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ECONOMY OF PAKISTAN: 2012-13

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ECONOMY OF PAKISTAN: 2012-13 Main Focus Economy of Pakistan Federal Budget: 2012-2013 Economic Challenges: 2013 Fiscal Policy Suggested Charter of Economy – PowerPoint PPT presentation

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Title: ECONOMY OF PAKISTAN: 2012-13


1
ECONOMY OF PAKISTAN 2012-13
Main Focus
  1. Economy of Pakistan
  2. Federal Budget 2012-2013
  3. Economic Challenges 2013
  4. Fiscal Policy
  5. Suggested Charter of Economy

Presentation by
Prof. Dr. Khawaja Amjad Saeed
Founder Principal, Hailey College of Banking
Finance, University of the Punjab, Lahore
Pakistan (2003----), Member Governing Council,
International Federation of Accountants (IFAC),
New York (1997-2000), President, South Asian
Federation of Accountants (SAFA) (1997),
President, Institute of Cost and Management
Accountants of Pakistan (1997-2000), President,
Association of Management Development
Institutions of South Asia (AMDISA) (1993-96),
Pro Vice-Chancellor University of the Punjab,
Lahore (1994-1996), Founder Director, Institute
of Business Administration (IBA), University of
the Punjab, Lahore (1973-1996) Senior Faculty
Member of Hailey College of Commerce, University
of the Punjab, Lahore (1965-73). Earlier he
served in Corporate Sector in Pakistan for eight
years (1958-65).
2
WELCOME TO OUR PROGRAM
  • PRESENTATION FRAME
  • Economy of Pakistan
  • Constitution of Pakistan 1973 Economic Matters
  • Federal Budget 2012-13
  • Pakistan Economic Challenges 2013
  • Economic Management Matrix
  • Fiscal Policy
  • Suggested Charter of Economy

3
1 ECONOMY OF PAKISTAN
Components
S. No. Components
1. Agriculture
2. Manufacturing
3. Services
4
1-1 AGRICULTURE
Components
S. No. Components
1. Livestock
2. Crops 1. Major 2. Minor
3. Fishing
4. Forestry
5
1-2 MANUFACTURING
Components
S. No. Components
1. Industry High Tech LSM SME Cottage
2. Minerals
3. Electricity
4. Construction
6
1-3 SERVICES
Components
S. No. Components
1. Physical
2. Social
3. Financial
4. Intellectual
7
2 Constitution of Pakistan 1973 Economic
Matters
Article Emphasis
03 Exploitation Eliminate
18 Freedom Trade, Business or Profession
37 Promotion Social Justice and Elimination of Social Evils
38 Well Being Social and Economic of People
8
3 Federal Budget 2012-13
MASTER CHART MASTER CHART MASTER CHART MASTER CHART
(Federal Budget 2012-2013) (Federal Budget 2012-2013) (Federal Budget 2012-2013) (Federal Budget 2012-2013)
Particulars Rs. b
Needed
1. Current Expenditure 2,612 81
2. ADP 2012-2013 591 19
Available 3,203 100
Net Federal Revenue 1,775 51
Shortfall 1,428 49
3,203 100
Financing Pattern
1.Capital Receipts (Net) 484 34
2. Bank Borrowings 478 34
3.External Receipts 386 27
4.Estimated Provincial Surplus 80 05
1,428 100
9
3-1 FEDERAL REVENUE BUDGET 2012-13
Federal Revenue Budget 2012-13 Federal Revenue Budget 2012-13 Federal Revenue Budget 2012-13 Federal Revenue Budget 2012-13
Particulars Rs. b
Current Revenue
1. Indirect Taxes 1,572 49

Composition Rs.b
Sales Tax 1,077 69
Custom Duties 248 15
Federal Excise 125 08
Others (Plus Petroleum Levy) 122 08
1,572 100
2. Direct Taxes 932 29
2,504 78
3. Non-Tax Revenue 730 22
3,234 100
10
3-1 FEDERAL REVENUE BUDGET 2012-13
Rs. B
4. Less Transfer to Provinces 1,459
Net Federal Revenue 1,775
Current Expenditure
1. Debt Servicing 1,142 44
2. Defence Affairs Services 545 21
3. Cost of Running Govt 404 15
4. Grants Transfer to Provinces 312 12
5. Subsidies 209 08
2,612 100
Less Deficit in Revenue Budget 837
1,775
11
3-2 Federal Annual Development Plan 2012-2013
Annual Development Plan 2012-2013 Annual Development Plan 2012-2013 Annual Development Plan 2012-2013 Annual Development Plan 2012-2013
Particulars Rs. b
Development Expenditure
1. Federal Govt 2012-13 Departments (rs. 207b), Corporations (Rs. 80b) Special Programs (Rs. 27b) Special Areas (Rs. 36b) and ERRA Rs. (10b) 360 61
2. Other Developments Expenditure 154 26
3. Provincial Governments 77 13
591 100
Earthquake Rehabilitation Reconstruction
Authority
12
3-2 Federal Annual Development Plan 2012-2013
Financing Pattern Rs.b
1. Bank Borrowings 484 82
2. External Receipts 386 65
3. Estimated Provincial surplus 80 14
4. Net Internal Resources (359) (61)
591 100
13
3-2 Federal Annual Development Plan 2012-2013
Break up of Internal Resources Rs. b
1. Deficit in Revenue Budget for 2012-2013 837
2. Less Net Capital Receipts (478)
(359)
14
3-3 Provincial Allocation 7th National
Financial Award
Province Allocated Population
Punjab 48 57.36
Sindh 27 23.71
KPK 16 13.82
Balochistan 09 5.11
100 100
Based on Population Census of 1997. Based on Population Census of 1997. Based on Population Census of 1997.
15
4 PAKISTAN ECONOMIC CHALLENGES 2013
  • A Economy Challenges 2012
  • Business Environment Deteriorating
  • Foreign Investment Declining
  • Exchange Rate Depreciating
  • Inflationary Pressure Building Up
  • Foreign Exchange Reserves Depleting
  • Industrialists relocating their Industries Abroad
  • Electricity and Gas Shortages Aggravating
  • Relations with International Financial
    Institutions Including IMF Deteriorating
  • Exports Growth Turning Negative
  • Mysterious Growth in Remittances Continuing
  • Economy Remaining the off radar Screen of the
    Government

