds Donor Funded Geographical Managed By Coverage Cash as Income Support Married females belonging to ultra Nationwide Federal poor households Government Cash as loan for establishing Provide financial services, credit to Nationwide RSPs/MFIs business the poor for self employment and move them out of poverty Cash as income support grant for Disabled persons, invalids, widows, Nationwide Federal daughters’ weddings, food orphans and household living below Government supplement in education the poverty line Cash for Work Provision of electricity, gas, farm to Nationwide Federal market roads, good, water supply Government and other facilities to the rural poor Financing for Selected businesses* Unemployed educated persons Nationwide National Bank of Pakistan In kind as social welfare Poor people of the country Nationwide Federal Government In kind as social welfare Poor people of the country Nationwide Federal Government Cash “Deserving/ Nationwide Government & Needy” among Muslims Zakat & Ushr Committees Protection survival development Working children facing abuse and Nationwide Federal & and rehabilitation services exploitation Provincial Government, FATA, GB Type of Benefit Target Group 9. Contributory Cash Formal Sector Employees Nationwide Federal (Employers) Government Contributory Cash General Population Nationwide Federal 11. (individuals) Government Workers Welfare Fund Contributory Housing, schools, health facilities Formal Sector employees Nationwide Federal 12. (Employers) Government *: Community Transport, Community Utility Sores, Community Mobile Utility Stores and PCO/Tele-Centers with a maximum of Rs 200,000/- three new products including Commercial Vehicle, Shopkeepers and Primary Healthcare Equipments to Medical Graduates, Science Graduates and B-Pharmacy qualified individuals. The maximum limit ranges from Rs 500,000/- to Rs 700,000/10. Employees Old-Age Benefit Scheme Social Health Insurance Social Safety Programmes Recognizing the need to protect the poor and the vulnerable, the government has launched several safety net programs. The following social safety net programs in particular minimize the adverse effects of poverty on the targeted population of the country. I. Pakistan Poverty Alleviation Fund The Pakistan Poverty Alleviation Fund (PPAF) is a flagship element of country’s poverty reduction strategy. It is sponsored and supported by the government with an endowment of Rs. 1,000 million and funded by the multilateral and bilateral donors like World Bank, International Fund for Agricultural Development, KfW Financial Cooperation Germany, US Department of Agriculture, Italian Government etc. The funding provided to PPAF is dedicated for micro credit, enterprise development, community based infrastructure and energy projects, livelihood enhancement and protection, social mobilization, 226 and capacity building institutional assistance for the partner organizations of PPAF. The overall operational and financial outreach during the half year ended December 2011 remained satisfactory. Total disbursements for core operations during the period were Rs. 8,490 million. Loan (micro credit and enterprise development facility) disbursements were Rs. 6,766 million; water and infrastructure disbursements were Rs. 365 million; disbursements for education and health were Rs. 361 million; capacity building disbursements were Rs. 438 million; social mobilization disbursement were Rs. 220 million; and disbursements for livelihood enhancement and protection were Rs. 339 million. In addition to disbursement for core operations, Rs. 576 million (Rs. 273 million from donors' funding and Rs. 203 million from PPAF's own resources) was disbursed for project and flood relief activities. By the end of December 2011, the total cumulative disbursements were Rs. 100 billion. Credit and Social Safety Nets enterprise development accounted for 59 percent of total disbursements followed by relief, rehabilitation and reconstruction activities (20 percent); community physical infrastructure (10 percent); human and institutional development (including social mobilization) (7 percent); livelihood enhancement and protection (1 percent); and health & education (3 percent). PPAF interventions are being carried out nationwide with 50% of the resources deployed in Punjab, 19 percent in Sindh, 16 percent in Khyber Pakhtunkhwa, 4 percent in Balochistan; 9 percent in Azad Jammu and Kashmir; 1 percent each in Gilgit Baltistan and Islamabad Capital Territory. By the end of December 31, 2011, PPAF funding had been disbursed in urban and rural areas of 129 districts of the country (about 297,000 community organizations / groups) through 114 partner organizations of which 12 were focusing exclusively or predominantly on women. On cumulative basis, PPAF has financed 5,352,838 micro credit loans. More than 27,417 infrastructure, health and education projects were initiated and a total of 488,249 staff and community members were trained. In earthquake affected areas, PPAF provided financing to 122,000 households to build earthquake resistant homes and trained over 108,000 individuals in seismic construction and related skills. II. Pakistan Bait-ul-Mal Pakistan Bait-ul-Mal (PBM) is making a significant contribution towards poverty reduction through its various poorest of the poor focused services such as providing assistance to destitute, widows, orphans, invalid, infirm and other needy irrespective of their gender, caste, creed and religion. The following are the ongoing core projects/schemes: a. Individual Financial Assistance (IFA): It is one of its major social dispensation programme to provide financial assistance to destitute and needy widows, orphans, invalid, infirm and other needy persons, to provide for free medical treatment for indigent sick persons, to provide stipend and financial assistance to brilliant but poor students. Under this head PBM has provided financial assistance of Rs. 734.901 million up to February 2012 and 13,171 beneficiaries from all over the country have benefitted from this scheme. b. Child Support Programme (CSP): This is a cash transfer programme, in which cash incentive is provided to the parents for sending their children to schools. Rs. 300 per month is paid to the families with one child and Rs.600 per month to the families with two or more children of school age. Currently the programme is running in 12 districts. An amount of Rs. 66.754 million has been disbursed up to February 2012. c. National Centres for Rehabilitation of Child Labour (NCsRCL): PBM has a proactive child labour rehabilitation policy and number of initiatives has been taken for the better`ment of working children. Efforts have been made to withdraw them from work places with a view to their mainstreaming into education by undertaking programmes for non-formal education. 159 centres have been established throughout the country on which Rs. 248.681 million has been spent up till February 2012. d. Vocational / Diversified Vocational Dastkari Schools (V/DVDS): PBM has established Vocational / Diversified Vocational Dastkari Schools (VDS/DVDS) where poor widows, orphans and needy girls are given training in a variety of skills to make them self-sufficient to earn their livelihoods in a respectable manner. PBM has established 144 VDS and 15 DVDS throughout the country on which Rs. 93.876 million has been spent up till February 2012. e. Pakistan Sweet Homes (PSHs): PBM has established Sweet Homes for Orphans having accommodation for 100 children in each home. A total of 28 Pakistan Sweet Homes (Orphanages) have been established so far on which Rs. 133.475 million has been spent up till February 2012. f. Langer Programme: PBM is also working for provision of assistance to needy persons. It provided ration bags to those affected by natural disasters such as the floods of of Sindh and of KPK. In this regard an amount of Rs. 185.306 million expenditures were incurred up to February 2012. 227 Pakistan Economic Survey 2011-12 g. Institutional Rehabilitation through NGOs: It provides grant-in-aid to registered nongovernmental organization (NGOs) for their projects aimed at institutional rehabilitation of the poor and deserving persons of the society. PBM has disbursed an amount of Rs. 24.383 million in this regard up to February 2012. h. Jinnah Burn and Reconstructive Surgery Centre, Lahore: On 21st May, 2004, Pakistan Bait-ul-Mal, Health Department, Government of Punjab and Jinnah Hospital, Lahore signed a memorandum of understanding for construction of single purpose state-of-the-art burn and reconstructive surgery centre in Lahore. Pakistan Bait-ul-Mal has so far released Rs. 610 million for construction of the centre out of which Rs. 350 million have been released up to February 2012. III. Benazir Income Support Programme Benazir Income Support Programme (BISP) was Box-3 Eligibility for BISP Eligible households are identified through a targeting process, which consists of household surveys and the application of a Proxy Means Test Formula (PMT) that determines welfare status of a family on a scale between 0100. Based on PMT, Nationwide Poverty Scorecard Survey was undertaken in 2010 with following features: ` ` ` ` Resulted in the creation of the largest and most reliable data bank of socio-economic conditions of the country (details at family level) for planning social sector policies and strategies First ever census of its kind in South Asia Covered almost 27 million households in the country Use of GPS devices to map the data of the entire country for informed decision making (to cope with natural disasters and other emergencies) established by the Government of Pakistan in July 2008 with the primary objective of providing immediate relief to the poor enabling them to absorb the shock of rising prices of food and fuel. BISP has evolved over the past few years into the country’s main social safety net. It is committed to the fulfillment of the dream of making Pakistan a welfare state through poverty alleviation and women empowerment. It has made remarkable progress by providing much needed relief to over 4 million recipients including flood and bomb blast victims all across Pakistan. An amount of over Rs 122 billion up to March, 2012 has been disbursed to its recipients. The number of recipients is expected to increase to 7 million once the on-going processing of data collected during the nation-wide poverty scorecard targeting survey is completed. The BISP has launched the following pro-poor activities. Box-3 describes the eligibility criteria for BISP. Families meeting the BISP eligibility criteria listed below are selected for monthly cash transfers: Proxy Means Test (pmt) Score of 16.17 or below anywhere in Pakistan ` ` One woman beneficiary per family Woman is CNIC holder Source: Benazir Income Support Programme Nation-wide Poverty Scorecard Targeting Survey: This survey was launched in October 2010 in all districts of the country, including AJK and Gilgit-Baltistan, with an initial target to cover almost 25 million households. The new system of 228 targeting was aimed at a much higher degree of objectivity, using international best practices, to minimize inclusion and exclusion errors. The use of Global Positioning System (GPS) devices was also made mandatory in this phase to uphold the Social Safety Nets dignity of households by conducting the survey at their doorsteps. The survey will be completed by June 30, 2012 and over 27 million households will be covered nationwide during this exercise. The task for data entry is entrusted to NADRA and data entry of all collected survey forms has been completed. During 2011-12, over 6.43 million eligible families have been identified through poverty scorecard census. It is expected that this figure will reach almost 7 million families by June 30, 2012. Payment to Recipients: During the 2011-12, Rs 24.1 billion has been distributed among approximately 3.5 million - recipients up to March 2012. This included over Rs. 3.95 billion paid Box-4 Innovative Payment Mechanisms used by BISP BISP is using alternate payment mechanisms including Benazir Debit Card, Smart Card and Mobile banking to efficiently make payments of the cash grants to its beneficiaries. 1. Benazir Debit Cards: In order to improve the efficiency of the payment delivery mechanisms and to provide multiple payment mechanism to its beneficiaries for more timely and efficient services, BISP has signed agreements with several commercial banks during the current fiscal year to introduce Benazir Debit Cards for cash transfers in over 122 districts in Pakistan by June 30, 2012. Launched in Feb 2012 (in phases), 650,000 Debit Cards have been distributed and through these cards Rs. 1.95 billion have been transferred to the beneficiaries. BISP has planned to distribute Benazir Debit Cards to over 3.5 million beneficiaries by June 30, 2012. Beneficiaries are able to collect their cash benefits from ATM machines and/or bank designated franchises 2. Smart Card: BISP had signed a contract in early 2010 with United Bank Ltd. (UBL) for making payments to beneficiaries through smart cards in four of the test phase districts (Mianwali, Mirpurkhas, Multan and Sanghar). The beneficiaries were issued Smart Cards, and they collect their cash benefits through bank designated franchises. Over 183,000 beneficiaries are benefiting from this payment mechanism 3. Phone-to-Phone Banking: Another Alternate Payment Mechanism already in place is the Phone-to-Phone Banking (P-to-P Banking). It has been implemented in 7 districts. Beneficiaries are provided free mobile phones and SIM’s. An amount of Rs. 1.7 billion has been disbursed under this payment mechanism to around 137,000 beneficiaries in the piloted districts. through Smart Cards to 182,789 recipients and Rs. 826.38 million paid to about 1.3 million recipients through mobile phone banking. The rest of the cash transfers were made through the Pakistan Post money orders. In order to further improve the efficiency of the payment delivery mechanisms, BISP has signed agreements with several commercial banks during the current fiscal year to launch the Benazir Debit Cards in over 100 districts of Pakistan by June 30, 2012. So far 92,000 Debit Cards have been distributed and an amount of Rs.1.02 billion has been disbursed to the beneficiaries. A total of 4,803,126 Debt Cards are planned to be distributed by June 30, 2012. Box-4 contains the innovative payment mechanism used by BISP. Source: Benazir Income Support Programme Graduation Initiatives: Besides cash transfers, BISP has also launched various graduation programmes for its recipients to enable them to exit from the poverty trap. During 2011-12, the following progress has been made by these programmes: Waseela-e-Haq: Under this programme, microfinance in the form of returnable soft loans up to Rs. 300,000 are provided to recipients, selected through a monthly computerized random draw, for setting up small businesses. During the reporting period, 29 draws were held and a total of 34,807 recipients were pre-qualified. An amount of Rs. 943 million was disbursed to 6,281 recipients while 2,680 new recipients started their own businesses. It is planned to hold another 5 draws by 229 BISP signed MOUs with several public sector training organizations and initiated training for the recipients and their nominees.5 million beneficiary families now have their bread earners covered under life insurance scheme launched by BISP in collaboration with State Life Insurance Corporation of Pakistan (SLIC).7. A comprehensive Health Insurance Scheme covering entire family of BISP beneficiary has also been piloted in District Faisalabad in April 2012.000 for the bread winners of BISP beneficiary families was launched from January 1. an amount of Rs. poor. V. Waseela-e-Sehat: Life insurance cover of Rs. Training has commenced in the first quarter of 2012 in most of these institutions and so far 964 persons have been trained while 4. 2011. BISP provides technical and vocational training to one member per recipient family to help them to secure their livelihood. a large number of private sector training institutions were also selected all across Pakistan through a competitive process.4 billion and Rs 31. Invalidity Pension.902 billion expenditures on PWPII.000. Over 900 cases have already been processed by SLIC during 2011-12.Pakistan Economic Survey 2011-12 June 30. telephone. 100. 5. Rs. After devolution of the subject of Zakat the Provinces/Federal Areas are directly managing the distribution of Zakat and the beneficiaries. Survivors pension and Old Age Grants. It is expected that by June 30.485 beneficiaries. 2012 to pre-qualify 10. which is 17.794 million was distributed in bulk amongst the provinces and other administrative areas. PWP-I & II incurred expenditures of Rs 8. etc. During the period of July.3.474 million has also been released in March 2012 as a reserve fund available within the Central Zakat Fund to Provinces/Federal Areas to provide financial assistance to mustahequeen.e. Peoples Works Program-I & II: Peoples Works programme (PWP) I & II are the welfare programmes comprising of small development schemes for provision of electricity.8 percent higher compared to the corresponding 230 . IV. widows. Zakat funds are utilized for assistance to the needy.222 billion expenditure have been incurred between July-December 2011-12 on PWP-I and Rs 2. education.668. These poor segments of society are provided Zakat funds either directly through respective local Zakat Committee or indirectly through institutions i. Waseela-e-Taleem: BISP designed a coresponsibility cash transfer programme titled “Waseela-e-Taleem” for the primary education of the children of its recipients whereby 3 million children will be imparted education during 20122016. The same is planned to be extended in other districts of Pakistan in coming years. BISP organized vocational trainings for a batch of 173 recipients from Rawalpindi division during the 1st quarter of 2012 through the funds provided by a Chinese civil society organization.000 additional recipients.049 billion and Rs 21.8 billion during 2009-10 and Rs. On the other hand. health.961. gas. Waseela-e-Rozgar: Under this programme.044 persons are currently enrolled. social institutions and hospitals. the subject of Zakat has been devolved to the Provinces/Federal Areas. and sanitation facilities to the rural poor. orphans. water supply.30 billion during 201011 where as Rs 2. farm to market roads.208 million has been utilized for 350.4. indigent. In addition to this. vocational. VI. Up to February. In addition. The programme is scheduled to be launched in 5 districts during the current fiscal year. handicapped and disabled for their subsistence or rehabilitation. 2012 a total amount of Rs. 2012 the total number of trained persons will be approximately 20. Zakat Zakat plays an important role in poverty alleviation. educational. Employees Old Age Benefits Institutions Employees Old Age Benefits Institution (EOBI) provides monetary benefits to old age workers through various programmes such as Old Age Pension. 2011 to March 2012.131. As a consequence of the 18th constitutional amendment. Over 3. 7 33.138 families of the workers have benefited.7 2010-11 2.13 -37. microfinance institutions (MFIs).11 -20. in the wake of floods and rains.6 below: Table-15. In addition.1 2.6 Increase/ 0. Further. it is planned that 331.200 million for Death Grants for 1.900 million expenditures have been incurred during July-April 2012 for 46 housing schemes which will benefit 15. VIII.6 12. There are 1.079 cases of mishaps of workers all over the country.53 9. and others including Commercial Financial Institutions (CFIs) and Non-government Organizations (NGOs). today microfinance is seen as encompassing a wide range of financial services such as credit. an additional amount of Rs. crop failures. Another Rs. The credit programs offer a small loan to the beneficiaries for self-employment purposes that can start or enhance their income streams. Details of the industry are provided in Table-15.05 2.98 25. 231 .000 families of workers. 77. hike in prices.6 3.7 2. to allow them to become economically active. Active Savers and Active Policy holders by Peer Group Micro-credit Micro-Savings Micro-Insurance Active Value (PKR Active Value (PKR Policy Sum insured Details Borrowers Million) Savers Million) Holders (PKR Million) (Million) 2009-10 1. who are children of poor workers. During the current fiscal year from July to March Rs.6: Active Borrowers. and access to basic necessities of life.10 -1. The microfinance industry provides services in three broad categories namely. Table 15. especially credit. WWF has also disbursed Rs.8 9. It provides funds for housing facilities for industrial workers and for other welfare programmes such as the Marriage Grant. micro-savings and micro-insurance.43 decrease (%) Source: Pakistan Microfinance Network (PMN). Microfinance Initiatives Microfinance has been widely recognized as an effective strategy to combat poverty by providing financial services. Workers Welfare Fund Workers Welfare Fund (WWF) is also providing assistance to poor labourers all over the country.792 million is allocated for these beneficiaries.29 -29.513 more beneficiaries will take benefit from the EOBI up to June 2012. food security.81 53. to the poor.791. VII.5 3. Although micro credit has been the main thrust in the past. Rs 2.10 decrease (Net) Increase/ 2.021 million in expenditures has been incurred for scholarships. 3.539. Death Grant and scholarships etc. terrorism and macroeconomic shocks.80 3.456 beneficiaries of this program. It is provided as a package through microfinance banks (MFBs). This has been very evident in 2010 and 2011. 636.56 28. Rural Support Programmes (RSPs). savings help them to manage their resources over time and to enable them to plan and finance their investments. 341.03 27. micro-credit. Microfinance services help the poor in accumulating assets and building income generating capacities that can provide better access to social services such as health and education.57 32.Social Safety Nets period of last year.40 0.7 presents the number of Micro-credit beneficiaries with Outstanding Loans Portfolio (OLP) and Disbursements by loan providers. and eventually making them self-reliant and move out of poverty. The objective of the microfinance initiative is to provide liquidity to the microfinance providers in response to tighter liquidity conditions and spikes in inflation.930 million have been disbursed as Marriage Grants from which 9. Furthermore. Insurance becomes useful in order to mitigate the effects of unexpected shocks such as natural disasters. savings and insurance. 306.09 380.633 20.93 675.010 799 19.03 17.283.68 0.383 86.18 301.942 6601 150.55 521.40 979.219 448.036 265.735 1949 12.08 605.342. a pre-requisite for the sustained economic growth but it is not sufficient to reduce poverty.29 446. A multi-pronged approach is needed.779.49 309.718 53. Macroeconomic stability is.307 149.917 132.728 744.72 694.51 459.653.56 152.73 315.96 1.86 231.453 MFIs 42.64 Number of Loans disbursed 1800.184 7.446 38.95 2.912 11.747 705.14 170.080 12.262 Disbursements (PKR) Million 36.52 4.540 569.31 3.547 15. of course.43 2.42 13.580.72 672 19 160.21 150.862 4.02 26.52 467.825 2443 16.73 184.823.186 15.31 2.07 6.725 492. which includes interventions to enhance incomes .814 14.236 2802 44.809.30 6641 87 153.89 260.47 127.95 96.14 214.601.825 39.08 6.107 24.54 3.290. it is the foundation on 232 which to build a thriving economy.42 43.41 43.60 8.982 1. Food-based interventions may play a supplementary and short term role in eliminating poverty. 2011) First Microfinance Bank Limited Khushhali Bank Kashf Microfinance Bank Pak Oman Micofinance Bank Tameer Bank Total for MFBS AKHUWAT ASA – Pakistan ASASAH Community Support Concern Centre for Women’s Cooperative Development DAMEN Kashf Foundation Orangi Charitable Trust SAFWCO Total for MFIs National Rural Support programme Punjab Rural Support programme Sindh Rural Suport Organization Sarhad Rural Support Programme Thardeep Rural Support programme Total for RSPs BRAC Jinnah Welfare Society Narowal Rural Development programme Orix Leasing Organization for Participatory Development Rural Community Development society Sungi Development Foundation Swabi WWS Total for Other Active Borrowers 1969.44 407. Rather.16 1.69 626.289 31.06 16.37 6.08 5.727 5.117 587.214 21.606 3.236 Outstanding Loans portfolio (PKR) Million 26.523 RSPs 329.989.741.484 11.555 25.674.591 150.51 669.85 326.683 374.776 Others 97.7: MFP Total for Pakistan MF sector (year ended December 31. No single policy can completely address the needs of poverty reduction.907 7049 979.43 355.595 28.022 20.67 128.14 MFBs 139.317 476.279.23 5.16 482.369 3020 46.911.538.224 10.45 8.881.81 160.895 62.704.975 61.625.070.645.435 440.87 137.069 142.82 2.98 47.85 19.61 5.51 916.975 13.67 179.328.461 19.03 Conclusion Sustained growth on a consistent basis is needed to reduce poverty in the country.Pakistan Economic Survey 2011-12 Table 15.42 439. Social Safety Nets and ensure growth combined with safety nets programs to cater to the marginalized and those that cannot be included directly. and high quality education opportunities for the youth are also interventions undertaken by the government to reduce poverty on a permanent basis. Government at all level is highly committed to poverty alleviation programs and all efforts are being made to ensure continuity of these programmes. 233 . fair and broad based fiscal regimes. This requires interventions in the production system. competition and youth and on vibrant cities that maximize the efficiency of production and commerce by taking advantage of all growth linkages. Furthermore. efficient labour markets that promote job creation. successfully targeted social safety net programs. The new growth strategy introduced by the Planning Commission focuses on enhanced growth through increase in productivity in a regulatory environment that enhances competition and promotes innovation. transfer of resources and employment programmes as well as effective safety net programs. It focuses on markets. The National Marine Disaster contingency plan was implemented by the Maritime Security Agency (MSA) by carrying out Barracuda-I and Barracuda-II exercises. This chapter discusses the various environment related issues and challenges faced by Pakistan. followed by an overview of the 2011 floods and institutional responses to the disaster. Improvements in weather forecasting which helps in sound and timely decision making in agricultural practices and better management of natural resources and disaster response. loss of biological diversity. and identifies key challenges and shortcomings in terms of air and water pollution and forestlands. the word “environment” has been gradually achieving a greater and wider audience and acceptance in the country.II standards for vehicle emissions were adopted for new manufacturing vehicles 235 ` ` ` ` . therefore. Provinces now have more powers in policy formulation and implementation. ` The National Climate Change Policy 2011 has been developed which provides a framework for addressing the issues that Pakistan face or will face in future due to the changing climate. The quality of the natural environment is not only an extremely important issue from the point of view of individual survival but it will also emerge as one of the principal human security issues in Pakistan. and the initiatives taken by the government to address and combat those challenges. This has become increasingly difficult in the backdrop of the consecutive floods and rains across the country as well as other exogenous and endogenous factors. EURO . Climate Change: The Evolution of Policies and Programmes As a result of concerted efforts of the government. The fast growing population poses a significant challenge for Pakistan. The environmental challenges include climate change impacts. Some highlights of the government’s efforts to combat the adverse effects of climate change are listed below. deforestation and degradation of air and water quality. The government. Awareness about environmental issues has been rising and institutions have been built to address these issues. The second section describes the state of the environment in Pakistan. Civil society institutions working on environmental issues are strengthening and their influence has increased. The existing environment management capacity cannot sustain such a large population with a good quality of life. With the devolution of Ministry of Environment.Chapter 16 Environment Pakistan continued to face challenges in achieving environmentally sound development. The final section concludes the chapter. The first section provides a review of government policies and programs intended to put a focus on environmental issues in Pakistan and actively combat the adverse impacts of climate change. Mangrove ecosystems and coastal resources are discussed next. has effectively engaged to arrest the processes of environmental degradation through various programmes during the last three years. These projects include the National Environmental Information Management System. and the public at large as well as the donors is needed to effectively respond to climate issues. the devolution of the Ministry of Environment on 28th June. Swiss Model of Vertical Shaft Brick Kiln (VSBK) was identified as an environment friendly and energy efficient brick manufacturing technology. Case studies on SEA from Pakistan were presented at international forums. Extensive training programmes were held to build capacity. As signatory to the United Nations Framework Convention on Climate Change (UNFCCC) and a member state of the World Bank.Pakistan Economic Survey 2011-12 industries. a number of projects have been funded by the government to improve the capacity of relevant institutions to deal with increasing environmental degradation. Ministry of Disaster Management (Pakistan Agency and Environment Wing). there are number of projects funded by the donors in which the government is a partner. After. Drinking water quality standards. At the UNFCCC Cancun conference the developed countries have committed to create a sizable “Green Climate Fund” with fast start finance. These are being currently implemented to improve overall environment of the country. the Government of Pakistan expects to take the following measures: Comment [MM2]: should this be "dissolution" or "dismantling"? 236 . The Netherlands Commission for Environmental Assessment is providing technical support for NIAP and it is funded by the Embassy of the Kingdom of Netherlands. Due to the limited resources at its disposal. coordinating amongst the Program partners and ensuring post-program sustainability of the efforts. National Impact Assessment Program and the Pakistan Wetlands Program. In order to benefit from international financial mechanisms. Ambient air quality standards and Noise standards were also adopted. Provincial EPAs and IUCN Pakistan. In response to the environmental and climate change related policies. ` Awareness raising workshops for the policy and decision makers in order to make grounds for SEA Capacity building through trainings on SEA. Pakistan is a signatory to major environmental conventions and protocols. A much larger participation and support from other stakeholders including industry. The Cartagena Protocol on bio safety was ratified. ` 17 Laboratories have been adopted with Provincial Agencies/Departments under Pakistan Environmental Protection Agency. The NIAP is housed in the Planning Commission of Pakistan since the Program Coordination Unit is primarily responsible for creating ownership for the program within the public sector. Pakistan Clean Air Programme (PCAP) has been approved. 2011 the Ministry of Disaster Management took over the responsibilities of the environment sector at the federal level. civil society. In addition. seminars and workshops were organized to raise awareness.. waste waters and other analytical research requiring Lab facilities in the country. The NIAP has achieved the following targets for SEA and EIA: ` Formulation of SEA task force where SEA pilots are under consideration. Demonstrations for the model were held in collaboration with Bricks Manufacturing Associations. government efforts alone are not sufficient to address challenges resulting from climate change. The objective of the program is to contribute to sustainable development in Pakistan through strengthening of the Environmental Impact Assessment (EIA) process and introducing Strategic Environmental Assessment (SEA) in the national development planning. ` ` ` ` Comment [MM1]: Please verify this rephrasing is reflecting the reality in Pakistan ` ` ` A National Impact Assessment Program (NIAP) is being jointly implemented by the Planning Commission/Planning and Development Division (Environment Section). (Certification of laboratories) Regulation 2000 for carrying out analysis of the industrial effluents. Pakistan qualifies for financial and technological assistance. EIA regulation were reviewed and revised. @ = Source (WHO/UNICEF) Box1 Climate Change Climate change is an area that has become increasingly important in recent years and raises issues of global justice and equity. Clean Development Mechanism (CDM).17 11. Establish a Pakistan Climate Change Trust Fund for financing climate change related projects. of petrol & diesel vehicles using CNG fuel (000) 380 Access to sanitation (national)% 42 Access to clean water (national)% 65 Number of continuous air pollution monitoring stations. Create domestic carbon market opportunities by introducing appropriate investment framework linked with regional banking institutions. Year 2004-05 2010-11 4. through Global Climate Fund (GCF).3 No. it is the poorer developing countries who would most heavily bear the costs of climate change. The goal of the policy is to ensure that climate change is mainstreamed in the economically and socially vulnerable sectors of the economy and to steer Pakistan towards climate resilient development The main objectives of Pakistan’s climate change policy 2011 include ` To pursue the sustained economic growth by appropriately addressing the challenges of climate change 237 . It is major concern for Pakistan because of its large population and economic dependence on primary natural resources. deteriorating air and water quality and waste management while the rural areas are witnessing rapid deforestation. crop failure.. 0 Number of regional offices of Environmental Protection 0 Agencies Functional Environmental Tribunals 2 Source: Environment Section. Whereas the richer industrialized countries are primarily responsible for greenhouse gas emissions. Ensure the access and effective use of the opportunities available internationally for adaptation and mitigation efforts e. desertification and land degradation. Adaptation Fund (AF).9 5. In this regard.World Bank’s Forest Carbon Partnership Fund (FCPF). Global Environment Facility (GEF). ` Continue to push for transparent delivery of new and additional fast start funding by developed countries. etc. ` ` ` ` The Millennium Development Goals (MDGs) are the centerpiece of development efforts of the Government of Pakistan.Environment ` Continue to assess how best to position Pakistan vis-a-vis other groups of developing countries in order to secure adaptation funding.g.1—The MDG targets and achievements Name of Sector/Sub-Sector MDG Targets 2015 6. (Table 16.0 920 90 93 ---- Forests cover including State and private forests/farmlands (%) Area protected for conservation of wildlife (%) 11. Develop public-corporate-civil society partnership for financing and implementation of climate change adaptation and mitigation projects. The status of the MDGs with reference to environment sector indicators is presented below.3 2740 48@ 92@ 10 4 3 Table 16. The policy provides a comprehensive framework for the development of an action plan for national efforts on adaptation and mitigation. biodiversity and habitat loss. Pakistan’s agrarian economy is heavily dependent on river water provided by melting glaciers Pakistani cities are facing problems of urban congestion.1). the National Climate Change Policy 2011 provides a framework for addressing the issues that Pakistan faces or will face in future due to the changing climate.0 12. P&D Division. Urban air pollution remains one of the most significant environmental problems facing cities. particularly in arid and semiarid regions. mangroves and breeding grounds of fish Threat to coastal areas due to projected sea level rise and increased cyclonic activity due to higher sea surface temperatures Increased stress between upper riparian and lower riparian regions on sharing the water resources Increased health risks and climate change induced migration The above threats are the cause of major survival concerns for Pakistan. particularly financial. tropical storms. adversely affecting coastal agriculture. industrial emissions. pollens. threatening water inflows into Indus River System (IRS) Increased siltation of major dams caused by more frequent and intense floods Increased temperature resulting in enhanced heat.Pakistan Economic Survey 2011-12 ` ` ` ` ` ` ` ` ` ` To integrate climate change policy with other related national policies To facilitate and strengthen Pakistan’s role as a responsible member of the international community in addressing climate change challenges To focus on pro-poor gender sensitive adaptation while also promoting mitigation to the extent possible in a cost effective manner To ensure water. The main sources of SPM are vehicular emission. burning of solid waste. Rapid urbanization has been accompanied by environmental problems such as pollution. and energy security considerations State of the Environment Air With an estimated 37 percent of its population living in cities. brick kilns and natural dust. To strengthen inter-ministerial and inter-provincial decision making and coordination mechanism on climate change To facilitate effective use of the opportunities. waste management.and water-stressed conditions. A substantial body of research demonstrates that high concentrations of suspended particulate matter adversely affect human health. particularly in terms of the country’s water. food. coupled with erratic monsoon rains causing frequent and intense floods and droughts Projected recession of Hindu Kush-Karakoram-Himalayan (HKH) glaciers due to global warming and carbon soot deposits from trans-boundary pollution sources. skill and institutional capacity of relevant stakeholders To promote conservation of natural resources and long term sustainability The climate change threats to Pakistan are: ` ` ` ` ` ` ` ` ` ` Considerable increase in frequency and intensity of extreme weather events. and energy security of the country in the face of challenges posed by climate change To minimize the risks arising from expected increase in frequency and intensity of extreme events: floods. leading to reduced agricultural productivity Further decrease in the already scanty forest cover from too rapid change in climatic conditions to allow natural migration of adversely affected plant species Increased intrusion of saline water in the Indus delta. available both nationally and internationally To foster the development of appropriate economic incentives to encourage public and private sector investment in both adaptation and mitigation measures To enhance the awareness. congestion and the destruction of fragile ecosystems. The higher concentration of Suspended Particulate Matter (SPM) in the air is a major issue in Pakistan. prolong a wide range of respiratory diseases and increases the probability of heart ailments. 238 . SPM can originate through natural phenomenon. droughts. such as unpaved roads and places uncovered by Comment [MM3]: chapter on labor force/population mentions that urban unemployment higher than rural. food. Pakistan is the most urbanized country in South Asia. etc. 00 20. which is mainly due to the combustion source. Table 16. water and noise pollution have been carried out by the Pakistan Environmental Protection Agency (Pak-EPA).00 100. was reported to have reached an alarming level (2-6 times higher than the safe limit).00 Concentration 120. temperature. 74. These include emissions from the motor vehicle and industrial activity.00 160. Several studies of air.5 is 25 micron/m3 annual average.05 2.5) from June 2011-March 2012 Sr. City Level (µg */m3) 1. relative humidity and quantity of precipitations. this should be the greek letter mu and not a u. Islamabad 87.5 micron).53 52. Sometimes the concentration of NOx and SO2 goes higher than the safe limit at Lahore and Peshawar.00 60.53 5. The National Environmental Quality Standards (NEQS) for PM 2.05 153. Nearly 43. Climatic and geographical conditions also affect the level of SPM in ambient air. No.Environment green grasses or trees.62 Karachi Peshawar Quetta 239 . Lahore 153. Another origin of fine particles is anthropological activities. Vehicles were examined at 13 different locations of Islamabad.1: PM 2. Oxides of nitrogen (NOx). Karachi 52. The level of other pollutants in the ambient air like carbon monoxide (CO). Sulphur dioxide (SO2). A total of 576 diesel. * µg = µg stands for microgram 63.5 3. Fine sized particles of soil may be raised in the form of dust cloud by driven motor vehicles and by strong wind.00 80. noise level was also monitored and found within safe limit except at two places where the noise level was recorded to be over the safe limit for a short period of time.5 percent of the total vehicles tested were found noncompliant of National Environmental Quality Standards (NEQS).00 Islamabad Lahore Cities 87.50 Standards (NEQS) for ambient air.00 140.5 in five capital cities. Pak-EPA conducted a study to monitor the vehicular emissions in Islamabad. Peshawar 74. During this study. Quetta Source: Pakistan Environment Protection Agency.2: Annual Mean Value of Suspended Particulate Matter (PM 2. wind speed. Ozone (O3) and Hydrocarbons (HC) are within safe limits according to National Environmental Quality Fig-16. The level of PM (Particulate Matter size below 2. In June 2011.00 40.92 Comment [MM4]: if i'm not mistaken.00 0.91 63. but this happens for short periods of time and represents a short time exposure to the public.91 4. petrol and CNG driven vehicles were tested in 13 days. The table and figure below show annual mean value of PM 2.5 180. Ambient air quality data recorded by real time automatic monitoring stations in the five capital cities confirmed the presence of high concentration of suspended particulate matter. These include the type of soil. please verify. 5 2607.1 2656. Since the country is facing a shortage of CNG.: Not Available another source of pollution in many areas.4 2007-08 162.9 81.2 5558. The 2-stroke vehicles Table 16.4 percent over 2001-02.9 5126. there has been a reduction in coal usage for domestic purposes.8 - In the past few years.6 The use of coal in the power sector has been decreasing.8 79.3—Motor Vehicles on the Road Year Total 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Source: National Transport Research Centre industry is fast growing in Pakistan and has increased by 117 percent in 2010-11 when compared with the year 2001-02. (Table 16.5 Source: Hydrocarbon Development Institute of Pakistan .0 2589. due to their two stroke (2-strokes) engines. the CNG Sector has seen tremendous growth. Brick Kilns 2577.0 1. Rickshaws have grown by more than 11.7 3274.6 2003-04 184.3 5456.2 2008-09 112.5 2009-10 125. Bricks kilns are Table 16.8 3277. The use of CNG as an alternate fuel in the transport sector has helped to reduce air pollution to a considerable extent including reduction of suspended particulate matter (SPM) emitted from the public transport as well as private vehicles.5 2010-11 96.4: Consumption of Coal Year Power 2001-02 249. Likewise.8 3035.5 77.8 4542. Motorcycles/Scooter 2481. are the most inefficient in burning fuel and contribute most to emissions.4 3868.1 1. 2stroke vehicles are responsible for emission of very fine inhalable particles that settle in lungs and cause respiratory diseases.1 percent while motorcycles and scooters have posted a growth of 120.9 2005-06 149.7 4221.) Rickshaws 80.1 2963.0 0.4 89.2 4231.1 1.0 5412.2 2882.0 89.2 percent for bricks kilns in 2010-11 when compared with year 2001-02 (Table 16. The use of coal has increased by 64.9 2004-05 179.1 5468.3).9 3791.0 4463.8 (000 Nos.3 2006-07 164.5 3146.4 3760.9 2737. 240 .8 80.331 CNG stations are currently operational making Pakistan one of the largest users of CNG in the world.0 1.Pakistan Economic Survey 2011-12 Motorcycles and rickshaws.1 89.8 2561. This may be due to the fact that a number of plants have now been converted to natural gas. other alternative sources such as LNG are being considered as a part of environment friendly component.4 3906.4).0 81.4 2002-03 203.5 (000 M/Tons) Household 1.0 5368.5 3064.4 5501. 3. Use of low-grade coal and old tyres in bricks kilns generate dense black smoke (soot) and other kind of emissions.3 88.9 5037. Drinking Water and Sanitation Globally.000. dysentery. This situation is leading to many health problems including serious illnesses transmitted by polluted drinking water such as cholera.000 1.051 June 2011 3. Water Pollution Water pollution has been a serious concern affecting not only humans but also plants and animals. the 4 major contaminants in drinking water sources of Pakistan were bacteriological (68 percent). according to the Pakistan Bureau of Statistics (PBS) report Pakistan Standard Living Measurement (PSLM) 2010-11. typhoid fever. Dumping of solid and liquid industrial waste. Ministry of Petroleum & Natural Resources Converted Vehicles (No. access to drinking water to urban and rural population of Pakistan is 94 and 84 percent respectively. lakes. Pak-EPA has conducted a 4 month study to monitor the water quality of Rawal Lake and its tributary. and seas are deteriorating due to contamination of water from various sources. . streams. glaciers.000 2.050. In Pakistan. with an average of 87 percent in 2011. Only 0. and residues of agriculture practices like fertilizer and pesticides are all major contaminants of drinking water. access to drinking water was at 87 percent in 2011. etc. As derived from the National Water Quality Monitoring Programme carried out by the PCRWR.) 120. arsenic (24 percent). Most of the remaining 3 percent are in the polar ice caps. In Pakistan about 68 percent of the drinking water consumption is from groundwater for both urban and rural areas. an additional 2 percent is needed by 2015. the majority of the population in the country is exposed to the hazards of drinking unsafe and polluted water from both surface and ground water sources.000 Water and Sanitation Although 70. Parameters like biological oxygen demand (BOD).000 210. only 45 water sources (13 percent) were found “safe” and the remaining 312 (87 percent) were “unsafe” for drinking purpose.450 February 2008 2.Hence access to the source of drinking water is satisfactory. then we need to add this sentence to the claim that access to drinking water is excellent. Similarly. atmosphere or underground reservoirs and hard to reach. the five years trend analysis has revealed that out of a total 357.9 percent of earth’s surface is covered with water nearly 97 percent of this is saltwater.300.000 330.331 Source: OGRA. improper disposal of human and animal waste.063 December 2009 3. Samples were collected on monthly basis and analyzed at the Central Laboratory for Environmental Analysis and Networking (CLEAN).000 1. statistics on access to drinking water is impressive. BOD was found to be 2 to 8 times and 241 Comment [MM5]: the subsequent paragraphs are suggesting that manys ources are polluted? if those paragraphs are true.5—Growth in CNG Sector As on CNG Stations (No. 2007 1.Environment Table 15.700. In order to meet the MDG target.740.000 2. nitrate (13 percent) and fluoride (5 percent).190 16th May.400. hepatitis A and B.) December 2000 150 December 2001 218 December 2002 360 December 2003 475 December 2004 633 December 2005 835 December 2006 1. These pollutants are discharged directly into rivers and irrigation canals and also transmitted by rain water runoff and get mixed with ground water aquifer. According to Pakistan Council of Research in Water Resources (PCRWR).000 1.4 percent is available for direct use. Freshwater is a precious natural resource and fundamental to the survival of humans and most other land-based life forms.000 1.000 660. The ecosystem of rivers.000 450. conductivity and total suspended solid were found to be higher than surface water standards. right? Comment [MM8]: This heading also talks about drinking water. Different national and international reports have identified Pakistan as one of the most ‘water stressed’ countries in the world. Makes sense to combine into one sub-heading? ` ` ` ` ` ` UN-2011 242 . Develop a water quality database to assist in decision making. The National Conservation Strategy states that almost 40 percent of all disease related deaths are connected to water borne diseases.500 million people still without access. Strategy and Action Plans (Water & Sanitation) ` Develop legal and policy frameworks regarding promotion of safe drinking water in Pakistan. industry and human consumption.Pakistan Economic Survey 2011-12 TSS 1. The most basic requirement for proper sanitation is safe disposal of excreta away from a dwelling unit. This promotion would include desalinization of sea water.2 to 6. high operational and maintenance and poor cost recovery. Half of the people living in developing regions have no access to improved sanitation1. both in rural and urban areas. Address arsenic pollution of groundwater in Sindh and Punjab through specific initiatives including investigative studies and awareness raising programmes. According to PBS Pakistan Standard Living Measurement 2008-09. Conduct cyclic 4 seasonal water quality monitoring for major rivers and water reservoirs. which mainly uses surface water. water supply in Pakistan fell from 5000 cubic meters to 1000 cubic meters in 2010. right? Comment [MM7]: 40 percent of disease related deaths. Therefore. 14 percent of all garbage collection facilities provided to the population are executed through municipalities. About 2 million wet tons of human excreta are annually produced in the urban sector of which around 50 percent go onto pollute water bodies. Urban Sindh has the best coverage followed by urban Khyber Pakhtukhwa. increasing population. up from 54 percent in 1990. Other sources of water pollution are industrial effluents. and part of Islamabad. In Pakistan sanitation facilities are improving. deteriorating ground water quality in Pakistan has serious implications for the environment and health of Pakistan’s population. much improvement is needed for rural areas sanitation facilities. 7 percent through privately managed collection systems. solid waste. by using a sanitary latrine. Establish a water quality monitoring and surveillance system based on enforceable water quality guidelines and standards. allocation of investment and pricing of water services. rapid urbanization and industrialization. Make installation of water treatment plants an integral component of drinking water supply schemes. and is likely to further reduce to 800 cubic meters per capita by 2020 due to growing population pressure. chemical fertilizers and pesticides. The government is committed to provide safe drinking water through clean drinking water initiatives and installation of water filtration plants. and low institutional capacities. with over 2. Globally. There is a great variation in latrine coverage between provinces. However. According to a World Bank report. improved sanitation coverage was just above the 60 percent mark in 2008. Comment [MM9]: How did access to water remain at 90-95% with this precipitous drop in availability? Comment [MM10]: don't capitalize unless that's the name of the initiative. Municipal sewage is a major source of surface water pollution. Hyderabad. fast growing urban development. Develop legal and policy frameworks regarding promotion of safe drinking water in Pakistan. In most of the urban and rural population water is supplied from the ground water except for the cities of Karachi.2 times higher than surface water guidelines. industrialization. Comment [MM6]: tonnes. However. lack of private sector participation. and the remaining 79 percent have no system. the execution and monitoring of government efforts are being hindered by limited resources. while the previous section also talks about sanitation. Develop an integrated approach that will guide the allocation of water. facing lack of 1 water availability for irrigation. hospital waste. Guide appropriate technical choices. In addition to this. This will involve enhancing existing forests and increasing forest cover. 