16
4 PAKISTAN ECONOMIC CHALLENGES 2013
  • B Measures with Question Mark
  • 7th NFC Award
  • 1. New NFC Award diverted bulk of Federal
    Government Resources to Provinces at a time when
    they were needed more
  • To Finance Growing Interest Payment
  • Security Related Expenditure
  • Bailing out of PEs with losses
  • Paying WAPDA/PEPCO to Finance their
    Inefficiencies
  • Tax System
  • Failure to Reform Taxation System and Broadening
    Tax Base to Generate more Tax Revenues.

17
4 PAKISTAN ECONOMIC CHALLENGES 2012
  • B Measures with Question Mark
  • 3. Petroleum Products
  • These are doubly taxed
  • Exchange rate depreciation has increased the
    landed cost of oil.
  • Petroleum Development Levy (PDL) is levied on
    Inflated basis to mobilize more resources.

18
4 PAKISTAN ECONOMIC CHALLENGES 2013
  • C 2013 Outlook
  • Outlook for 2013 is Likely to Further
    Deteriorate.
  • Political uncertainty with adverse consequences
    on the economy.
  • Fiscal indiscipline hallmark of the Government
    during election year.
  • Mobilization through taxation will take the back
    seat.
  • Reliance on Non-Tax Revenues would increase
    further.
  • Expenditure is expected to rise further with
    budget deficit likely to be in the range of 6
    6.5 of GDP.
  • Economy will remain out of focus of the political
    leadership.
  • Energy shortage (electricity and gas) to
    aggravate further.
  • Politics is likely to dominate economics.

19
4 PAKISTAN ECONOMIC CHALLENGES 2013
D Expected Trends 2013 1. GDP Trend 3-4 2.
Domestic Investment Not expected to Pick up 3.
Unemployment and Poverty are likely to rise
further 4. Inflationary pressure to rise on
account of senseless increase in government
administered prices 5. External balance of
payments to come under pressure due to following
a. Flat, even negative export growth b.
Search in payment to the IMF c. FDI to witness a
sharp decline d Sharp depreciation of exchange
rate e. Public debt is likely to worsen on
account of large fiscal deficit.
20
4 PAKISTAN ECONOMIC CHALLENGES 2013
  • E Consequences
  • National Security at Stake
  • Miss-Governance to Continue
  • In Search of a Direction

21
5 ECONOMIC MANAGEMENT MATRIX
Economic Dimension Management Dimension Consumption Production Exchange Distribution Public Finance
Planning
Organizing
Staffing
Leading
Controlling
22
6 FISCAL POLICY
  • Objectives
  • Full Employment
  • Resource Mobilization
  • Resource Allocation
  • Maintenance of Economic Stability
  • Income Re-Distribution
  • Canons of Taxation Adam Smith
  • Equity
  • Certainty
  • Convenience
  • Economy
  • Other Canons
  • Flexibility
  • Situation

23
6 FISCAL POLICY
  • 4. Income Tax Rates 2013
  • Individuals
  • - Non-Salaried - 5 brackets (10 -----25)
  • - Salaried 5 brackets (5.0 -----20)
  • - Exempt upto Rs. 4 Lac
  • Companies
  • - Public, Private Banking Companies 35
  • - Small companies 25
  • 3. Dividend received by all tax payers 10 and
    20 on banking company from its assets management
    company
  • 4. Property income
  • - Rs. 150,000 exempt
  • - Rates 5 -----10
  • 5. Capital gains
  • With holding period less than six months 10
  • More than six month but less than 12 months 8

24
7 SUGGESTED CHARTER OF ECONOMY
  1. Domestic Resource Mobilization
  2. Income Tax by All
  3. Self Reliance for Financing
  4. ADP Financing
  5. Provincial Govt Budgets
  6. Public Enterprises Losses
  7. Good Governance Corporate Governance
  8. Inflationary Impact Salary increase
  9. CBA----PSA
  10. NPLs
  11. Professionals Role
  12. Holistic approach to Economic Development with
    equitable distribution of wealth and income
    across the board

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