48 percent people have been using improved sanitation by 2010 while this ratio was 27 percent and 37 percent in 1990 and 2000 respectively. The MDG target for access to sanitation is 90 percent by 2015. the concept of REDD+ was developed as an incentive based mitigation response from the Montreal Climate Change Negotiations (COP 11) in 2005 to address 17-25 percent reported global share from deforestation and forests degradation. This decline needs to be taken into account to get maximum benefits from 243 . matches and furniture are continuously growing. Therefore. in Pakistan 92 percent people had gained access to source of drinking water by 2010 while this ratio was 85 percent and 89 percent in 1990 and 2000 respectively. with the amount of forests declining by just under 2 percent in the 1990s.17 percent of total land area covered with forest placing Pakistan among countries with low forest cover. Establish public-private-civil collaborative arrangements. either by direct funding or via links to the global carbon market. since they do not have heavy industry that produce carbon but have forests that can stock excess carbon in the air. Moreover. the MDG target for 2015 is stated to be 87+2= 89 percent? these reports need to be consistent. Generate resources (locally and nationally) and ensure participation of stakeholders. Under REDD+ mechanism. Forest Currently Pakistan has only 5. Major forest types existing in Pakistan are temperate and subtropical conifer forests. riverine forests (irrigated plantations). The existing forest resources in the country are under severe pressure to meet the fuel-wood and timber needs of a rapidly growing population. The REDD+ initiative facilitates trade between developed countries who are net emitters of GHG and the developing countries who are net non-emitters. the emitters may trade their carbon to be consumed/stocked by forests in developing countries at a per ton cost to be calculated as per Certified Emission Reduction (CER). Clarify national sanitation policy in order to make it explicit and consistent. sports. Encourage and promote public toilets in all urban centres. The country’s forest area is divided into state-owned forests.Environment ` ` ` ` ` ` ` ` Promote and devise methods for harvesting rain water using low-cost structures. Comment [MM11]: toilets. Implementation or Operations phase (20132020): performance-based payments are made. Develop systems for safe sewage disposal. The MDG target is to achieve the ratio of 93 percent by 2015. This concept has three important phases: ` Readiness phase (2010-2012): enacting national strategies supported by appropriate capacity building Pilot phase or Investments phase: ‘learning by doing’ through pilot projects. but by more than 2 percent in just five years. ` ` REDD+ Potential and Pakistan: Pakistan has a low forest cover with diversified forest types from coastal mangrove and riverine ecosystem to alpine Chir Pine forests within placed diversified community. There is a decline in overall forest cover in Pakistan. leading to the global implementation of REDD+. communal forests and privately owned forests. Comment [MM13]: first paragraph on page 10 put the global access to water at 87 percent in 2011. surely? Comment [MM12]: right? According to a report released by the WHO/UNICEF Joint Monitoring Program (JMP) 2012. Awareness raising and bringing an attitudinal change. scrub forests. This process builds a nexus between climate change and forest carbon credits. This is underway in some countries. It droped 5% in a year? Comment [MM14]: on page 12. liner plantation (roadside. society Forests and REDD+ (Reducing Emissions from Deforestation and Degradation plus) Increasing GHG emissions are contributing to global warming and leading to accelerated climate change. the wood based industries including housing. canal-side) and mangrove forests. before the enactment of international rules. from 2000 to 2005. 2 million people. M. Mangroves Ecosystem and Coastal Resources The coastal belt of Pakistan extends up to 1. nearly 900. However.000 goats. stabilize shorelines and reduce coastal erosion. It is estimated that one hectare of properly managed mangroves can yield 100 kg of fish.000 buffaloes and over 1. (2011) SDPI.74 million and $315. LEAD-Pakistan 4 (Salman 2002). K. the active engagement in REDD+ is a unique opportunity to support this national priority. Moreover. On the bases of FAO Deforestation data 1990-2005 and ALGAS. in addition to providing other forest products like fuel wood. and Sindh Forest Department 2012. The actual potential could be far greater.5 million Comment [MM15]: what's this? per tonne? 2 Iqbal. Beside these economic benefits. According to the change analysis done by WWF-Pakistan at Keti Bunder site through satellite imaging. Pakistan’s efforts with regard to the REDD+ initiative need to be significantly enhanced on a priority basis in order to achieve the global target and meet the basic requirements of REDD+ readiness phase.050 km along Sindh and Balochistan provinces.000 ha of mangrove forest in Pakistan has been lost up to 2007.8 million per year if deforestation is halted completely. and the export of mud crabs contributes an additional $3 million to the regional economy.000 of whom reside in the Indus Delta 4 . Shrimps are also particularly important. and protect coastal habitations from storm damage. Policy Paper Series # 38 September 2011 LEAD (2010) REDD+ Policy Brief 4. 3 244 . and Ahmad. At least three quarters of the Delta’s rural population depend. It provides grazing grounds to at least 8. the mangrove cover has experienced a drastic decline of 20 percent. The figures from Sindh Forest Department (SFD) and IUCN-Pakistan estimated that 196. Pakistan’s commercial marine fisheries operate in and around the mangrove creeks on the coast of Sindh province.000 camels. with a domestic value of $70 million and an export value of about one and a half times this figure.. honey.. this needs to be driven by a focused strategic plan and supported by a scaling up of national technical and institutional capacity to deal with REDD+ mechanism.J. 389 mega tons of carbon potential could be estimated for all types of forests in Pakistan with an estimated annual return of US$ 54 million at a rate of US$ 15 per tonne of carbon credits2. 5. and medicinal plants to local communities. the creeks are also perceived to widen in future due to exacerbation of soil erosion along the Arabian Sea. This estimate reflects the limited data available and provides only an indicative estimate. and 15kg of crab meat annually. Similarly WWF-Pakistan also reported that the 0. The total population in and around mangrove forests on the coast of Pakistan is estimated to be around 1. Other estimates by Leadership for Environment and Development (LEAD) 2010 3 points to potential earnings of between $94. directly or indirectly on fishing as their main source of income. which forces the mangrove forest towards instability and this instability trend has been continuous from 1992 to 2007.M. The total carbon stock of conifer forests could be estimated as 58 mega tons on the basis of biomass estimations by Asia Least cost Greenhouse Gas Abatement Strategy (ALGAS).Pakistan Economic Survey 2011-12 REDD+. As Pakistan faces a high rate of deforestation and aims to reverse this trend. from 1992 to 2007. The government is striving to reverse these negative trends and aiming to increase Pakistan’s forest cover to 6 percent by 2015. 25 kg of shrimp. The annual value of fish caught from mangrove dependent fish species in the Indus Delta is estimated at around $20 million. depending on the carbon price and the sectors included under REDD+. Mangrove Forest Degradation The most prominent and most sensitive ecosystem of the region is characterized by mangroves forest that form a number of direct and indirect linkages with the socioeconomic status and occupations adopted by the community. the mangrove forest benefits the ecosystem by providing nurseries for many species of fish and shrimp. with a very nominal percentage of dense mangrove forests remaining stable during this time period. it's hard to see the "social" impact here.873. The Government of Pakistan has taken steps to halt the deforestation of mangroves by establishing protected areas and new plantations by forest department with the help of nongovernmental organizations like WWF-Pakistan and IUCN. anthropogenic interventions exacerbated them. oil spills and leakages. Towards this end. The conditions created by the floods could result in a significant increase of these and other illnesses. transport. and huge losses to the economy. health. hygiene and indoor air quality Reviewing/updating the flood protection strategy and master plan. Floods of 2011 and Policy Responses In a Damage and Need Assessment Report jointly prepared by the Asian Development Bank and the World Bank. The reconstruction and recovery needs are diverse and multi-faceted and work has to be undertaken on an urgent basis. diarrhea and acute respiratory illnesses associated with environmental factors.8 million) and environmental recovery / reconstruction needs has been estimated at Rs. particularly women and children. No estimates are available for damages to other environmental resources such as wetlands and mangroves at this stage. However. 2. housing. To fill such damage data gaps. strengthening the resilience of the Indus Watershed is urgently needed.Environment hectares of fertile land in Thatta district alone is affected by sea intrusion. proliferation of disease vectors caused by stagnant water ponds. 2. however. the floods in 2011 have resulted in environmental damages. heightened environmental health risks and affected forests. Environmental Considerations in Policy Response The 2011 floods have caused wide-ranging damage to different sectors of the economy. and preparing a storm water drainage master plan. and water supply and sanitation are likely to cause negative environmental impacts. Also. Comment [MM17]: I don't know if I understand the message here: reconsutruction efforts are going to create a carbon footprint. which has some of the highest prevalence rates in all of South Asia for child mortality. wetlands and other natural systems. To avoid such disasters in the future. and encroachment of settlements around mangrove forests. these interventions.6 million (US $ 33. feasible. displacement of millions. industrial and municipal pollution. The floods have also caused contamination of drinking water. Such an approach also calls for improved management of the Indus Basin’s major natural resources through strengthened coordination of flood-related actions within and among the provinces. these negative environmental impacts ought to be addressed as an integral part of all sectoral plans. and affordable to minimize vulnerability to extreme weather events. and accumulation of solid wastes – factors that would further exacerbate health risks for the affected population. development of settlements and croplands in floodplains as well as blocking of natural drainage routes created the conditions for the current human tragedy. particularly those related to irrigation. Environmental degradation and its effects on human health was already a significant development challenge in Pakistan. follow-up environmental studies have been proposed to address safe disposal of debris.7 million (US $ 31.02 million). The floods were initiated by a natural phenomenon. including drinking water. leakage/spillage of hazardous and/or toxic substances and assess damage to cultural heritage sites. Is that the negative environmental impact being referred to here? Even if it is. it has also been pointed out that in addition to causing loss of life. involving an approach that combines structural and non-structural measures that are strategic. particularly as destruction and degradation of natural ecosystems reduced their capacity to protect from flood. and strengthening legal and institutional frameworks. 245 . Comment [MM16]: this sentence is not adding anything new The environmental damage caused by floods has been estimated at Rs. dumping of waste. The other major threats to mangrove ecosystem includes shortage of fresh water and resultant silt depositions. agriculture. the following priority actions are proposed to be undertaken: ` ` ` Addressing environmental health priorities.762. and Preparing land use plans and building regulation. sanitation. In order to ensure the sustainability of the reconstruction and recovery process. education. Conclusion The Government of Pakistan has undertaken various steps to combat the negative impacts of climate change. hence the potentially adverse environmental and social impacts of these activities cannot be identified. The state of Pakistan’s atmosphere. and obtaining approvals/clearances of these documents from the relevant agencies. However.Pakistan Economic Survey 2011-12 The national environmental legislation (Pakistan Environment Protection Agency 1997). To ensure implementation of ESSAF. including raising awareness. it is further proposed that each line agency (Provincial Disaster Management Authority / District Disaster Management Authority) appoints an environmental and social focal person within the department. state of forestry. and coastal resources were described. The chapter identifies that it will be crucial to carefully evaluate disaster response and rebuilding strategies to make sure that they are environmentally sustainable. This chapter provided an account of institutional change. Instead. identifying the key challenges that remain in these areas as well as new strategies that have been adopted (REDD+) by the government. and will guide the implementing agencies in identifying the appropriate type and level of environmental and social assessment to be carried out prior to undertaking each project or intervention in compliance with national as well as IFI’s safeguard requirements. The ESSAF will also define the requirements for preparing appropriate environmental and social documents. and implementing programmes to actively address and reverse adversities faced due to global warming and the resultant climate change. developing strategy and policies. The ESSAF will define the environmental and social screening and assessment requirements of individual projects or interventions. details of the specific activities associated with the individual reconstruction and recovery plans in the majority of sectors are not currently known. including air and water quality. as well as the international financial institutions’ (IFIs) safeguards require that environmental and social assessments are carried out and management plans/frameworks are prepared prior to undertaking the interventions such as those recommended in the floods Damage and Need Assessment. 246 . it is proposed that a broad Environmental and Social Screening and Assessment Framework (ESSAF) be prepared for the overall reconstruction and recovery needs. March 2012 The outstanding contingent liabilities as of March 31. for instance. the terms of the borrowing. rates of return. the credit-worthiness of the borrower.7 2008 138.7 Source: Budget Wing & Debt Policy Coordination Office * : July .544 Source: Debt Policy Coordination Office Sector Enterprises (PSEs) and unfunded losses of State Owned Entities. these include. Contingent liabilities should be examined in the same manner as a proposal for a loan.8 2009 276. taking into account. 146. The Fiscal Responsibility and Debt Limitation (FRDL) Act 2005 stipulates that the issuance of guarantees. 487 billion.2 1. Hence. Similarly.5 0. 559 billion (Table 3). such off balance sheet transactions cannot be overlooked in order to gain a holistic view of a country’s fiscal position and unveil the hidden risks associated with the obligations made by the government outside the budget. inter alia.6 As % of GDP 1. explicit or implicit. justification and public purpose to be served. Table 2: Guarantees Issued Details Issuance Fiscal Year (Rs.4 2. Government of Pakistan issued new guarantees aggregating to Rs. which may materialize in future. bonds. Table 1 Guarantees Outstanding as of March 31.3 0.Annex 1 Contingent Liabilities Introduction Contingent liabilities are possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the government. Total outstanding stock of government guarantees as of March 2012 stood at Rs. Billion) Outstanding Guarantees extended 487 to PSEs -Domestic Currency 256 -Foreign Currency 231 Memo: Foreign Currency (US$ Million) 2. In the case of Pakistan. output purchase agreements and all other claims and commitments that may be prescribed from time to time as well as renewal of existing guarantees.0 percent of the estimated gross domestic product in any financial year.7 percent of GDP [as shown in Table 2]. reported debt levels of a sovereign may be understated owing to the non-inclusion of contingent liabilities. As of March 2011.487 billion against the endJune 2011 position of Rs.3 2010 224.0 2011 62.6 billion or 0. 2011 stood at Rs.6 1. including those for Rupee lending. explicit and implicit guarantees issued to Public 259 .4 2012* 146. Billion) 2007 140. 2012 (Rs. should not exceed 2. probabilities that various commitments will become due and possible costs of such liabilities. the amount and risks sought to be covered by a sovereign guarantee. The quantum of these guarantees depends on the supply-demand gap of various commodities.Domestic Currency (Rs.246 2011 559 301 258 2. As of April 2012.Pakistan Economic Survey 2011-12 Table 3: Guarantees Stock Guarantees Outstanding Guarantees (1+2) 1. the outstanding stock of Rs.544 Guarantees issued against commodity operations are not included in the stipulated limit of 2 percent of GDP as the loans are secured against the underlying commodity and are essentially self liquidating and thus should not create a long term liability for the government. and provincial governments. volume procured. Billion) 2.5 billion indicates a retirement of Rs. their price stabilization objectives. 93. The guarantees were issued against the commodity financing operations undertaken by TCP. 260 .Foreign Currency (Rs. PASSCO. 397. 303. Billion) Foreign Currency (US$ Million) Source: Debt Policy Coordination Office * July-March 2012 2010 603 329 274 3.6 billion on behalf of commodity financing operations.9 billion against the end-June 2011 position of Rs.999 2012* 487 256 231 2. and domestic and international prices. an increase of 16 percent. Overall. economy was struck by heavy rains in Sindh and parts of Balochistan costing $ 3. Notwithstanding these challenges. Non-tax receipts have been less due to non disbursement of anticipated coalition support funds and delaying the expected auction of 3 G license to a later part of summer.2 percent) and India (6. 1445 billion as compared to 1250 billion last year. negative 0. The Large Scale Manufacturing (LSM) growth is 1.Executive Summary The Government remained focused on maintaining macroeconomic stability.7 percent as compared to 3. infrastructure and human settlements. In comparison. Pakistan has managed to maintain its exports during July-April 2012 to last year’s level which saw a phenomenal growth. July-April 2012 growth in FBR tax revenues demonstrated a growth of 24 percent with Rs.8 percent for United Kingdom. Current account balance was affected due to sharp increase in oil prices and import of 1. These included sharp increase in fuel and commodity prices. recessionary trend globally and weak inflows. engulfing 23 districts of Sindh Province and adjoining areas of northern Balochistan causing damages to crops. growth. 0. The Services sector recorded growth of 4. the global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere. mobilizing domestic resources and increasing exports. the Gross Domestic Product growth this year is estimated at 3. The Agriculture sector recorded a growth of 3.1 percent against 2.3 percent for Euro area.0 percent in 2011-12.0 percent in the previous fiscal year 2011. Despite global slowdown. Flood Impact Assessment This performance has been achieved despite severe monsoon rains triggered floods of an unprecedented scale in Southern Pakistan.0 percent last year. Despite numerous challenges. Remittances remained buoyant and estimated at close to $ 13 billion. however. Growth and Stabilization The economy is now showing signs of modest recovery.7 billion.0 percent for Japan. the commodity producing sectors and especially the Agriculture sector have performed better. Domestically.1 percent during July-March 2011-12 against 1.2 million metric tons of fertilizer.7 percent as compared to 3. 5. Tax measures enforced by the Government in April 2011 has yielded dividend.0 percent last year.7 percent for Emerging and Developing Economies after factoring China (8.4 percent last year. GDP growth for 2011-12 has been estimated 3. balanced regional development and providing safety nets for the vulnerable groups. International Monetary Fund has maintained its growth forecast of 2.9 percent) and 2.1 percent for United States in the year 2012. thus adversely affecting national economy. impacted capital flows to Pakistan. Recessionary trend globally have. Efforts are underway to reach the ambitious target of 1952 billion. According to the World Bank and the Asian Development Bank (ADB) Damage and Needs i . the economy performed better in 2011-12 than many developed and developing economies. The supportive policies of the government resulted in a growth of 3.7 percent growth last year and real government consumption grew at 8.3 percent in 2011-12 as compared to 1.3 percent against 1. Foreign Direct Investment stood at $ 668 million during July-April 2011-12 as against $ 1293 million last year. Commodity Producing Sector: The commodity producing sector has performed better in the outgoing fiscal year as compared to last year.9 percent and 27.7. The capital flows were affected because of global financial crunch and euro zone crisis. Fisheries sector showed a growth of 1. Electricity and gas distribution witnessed a negative growth of 1.4 percent last year.6 percent of GDP last year. Similarly Private investment also contracted to 7.5 percent growth as compared to negative growth of 7.8 percent. The major crops including Cotton.6 million people were affected in Sindh and Balochistan as a result of these rains.5 billion (US$ 3.9 percent of GDP in 2011-12 from 11.6 percent in fiscal year 2011-12 as compared to 3.95 percent as compared to the contraction of 0. Water Supply and Sanitation amount to Rs. In dollar terms. 239 billion (US$ 2. Social and Community Services 6.0 percent against the growth of 3. Health.97 percent last year.1 percent against 2.4 percent during July-March of the fiscal year 2011ii 12 against negative growth of 1. Per capita real income grew at 2.5 percent of GDP last year.4 percent last year. whereas public consumption expenditures are 13 percent of GDP. increase in rural income due to higher production of crops and sharp increase in commodity prices also supported the consumption demand.2 percent as compared to 5. Consumption: Real private consumption grew at 11.9 percent of GDP in 2011-12 as compared to 8.2 percent last year. Mining and Quarrying sector recorded a positive growth of 4. Public investment as a percent of GDP is 3.40 percent last year. Large Scale Manufacturing (LSM) has shown a growth of 1.3 percent growth last year.7 percent of GDP in 2011-12 as compared to 13.Pakistan Economic Survey 2011-12 Assessment (DNA) Report.7 billion). approximately. it increased from $ 1258 in 2010-11 to $ 1372 in 2011-12. Manufacturing Sector: The growth of the manufacturing sector is estimated at 3.5 percent during last year. Private consumption expenditure has reached 75 percent of GDP.5 percent of GDP in 201112.1 percent last year. 9.5 percent against 4.6 percent. Energy. This is in addition to damages of $ 10 billion to the economy during 2010 floods. Forestry recorded a growth of 0. fixed investment has declined to 10. However. Furthermore. National savings are 10.3 percent last year. Sugarcane and Rice witnessed growth in production of 18. Agriculture Sector is a key sector of the economy and accounts for 21 percent of GDP.2 percent compared to a negative growth of 0.6 percent. Oil and Gas Exploration remained the major .5 percent and slaughtering growth is estimated at 4. Environment as well as the Forestry. The total damages estimated to Agriculture.0 percent during JulyMarch of the fiscal year 2011-12 against 4.8 percent and Wholesale and Retail Trade 3.9 percent last year.0 percent in 2011-12 against the 2. Transport and Communication.5 percent. Total consumption has reached 88.7 percent respectively. preliminary estimates of wheat production showed a negative growth due to late receding of flood waters in lower Sindh which hampered the timely cultivation of the wheat crop.4 percent of GDP in fiscal year 2011-12 as compared to 83 percent last fiscal year.2 percent in 2010-11.1 percent during July-March 2011-12 against 1.0 percent last year. Real Investment has declined from 13. Its growth rate this year was 3. Small scale manufacturing maintained its growth of last year at 7. 324.The rehabilitation and Cost of recovery is estimated at Rs. Livestock has witnessed a marginally higher growth of 4. Services Sector: The Services sector has registered a growth rate of 4.1 percent of GDP last year to 12. 4. It is dominated by Finance and Insurance at 6. Private consumption has increased on the back of sustained growth in remittances.1 percent last year.2 percent last year.4 percent last year.3 percent last year. Major Crops registered an accelerating growth of 3.6 percent against . The Construction Sector has shown 6.6 percent compared to 3.8 billion). 0 billion against Rs. For this. The award also acknowledged multiple criteria for transfer of resources.09 billion compared to $ 0. pesticides.0 percent. austerity measures and reforms in public sector enterprises. a centralized sales tax refund cheque issuance system is now operational in the Federal Board of Revenue. worker’s remittances grew by 20. Khyber Pakhtunkhwa has been assigned 1 percent of the total divisible pool to mitigate the impact of campaign against extremism. 19 billion collected by Sindh province on GST on services. Broadening the tax base identifying potential taxpayers has remained a key focus for which a dedicated unit has been established in the FBR.1 to 9. Workers’s Remittances witnessed a strong growth of 25. A three years plan to phase out Federal Excise Duties is under implementation. 18th amendment in the Constitution of the Islamic Republic of Pakistan was an historic step forward abolishing the concurrent list transferring additional functions to the Provinces. These efforts are now paying dividend.149. 633 billion.8 billion in the comparable period of last year. This should help the provinces to earmark more resources to social sectors and development of infrastructure. It was combined with a path breaking 7th National Finance Commission Award in 2010.8 percent in 2011 over the previous year 2010. Fiscal Development: The Medium Term Budgetary Framework has improved the budget preparation process. The Output Based Budget (OBB) has also been institutionalized in the federal government which presents policies of the ministries in the shape of goals. The political level involvement includes Cabinet. Capital Gain Tax has been levied on sales of securities in the stock exchange. which include medium-term indicative budget ceilings for the recurrent and development budgets.426. health. The government is committed to simplification of tax regime. sports goods and tractors except food items. and political parties. 1. 800 billion additional over 2009-10 resource transfer of Rs. Share of Balochistan has increased from 5. showing an increase of 24 percent. 1952 billion. tax collection stood at Rs.e. Standing Committees on Finance & Revenue. the Government resolved long standing demands of the Khyber Pakhtunkhwa relating to Net Hydel Profit and Royalty and Gas Development Surcharge of Sindh and Balochistan. 1. The share of Oil and Gas Exploration in total FDI during July-April 2011-12 stood at 70 percent. outcomes. Federal Board of Revenue target for 2011-12 was set at Rs. Special Excise Duties and Regulatory Duties have been abolished. This has allowed transfer of 70 percent of the divisible pool to the provinces and FATA and Gilgit-Baltistan. Efforts are being made to manage the fiscal deficit within acceptable level through an expenditure management strategy. education and agriculture produce. Medium-term fiscal framework and budget policies have been incorporated into a medium-term Budget Strategy Paper on rolling basis. During first ten months. The operational expenditure of the federal ministries was reduced by 20 percent. A iii . broadening the tax and mobilizing domestic resources.Executive Summary sector for foreign investors. Efforts are underway to move towards two main taxes. The OBB also presents key performance indicators for the outputs to introduce government wide monitoring system. and provides an opportunity to discuss the budget between technical and political levels prior to the presentation of the annual budget. The buoyancy in remittances is largely attributed to the government’s efforts to divert remittances from informal to formal channel. As a result. It does not include Rs. i. leather. During July-April 2011-12. The upsurge in the remittances is attributed to the government’s efforts of redirecting these flows from informal to formal channels. fertilizer. Government continued its efforts to broaden the tax base and simplifying the tax structure.90 billion during the corresponding period last year. Sales tax exemptions and zero ratings have been withdrawn on all items including textile. During the last two years.2 percent at $ 10. Likewise. income tax and sales tax. The Government has strengthened automated e-filing and electronic payment and refund system to ensure expeditious settlement of refund claims expeditiously. outputs and medium-term budgets. Federal Government has transferred over Rs. Data on remittances suggests that the monthly average for the period of July-April 2011-12 stood at $ 1. In addition.9 billion. During the first eleven months of the current fiscal year (June 2011-11th May 2012) broad money (M2) witnessed an expansion of 9.496 on June 20. 2012. Conversely. 107. Accordingly.2 trillion were provided during the last four years for PSDP.Pakistan Economic Survey 2011-12 general ban was placed on recruitment and purchase of durable goods. It is pertinent to mention that since the SBP was following a tight monetary policy till August 2011 and the interest rates were moving up. The expansion in NDA is mainly contributed by a rise in demand for private sector credit and government borrowings.11th May 2012 stood at Rs.8 percent while the weighted average deposit rate (including zero mark-up) stood at 6.8 percent. The net investment by the foreign investors in Pakistan’s Stock Markets during July-March. credit to the private sector witnessed a net increase of Rs. This indicates that bullish trend observed in Pakistani equity market is due to the restoration of the confidence of local investors and institutions.1 percent in China to 19. Demutualization and Integration) Act.8 billion in the same period last year. 2012 which will further strengthen the country’s stock markets. During July2011-11th May.618 on 7th May.000 and closed at 14.0 percent of GDP in July-April 2012 against 5.1 percent as compared to 11. the Government made a special effort to fully fund the PSDP. 2011. 234.03 percent positive growth in case of Philippines. mutually owned organization to for-profit entities owned by shareholders. As a result of these efforts. 2011-12 reflected a net outflow of US$176 million. 2012. Official transport assigned to entitled officers of BPS-20 to 22 was monetized to reduce expenditure on POL and repair and maintenance as well as drivers.profit.47 percent as compared to last year. Money and Credit: The SBP lowered the discount rate by cumulative 200 bps points to 12 percent during the first half of fiscal year 2011-12 in line with inflationary trend in the country. 2.5 percent by 11th May.9 billion against Rs. Net Foreign Assets (NFA) witnessed a contraction. 481. the leading stock markets indices of the world observed mixed trends with negative growth of 18. It is noteworthy that containing the deficit during the period under review was quite challenging as the burden of financing fell directly on domestic sources due to the non materialization of external inflows. It crossed the barrier of 14. The Government has enacted Stock Exchanges (Corporatization. Year-on-year growth in private sector credit was up 7. iv . Net Domestic Assets (NDA) during July 2011 . the highest level seen in last four years showing a growth of 17 percent over the closing index of last financial year. The decline in the weighted average lending rate is due to the lag involved in contracting fresh loans in the new declining interest rate environment and the decline in banks return on government securities.5 percent of GDP of the comparable period of last year. This was mainly due to the steps taken by the government to boost the confidence of the equity market investors which included reforms in the Capital gains tax. Subsidy expenditure was rationalized. etc. Capital Markets: The KSE 100 index stood at 12.8 billion compared to Rs. This resulted in a spread of 5. 2012. demutualization of stock exchanges would entail converting their structure from non. The weighted average lending rate (including zero mark-up) on outstanding loans stood at 12. The Government has now levied Capital Gain Tax on securities. The Government efforts can be gauged from the fact that Rs.98 percent in March 2012. Despite huge financial constraints. 880. 304 billion were released that facilitated in completion of 200 projects. Rs. The law requires stock exchanges to be demutualized within 119 days of its promulgation in accordance with timelines specified for completion of various milestones involved in demutualization exercise. Pakistani Stock market performed well as compared to markets of the world during the current fiscal year. Unlike the past. The deceleration in money supply is primarily driven by the significant fall in the Net Foreign Assets of the banking system along with increased government borrowing and a one-off settlement of circular debt. the banking spread remained high. Corporatization.6 billion during the same period last year. During fiscal year 201112. overall fiscal deficit was at 5. it was for the first time in many years that Public Sector Development Program did not face any cut. improve liquidity and enable stock exchange to attract international strategic partners. USA.5 percent and stood at $ 33. Efforts are underway to formalize Free Trade Agreements and Preferential Trade Agreements with many countries. Inflation has declined for the third consecutive year. Imports grew by 14. Hong Kong and U. Trade and Payments: The Government pursued vigorously to secure concessional duties package on 75 items from the European Union. The exchange rate averaged at Rs. It will help expand market outreach. During v . The Pak Rupee depreciated by 3. This has been achieved despite sharp increase in international oil prices.Executive Summary Demutualization would result in increased transparency at stock exchanges and greater balance between interests of various stakeholders by clear segregation of commercial. Australia.5 billion at the end-April 2012 compared to $ 17. Malaysia. the Cabinet and the Economic Committee of the Cabinet monitors the prices of essential items and take corrective measures to ensure that prices remain under check.024 billion as of March 31. attract new investors. Despite euro zone crisis.4 percent during July-April 2011-12 over the depreciation of 2.50/US$ during July-April 201011. UK. Singapore. The Government has constituted a National Price Monitoring Committee headed by the Finance Secretary with representatives of Federal Ministries and Provincial departments. Demutualization is wellestablished global trend and almost all stock exchanges worldwide operate in demutualized set up. It will help boosting Pakistan’s exports. It is expected that this will boost Pakistan’s exports to EU.8 percent and 10. Exports witnessed a strong performance last year attaining the highest level ever of $ 25 billion showing a growth of 30 percent. 2012 from a high of 25 percent in October 2008. one of the major trading partner of Pakistan. Afghanistan and Bangladesh. supply disruptions due to devastating floods of 2010 and heavy rains of 2011 and bank borrowings. Pakistan has witnessed some geographical diversification in exports. 12.A. Turkey among others.8 percent. This concentration is on continuous decline since 200506 and recently the share of these five markets stood at 35. regulatory functions and separation of trading rights and ownership rights.3 percent during JulyDecember 2011-12. Germany.1 billion during July-April 2012. It reflected both the price and quantity effect. These efforts have yielded results.1 percent and 10. Pakistan’s foreign exchange reserves reached to $ 16. Public Debt: Pakistan’s public debt stood at Rs. Exports during July-April 2012 were $ 20. Inflation: Price stability remained the priority of the government.E.7 percent whereas the share of all other countries increased to 64. The Committee meets every month. The current account deficit stood at $ 3. During 2005-06. impacting the demand for Pakistan goods.0 billion at end-April 2011.4 billion in the same period. 85. whereas it averaged at Rs.8 percent in the same period of last year. The World Trade Organization approved the package this year. The Afghan Transit Trade Agreement (APTTA) has encouraged formal trade between Pakistan and Afghanistan and the volume has risen to around $ 2. The enactment of this law has brought Pakistan capital market at par with other international jurisdictions like India.2 percent in July-April 2010-11 period. It was in single digit in December 2012.55/US$ during July-April 2011-12. 88.8 percent during July-April. 2012. It was largely as a result of high oil prices and import of fertilizers. Pakistan has successfully maintained its exports at last year’s until April this year. Food and non-food inflation averaged 11. Efforts are also in hand to normalize trade relations with India.) of the world and remaining share of all other countries was 52.5 million compared to $ 20. UK. In addition. 47.2 percent of the country’s exports were concentrated in five markets (USA.5 billion annually. Germany.7 percent respectively against 18. This improvement in geographical diversification was mainly the result of Strategic Trade Policy Framework (STPF-200912) introduced by the government and the resulting increase in exports to China. CPI was 10. Hong Kong. Continued support from current transfers in the form of workers’ remittances helped in containing current account balance.46 billion last year. effect of upward adjustment in the administered prices of electricity and gas. NHA is simultaneously constructing 12 bridges across the rivers. According to the Labour Force Survey 2010-11. At the end of March 2012. (ii) Railways. PR is being provided Rs.7 percent in 2010-11. on river Swan 1 and on river Indus 5.6 billion. on river Sutlej 2.3 billion against the budget amount of Rs. An Asset Management Company is being established for optimum utilization of PR’s assets.5 million in 2011.985 kms are ongoing costing Rs. Public debt as a percent of GDP stood at 58. cities development is one of the key pillars of Pakistan’s growth framework.9 million more than the last year. In this regard.6 million more than the last year. Private sector involvement is the focus moving forward. The government is making sincere efforts to boost overseas employment which will not only reduce the unemployment burden in the country but will also enhance remittances. Out of this potential labour force.3 billion per month from the budget to finance pay and pensions of Railway employees.4 million and 0. tunnels. rail experts and executive functionaries. Sustainable economic development is dependent on a robust and low cost transport system. The population in urban areas has increased from 65. Saudi Arabia.8 million. bridges.2 million people which is 0. the participation rate has increased from 13. which is 0. They can be a productive asset of the country if put to proper training and skill development. MoUs have been signed with number of labour importing countries such as Malaysia. flyovers and interchanges costing Rs. The Government arranged Rs. 6 billion loan for repair of locomotives and freight operations are also being prioritized for revenue generation. Emigrants sent abroad in 2010 were 0. The Cabinet Committee of Restructuring (CCOR) approved a restructuring framework for Pakistan Railways (PR). Accordingly.2 percent in 2009-10 to 13. Oman and Kuwait are the largest market of Pakistani workers. involving academia.Pakistan Economic Survey 2011-12 first nine months of the ongoing fiscal year. The government is committed to implementing a comprehensive and modernizing transport and logistics sector through continuous reforms in all of its sub sectors. Transport and Communication: The transport and communication sector is a major contributor to government revenues. These are: on river Chenab 4. Pakistan has a labour force of 57.720. Labour Force and Employment: Pakistan is endowed with demographic dividend with a bulging young population. management professionals. and Qatar etc. 245 billion in different sections/packages. Population. servicing of the public debt stood at Rs. 1034.5 million in 2011-12. Gulf State including United Arab Emirate (UAE). total public debt registered an increase of Rs. 46 development projects of roads covering 2.2 billion. In manufacturing sector. $179 million was added to the EDL stock. 71 billion. Pakistan is also facing rapid urbanization. The total labour force working in the agricultural sector remained unchanged during the period 2008-2011. (i) Roads. 391 billion consolidated by the Government into public debt against outstanding previous year’s subsidies related to food and energy sectors. The Ministry of Communications has prepared a draft National Transport Policy which covers all modes of transport sectors i. flyovers and interchanges. This policy also includes the National Transport Corridor Improvement Program (NTCIP) to make it more productive and environment friendly. river bridges. At present. New Board of Directors of PR has been instituted. Efforts are being made to develop an efficient. equitable and rights based labour market that provides the mechanisms for productivity growth in the economy which results in real wage increases. 2. During July-March 2012. The National Highway Authority completed 12 projects of flyovers.3 million in 2010-11 to 67. These projects include construction of roads. Enhanced export competitiveness is also contingent upon the efficient performance of this sector. interchanges and the upgrading of roads during the last one year at a cost of Rs. (iii) Ports and Shipping and (iv) Aviation.2 percent by end-March 2012.315 billion which includes Rs. 19. NHA has also launched and awarded 16 new development projects covering over 500 kms.e. the total number of people were employed during 2010-11were 53. Kuwait. 1. the Chamber of Commerce and Industries Lahore has been engaged for their freight transportation from vi . including construction of a number of bridges. over 7 million people have been accommodated through indirect employment. Loss mapping in each DISCO initiated to identify losses and their sources. The Energy Committee headed by the Finance Minister presented a well articulated Energy Recovery Plan to the Cabinet in November 2011 which was approved after due deliberations. Private Sector is also running a passenger train. Commercial management of rail operations and outsourcing of non-core functions is being initiated with an aim to improve efficiency of rail operations.0 billion by the end of the current financial year.9 million at the end of February 2012. 2013. Signaling system of four railway stations damaged during the riots of 2007 was rehabilitated during the period. a limit of 45 days for payment overdue has been set for disconnection. 1. Energy: Energy is considered to be the lifeline of economic development. Lahore through publicprivate partnership.Executive Summary Karachi to Lahore. Total mobile subscribers has reached 118. issuance of explicit guidelines of professionalizing the BOD.8 million belong to WLL. it is estimated that the cumulative investment in the electronic media industry will reach above $ 3.9 million.9 percent in 2011-12 against 60.4 percent in 2010-11. (ii) Supportive legislative framework: NEPRA law was amended authorizing NEPRA to notify fuel adjustment.3 million by the end of March 2012. 22 passenger coaches have been rehabilitated at the Pakistan Railway Carriage Factory Islamabad during the last year. More than 200.25 per kwh very recently to recover the full cost of electricity supply which is still Rs.000 new jobs with diversified skills and qualifications have been provided. 16 kms of track was rehabilitated on the Pakistan Railways network besides doubling the previous 15 kms of track. (v) Supply Side Management: reduction in transmission and distribution losses as well as running the most efficient plants. Remaining 150 passenger coaches will be manufactured at Pakistan Railway Carriage Factory Islamabad by June 30. Additionally. In addition. and business plans for each DISCO and GENCO to be developed by the newly hired CEO and approved by the new Board. 52 new design passenger coaches were imported from China. Pakistan’s economy has been growing at an average growth rate of almost 3 percent for the last four years and demand of energy both at the production and consumer end is increasing rapidly. GENCOs and CPPA.7 percent growth as compared to the previous year. In addition.5 billion in the electronic media industry in Pakistan. Usmanwala. (iii) Financial Sustainability of the System: the Government has increased electricity tariff by 90 percent and Rs. out of which 3. There has been a cumulative investment of approximately US$ 2.10 million belong to FLL and 2. (vii) Promoting Private Sector Participation (viii) changing fuel mix and (ix) changing energy mix moving towards hydel and coal based generation. Government facilitating recovery of dues of Provincial and Federal Government departments. Teledensity in the country has increased by 68. (vi) Demand Side Management: Standard Operating Procedure (SOP) issued for recovery of private receivables. extremely low collection than required (90 percent of the billed amount) by DISCOs always leaves a high balance as receivables. Mobile penetration rose to 64. and Media campaign for prudent use of electricity. Fixed Local Loop teledensity now stands at 1. The Plan focused on: (i) improving governance structure: it included dissolution of PEPCO and replaced by Central Power Purchase Authority. During February 2012. Raiwind and Kanganpur railway stations was carried out. the Government has launched a major vii . constituting new Boards of Directors (BODs) of 8 DISCOs and NTDC comprising professionals. Cabinet has approved amendment making electricity theft a serious crime. Broadband subscribers reached 1.93 percent. renovation of Khudian Khas. With the current growth rate of more than seven percent per annum in this sector. (iv) Resolution of Circular Debt: the Government has provided Rs. Construction of a D Class railway station at new Multan City. 1122 billion from the budget during the last four years to resolve circular debt issue. Subscribers of Local Loop (FLL + WLL) are 5. hiring professional CEOs for DISCOs.3 percent in April 2012. A new dry port was set up at Prem Nagar near Raiwind industrial area. However. showing 6. 3 per kwh below the determined tariff. During the financial year. Kot Addu Power Company (KAPCO) 6. Total expenditures in 2010-11 were 6. A total amount of Rs. an average 7. The government prioritized 17 pro-poor sectors through the Medium Term Expenditure Framework (MTEF) which provides a link between the policy priorities and the budget realties.2 and the Hub Power Company (HUBCO) 9. Social Safety Nets: The government is committed to a sustained poverty reduction strategy and to allocate a minimum of 4. Pakistan Atomic Energy Commission (PAEC) 3. 122 billion has been disbursed to its recipients up to March 2012. Karachi Electricity Supply Corporation (KESC) contributed 8. In this regard.6 percent. 4320 MW-Dasu. Almost 96 percent of the work on the main dam at Mangla.5 percent in 2008-09.6 percent in 2011.Pakistan Economic Survey 2011-12 energy conservancy program that includes two holiday a week. The floods of 2010 and heavy rains of 2011 significantly hurt the efforts to improve standard of living of the people. the loss to infrastructure and livelihood sources further impacted the people of these areas. Likewise 99. 1410 MW-Tarbela 4th Extension.6 percent. This was first year of the 7th National Finance Commission Award when 70 percent of the divisible pool was transferred to the provinces as well as transition was taking place as a result of 18th amendment.6 percent in 200910. spillway and allied facilities are completed and resettlement work is in progress. 80 MW Kurram Tungi Dam. 178 billion out which Rs. The gas sector viii supply increased by 4. (iii) Waseela-e-Haq.1 percent to total electricity generation. Liquified Natural Gas (LNG) Policy 2011 has been notified which encourages private parties to develop LNG projects and sets them free to participate in any segment of the LNG value chain.5 percent of GDP to social and poverty related expenditures. (ii) Graduation Initiatives. 7100 MW-Bunji. closing the markets at 8:00 pm. (iv) Waseela-e-Rozgar. has made a remarkable progress by providing much needed relief to over 4 million recipients all over Pakistan. The Government is also working on different gas pipelines as well as import of LNG and LPG to address the gas shortages. a flagship program of the Government.7 percent change occurred during the last ten years. (v) Waseela-e-Sehat and (vi) Waseela-e-Taleem to . 153 billion were contributed from domestic resources.9 percent in July-March 2011-12 as compared with the corresponding period of last year. 740-MW Munda Dam and 4500 MW-Diamer Bhasha Dam are in the pipeline. The Benazir Income Support Programme. The floods and rains affected approximately 20 million people directly and a much larger proportion indirectly. The average production of natural gas during July-March 2011-12 was 4236.7 percent work on Satpara and 72. a number of thermal projects are under implementation including 747 Guddu refurbishment.9 percent of GDP. Independent Power Producers (IPPs) have contributed almost 25 percent. Federal as well as Sindh Governments are actively pursuing to provide necessary infrastructure at Thar for exploiting these coal reserves for power generation.1 million cubic feet per day (mmcfd) as against 4050.1 percent on Gomal Zam dam have been completed. 7.m. Two blocs have been leased out on pilot basis. The contribution of Hydel in electricity generation increased to 33. BISP has launched a number of programmes including (i) Payment to Recipients. Thus the long term trend shows that there was an increase of production of coal. The number of recipients is expected to be increased to 7 million once the on-going processing of data collected during the “nation-wide poverty scorecard targeting survey” is completed.3 percent. The Government is implementing a number of priority hydel projects such as 969 MW-Neelum Jhelum. and Patrind in the private sector. Efforts are underway to provide the missing transmission link between Matiari and Thar. In addition. 7.6 percent of GDP. lighting alternate pole of the Municipalities and using air conditioners in offices after 11:00 p.6 (mmcfd) during the corresponding period of last year showing an increase of 4. Pakistan has huge coal reserves estimated at over 185 billion tones. Expenditure on pro-poor sectors in 2007-08 stood at 5. Over the last 4 years. BISP was provided over Rs. Pakistan is one of the beneficiaries of Tetra-partner power import project under the head of Central Asia-South Asia (CASA-1000) electricity trade. Workers Welfare Fund is also facilitating the poor labourers in industrial sector by providing funds for housing facilities and marriage grant. Government efforts alone. Zakat funds have been utilized for assistance to the needy. wheat and subsidized items through Utilities Stores. Pakistan Bait-ul-Mal is making a significant contribution towards poverty reduction through its various services by providing assistance to destitute. Rs. 137 billion for food items such as sugar. education. invalid. The environmental challenges include climate change impacts.5 billion has been incurred for these schemes. Invalidity Pension. PWP-I & II have been provided over Rs. 1122 billion for the power sector. handicapped and disabled for their subsistence and rehabilitation. The PPAF is dedicated for micro credit. During (July-March) 2011-12. indigent. vocational schools. 8 billion has been disbursed to 350.8 billion was distributed amongst the provinces and other administrative areas.8 billion has been utilised upto February 2012 on schemes such as individual Financial Assistance. poor. widows. livelihood enhancement and protection. are not enough and demand a much larger participation and ix . Rs. This has become increasingly difficult to achieve in the backdrop of back to back flooding and rains across the country as well as other exogenous and endogenous factors. Survivors Pension and Old Age Grants. A number of projects have been funded by the government to improve the capacity of relevant institutions to deal with increasing environmental degradation. enterprise development. because of the limited resources at its disposal. social mobilization. creed and religion through its ongoing core projects/schemes. The quality of the natural environment is not only an extremely important issue from the point of view of individual survival but it will also emerge as one of the principal human security issues in Pakistan. 104 billion for the petroleum sector in addition to foregone income of Rs. Rs. community based infrastructure and energy projects. farm to market roads. Rs.5 billion. there are a number of projects funded by the donors in which the government is a partner.Executive Summary mitigate the impact of stabilization program as well as inflation. These are being currently implemented to improve overall environment of the country. 2. Peoples Works Programme (PWP) I & II are welfare programmes comprising small development schemes providing village electrification. child support program. sweet homes etc. gas. In addition. health and other services to create jobs at the local level. loss of biological diversity. caste. 8. Up to March 2012. and capacity building. 38 billion during 2011-12. 1. the Provinces/Federal Areas are directly managing the distribution of Zakat to the beneficiaries. a total amount of Rs. After devolution of the subject of Zakat. 136 billion from Petroleum Levy by adjusting it downward to keep the petroleum prices lower than the international market. Federal Government provided Rs. floods and international prices. Environment: Pakistan continued to face challenges to achieve environmentally sound development. The Pakistan Poverty Alleviation Fund (PPAF) is yet another element of the country’s poverty reduction strategy. The overall disbursements for core operations during the period of JulyDecember 2012 were Rs. The Government has provided huge subsidies during the last four years to the vulnerable and poor to mitigate the impact of stabilization. 110 billion on fertilizer and Rs. widows. orphans. infirm and other needy persons irrespective of their gender.7. Employees Old Age Benefits Institution provides monetary benefits to the old age workers through various programmes such as the Old Age Pension. Government has also taken various micro-finance initiatives in collaboration with all stakeholders to generate employment opportunities and to eliminate poverty. death grant and scholarships etc. These include: Rs. deforestation and degradation of Air and Water quality. During the period of July-March 2012. orphans. 42 billion to the flood affectees through Watan Card as well as Citizens Compensation Damages Program. A total of Rs.485 beneficiaries. In addition. State of Economy in 2008 It is important to appreciate the state of economy inherited by the democratically elected Government and the challenges it faced as the Government presents 5th budget for the first time in the history of Pakistan. 92 percent people had access to drinking water by 2010 in Pakistan while this ratio was 85 percent and 89 percent in 1990 and 2000 respectively. Just when the economy was transitioning from stabilization to growth. access to drinking water to urban and rural population of Pakistan is 94 and 84 percent. Headline CPI 12-month inflation rose to 25 percent in October 2008. According to a report released by the WHO/UNICEF Joint Monitoring Program (JMP) 2012. The MDG target is to achieve the ratio of 93 percent by 2015. refineries. civil society.Pakistan Economic Survey 2011-12 support from other stakeholders including industry. growth and creating jobs. Pakistan was struck by the great floods of 2010. 2008. with an average of 87 percent in 2011. bridges. crops and livestock. incentivizing the private sector. and strengthening the social safety nets. global financial turmoil. By the time this Government assumed responsibilities in March 2008. More specifically: ` Real GDP growth slowed down in 2007-08 reflecting weaker performance of the agricultural and manufacturing sectors. The level of access to drinking water is quite impressive in Pakistan. with core inflation (excluding energy and food) increasing to 18 percent. External current account deficit widened to about $14 billion or 8½ percent of GDP in 2007/08. ` ` ` ` ` ` The Government had no choice but to go to IMF to strengthen international reserves and ensure fiscal stabilization. According to Pakistan Bureau of Statistics report (PBS) Pakistan Social and Living Standards Measurement Survey 201011. A large number of human lives were x . the government will continue to pursue policy of macroeconomic stability.6 percent of GDP in 2007/08 mainly because of a substantial increase in energy and food subsidies and import prices Gross reserves declined from $ 16 billion to $ 11 billion Domestic pressures and the global financial crisis led to rising dollarization and an outflow of deposits from the system in 2008 which contributed to a deterioration of liquidity conditions Karachi KSE-100 index dropped by one third. a combination of large exogenous price shocks (oil and food). and the public at large as well as the donors. Going forward. roads. Sanitation facilities are also improving. National Climate Change Policy 2011 provides a framework for addressing the issues that Pakistan faces or will face in future due to the changing climate. power stations. It caused severe damages to infrastructure. hospitals. huge expenditure on security and policy lapses during the political transition had set a stage for full blown crisis. schools. mobilizing domestic resources. Fiscal deficit rose to 7. prompting the Karachi Stock Exchange Board to impose a floor on the decline of all stock prices on August 27. extraordinary rains in 2011. 1.5 percent deficit in 2008.4 billion showing a growth of 28. particularly in the North-West. In addition. This year. (ii) it increased share of Balochistan to 9.2 billion. Currently. The total loss was estimated to be around $ 10 billion. poverty/ backwardness. Pakistan’s overall foreign exchange reserves stood at a record level of US$ 18. the trade deficit.7 percent on the back of pick up in agriculture and large scale manufacturing growth as compared to 3 percent last year Inflation: Average inflation seems remain close to the targeted 11 percent. great floods of 2010. It was followed by yet another spell of severe rains in Sindh and parts of Balochistan in 2011 causing a loss of additional $ 3 billion. The security development in the country during 2008-09. revenue generation and inverse population density. FY11 current account balance posted a small surplus of $ 0. exports have maintained last year trend during July-April 2012 despite adverse global environment Strong flow of remittances: The rising trend in remittances continued for the fourth consecutive year in FY12 as remittances are estimated close to US$ 13 billion as compared to $ 6. Achievements since FY2008 Inspite of huge challenges during the last four years including global economic contraction especially in the advanced economies. humanitarian crisis spawned by the security situation displacing over 3 million people resulted in huge budgetary costs. 633 billion in FY10 under 6th NFC Award to Rs. 999 billion in FY11 and Estimated Rs. remained in check. The exports surged to $ 25. and contracted by 8.7 percent as compared to the preceding year.2 billion in FY08 Build up of Foreign Exchange Reserves: The improvement in the overall external balance despite the contraction in financial account surplus helped build up foreign exchange reserves during FY11.09 percent (iii) 70 percent share of the divisible pool is now being transferred to the Provinces and Special Areas (iv) transfer to the provinces increased from Rs.204 billion in FY12 18th Amendment in the Constitution abolishing the concurrent list and transfer of 17 federal ministries to the provinces Autonomy to Gilgit-Baltistan Aghaz-e-Haqooq-e-Balochistan ` ` ` ` ` ` xi .Executive Summary lost. which had been a major factor in the deterioration of the external account in the past.3 billion as ` compared to 8. by the end of June 2011.4 billion despite repayment to the IMF as well as discharging all our obligations ` Several New Initiatives of the Government This Government has undertaken several new initiatives during the last four years. revenue collection. declining from the peak of 25 percent External Sector: Pakistan’s external account registered an unexpected improvement during FY11 providing much needed breathing space to the economy. continuing security situation. financial turmoil. The most significant initiatives include: ` 7th National Finance Commission Award: The Award was path-breaking as (i) it moved away from population as the sole basis for horizontal distribution of resource and gave due weightage to population. As a result.4 percent whereas the imports registered an increase of 14. Thus. required beefing up of security forces and mobilization of additional resources to deal with the situation. persistently rising energy prices.7 percent. the Government succeeded in: ` Maintaining macroeconomic stability by pursuing tight monetary policy and fiscal discipline Revival of Growth: Economy is recovering from the floods and exogenous shocks and real GDP growth is estimated at around 3. these are at $ 16. 2 trillion. road. Rs 85 billion under current budget and Rs 34 billion for development budget Energy Sector: Government injected professionalism in power sector by restructuring Board of Directors of some PSEs.000 internship to Master degree holders paying them Rs 10. water supply and sanitation Citizens’ Damages Compensation Program: Federal Government provided Rs 42 billion to the flood affectees Subsidies: Over the 4 years. It was spent to complete 657 projects in 4 years Peoples’ Works Program: Rs 130 billion were earmarked under Peoples Works Program-II (Rs 110 billion) and Rs 20 billion under PWP-I in 4 years for implementation of hundreds of schemes for electrification. gas supply. put hard budget constraint and resolved circular debt issue partially Tax Simplification: The government took many steps to (i) simplify the taxation system (ii) minimum tax slab increased from Rs 100. initiated alternate energy program.000 employees of those SOEs making them shareholder Internship Program: The Government also provided 100. 12 percent shares of 80 State Owned Enterprises were transferred to 500. In addition.000 per month Railways: Railway was provided Rs 119 billion over the last 4 years. Government has provided so far (i) over Rs 1122 billion towards tariff differential subsidy to maintain the notified tariff lower than the determined tariff (ii) Rs 104 billion in petroleum subsidy (iii) Rs 110 billion for fertilizer subsidy and (iv) Rs 137 billion in food subsidy.Pakistan Economic Survey 2011-12 ` Additional Resources to less developed areas in 4 years: It included (i) Rs 32 billion to Gilgit-Baltistan in 2 years (ii) Rs 71 billion to AJK and (iii) Rs 110 billion to FATA Public Sector Development Program: PSDP over a period of 4 years was Rs 2. Current year’s PSDP outlay is Rs 730 billion as compared to Rs 480 billion last year. ` ` ` ` ` ` ` ` ` xii . FBR revenue has moved from Rs 1 trillion in 2007-08 to around Rs 2 trillion in 2011-12.000 (iii) expanding the tax base by bringing new tax payers in the net (iv) improve the tax administration (v) Special Excise duties were eliminated (vi) gradual elimination of federal excise duty (vi) abolishing regulatory duties on 392 items (vii) elimination of zero ratings on key sectors Doubling the FBR Tax Revenues: As a result of these efforts. the Government lost Rs 136 billion in revenue by adjusting the petroleum levy downward Benazir Income Support Program: Additional resources of Rs 178 billion allocated for disbursement through BISP to vulnerable groups including Rs 153 billion from the budget ` ` Benazir Employees Stock Option Programme: Under this scheme.000 to Rs 350. Islamabad. Pakistan Economic Survey 2011-12 Economic Adviser’s Wing. Government of Pakistan. . Finance Division. ............................. Public Debt .........................................................................................Contents 1............... Labour Force and Employment .................................................................................... 16 17..................................... Trade and Payments ...................... 11 14..................................................................... 8 10........................................... 10 13............................................................................................ Social Safety Nets ......................................... 2 3...................................................................... 3 4....... 7 8.............. Inflation ......................................................................................................... Money and Credit ............................................................... Transport and Communications ......................... 17 ....... Population................................................................................................................................ 14 15.................................................................................................... Large Scale Manufacturing ........................................................................ Energy ............................................................... 6 7.............................................................. 1 2................................................................................................... 4 5.......................................................... 5 6........ 15 16....................................... Fiscal Development .......... Growth and Stabilization ............................................................................................... 8 11................................................................................................................ Environment. Health and Nutrition ....... 9 12............................................................................... Agriculture .... Capital Markets ............. Education ........................... 7 9...................................................................................... Flood Impact Assessment ............... ` Large Scale Manufacturing has also witnessed a slight improvement.51 percent and slaughtering growth is estimated at 4. sowing was also delayed because of late receding rain water in lower Sindh which resulted in a decline in both the acreage as well as the yields. 4.46 percent growth as compared to negative growth of 7.6 percent.38 percent during the year 2011-12 against the negative growth of 1.38 percent last year. ` Minor Crops growth declined by 1. Sugarcane and Rice witnessed growth in production of 18.13 percent against 2.23 percent last year.18 percent compared to a negative growth of 0. ` Small scale manufacturing maintained its growth of last year at 7. mining & quarrying and electricity and gas distribution.05 percent in July-March 2011-12 as against 0.7 percent mainly due to 2.HIGHLIGHTS Growth and Stabilization ` Real GDP growth for 2011-12 has been estimated at 3.56 percent compared to the growth of 3. ` Livestock witnessed a marginally higher growth of 4.95 percent as compared to the contraction of 0.0 percent in the previous fiscal year 2011.98 percent last year. The major crops including Cotton.25 percent last year.02 percent in 2011-12 against the growth of 4.9 percent and 27. ` The commodity producing sector has performed much better in outgoing fiscal year as compared to last year. This performance is dominated by Finance and 1 .09 percent in last year. However. ` Electricity and gas distribution witnessed a growth of -1. ` Industrial sector contains 25. ` Major Crops registered an accelerating growth of 3.06 percent last year. ` The Services sector has registered a growth rate of 4.62 percent against the growth of -7.28 percent against 1.4 percent of GDP having sub sectors: manufacturing.78 percent against the growth of 1. ` Fisheries sector witnessed a growth of 1.7 percent as compared to 3.04 percent against the growth of 3.46 percent against 4. its growth rate is 3.6 percent decline in area under cultivation.94 percent last year.26 percent.97 percent last year. construction. due to rains affect in Sindh resulted in destruction of minor crops. ` Construction Sector has shown 6. ` Manufacturing Sector registered growth at 3. ` Forestry recorded growth at 0.40 percent last year.28 percent last year. ` Mining and Quarrying sector recorded positive growth of 4.47 percent last year. Wheat registered a negative growth of 6.38 percent last year. ` Agriculture registered the growth of 3.45 percent in the last year. It has shown a growth 1.7 percent respectively. 1 percent as compared to 2. whereas public consumption expenditures is 13 percent of GDP.160 thousand tons in 2011-12 from 4.9 percent of GDP in 2011-12 as compared to 8. Total consumption has reached 88. ` Private investment witnessed a contraction of 7.0 percent in 2011-12 against the 2.6 percent. ` Per capita real income grew at 2.35 percent of GDP in fiscal year 2011-12 as compared to 83 percent in the last fiscal year.7 percent last year. ` Worker’s Remittances has increased to $ 10. ` Cotton production has increased to 13. Agriculture ` The agriculture growth this year stood at 3. ` Real private consumption grew at 11. Whereas. ` Private consumption expenditure has increased to 75 percent of GDP.876. ` Public investment as a percent of GDP increased to 3.7 percent. ` National Savings are 10. ` Sugarcane production has increased by 4.517 thousand tons in 2011-12 from 25.33 percent in 2011-12 as compared to 1.5 percent of GDP as compared to last year. posted a positive growth of 20.99 million in July-April of 2011-12.6 percent in 2011-12 as compared to 3.58 percent.77 percent and Wholesale and Retail Trade 3.5 percent of GDP in 2011-12 as compared to last year.9 percent to 58.2 percent last year.9 percent last year.2 percent in 2010-11.0 million tons in 2011-12 from 55.823 thousand tons in 2010-11 showing an increase of 27. ` Foreign Direct Investment in Pakistan stood at $ 666. ` Rice production has increased to 6. Social and Community Services 6. as against $ 9.2 percent in 2011-12 as compared to 5.61 million in the comparable period of last year.Highlights of the Pakistan Economic Survey 2011-12 Insurance at 6.4 percent during 2010-11. ` Total investment has declined from 13.6 percent of GDP last year.1 percent of GDP to 12.3 million tons last year.9 million last year. The contribution of transport. real government consumption grew at 8. 2 .25 percent.8 million during July-April 2011-12 as against $ 1292.33 percent growth in last year.460 thousand bales in 2010-11 showing an increase of 18. In dollar term it increased from $ 1258 to $ 1372 in 2011-12. ` Fixed investment has declined to 10.53 percent.9 percent of GDP in 2011-12 from 11.595 thousand bales in 2011-12 from 11.046.214 thousand tons in 2010-11 showing a decrease of 6.7 percent.7 percent of GDP in 2011-12 as compared to 13.23 percent. storage and communication is estimated at 1. ` Wheat production has decreased to 23. 3 percent). showing an increase of 15. Tablets (10. Nonmetallic mineral Products (2.4 percent). 3 . The total availability of DAP was 758 thousand tonnes including 271 thousand tonnes of imported supplies and 263 thousand tonnes of domestic production.4 percent). respectively.5 percent).9 percent).Highlights of the Pakistan Economic Survey 2011-12 ` Gram production has decreased to 291 thousand tons in 2011-12. However. Tea blended (13. Cement (2. Electric Transformer (31. as compared to Rs.2 percent). ` Agriculture credit disbursement of Rs. The estimated demand is around 620 thousand tonnes during Kharif 2012.8 percent) and Textile (0.9 percent).4 percent). 361 thousand tonnes of domestic production and 300 thousand tonnes of imported supplies.202 thousand tonnes.Likewise estimated DAP availability during Kharif 2012 will be around 838 thousand tonnes comprising 177 thousand tonnes of opening stock. ` The total availability of urea during Rabi 2011-12 was 3.98 percent during the same period last year. ` Maize production has increased to 4.0 percent.1 percent).8 percent.526 thousand tonnes comprising of domestic production 2. Sugarcane Machine (19. Large Scale Manufacturing ` During the first nine months of the current fiscal year 2011-12. from 496 thousand tons in 2010-11 showing a decrease of 41.2 percent). Likewise the total estimated availability of urea during Kharif 2012 will be around 3487 thousand tonnes comprising 800 thousand tonnes of opening stock. Heavy Machinery & equipments (21. the production of mung and potatoes increased by 22.271 thousand tons in 2011-12 from 3.9 percent).710 thousand tonnes. LPG (3.2 percent. 2280 thousand tonnes of domestic production and 407 thousand tonnes of imported supplies. which reflects comfortable situation. Large Scale Manufacturing (LSM) posted a growth of 1. 197. ` The Rabi 2011-12 started with 224 thousand tonnes of DAP as opening stock.7 billion over the same period last year.The total offtake was 2. 168.The total offtake is estimated around 3200 thousand tonnes during Kharif 2012 leaving a stock around 287 thousand tonnes.4 percent and 12.5 percent. Liquids/Syrups (14. The offtake of DAP during Rabi 2011-12 was about 572 thousand tonnes leaving behind 177 thousand tonnes of opening stock for Kharif 2012.707 thousand tons in 2010-11.8 percent).9 percent) and Sugar (15.3 percent.160 thousand tonnes and imported supplies of 1.4 billion during July-March 2011-12 is higher by 17.7 percent). ` Items wise contribution in Large Scale Manufacturing indicates growth in Generating Sets (143. 15. Footwear (6.0 percent).2 percent). onion and masoor decreased by 78.0 percent and 17. Sugar (15. ` The groups wise showing increase included: Pharmaceutical (10. the production of chillies. respectively. Blankets (109.8 percent). Paper and Board (8.3 percent).3 percent. ` In minor crops. Wood Product (7. Food Beverages and Tobacco (6.9 percent).3 percent).05 percent as compared to growth of 0. Jeeps & Cars (8. leaving a stock of 800 thousand tonnes for next season. Leather Product (1. 3 percent. iv.2 percent.5 percent. pesticides. 16. followed by customs 17. The following tax measures have been taken through these amendments:i. 5.7 percent has been recorded in sales tax receipts. Through a combination of Presidential Ordinance and withdrawal of SRO base exemptions. carpets. vi. Removal of SRO based exemptions from fertilizer. sports goods and surgical goods.7 percent and 3. ` Tax collection by the FBR was targeted at Rs 1952. machinery and equipment. Revenue collections of FBR stood at Rs 1426.4 percent. Flourite. LCVs and two/three wheelers managed significant growth at 23 percent.0 percent during July-March 2011-12 as compared to 5. The main contribution to this modest performance came from Chromite. Additional efforts are being made to manage the fiscal deficit within the acceptable level through austerity measures and reforms in public sector enterprises.1 percent respectively as compared to 24. 2011-12. Chalk and Natural gas which posted a positive growth of 591. Withdrawal of special regime of assessable price for levy of GST at 8 percent on actual value of sugar. 4 . however Special excise duty was abolished in 2011-12.0 percent growth over Rs 1149.Highlights of the Pakistan Economic Survey 2011-12 ` Automotive Industry such as Buses. Fiscal Development ` Fiscal deficit is recorded at 5. 19 billion collected by Sindh province on GST on Services. 23.6 percent.1 percent.3 billion for fiscal year 2011-12. Income Tax Ordinance 2001 and Federal Excise Act 2005. iii. amendments have been made in the Sales Tax Act 1990. 111.3 percent and 12. 9. v. ` Mining and quarrying sector 4. leather. 82.0 percent respectively during the current financial year.2 percent and 4.7 percent.5 percent.3 percent last year.4 percent in 2011-12 as against -1. The withdrawal of exemptions and the left over amount of 15 percent flood relief surcharge contributed an additional amount of around Rs 50 billion during JulyMarch. Among the four federal taxes. ` The government has also announced various tax policy measures through Presidential Ordinance to generate additional revenues.7 percent. thereby reflecting 24. ii.0 billion during July-April 2011-12. Cars.8 billion collected during the corresponding period last year. Levy of 15 percent surcharge on income and advance taxes Increase the rate of special excise duty from 1 percent to 2. 82.5 percent last year.6 percent during the same period last year. and direct tax 22. It does not include Rs. tractor and elimination of zero rating from plants. the highest growth 33. Restriction of zero rating to registered person for export of textile. Bauxite. ` The government is focused on prudent expenditure management and better resource mobilization to create fiscal space for providing support to growth. 47 percent during the same period in 2010-11.2 billion including Rs. to assist in boosting the private sector credit and investment. Within Revenues tax revenues stood at Rs 1379. ` The credit to private sector witnessed a net increase of Rs. contributing 37. ` Broad Money (M2) witnessed an expansion of 9. reflecting an increase of 14.3 billion during July-11thMay. 2012 loans for commodity finance registered a net retirement of Rs 81. 367.9 billion against Rs 2262. 2976. ` Net Domestic Assets (NDA) during July-11thMay. 506. 528. 234.2 billion.1 billion in the same period of 2010-11.9 billion of development expenditure and net lending (20 % of total). ` Total revenues reached to Rs 1747.0 percent of total receipts.8 billion during July 2011-11thMay.Highlights of the Pakistan Economic Survey 2011-12 ` For July-April.897.09 percent during July-11th May. 3721. 2011-12 as compared to 11.3 billion from the State Bank of Pakistan. Government has borrowed Rs.89 percent over the last year. while Rs 642. Money and Credit ` SBP lowered the discount rate by cumulative 200 bps points to 12 percent during first half of fiscal year 2011-12. 2011-12 total expenditures amounted to Rs 2641. 1.1 billion in the same period of fiscal year 2010-11.2 billion as compared to an increase of Rs 181.1 billion borrowed from the scheduled banks. ` The weighted average lending rate (including zero mark-up) on outstanding loans stood at 12. comprising of Rs.1 billion and development expenditures and net lending recorded at Rs 428 billion during July-March.6 billion of provinces.321. 2012 and accounted for 62. Net collection was estimated at Rs.8 billion in the same period last year.6 billion in the same period last year.98 percent in March 2012. Net collection was estimated at Rs.9 percent during July-April. Current expenditures stood at Rs 2154. ` On the other hand Net Foreign Assets (NFA) of the banking system during the period under review declined to Rs 272.6 billion during the same period last year. ` Government borrowing from the banking system for budgetary support and commodity operations stood at Rs 1.9 percent of the total FBR tax revenue.9 billion during the same period of fiscal year 2011-12. direct taxes have been a major source of FBR tax revenue collection. 2011-12 as compared to Rs.2 billion was estimated for the full year.9 billion against Rs 481. The retirement was primarily concentrated in the second quarter of fiscal year 5 .80 percent while the weighted average deposit rate (including zero mark-up) stood at 6. 744. 2011-12.442.5 billion in the comparable period of the last year.5 billion of Federal and Rs 57.003. 2012. 2012 stood at Rs 880. and non tax revenues remained at Rs.3 billion of current expenditure (80% of total). ` Total expenditure of Rs.3 billion in the same period of last year. 2011-12 against Rs 1495.9 billion. ` During July-March. and Rs. 2012 as compared to Rs 107. ` During July 2011-11th May.0 billion during July-March. ` Indirect taxes grew by 24.6 billion against the retirement of Rs 101. ` The Stock Exchanges (Corporatization.6 billion in 2010-11 to Rs 142. 159.108.303 million.Highlights of the Pakistan Economic Survey 2011-12 2011-12 as the government released Rs 78 billion to procurement agencies for the settlement of accumulated subsidies. Capital Markets ` The Pakistan Stock Markets remained range bound during first half with predominately declining trend (9. 2012) and 120 days (till June 30. ` The government conducted seven auctions of Pakistan Investment Bonds (PIBs) during 2011-12 (Jul-Mar) raising Rs. ` The Pakistani Stock markets performed well during the current fiscal year as compared with the other world indices.6 billion. ` During the period July . 2012. in a joint session of the Parliament. ` The investment by foreign investors in the capital markets during the period from July. no question relating to the source/nature of money will be asked by the tax authorities if the money remain invested in the stock market for a period of 45 days (till June 30.246 billion. etc. 2012 depicted a net outflow of US$ 176. 2014) before and after the promulgation of CGT Ordinance. the KSE -100 index resumed momentum during the 3rd and 4th quarters of the FY 12. Demutualization and Integration) Act. collect and deposit the CGT on listed securities. demutualization and integration of the stock exchanges. This was mainly due to the steps taken by the current government to boost the confidence of the equity market investors which includes reforms in the Capital gains tax. The law requires the stock exchanges to be demutualized within 119 days of its promulgation in line with pre-defined timelines specified for completion of various milestones involved in the demutualization exercise. 2012 credit to public sector enterprises registered a sharp decline from Rs 10.393 billion by Pakistan Domestic Sukuk Company Limited.March. 2011 to March. In addition. was promulgated with the signing of the bill by the President of Pakistan on May 7. ` During July 2011-11thMay. 2012 a total of six debt securities were issued through private placement including two Sukuk Issues of Rs. determine. 2012. Further. The demutualization bill was approved on March 27. 6 . the market sentiment was boosted by the promulgation of the Capital Gain Tax Ordinance. 2012. ` Under the CGT Ordinance the National Clearing Company of Pakistan Limited (NCCPL) has been appointed as an intermediary entity to compute. ` The robust performance of Pakistani stock markets during 2nd half of 2011-12 was due to certain encouraging measures like considerable reduction in discount rate by the central bank during later period of the first half of CFY and increase in foreign exchange reserves. However.2 percent). ` The demutualization law provides a framework for the corporatization. This reflects that present bullish sentiments in the equity markets are due to restoration of the confidence of the local investors. 2 percent against 21.8 percent during (July-April) during current fiscal year 2011-12. electricity and fuel prices. the Securities and Exchange Commission of Pakistan has recently approved notification of the Debt Securities Trustee Regulations (DST Regulations). ` The food inflation on average basis is estimated at 11.0 percent last year. ` The Sensitive Price Indicator (SPI) recorded at 8. ` Financial Account surplus during July-April 2011-12 stood at $ 1200 million as compared to $ 690 million in corresponding period last year.1 percent of last year.5 percent compared with the same period of last year. ` The rise in non-food inflation has resulted from the upward adjustment in energy.225 million during the same period last year. ` The increase in overall inflation has driven by rise in world commodity and fuel prices. against 18.2 percent. ` Services account deficit reached to $ 2. 2011-12 on annual average basis has recorded at 11.8 percent in the comparable period of last year.5 percent during July-April. better supply management and regular monitoring of prices and supply chain by the Cabinet and National Price Monitoring Committee. inflation has been contained during current fiscal year as compared to last year due to tight monetary policy. ` Core inflation is estimated at 10. ` However.1 percent and non-food 10. ` Current Account Deficit stood to $ 3394 million in July-April 2011-12.Highlights of the Pakistan Economic Survey 2011-12 ` In one of the major moves towards the development of a vibrant debt market in Pakistan. ` Imports during the first ten months (July-April) of the fiscal year 2011-12 increased by 14. gas.4 percent during July-April 2011-12. The main objective of the DST Regulations is to protect the interests of debenture holders.347 million during July-April 2011-12 as compared to $ 1. depicting an increase of 20. Trade and Payments ` In absolute terms. ` Exchange rate of Pak Rupee depreciated by 3. ` The Wholesale Price Index (WPI) during July-April.8 percent and 10.4 percent during July-April 2011-12. against 13.7 percent. 2011-12 against 18. Inflation ` The inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 10. reaching to $33. exports have increased from $20460 million in July-April 2010-11 to $ 20474 million in the period thereby witnessing a growth of 0.8 percent in the corresponding period of last year.1 percent during the first ten months (July-April) of the fiscal year 2011-12. disruption in domestic supply chain by the floods. ` Worker’s Remittances reached to $ 10877 million during July-April 2011-12 as against $ 9046 million in the comparable period of last year. 7 .15 billion. 206. Public Debt ` During first nine months of current fiscal year (2011-12).315 billion and stood at Rs.12. ` The bulk of the increase in public debt in the first nine months of 2011-12 has been recorded under domestic debt that accounted for 91 percent of the total increase.5 billion in the first nine months of the current fiscal year. During July-March 2012. as compared to 57 percent in 2008-09 . ` The domestic debt grew by 19. ` As a percentage of GDP in dollar terms. ` The total domestic debt is posted at Rs 7. The focus on deficit financing through internal sources owing to lower external receipts has been the major cause.8 percent in first nine months of current fiscal year.719 billion against the budget amount of Rs. ` Public debt as a percent of GDP stood at 58.5 percent of GDP during the same period last year. ` The Gross Enrolment Rates (GER) at the primary level excluding katchi (prep) for the age group 5-9 years at National level during 2010-11 increased slightly to 92 percent from 91 percent in 2008-09. Khyber Pakhtunkhwa improved from 87 percent to 89 percent and Balochistan declined slightly from 75 percent to 74 percent in 2010-11 8 . ` Domestic debt comprises permanent debt.2 percent by end-March 2012 as compared to 55.1.04 billion and by banks $ 4.9 billion at the end-March 2012.3 billion as of March 2012. Literacy remains much higher in urban areas than in rural areas and much higher for men than for women.45 billion.5 percent and 23. Punjab shows a marginal increase from 97 percent in 2008-09 to 98 percent in 2010-11.Highlights of the Pakistan Economic Survey 2011-12 ` Foreign Exchange Reserves stood at $ 16.5 percent) and approximately to 26. 54. servicing of the public debt stood at Rs.1034. ` As at the end of March 2012. Khyber Pakhtunkhwa with 50 percent and Balochistan with 41 percent. floating debt and unfunded debt having shares of 21.1. 2012. Education ` According to the Pakistan Social and Living Standard Measurement (PSLM) Survey 2010-11 and last PSLM 2008-09.6 percent.190.2 billion. Of which. $179 million was added to the EDL stock. Sindh remained stable with 84 percent. total public debt registered an increase of Rs. reserves held with the State Bank of Pakistan stood at $ 12. representing an increase of Rs. Amongst the provinces. the EDL was down by 200 basis points in JulyMarch. 2012 compared to fiscal year 2010-11 (28.5 billion at the end of April. Province wise data suggest that Punjab leads with 60 percent literacy followed by Sindh with 59 percent.9 percent respectively in total domestic debt.5 percent. ` Pakistan External Debt and Liabilities (EDL) stock was recorded at $60. the literacy rate for the population (10 years and above) is 58 percent during 2010-11.024 billion. 4 percent.958 dentists. 450 dentists.500 paramedics have completed their academic courses and 4. During the period 2008-12 a number of 3996 scholarships were awarded under different programmes. 10.000 nurses and 4.244 nurses and 104.244 nurses and 108.426 persons per dentist and 1.137 hospital beds in the country during 2011-12 compared to 144.5 thousands during 2011-12. 9.3 thousand during 2011-12. Punjab shows a decrease from 62 percent in 2008-09 to 61 percent in 2010-11.300 doctors. 10.3572 scholars proceeded to avail these programmes on merit basis and a number of 1650 scholars completed their studies.118 youth received vocational and technical training under the President’s Funni Maharat Programme and Prime Minister’s Hunermand Pakistan Programme.206 persons per doctors. 9 .3 thousands as compared to 38202.665 persons per hospital bed.842 dispensaries. The NER at the National level during 2010-11 slightly decreased to 56 percent from 57 percent in 2008-09. Khyber Pakhtunkhwa witnessed a decrease from 52 percent to 51 percent and Balochistan improved from 44 percent in 2008-9 to 47 percent in 2010-11 The overall number of enrolments during 2010-11 were 39900. while 15 rural health centres and 35 basic health units have been upgraded.508 dentists. The number of teachers during 2010-11 were 1409. 16. This number is estimated to increase further to 1445. ` With availability of 149. However. 73. Health and Nutrition ` At present. ` HEC is also playing its role in running different scholarship programmes to enhance the academic qualification at various levels on merit basis in line with requirement. Moreover.201 doctors. the population and health facilities ratio worked out 1. 76. This shows an increase of 4. 4. ` ` A total of 134. ` ` 4.7 percent. some 7 million children have been immunized and 20 million packets of ORS has been distributed.374 basic health units and 909 maternity and child health centres in Pakistan. ` In addition to ongoing various health programmes such as cancer treatment.1 thousand during the same period 2009-10 showing an increase of 1. 3. there are 972 hospitals.0 thousands during the same period last year.4 thousand as compared to 1386. Malaria Control Programme. 5.Highlights of the Pakistan Economic Survey 2011-12 ` The Net primary level enrolment rates at the National/Provincial (excluding katchi abadies) level for the age group 5-9 years.4 thousand during the same period 2009-10.137 hospital beds last year. the number is estimated to increase to 228. ` During 2011-12. this year special focus was given by Federal as well as Provincial Government to “Dengu Epidemic Control Programme”. Sindh also shows decrease from 54 percent to 53 percent in 2010-2011. AIDS prevention. 30 basic health units and 7 rural health centres have been constructed.8 thousand during 2010-11 as compared to 228. It is estimated to increase to 41596.901 doctors.0 thousand during the year 2011-12.000 new beds have been added in the hospitals.500 Lady Health Workers (LHWs) have been trained and deployed mostly in the rural areas. The number of institutes stood at 227. 94 million to 2. ` The minimum wage of labour has been increased to Rs.000 from Rs.33 million in 2009-10 to 57.55 million to 0.03 percent in 2011-12 while it was 2. 0.53 million and in Baluchistan unemployed people also increased from 0.7 percent in 2010-11.Highlights of the Pakistan Economic Survey 2011-12 ` The total outlay of health sector is budgeted Rs. 7. Population Growth Rate is 2. The share of wholesale and retail trade has decreased from16.9 billion for current expenditure which is equivalent to 0.0 percent in 201011.24 million in 201011.84 million. in Sindh from 0. ` Agriculture sector is the largest provider of employment to 45 percent of total labour force.3 percent to 16.20 per thousand in 2011-12. ` Infant Mortality Rate decreased to 69. Labour Force and Employment ` Population of Pakistan is estimated 180.55 million from 65.2 percent to10.2 per thousand and Crude Death Rate has decreased from 7. 28.0 per thousand in 2011-12 from 70. 2012.06 million to 0.1 billion which included Rs.2 percent while.57 million to 0.5 per thousand in 2010-11.The unemployment rate is high in Punjab as compared to other provinces while in KPK unemployment decreased.3 million in 2010-11 while rural population has increased to 113.8 percent in 2010-11. ` Contraceptive Prevalence Rate has decreased from 30 percent to 27 percent in 2011.4 children per women in 2011-12 as compared to 3.2 billion for development and Rs.70 million in 2010-11.1 million in Punjab. ` The number of unemployed people increased from 1.71 million during the year 2011-12.63 million more than the preceding year.000 as announced by the Prime Minister of Pakistan on 1st May.07 million in 2010-11.16 million from 111.82 million in 2010-11 ` Total Fertility Rate (TFR) reported 3.3 years for male in 2011-12 ` Crude Birth Rate has improved from 27.8 years to 66.5 in 2010-11. ` Life Expectancy rate has increased from 65. 8.26.3 per thousand to 7.55. The employment share by manufacturing sector has increased from 13.6 percent in 2009-10 to 6. 10 .23 percent in 2010-11. the share of community/social and personal service sector decreased from 11.05 percent in 2010-11 ` Urban population has increased to 67.2 percent in 2009-10 to 13. ` The total labour force has increased from 56.27 percent of GDP during 2011-12 as compared to 0. In KPK the situation is different the unemployed people decreased from 0. Population. ` Total unemployment rate has increased from 5.9 years to 64. ` The total number of people employed during 2010-11 was 53.1 years for female and 63.5 per thousand to 27. interchanges and road up gradation during the last one year at a cost of Rs 19. are being corporatized for eventual privatization subject to approval of the government. interchanges.951 million. ` Heavy rains and floods severely damaged the Transport and Communication system during last two years ` Preliminary estimates indicate that road network approximately 8. on rivers Sutlej 2.8 percent of total labour force in 2010-11as compared to 73. These are. ` NHA has completed 12 projects of flyovers.985 km are ongoing at a cost Rs 245 billion in different sections/packages. ` Ministry of Railways has created a “Real Estate Development and Marketing Company” as subsidiary of Ministry of Railways. equipment. 46 development projects having length of 2. flyovers. tunnels.073 million semi skilled. ` NHA road network is around 12.Highlights of the Pakistan Economic Survey 2011-12 ` Informal sector employs 73.17 million skilled.0030 million highly skilled and 0. ` Ministry of Railways has also adopted a “Track Access Policy” for private sector participation to operate freight and passenger trains on Pakistan Railways infrastructure. 0.2 percent) in 2010-11. NHA is simultaneously constructing 12 Bridges across the rivers. Transport and Communications ` The roads in Pakistan carry over 96 percent of inland freight and 92 percent of passenger traffic and undoubtedly the backbone of Pakistan’s economy. ` Six factories including Locomotive Factory Risalpur.000 km. These projects include construction of roads. flyovers and interchanges costing Rs. river bridges.000 km which caters services to eleven million vehicles of all type. Carriage Factory Islamabad.385 km and 190 km railway lines were damaged including bridges and allied structures. on river Chenab 4. 0. 70. Sukkur and Kotri. bridges.5 percent) is higher as compared to that in the urban sector (71. on river Swan 1 and 5 on river Indus.6 billion. exchange centres. ` The Government of Pakistan is making sincere efforts to boost overseas employment. ` At present. 0. and four Concrete Sleeper Factories in Kohat. which is merely 4 percent of the overall road network but takes 80 percent of Pakistan’s commercial traffic.0069 million highly qualified workers. Khanewal. ` The telecommunication infrastructure includes damages to cellular sites.45 million in 2011 which include 0.9 million.The employment ratio in rural informal sector is (76.3 percent in 2009-10.36 million in 2010 which has increased to 0. NHA has launched/ awarded 16 new development projects covering a length of above 500 km inclusive construction of a number of bridges. ` During the current financial year. The number of emigrant was 0. power system and supporting civil works is amounting to $1. ` Pakistan’s current road network is about 260. 11 .20 million unskilled. In addition.1 million tones while Gwadar Port earned total revenue since its start of operation amounting to Rs. 116.02 billion in year 2011 as compared to 107. ` Karachi Port Trust handled cargo 27. ` The volume of import cargo during July-March 2011-12 stood at 14.8 million tones during the first 9 months of the current fiscal year. 6. and exports handled 4. 16 kms of track was rehabilitated on Pakistan Railways network besides doubling more than 15 kms of track.9 million tones during July-March 2011-12. aviation etc. 6772 million last year. ` Two new destinations have been introduced during the year 2011: Karachi – Madina and Quetta – Zahedan ` Three new routes were introduced during the year 2011: Peshawar .7 million tones. This policy also includes the National Transport Corridor Improvement Program (NTCIP).e. ` Port Qasim Authority handled a cargo volume 19. 53.7 million tones during July-March 201112. (iii) Ports & Shipping and (iv) Aviation. 4. ` Pakistan International Airlines Corporation earned increased revenue amounting to Rs. A purchase agreement of five Boeings 777 has been signed. railway. ` Renovation of Khudian Khas.1 billion. ` A new dry port was set up at Prem Nagar near Raiwind industrial area. while two more vessels will be acquired in next financial year. roads. ` Total cargo handled on Gawadar port up till now is 4. This programme has been launched in the country to revamp the whole transport sector including ports.640 million as compared to Rs.Highlights of the Pakistan Economic Survey 2011-12 ` Cabinet Committee of Restructuring has approved a restructuring framework for Pakistan Railways. and provides a frame work to develop and improve the North South corridor. 22 passenger coaches have been rehabilitated at Pakistan Railway Carriage Factory Islamabad during last year.3percent in April 2012. Usmanwala. 494. (ii) Railways. ` Ministry of Communications has prepared a draft National Transport Policy which covers all modes of transport sectors i.Kuala Lumpur.0 million. ` Teledensity of the country has increased by 68. 2013. Acquisition of two vessels is in process.0 billion last year. ` During the last financial year.4 million. 24.7percent growth as compared to the previous year. Lahore through Public Private Partnership at a cost of Rs. (i) Roads. ` The Corporation intends to acquire four vessels through commercial loan / joint venturebasis. ` 52 new design passenger coaches were imported from China at a cost of Rs.0 million to improve facilities for the passengers. Sialkot–Riyadh and Sialkot–Dammam. ` The consolidated revenues of PNSC group during July-March 2011-12 were Rs. showing 6. Raiwind and Kanganpur railway stations was carried out at a cost of Rs. Remaining 150 passenger coaches will be manufactured at Pakistan Railway Carriage Factory Islamabad by June 30. 12 . ` 55 Small and Smart Express Centres have been set up in the urban areas.3 million by the end of March 2012 as compared to 108. ` Broadband subscribers reached 1.9 million last year. ` Subscribers of Local Loop (FLL + WLL) reached at 5. ` In 2011.4percent in 2010-11 which shows an improvement of 4.797 urban and 10.5 billion in the electronic media industry in Pakistan. ` Due to mobile substitution. documentaries and programmes for special occasions. standing at Rs. features. Nepal and Sri Lanka.000 people of diversified skills and qualifications have been provided.1 percent last year showing a decrease of 0. External and Local News bulletins besides resume of National Assembly and Senate. ` There has been a cumulative investment of approximately US $ 2. In addition.642.0 billion by the end of the current financial year.035 (1.2 billion show an increase of 5. special news bulletins from PBC Hyderabad on rain/ flood situation and ongoing rescue and relief activities in Urdu and Sindhi languages. telecom sector attracted over US$ 79 million Foreign Direct Investment (FDI) in the country which is about 5 percent of the total FDI landed in Pakistan in 2011. Bangladesh. ` PBC External Services.83 million belong to WLL.10 million belong to FLL and 2. 13 .Highlights of the Pakistan Economic Survey 2011-12 ` Mobile penetration rose 64.93 percent compared to 2. telecom sector invested US$ 495.17 percent. China. ` Total mobile subscribers reached 118. New jobs to more than 200.8 million with cellular mobile sector being the major contributor. broadcast programmes for 08 hrs daily in 11 foreign languages covering Afghanistan. CPU has over 2 million minutes recording in its archives which are being digitized.0 million have been paid within prescribed period of time. ` Money Orders of Benazir Income Support Programme amounting to Rs.4 percent.16. it is estimated that the cumulative investment in the electronic media industry will reach above $ 3. 363 billion compared to the last year 344. Iran. These include National.3 percentage points in total teledensity.9 million at the end of February 2012.238 rural) post offices across the country. ` Central Production Units (CPU) produce music. drama. ` In 2011. India. ` The Pakistan Telecommunication Authority and the State Bank of Pakistan have signed a Memorandum of Understanding (MoU) both the institutions have shown their interest and commitment in stimulating mobile banking services in the country. Regional. ` PBC News is putting on air 117 News bulletins daily. ` Pakistan Post provides services through a network of 12. ` Revenues of the telecom sector during the 2011-12.9percent in 2011-12 against 60. Auction of 3G licenses is expected which will bring more FDI in the country.93 million. PBC news launched broadcast FATA News. over seven million people have been accommodated through indirect employment. Fixed Local Loop teledensity has been declining over the years and it stands now at 1. out of which 3. With the current growth rate of more than seven percent per annum. on priority basis.2 and 9. 7100 MW-Bunji. ` Transport sector surprisingly showed a relative small growth of 3.Highlights of the Pakistan Economic Survey 2011-12 ` During the period July-March 2011-12 an amount of Rs.1 percent on Gomal Zam dam has been completed.6 percent in 2010-11.16 percent. ` The gas sector supply increased by 4. 740-MW Munda Dam and most mentionable 4500 MW-Diamer Bhasha Dam projects.3.83 million cubic feet per day (mmcfd) in corresponding period last year.139 million tones compared to 8. ` WAPDA is executing. to cope with the increasing demand of power.9 million has been collected through National Savings Schemes and earned commission amounting to Rs. ` Natural gas in the form of CNG posted a positive growth 10.6. ` The consumption of petroleum products in the power sector was 8. ` The average crude oil production during July-March 2011-12 remained 66032 barrels per day as against 65997 barrels per day during the corresponding period of last year.1 million tones during corresponding period last year.814 million tones last year which hampered the growth in this sector.266. spillway and allied facilities had been completed and resettlement work is in progress.09 million TOE last year thus showing an increase of 2.9 percent in July-March 2011-12 as the average production of natural gas was 4236. 6. 3. showing an increase of 0.52 million TOE compared to 63. 4320 MW-Dasu. Pakistan Atomic Energy Commission (PAEC).3 million during this period. Water and Power Development Authority (WAPDA) remained the main contributor to electricity generation with 48.832. Kot Addu Power Company (KAPCO) and the Hub Power Company (HUBCO) have 8.1 percent.7 percent coming from this source. ` Almost 96 percent work on the main dam at Mangla.3 percent.9 million tones during July-March 2011-12 compared to 6. Karachi Electricity Supply Corporation (KESC). respectively. thus posting negative growth of 5. Independent Power Producers (IPPs) have contributed almost 25 percent.050. the projects such as 969 MW-Neelum Jhelum..371 Tone Oil Equivalent (TOE) in 2010 posting a positive growth rate of 0.05 percent. 801.372 Tone Oil Equivalent TOE compared to 0. Likewise 99. ` The industrial sector had shown positive growth of 24. 14 .8 percent during July-March 2011-12.06 million cubic feet per day (mmcfd) during this period while it was 4. The availability of energy per capita in 2011 remained 0.2 percent in this sector. 160. Energy ` Primary energy supply during current year is 64.2 percent in the consumption of petroleum products during July-March 2011-12 when compared with last year. ` The contribution of Hydel in electricity generation increased to 33. 1410 MW-Tarbela 4th Extension.5 percent in the consumption of petroleum products as consumption of petroleum product in transport sector remained 6.599.7 percent work on Satpara and 72. 04MW. 4. AEDB has initiated a program with the assistance of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to assist the provinces to solicit private investments in small hydro sector. Productive Use of Renewable Energy (PURE) Project is being implemented to install 103 hydro power plants in Khyber Pakhtunkhwa (KPK) and Gilgit Baltistan (GB). AEDB has issued a LoI to set up a 12MW Biomass to Energy power project in Sindh. to set up a 12MW power plant at Jhang based on agricultural waste like cotton stalk. the SSJD Bio Energy. with the total cost of US$ 19.38MW. of 5. 15 . 36.82MW. Another LoI has been issued to M/s Lumen Energia Pvt Ltd.64MW) and (c) Gilgit Baltistan (worth U$ 71. biogas.6MW and 2. Punjab and KPK with the cumulative capacity of 284.12 Million. Another 51 villages in Sindh and 300 villages in Balochistan have been approved for electrification using solar energy and will be implemented. rice husk. of 26MW and 4MW.74 Million.8 percent) during July-March 2011-12.0MW. Sindh. Sindh. ` The household sector consumed 44 percent of the total electricity generated followed by industrial (26 percent). It has made remarkable progress by providing much needed relief to over 4 million recipients including Internally Displaced Persons. based exclusively on Biogas / Agricultural Waste. in terms of 66 percent of population using flush toilets compared to 63 percent in 2008-09. flood affectees and bomb blast victims all over Pakistan.3 percent). • • • • Social Safety Nets ` Sanitation situation at household level has registered an improvement.99 Million. The project is jointly sponsored by investors from US and local entrepreneurs. of 17. Alternative Sources of Energy • National Grid Code for wind power projects has been amended. government (12. Grid Integration Plan 2010 -2015 for wind power projects is developed by AEDB to support National Transmission and Dispatch Company (NTDC).Highlights of the Pakistan Economic Survey 2011-12 ` Pakistan is one of the beneficiaries of Tetra-partner power import project under the head of Central Asia-South Asia (CASA-1000) electricity trade. ` The major users of coal are the cement sector and brick kilns. sugarcane trash. (b) Punjab (worth U$ 138. ` Benazir Income Support Programme launched by the government with the primary objective of providing immediate relief to poor.16 MW and 7.6 MW). wheat chaff and other crops as multi-fuel sources Three thousand Solar Home Systems have been installed in 49 villages of district Tharparkar. 2. 4.4 percent) and commercial (6.14MW has been completed.5 million. about 60 percent of total coal is consumed by cement while 39 percent is consumed by the brick kiln industry during current year as compared to 62 percent consumption of coal in cement industry and 37 percent in brick kiln industry last year. agriculture (10. Public sector Hydro power projects are initiated in (a) KPK (worth U$ 150. under this program pre-feasibility study for 25 hydro sites in AJK. 00 billion for the fiscal year 2011-12. ` Workers Welfare Fund utilised Rs. (v) Waseela-e-Sehat and (vi) Waseela-e-Taleem. The overall disbursements for core operations during the period of July. (iii) Waseela-e-Haq. In addition. community based infrastructure and energy projects. widows.March 2011-12. 2012 have been disbursed to its beneficiaries. Survivors Pension and Old Age Grants and Rs. the National Climate Change Policy 2011 provides a framework for addressing the issues that Pakistan faces or will face in future due to the changing climate. Widows.3 billion during 2010-11 respectively where as Rs 2. orphans. 8. ` Pakistan Poverty Alleviation Fund is dedicated for micro credit. In this regard. ` Zakat funds have been utilized for assistance to the needy. PWP-I & II incurred expenditures of Rs. 2539 millions during July-March 2011-12 for housing facilities and Marriage Grant. (ii) Graduation Initiatives.9 billion expenditures on PWP-II. for the industrial workers. ` Pakistan Bait-ul-Mal is making a significant contribution in poverty reduction by providing assistance to destitute. (iv) Waseela-e-Rozgar.0 billion and Rs 21. gas. Invalidity Pension.Highlights of the Pakistan Economic Survey 2011-12 ` Rs 122 billion up to March. 1777. ` Climate change is an area that has become increasingly important in recent years. and other needy. and capacity building. Environment ` A number of projects have been funded by the government to deal with increasing environmental degradation. ` BISP recipients are expected to be increased to 7 million once the on-going processing of data collection during the “nation-wide poverty scorecard targeting survey” is completed. 7961. handicapped and disabled.490 million. Orphans. ` BISP has launched a number of programms of society safety including (i) Payment to Recipients. Death Grant and Scholarships etc. there are number of projects funded by the donors in which the government is a partner. poor. Rs. indigent. enterprise development. farm to market roads and other services to the rural poor. 16 .December 2012 are Rs. BISP has an allocation of Rs 50. livelihood enhancement and protection.268 million have been distributed in bulk amongst the provinces. 7800. ` Peoples Works programme (PWP) I & II are providing electricity.2 billion expenditure have been incurred between July-December 2011-12 on PWP-I and Rs 2. ` Government has also taken various micro-finance initiatives in collaboration with all stakeholders to generate employment opportunities and to eliminate poverty. Up to March. social mobilization. ` Employees Old Age Benefits Institution provided benefits to the old age workers through Old Age Pension. The goal of the policy is to ensure that climate change is mainstreamed in the economically and socially vulnerable sectors of the economy and to steer Pakistan towards climate resilient development.5 million has been utilised upto February 2012 on various schemes. These are being currently implemented to improve overall environment in the country. 2012 Rs. 5.2 million has been utilized during July. ` The higher concentration of suspended particulate matter (SPM) in the air is a major issue in Pakistan. wetlands and other natural systems. A substantial body of research demonstrates that high concentrations of suspended particulate matter adversely affect human health. ` According to a report released by the WHO/UNICEF Joint Monitoring Program (JMP) 2012. burning of Solid waste. industrial emissions. According to Pakistan Bureau of Statistics report (PBS) Pakistan Social and Living Standards Measurement (PSLM) Survey 2010-11. with an average of 87 percent in 2011.02 million). 17 . However. 2873. due to their two stroke (2-strokes) engines. The MDG target for access to sanitation is 90 percent by 2015. are the most inefficient in burning fuel and contribute most to emissions.000 sq. Km. engulfing all 23 districts of Sindh Province and adjoining areas of northern Balochistan Province.6 million (US $ 33. ` The situation of access to drinking water is quite impressive in Pakistan. heightened environmental health risks and affected forests. ` Damage and Need Assessment Report jointly prepared by the Asian Development Bank and the World Bank regarding floods 2011. Moreover. The main sources of SPM are vehicular emission.Km area damaged in Sindh province out of the total 27. The MDG target is to achieve the ratio of 93 percent by 2015. much improvement is needed for rural areas sanitation facilities.7 million (US $ 31. Motorcycles and rickshaws. and huge losses to the economy.376 housing units in Sindh and Balochistan. 520 people died and more than 1180 people were injured. brick kilns and natural dust.370 sq. ` The flood caused total or partial damages to an estimated 998. According to PSLM Survey 2007-08. 27. the floods in 2011 have also resulted in environmental damages.the garbage collection facilities to the population is only 14 percent done through municipalities. 92 percent people had gained access to drinking water in Pakistan by 2010 while this ratio was 85 percent and 89 percent in 1990 and 2000 respectively. pollens. 9. ` The Environmental damage caused by floods has been estimated at Rs. ` Approximately. displacement of millions. both in terms of volume and intensity. ` According to World Bank and Asian Development Bank report. access to drinking water to urban and rural population of Pakistan is 94 and 84 percent. In Pakistan sanitation facilities are improving. 2762.6 million people were affected in Sindh and Balochistan as a result of the floods. 7 percent through privately managed and remaining 79 percent have no system. 48 percent people have been using improved sanitation by 2010 while this ratio was 27 percent and 37 percent in 1990 and 2000 respectively. Flood Impact Assessment ` Severe monsoon rains triggered floods in Southern Pakistan at an unprecedented scale. facing the cities. it has been pointed out that in addition to causing loss of life. prolong a wide range of respiratory diseases and increased the probability of heart ailments.Highlights of the Pakistan Economic Survey 2011-12 ` Urban air pollution remains one of the most significant environmental problems.8 million) and Environmental recovery/reconstruction needs has been estimated at Rs. ` The total damage caused by 2011 floods has been estimated [direct damage and indirect losses] amounting to Rs.Highlights of the Pakistan Economic Survey 2011-12 ` The highest damage occurred in the agriculture.7 billion).239 billion (US$ 2.324. 18 . has been estimated at Rs. ` The total cost of recovery and reconstruction needs has been estimated at Rs.160 billion (US$ 1.5 billion (US$ 3.7 billion).84 billion). livestock and fisheries sector. both in terms of volume and amount of land flooded. Continuing rains and damaged infrastructure impeded the delivery of aid. In 2010. Badin (647mm). A large number of farmers lost their livestock on way to safe havens and through nonavailability of fodder and exertion. Umerkot (552mm). There was hardly a place in the severely affected area that was free of standing water. Essential infrastructure including roads. The sector wise breakdown of flood damages and respective reconstruction cost estimates are given in Table-1.180 people were injured. infrastructure and human settlements. The maximum rainfall during the year was from 1st July to 30th September. 2011. The minimum reconstruction cost amounts to a total of Rs. Shaheed Benazir Abad (650mm). Despite forecasts of below-average rainfall.Special Section Pakistan: Flood Impact Assessment Severe monsoon rains triggered floods in southern Pakistan of an unprecedented scale. bridges and markets had been severely damaged and many remained impassable. 239 billion (US$ 2747 million). 9. These indicate that the agriculture sector received a major blow followed by housing. 3 In comparison. Both events demonstrate changing climate and weather pattern in the region and their intensity of recurrence.FAOand Supparco] 2 The other areas that received excessive rainfall were Mirpur Khas (866mm). private sector and industries. where cumulative rain fall varied from 400mm to around 1300mm [Source: Rapid Crop Damage Assessment. Being sandy area the rate of soil infiltration was very high and rate of runoff water was minimal. approximately. economic growth is likely to decline. 520 people were killed and more than 1. The 2011 floods compounded the damage of the previous disaster. many of the victims of the 2010 floods were still in the recovery phase when the 2011 floods struck. heavy downpours began in mid-August.6 million people have been affected in Sindh and Balochistan as a result of the floods. 247 . 20 million people 1 were affected by the largest floods in living memory3. the worst of which (5 districts) were confined in the southern and northern parts of the province According to the World Bank and Asian Development Bank (ADB) Damage and Needs Assessment (DNA) report. flash flooding as well as overflowing local rivers and irrigation and drainage channels caused damages in 14 districts. The impact of the flooding in 2011 cannot be seen in isolation.The peak rainfall was received in Mithi. and financial. thus affecting the national economy. Dadu (485mm) and Padidan (423mm). the 2011 floods were driven by high intensity unprecedented rainfall on the eastern side of the Indus River. Sindh. In severely affected areas.2 In Balochistan. food insecurity and malnutrition were already at critical levels before this year‘s new wave of rains and flooding. engulfing all 23 districts of Sindh province1 and adjoining areas of northern Balochistan province causing damage to crops. education. Pakistan Economic Survey 2011-12 Table 1: Flood Damages and Reconstruction Cost by Sectors Sectors Damages Reconstruction Cost Rs.953 22 4. Livestock & Fisheries 160.510 1051. 5 This mostly includes cases of repairable damage.7 Health 1.258 14 864 9.790 kacha houses and 76. despite being substantially lower in intensity.014 138. the impact has often been extreme and irreversible.6 This primarily includes washed away.462 houses [493.768 54. standing water has subjected submerged portions of walls to hydraulic pressure.254 313 8. 85.900 22 Governance 1.3 Total 324.465 million (US$ 982. the total number of houses damaged is estimated to be 5.427 pucca houses] have been partially destroyed. 512. out of which 1. At places subsidence of the ground under waterlogged foundations has resulted in cracking and collapse of walls. million US$ million Irrigation and Flood Management 4.107 1840 26. fully collapsed. pucca houses have withstood the floods better but have still been vulnerable to collapsing of roofs.1 22.8 million).7 Financial.093 partially damaged 5 .8 Agriculture.283 houses have been completely destroyed 4 and another 484. ft covered area.763 55 9.204 14 1.8 Environment 2.533 3730 239.827 21 Social Protection 34.679 houses affected in Sindh.4 Social & Gender 44 1 65 0. For kacha buildings.763 32 2.606 kacha houses and 18.178 94 Education 12.876 houses have been partially destroyed. The reconstruction cost (completely destroyed and partially damaged houses) is estimated at Rs. calculated on the basis of currently prevailing prices of materials and labour. Sindh province has suffered the overwhelming majority of damage to housing stock with 99 percent of the total affected housing stock in this province.9 Water Supply & Sanitation 1. As mentioned above.011 2747 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011. 248 .468 304 33. The damage to housing structures is estimated at Rs.856 pucca houses] have been completely destroyed and the remaining 480. Summary of Damage and Needs by Sector Housing The floods caused total or partial damage to an estimated 998.4 million) for completely destroyed and partially damaged houses. undermining of foundations. In general.240 14 292 3.126 392. Furthermore.6 Transport & Communication 26.827 houses have been completely destroyed and 4 the remaining 3. often causing walls to overturn or tilt laterally.465 982. An estimated 514. million US$ million Rs.217 houses [403.5 Housing 85.590 305. Private Sector and Industries 27.510 million (US$ 1051.526 109. because of their location and timing. 6 These estimates are based on replacement of a destroyed house with a core unit of 500 sq.376 housing units in Sindh and Balochistan. the 2011 floods had a significant negative effect on the economy with lingering long term impact.589 259. or structurally damaged houses with foundation failure or erosion of supporting walls.697 kacha houses.902 388 Energy 1.4 91. Out of the 992. and scouring/erosion at the base of walls and corners. In Balochistan. 91.874 33 Disaster Risk Management 1. maize.157 million.771 million and direct loss of Rs.838 are partially damaged). 431. The total cost of reconstruction for this sector is estimated at Rs. Out of which. the estimated amount required to meet short-term needs has been taken as proxy of indirect losses i.4 million). However. namely. In Balochistan.8 million) for the fully and partially damaged health facilities. and 85 (12 percent) were partially damaged. Furthermore. the agriculture sector has strong backward and forward linkages and as a result has a large impact on the overall economic performance. which starts in October and ends in April. In Balochistan. 51 damaged schools are females schools (3 are fully damaged and 48 are partially damaged). 863.6 million) and Balochistan Rs.22.1 million respectively.These make up 25 percent of the total of 204 damaged schools. total damage and loss is estimated at Rs. 177. less than 240 mm in an average year. Basic health units and rural health centers suffered the most damage.013 million including indirect loss of Rs.e. The sector’s performance has been weak over the last few years recording a growth of around 2 percent per year. 9. Balochistan: 204).892 damaged schools. Kharif (summer) and Rabi (winter). and the main crops during this season are cotton. is dominated by wheat production which is the main staple food in 249 . Education The total number of educational institutions affected by the floods is 4. In Balochistan. In Sindh. the direct losses for all health facilities was calculated as Rs. The Rabi season. This means that 73. pulses. The total cost of reconstruction to this sector for all the damaged institutions in Sindh and Balochistan is estimated at Rs. The performance of the livestock subsector has remained healthy and its share in agriculture GDP has surpassed the crop sector standing at around 55 percent.856 million and direct loss of Rs. Livestock.1.589 million.7 percent of the total institutions in the affected districts in the two provinces. 113 (16 percent) were damaged out of which 28 (4 percent) were fully damaged.Pakistan: Flood Impact Assessment Health The floods caused by heavy rains in 2011 resulted in damage to the public health infrastructure in Sindh and Balochistan provinces.9 million) [Sindh: Rs. In Balochistan. while the 153 damaged schools for males (17 are fully damaged and 136 are partially damaged) make up 75 percent of the total of 204 damaged schools. 12. In Sindh. fruits and vegetables.85 million (US$4.022 are fully damaged and 1.860 schools for males are damaged (1.486).5 percent of the total of 3. 27 million (US$0. 404. 85.258 million (US $ 14. 11. The total damage and loss in both the provinces is estimated at Rs. rice. mainly due to poor performance of the crop subsector.892. 1. crop production is dependent on irrigation and more than 80 percent of land is irrigated.096 (Sindh: 3.On the other hand. Agriculture. 28 (15 percent) were damaged out of which 13 (7 percent) were fully damaged and 15 (8 percent) were partially damaged. of the total of 193 health facilities in the 3 affected districts. and Fisheries Agriculture is a key sector of Pakistan‘s economy and accounts for 21 percent of GDP.10. Due to limited rainfall. The Kharif season starts in April and ends in October. There are two main cropping seasons.85 million (US$4. accounting for 74 (52 percent) of the total 141 damaged facilities. there is no data available for calculating the indirect losses.3 million).5 percent of the total of 3. and a total of 2. indirect and direct losses are Rs. 826 million (US$9. 1 percent of the total health facilities (2. Rs.3 million). The livelihood of more than 60 percent of the total population is directly or indirectly dependent on agriculture sector.751 million including indirect loss of Rs 1.980 million. Sindh has 30 percent and Balochistan 8 percent share in the national agricultural GDP.1 million and Rs. sugarcane. The damaged institutions are 6.7 million (US $ 9. of the total of 708 health facilities of various categories in the 11 districts where health sector facilities were affected.892 damaged are male schools.032 schools for females are damaged (385 are fully damaged and 647 are partially damaged) or 26. The total damage to this sector is estimated at Rs.075) were damaged. 45 percent of employment and 60 percent of exports. 1.. The damage caused to the health sector in Sindh province constitutes 7 percent of its total health facilities (1. In Sindh. apples in Balochistan. rice. About two thirds of this are from marine sources (70 percent from Sindh) and mostly comprise prawn and demersal species.5 percent. . The floods have heavily impacted the agriculture sector. sugar cane. and support services for crops. Thatta.00 million tons of fish products annually. as well as a range of semi-temperate fruits like grapes. wheat straw. maize thinnings and Stover are used for livestock. Matiari. fisheries. chilies and onions. Khairpur. The total loss estimated is US$ 1. Sindh has reported that approximately 115. Livestock is an integral part of the farming system and is the main asset for many farmers. with damages to crops.840. Most households also have sheep. poultry and on-farm water distribution infrastructure. and fruits.Pakistan Economic Survey 2011-12 Pakistan. Important vegetables include potato. sorghum. Inland fisheries were largely restricted to the main rivers and canals. food and seed stocks. The rest is from inland sources. Dadu. In addition to the settled agricultural population. of which 89 percent is in the form of direct damage and 11 percent is in the form of indirect losses. Tando Mohammad Khan. in recent years there has been a rapid increase in aquaculture with many farmers using small ponds and other water bodies. Sindh suffered most with 94 percent of total damage and Balochistan with 6 percent. Their animals are mostly for sale to the large urban centers particularly during Eid times when it is traditional to sacrifice sheep or goats. dates and banana in the tropical and subtropical areas like Sindh. meat and hides being other important products. Neushero Feroze. vegetables and pulses have been destroyed on about 0. as well as indirect damages to the forthcoming Rabi 2011-12 and Kharif 2012 crops. there are also a significant number of transhumants (Gujars) who move within the country as well as in the region and specialize in the rearing of sheep and goat. Fodder. Hyderabad. Pakistan has a significant fisheries sector producing about 1. Similarly the livestock sub sector also suffered heavy losses.3 million. vegetable. Tharparkar. However. which accounted for 91. The subsequent breaches in the drainage canal [Left Bank Outfall Drain (LBOD)] at several locations resulted in submerging of vast areas. The losses were largest in the crops subsector.84 million hectares of land. Other Rabi crops include fodder. Sangar. sugarcane 34 percent. Shaheed Benazirabad. The heavy monsoon rains during this year caused renewed and devastating flooding in southern 250 Sindh and northern parts of Balochistan provinces. In terms of the damage to different crops it is estimated that land area under rice 33 percent. on-farm irrigation water facilities. including estimates of damages to Kharif crops. While it was mostly the right side of the river Indus hit by floods last year. Concentrate feed is widely used in commercial poultry farms and for lactating cattle. tomato. Larkana. vegetables 79 percent and fruits 32 percent was affected adversely. Mirpurkhas. livestock. citrus. Umerkot have been the worst affected. goat and poultry for domestic consumption as well as for sale. particularly for the main urban markets has increased rapidly in recent years. particularly close to major cities or where agroclimatic conditions are favorable. Kamber Shahdadkot. pastures and crop stubble. Important fruits include mangoes. peaches. Tando Allahyar. The Provincial Disaster Management Authority (PDMA) and the Sindh Department of Agriculture Extension estimate that standing crops of cotton. Commercial production of fruit and vegetable. this time it was mostly the left side. Supplies of fingerlings come from a few large government hatcheries but there has been a rapid increase in private sector activity in the area particularly in Sindh. The Directorate of Animal Husbandry.500 livestock have perished and about 5 million surviving livestock have been directly affected. The most affected crops are cotton with 74 percent damages to the overall planted area in the affected districts. Buffalo and cattle are mainly kept for milk. the central and southern districts of Badin. Animals are also grazed on rangelands (particularly in Balochistan). with draft power. In Sindh. partial subsidies for fishing communities as well as the partial rehabilitation of on-farm water management infrastructure.87 81.17 3.19 89.8 81.42 1.77 1. and destruction of animal health support services.94 8.14 1.22 153. Fisheries losses are estimated at around $ 3.88 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011.62 494.39 Total 45.2 percent of the total losses). The flood also substantially affected the livestock population causing death and loss in productivity mainly in Sindh.36 million (0.51 99.19 Total 881.2 1.30 1.31 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 The total reconstruction cost to this sector is estimated at Rs.35 87.) Balochistan 0.23 178. Fishery/Pond Damaged n/a 393 393 Table-3: Livestock.736. livestock based assistance package.28 144. Fisheries losses are estimated at around $3. 251 .15 88.588. Fisheries/ Pond n/a 3.42 Sindh 45.58 95. The loss in productivity accounts for more than 50 percent of the total loss.54 1.3 percent of total losses.78 1. which include loss of animals. these livestock were left stranded. The losses in productivity occurred due to acute fodder shortage.14 Total 33.0 Sindh 33.04 496. A total of about 881 thousand ha or 53 percent of the fisheries areas was affected.24 13.10 0.36 3. Animals standing in mud and stagnant water for extended periods contracted various diseases. Poultry and Fisheries Damages in Flooded Areas Province Large Animals Small Animals Poultry Perished (000head) (000heads) (Million Nos. fertilizers. The productivity of milking animals dropped from an average of 7 or above litres to 2-3 litres (50-70 percent). Facing an acute shortage of feed.85 88.590 million (US$ 306 million) which focused on the restoration of normalcy in the agriculture sector.2 percent) that accounts for private fish farms/ponds and hatcheries.36 Total Table-4: Estimated Direct and Indirect Losses (US$ million) Province Livestock Crop Direct Indirect SubDirect Indirect Sub-Total Total Balochistan 0.587.94 163.26. The deaths were mainly in small ruminants and productivity losses were mainly in large ruminants. distress sales. tools and implements along with support for land preparation.40 99.40 101.02 13. Sources of livestock feed were fully inundated and the availability of fodder in local markets was very low.84 7.4 million (0. to support small and medium farmers through provision of seeds.4 1.29 14.78 0. Livestock damages. debilitation and emaciation.31 103.36 3.20 0.03 96.683.20 1. and many young calves died due to the reduction of the milk in their mothers.79 1499.Pakistan: Flood Impact Assessment Table-2: 2011 Kharif Area Affected by Flood Province Crop Area Area Damaged (000’Ha) Damaged Cotton Rice Sugarcane Maize Vegetables Fruit Other (000’ ha) Balochistan 21.840.41 7. accounts for 8.92 107. as well as indirect damages due to reduced milk production.88 Sindh 859.14 Source: World Bank and Asian Development Bank (ADB) Damage and Needs Assessment Report 2011 The summaries of preliminary loss estimates are shown in Table 4. 341 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 Transport & Communication The 796.2 billion (US$ 14.8 261.0 Total Damage 456. hydroelectric facilities and a small nuclear facility (300 MW). 281. a public sector entity.7 19.5 3. Table-6: Recovery and Reconstruction Needs Assessment Summary Sector Reconstruction and Total Total rehabilitation/repair cost (Rs.0 Total Power 281.Pakistan Economic Survey 2011-12 Energy Power generation is provided by thermal plants.115 million) as shown in Table 6 for damages not covered by insurance.million) (US$ million) Transmission 19.226 Petroleum 10.955 MW.481 MW) are owned and operated by the Water and Power Development Authority (WAPDA). The 13 hydroelectric facilities (installed capacity 6.0 10. The public sector operates 13 thermal power plants (installed capacity 4.5 14.950 km of 252 telecommunication lines and other infrastructure. 7. Thermal power plants are owned by public and private companies.out of which Rs.2 million). Out of the total 19.000 km of .7 0.400 km that fans out to the districts through 161.239. 10 million (US$ 0.523 MW in the summer and about 14. effecting only two upstream public owned (70 percent shares) gas fields.226 million) covering the direct damages suffered by the Public Sector Powers (PSPs). The 11.5 3.5 291.226 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 The immediate need for the power sector is Rs.987 MW) is provided by private sector companies (independent power producers or IPPs). The needs for the petroleum sector are only Rs. depending on the annual hydrology. 281.5 (US$ 3.115 Total 291. Table-5: Damage and Losses in Energy Sector Entity Direct Damage Indirect Damage Total Damage Total Damage (Rs.5 783 1.5 281. KESC operates plants with a total capacity of 1.900 MW). dependable generation is about 17. 456.226 Upstream Oil and Gas 175 783 958 11.2 million) whereas in the petroleum sector total damage was Rs. and 34.618 km of roads.5 3. Damage to the energy sector was modest.5 million (US$ 3. Also.800 km long national highways and motorways network is the spine of the primary transport corridor. About a third of Pakistan’s generation (5. million) (US$ million) (Rs. This is supported by the provincial highways network of 37. million) Power 281.640 MW in the winter. 783 million (US$ 9 million) relates to indirect losses as shown in table below. Damages to the petroleum sector are also very heavy.million) (Rs.226 Distribution 261.2 million) and Rs.5 million (US$ 5. 1. 783 million (US$ 9 million) of indirect damage. 42 airports. In the power sector the majority of the direct damage is in distribution network with about 90 percent of the damages being to distribution transformers. In the power sector the total damage was Rs.8 3.252 MW of the national installed generation capacity. million) (Rs.5 281. This comprised of direct damage of Rs. 958 million (US$ 11 million):.791 km of railways. estimated at Rs. Insurance cover for public sector companies has not been factored into the needs assessments.0 0.095-square kilometer area of Pakistan and its almost 180 million inhabitants are connected through a transport and communications (T&C) network of 259. 554 transmission towers for the cellular telephone networks.975 km in Sindh and 4.974 Balochistan 1. 34.900 km of district roads are located in Sindh and 11. In the communication sector.Pakistan: Flood Impact Assessment district roads (including farm-to-market and access roads) in rural areas and 54.155 exchanges.955 km of provincial highways in Sindh. A summary of loss and damage in Transport and Communication is given below:Total (Rs. equipments and transmission network of cellular and landline operators. seven bridges were also reported to be partially damaged. There were no reports of damages by Civil Aviation Authority in the aviation sub-sector. floods have caused damages to railway tracks. representing 15 percent of the provincial highway assets and 5. the data is segregated into lengths of roads. Province Direct Damages Indirect Losses (Rs. The reported damage is classified into two broad categories: Completely Destroyed (CD) and Partially Damaged (PD). all located in Sindh.200 km of district roads are in Balochistan.million) 24.095 108 Subtotal 15.791 km railway lines and 1.899 km of railway lines are in Sindh while 1. On these highways. damages were reported to the buildings. It affected the network of national and provincial highways. the national highway system traverses 1.630 km in Balochistan. Approximately 1.203 26.386 10.000 km of municipal roads in urban areas.100 stations serve the long-distance main north south corridor and connections to other regions including Balochistan. On the contrary. and 25. For telecommunication infrastructure.850 9. damages in Balochistan are lower and comprised about 426 km provincial highways and district roads (about 1 percent of this road stock). Damages to the road infrastructure were caused by submergence.202 km are in Balochistan. In the two flood-affected provinces.945 10. About 1. Six international airports in major cities serve as hubs connecting to 19 regular and 17 feeder and other airports. high surface runoffs and ingress of water in roadway formation. The telecommunication infrastructure consists of 3. The rains and floods during August and September 2011 damaged the Transport and Communications (T&C) infrastructure in the province of Sindh and Balochistan.773 km of district roads were affected (including municipal and urban roads). bridges. For roads and railways.950 km of optical fiber transmission lines for the landline networks.082 Railways Sindh Balochistan Subtotal Telecommunication Total 277 277 165 16. railway lines and number of affected structures.800 km of provincial highways and 20. stations and residential buildings under the administrative control of Pakistan Railways. Based on the data received on the damages to the T&C Sector. million) Roads Sindh 14. the reported damage is more specific. About 13. million) (Rs.824 1. three in Sindh and one in Balochistan.700 km of provincial highways and 31.468 Table-7: Transport and Communication Damage and Loss Figures.082 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 253 . district and municipal roads. a total of 5 districts in Balochistan and 18 in Sindh have been affected by the floods and the longer than usual spell and higher intensity of rains.027 277 277 165 26. Four national highways were affected at various places. The railway network of 7. 762. ii) contamination of water resources that are used for other domestic usage. 9.59 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 0. Total deaths are reported as 520.33. Approximately 90 percent of typhoid and diarrheal illness in Pakistan is attributable to inadequate drinking water.75 million).19 0.13 percent of GDP) while the rest stems from the malnutrition caused by environment-related disease (4.94 4. 4. The flooding in 2011 was relatively localized.00 Total 2873. 2. In 254 Balochistan.Pakistan Economic Survey 2011-12 drinking water. but infrastructure damages were less so. sanitation and hygiene.No Description Rs. vi) damage to soil through erosion. According to the report. iii) stagnant water ponds resulting in proliferation of disease vectors such as mosquitoes.6 million people were affected including 744.79 million) are shown in table below.0 0. and information databases 442. and cultural heritage sites. in million US $ million 1 Field investigations to determine damage to agriculture land caused by 20. The direct damage estimated costs are Rs. department infrastructure. v) agricultural lands affected by pollution and salt.20 6. 2. vii) damages to wetlands and mangroves. The environmental damages caused by the 2011 floods included: i) contamination of resources for Table-8: Total Cost to Address Environmental Needs Associated with the Floods S.85 5. 18.000 displaced in the aftermath of the 2011 flood. Indirect costs are assessed as Rs. The 2011 floods have caused damages to the forests.59 million (US$ 32.500 deaths a year are linked to these causes. and viii) damages to protected areas and cultural assets.6 million. Morbidity linked with waterborne diseases amounts to 74.71 percent of GDP).41 Study to estimate damage to cultural heritage sites 2.873. In Sindh.06 0. According to the United Nation office for the Coordination of Humanitarian .902 million (US$ 388 million) including US$5 million for railways and US$ 2 million for telecommunication sub-sector and remaining US$ 383 million for the roads subsector. nurseries. The reconstruction and restoration costs of the damages estimated at Rs.403 people were reported affected with no damage to social welfare infrastructure.02 8. the impact on people and livelihoods was severe.00 Rehabilitation of cultural sites 16. social and environmental consequences for years to come.00 Monitoring and evaluation.66 million (US$ 31.5 million cases per year. Environment Pakistan suffers a loss of 8. Almost half of this cost is caused by mortality (4.23 pollution and salts 2 3 4 5 6 7 8 9 10 Study to estimate debris quantity and disposal arrangements 5. The floods that recently affected Sindh and Balochistan have already impacted millions of people and are likely to have economic.47 32. iv) solid waste and debris accumulation.18 Study to estimate damage to wetlands and mangroves 5. 39 million.06 6.00 Strengthening the Legal and Institutional Framework 476. The total reconstruction cost to this sector is estimated at Rs.77 0. plantation.00 Storm water drainage master plan 714. These damages have been estimated to be Rs.00 Land use plans and building regulations in urban areas 604.006 people were partially or fully damaged. Up to 83.79 Social and Gender Impact Barely one year has passed since the floods of 2010 devastated the lives of an estimated 20 million people nationwide. 19 social welfare infrastructure units serving a population of 37.00 Rehabilitation of forests and plantation 589.84 percent of its GDP each year from environment-related disease. Lasbela.6 million in 378 reported schemes in the flood affected districts. Indirect losses which is derived from higher expenditures related to (i) supplying potable water (tankers. while 744. More damages are reported in the sanitation sector as compared to the water supply sector. In Balochistan.2 million women were affected by the floods in 2011. 253 million for public sanitation. followed by Sanghar (299. wells.831.6 million.160 million and Rs. Demand of governance and related services in a crisis is much higher and ever more challenging to respond to effectively and promptly. and for the loss of revenue from interrupted water supply services. In Balochistan. An amount of Rs 56 million for community infrastructure damage is also included. The total reconstruction cost for water supply and sanitation is estimated at Rs. cost of hand pumps. reported damage to the governance sector was limited.7 million and Rs.68. which are severely affected by the rains.000). the vulnerability of women and children have increased in the affected areas. and (ii) cleaning.000. No such loss is calculated for Balochistan due to lack of data. Governance Infrastructure Governance related institutions in the flood-hit districts of Sindh have suffered damage to their assets. However. Direct damages in Sindh are Rs. 456. including fisheries.6 million for public water supply and Rs. purification and disinfection processes). The children who are pushed out of schools are estimated at over 733. which in turn eroded their already limited capacities.000 sq feet. Indirect losses for Sindh have been calculated to at Rs 703. Sanghar and Mirpurkhas districts also show significant damages to the water supply related infrastructure and facilities. Acute Respiratory Infections (ARI) and skin infections represent major health risks in flood affected areas.Pakistan: Flood Impact Assessment Affairs (UN OCHA). The most obvious result from the data compilation is the finding regarding the relative damage distribution amongst the districts and talukas. 60 percent schools were damaged in Sindh alone.6 million. Failure to meet Rabi cultivation will have severe consequences on farm dependent households. respectively. faced many challenges. Shaheed Benazirabad (Nawabshah) district is the worst hit accounting for 42 percent of the overall damage cost in the public sanitation sector. These damages include Rs. In the Sindh province that has been largely affected in the 2011 floods the Shaheed Benazirabad (Nawabshah) district by far shows the most extensive damages both in the public water supply and sanitation sectors. sewers and pipes.5 million children and 1. 43. The worst hit district in Sindh is Mirpurkhas where estimate of aggregate affected covered area is 845.1. water supply and sanitation damages have been assessed at Rs. 10-15 percent of the affected population is engaged in non-farm livelihoods. From the Balochistan province flood damages were reported from Kalat. flood damage data was forthcoming only from thirteen (13) districts. With 46 percent of health facilities damaged. Women are at high risk due to disruption in the provision of pre and post natal care. 147.5 million for Sindh and Balochistan respectively. Aggregate covered area damaged or destroyed has been estimated to be slightly below 3 million square feet. 43. Water Supply and Sanitation The government of Sindh had indentified seventeen (17) districts as flood affected where damages needed to be assessed. Governance institutions in the 17 affected districts of Sindh have reported damage to 648 facilities including offices and residences.000 people were displaced. Badin.1. In Balochistan. even before the disaster. Flooding caused by rains led to disruption of social and economic life and created a crisis. Nasirabad and Jaffarabad districts. in a total of 80 schemes.6 million in Sindh and Balochistan. the 5 affected districts have reported damage to 18 buildings. 255 . Tharparkar Total damages (both direct and indirect) for water supply and sanitation are estimated at Rs. The UN reported that 2. Migration has taken place largely due to nonavailability of fodder in flood affected areas. Governance sector institutions in Pakistan. Approximately. the situation remains alarming with poor coverage of all essential sectors. and that too for the water supply sector only. water tanks. Partial damage to 11 Prison and 71 Police facilities and complete damage to 3 Prison and 66 Police buildings have been reported.statistically and factually.sound assumptions have been used. Consequently.Pakistan Economic Survey 2011-12 (246.000).925.83 369. Shaheed Benazirabad (201.65 28.572 3. Computations have been made in spreadsheet with stated assumptions.571. property and citizenship records and management capacities of public accounting and local level public management become exposed to risk of deterioration because of damage and serious inadequacy in the face of much higher volume of work demanded by recovery and reconstruction needs. pre-flood condition and the nature of damages.23 1. Disruption of governance services and functions affect the condition of the population already suffering from the direct effects of the disaster. security.000). and Hyderabad (140. Damage and Loss (Rs. In Balochistan only about 767.555. in million) Provinces Direct damage Indirect Damage Total Sindh 1.26 Total 1. Dadu (186.700 40. NADRA.240 km of drains and 5.752.120 ha land in 3 out of the 26 districts is irrigated by Indus Basin Irrigation . Post Offices and other governance institutions shared the remaining disaster damage. The value of reconstruction needs is based on the current government notified rates for contractors. In order to improve accuracy of the estimates.953. The Sindh irrigation system consists of Guddu. suitable assumptions and broad classifications had to be used.113 12. States of rule of law.61 12.06 Balochistan 15. Disruption of services or functions and inability to respond to much bigger demand can and do impede relief and reconstruction. These barrages divert water into fifteen canals 256 four at Guddu. Umerkot (171.272 Total 4. in Million) Reconstruction and Capacity Building Total Province Rehabilitation/Repair costs Sindh 4. Khairpur (161.32 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 In case of governance institutions service and productivity losses create complex issues. 000).280 4. Additionally. Table-10: Recovery and Reconstruction Needs Assessment Summary (Rs. Indirect loss to governance institutions is estimated on notional costs of continued services and functions despite loss to their facilities.965 Source: World Bank and Asian Development Bank (ADB) Damage and Needs Assessment Report 2011 Irrigation and Flood Management Sindh’s agriculture accounts for 17.728. The civil administration in Sindh suffered heaviest damage to its facilities. Sukkur and Kotri Barrages on the Indus River. It was challenging to gather information in precise categories on the types of construction required. justice.88 1.000).4 percent of the provincial GDP and 50 percent of the employment. The economic loss to the population is complex to estimate as it would involve estimating economic value of security.693 Balochistan 36. 14 court buildings have been partially damaged and 10 have been reported as completely destroyed along with 21 Auqaf buildings which are reported as completely damaged and 10 as partially damaged.716. criteria and parameters clearly identified.768.835 tube wells complement the irrigation system.000).580 4. seven at Sukkur and four at Kotri Barrage commanding 2. Table-9: Government infrastructure.44 381. justice and protection. A total of 257 buildings were reported to have been partially damaged and 86 as completely destroyed.000).685 16.5 million ha. A total of 2. records and reduced staff productivity/availability in the damage quantification. 827 million or US$ 9. Tando Allah Yar. In Balochistan.000 tents in the affected areas and 3.7 million ration packs. To provide immediate cash assistance to the flood affected population in Sindh. In Sindh.0 million. small irrigation schemes.897 to 851.127 606.654 million (US$ 19 million). Khairpur.439 34. and 14 irrigation divisions of Balochistan province (Rs. 10. Tando Muhammad Khan. and Kalat.500 relief camp managed by the government. The reconstruction cost estimated for Sindh province is Rs.000 per family). Table-11: Summary Estimates of Cash Grants to Severely Affected Poor Households (Rs. Several infantry platoons of the army as well as medical and engineering teams were deployed in disaster affected areas to carry out search and rescue operations. Dadu. The damages reported are in 38 irrigation divisions of Sindh province (Rs. Districts with over 50 percent.519.66 Source: World Bank and Asian Development Bank (ADB) Damages and Needs Assessment Report 2011 Government Response In the immediate aftermath of the floods. In remaining parts of the province there are many small basins where spate irrigation. and Lasbela in Balochistan. drainage and flood protection sector reconstruction strategy is to restore all damaged infrastructures. To support the national and provincial Disaster Risk Management (DRM) institutions.936 million or US$ 45. international partners. The majority of these are in Sindh (786. Kirther and Uch canals. provincial and district resources including the deployment of civil and armed forces personnel. almost 700. has disbursed approximately Rs. representing 52-54 percent of the total affected population.872 million (US$ 90. fifteen divisions suffered damages exceeding US$ 2. Social Protection and Livelihoods The total affected population in flood hit districts of Sindh and Balochistan are based on the total affected area. 6. The total is in the range of 801. small dams and tube wells are the main sources of irrigation.439. which were further supported by helicopters and dozens of navy and coast guard personnel and boats. and strengthen vulnerable and damaged sections before 2012 monsoon. severely affected households are Badin. NDMA reported to World Bank and Asian Development Bank Damage and Needs Assessment. NGOs and civil society organizations. Pakistan Social and Living Standards Measurement Survey (PSLM) data was used to calculate post-flood poverty levels.5 million) and for Balochistan it is Rs. The proposed irrigation. In January 2012.311) and the rest in Balochistan. 3. this was combined with damage to housing and agriculture to estimate the number of severely affected poor and vulnerable households who require assistance to cope with the negative impact of the floods.5 million). Sanghar. the government responded through the mobilization of national. Jaffarabad. the provincial government. During peak of this humanitarian crisis. 10. The main canals are the Pat Feeder. in Million) Provinces No.31 Total 851. with the support from the federal government. karezes. three divisions have reported damages exceeding US$ 1.3 billion through the Pakistan Card-based cash transfer scheme (Rs.Pakistan: Flood Impact Assessment System.5 million each. a report regarding the distribution of over 316. the Prime Minister‘s Flood Relief Committee was also formed to monitor rescue and relief activities. The damage estimates reflect the reconstruction requirement at depreciated value as most of the infrastructure is more than 15 years old.125. and Thatta in Sindh. 257 . Matiari. or more. of Severely Affected House Holds Cash Grant of Rs.2 million).311 33. siltation and water-logging of agricultural land are not covered in irrigation and flood sector.680 per (HHs) month for 6 months Sindh 836. 1.000 people were being housed in approximately 3. Small-scale engineering works were also undertaken to strengthen flood mitigation infrastructure to avoid further damage and loss of lives. out of which 48. Mirpurkhas.000 ration packs were distributed in Balochistan. 7.917 to 836.35 Balochistan 15. Indirect losses such as damage to crops due to flooding and disruption of irrigation supplies. Furthermore. (iii) health and. closely liaised with the members of the diplomatic community and international organizations to coordinate international assistance. established at the Ministry of Foreign Affairs.969 people. an emergency flood relief cell. In December 2011. the UN launched the Early Recovery Framework seeking a further US$ 439 million to continue flood response until September 2012. forty-six countries pledged a commitment of approximately US$ 260 million including support in cash and in-kind. As of April 2012. In January 2012.Pakistan Economic Survey 2011-12 The Government continued to mobilize shelter materials. approximately. (iv) water sanitation and hygiene. Based on these cluster assessments. which accommodated 194. the international community immediately responded to the appeal by the Government of Pakistan for international support for rescue and relief activities following 2011 floods. Provision of temporary shelter in public buildings had been arranged for those uprooted by the floods in 13 districts out of 23 in Sindh. were overwhelmed in the wake of the growing humanitarian crisis. US$ 171 million or 48 percent were received in response to the UN‘s appeal. which however. The United Nations (UN) undertook an Initial Rapid Needs Assessment to focus on the immediate relief phase for the following clusters: (i) emergency shelter. (ii) food security. 258 . Despite providing assistance during the unprecedented floods of 2010. the UN launched a US$ 356 million Rapid Response Plan in September 2011. non-food items (NFIs). Initially the federal and provincial governments responded to the disaster through own resources. bottled water and food rations. Previously.624 46.049 0. Detailed are as follows: Income Tax The cost of exemptions. 6. Welfare and Charitable Institutions and Non-Profit Organizations Profits on Debt/interest from government securities and certain foreign currency accounts/books. Federal Excise Duty has not been included due to very restrictive base and exemptions.950 46.608 (billion) has been reflected in Table -1 below: (Rs. deductions. 5. 185.649 0. Sales Tax exemptions were available on certain items including tractors.979 6.939 0.108 11. tractors. profit on debt earned by certain non-resident individuals and institutions Export of Information Technology Capital Gains Other Sectors/enterprise specific exemptions Total 7. 9.201 69. Tax Expenditure in respect of Sales Tax is estimated at Rs. Universities and Computer Training Institutes etc. the Federal government rationalized these exemptions during last year.724 21. resulting in reduction in the cost of exemptions. exclusions. fertilizers & pesticides etc.171 0. No 1. The Tax Expenditure for the year 2011-12 works out to Rs. From 15-03-2011 onwards.508 0. Details have been worked out and are indicated in Table-2 below: 261 . Donations and Contributions to Charitable Organizations Independent Power Producers Income from certain Trusts. 69.360 0. pesticides and fertilizers have been made chargeable to Sales Tax.496 billion. 0. Details of Direct Taxes have been indicated first in the report.300 billion for fiscal year 201112. 4. Tax Expenditure Items Pensions & Gratuity Income from Funds.870 1. rebates and credit etc that cause loss of Direct Taxes revenue comes to Rs.608 Sales Tax Sales Tax exemptions are provided at the import stage and on domestic supply of goods and services. Boards of Education.077 0. substractions.087 0.822 2. 8. 2. 3. However. followed by Sales Tax and Customs Duty.840 19.205 1. in billion) Estimated Revenue Loss 2010-11 2011-12 0. 24.461 Table-1: Income Tax Expenditure for 2010-11 and 2011-12 S.Annex 2 Tax Expenditure A Note on Tax Expenditure 2011-12 Estimates of tax expenditures are being prepared by FBR and reported in the Pakistan Economic Survey since last few years as part of the budget process. 91.762 2.588 (billion) for 2011-12.581 13. special classification in Chapter 99 of Pakistan Customs Tariff.941 0. equipment.0009 0.800 4.004 0.750 7.851 19.895 4. Exemption of Customs Duty and Sales Tax to Oil Exploration and Production (E&P) companies on import of machinery equipment & vehicles Exemption of Customs Duty and Sales Tax on import of machinery.712 9.031 0.867 2.196 0.148 0. The details are given in the following Table-3: (Rs.196 94.810 9. No Sectors Estimated Revenue Loss 2010-11 2011-12 1. Others 12.220 Total: 33. for manufacturers of different sectors. in billion) Estimated Revenue Loss 2010-11 2011-12 0.300 Customs Duty Under the Customs law. Pharmaceutical Products 5. Fertilizer 9. apparatus and other items Exemption from Customs Duty for vendors of Automotive Sector Exemption from Customs Duty for OEMs of Automotive Sector Exemption from Customs Duty on import of machinery & equipment by Industrial units registered with Ministry of Textile Industry Total 262 .756 91.762 24.055 0. General and conditional exemption of Customs Duty.280 3.Pakistan Economic Survey 2011-12 Table-2: Tax Expenditure of Sales Tax for 2010-11 and 2011-12 (Rs.0002 0.830 2. in billion) S. the tax expenditure in respect of Customs Duty has been estimated at Rs. and/or through specific rate of tariff.505 5.073 1.116 10.653 30.489 4.196 0.315 19. No & date 558(I)/2004 01-07-2004 570(I)/2005 06-06-2005 1296(I)/2006 31-12-2005 894(I)/2006 31-08-2006 1274(I)/2006 29-12-2006 659(I)/2007 30-06-2007 1261(I)/2007 31-12-2007 565(I)/2006 05-06-2006 567(I)/2006 05-06-2006 678(I)/2004 12-06-2004 575(I)/2006 05-06-2006 655(I)/2006 22-06-2006 656(I)/2006 22-06-2006 809(I)/2009 19-09-2009 Tax Expenditure Items Concession of Customs Duty on goods imported from SAARC and ECO countries. On the basis of these provisions.391 21. exemptions or concessions are granted to goods that are imported into Pakistan through SROs.151 13.588 Table-3: Tax Expenditure of Customs Duty for 2010-11 and 2011-12 SRO. Exemption from Customs Duty on imports from Sri Lanka Exemption from Customs Duty on imports from China Exemption from Customs Duty on imports from Iran under PakIran PTA Exemption from Customs Duty on imports under SAFTA agreement Exemption from Customs Duty on imports from China Exemption from Customs Duty on imports from Malaysia Conditional exemption of Customs Duty on import of raw materials and components etc.277 2. Tractors 6.138 0 2.833 12.630 14.073 0. they pertain to 10 months i. the overall tax expenditure for 2011-12 has been estimated to be around Rs.2011 to 30.300 3 Customs Duty 94.7. 185. Type of Tax Tax Expenditure 2010-11 2011-12 1 Income Tax 46.4. No.211 185.508 69.2012.Tax Expenditure Consolidated Summary Based on the aforementioned estimates for individual taxes.588 Total 175. 263 . 1. The consolidated summary of the tax expenditure for fiscal year 2011-12 is given in Table-4: Table-4: Tax Expenditure of Federal Taxes for 2010-11 and 2011-12 (Rs.496 Note: The estimates for 2010-11 are for the full year while for the year 2011-12.762 24.941 91. in billion) S.e.608 2 Sales Tax 33.496 billion.