GROWTH IN FEDERAL GOVERNMENT REVENUE

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THE ECONOMY OF PAKISTAN
- Some Thoughts
Presentation by PROF. DR. KHAWAJA AMJAD
SAEED Principal HAILEY COLLEGE OF BANKING
FINANCE University of the Punjab,
Lahore. Email principal_at_hcbf.pu.edu.pk
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WELCOME TO OUR PROGRAM
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PRESENTATION

1. Overall Framework PEST Formula
2. Constitution of Pakistan
3. Global Tributes to Pakistan
4. GDP
5. Federal Budget 2006-07
6. Growth in Federal Government Revenue
7. Corporate Income Tax Rates
8. Energy
9. China Factor
10. Pakistan-Economy Final Review

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1 OVERALL FRAMEWORK

• P Political
• E Economic
• S Sociological
• T Technological

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2 CONSTITUTION OF PAKISTAN

• Article Focus
• 03 Elimination of Exploitation
• 18 Freedom of Trade, Business or
  Profession
• 37 Promotion of Social Justice and
  Eradication of Social Justice
• 38 Promotion of Social and Economic
  Well-being of the People

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1 World Bank - Managing Director October 2006
3 GLOBAL TRIBUTES TO PAKISTAN

• Rich in Human Capital
• Impressive Record
• - Growth
• - Development
• - Poverty Alleviation
• 3. Continuous Economic Reforms

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• 4. Inflation-Down
• 5. Government 5-10 Years Plans
• - Water
• - Energy
• - Food Security
• - Infrastructure
• - HRD

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• 6. Privatization Program
• 7. Gawadar-Corridor
• - Trade
• - Transportation
• - Energy
• - Central Asia China.

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2 IMF-September 2006

• Tributes
• 1. Excellent Medium Term Planning
• 2. Strong FDI
• 3. Growing Domestic Investment

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3 Economic Freedom Index 2006

• Pakistan 110 better than India
• India 121

4 Opacity Index
Economist London Pakistan rated higher than
India
5 Moodys Investors Service-2006
Pakistans Rating Improving B2 to B1 Foreign
and Local Currency Bonds
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4 GDP

• Pakistan
• Average Four Years 7.0
• 2005-06 6.6
• Others
• World 4.8
• Euro 1.3
• USA 3.5
• Japan 2.7
• Germany 0.9

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• China 9.9
• Asian South Asian 5.0
• - India 8.0
• - Pakistan 6.6
• - Sri Lanka 5.9
• - Bangladesh 5.8

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5 FEDERAL BUDGET 2006-07

• Outstanding Features
• 1. Record ADP Rs 435b
• 2. Record Allocation to Provinces
• - Revenue Budget Rs 378b
• - ADP Allocation Rs 115b
• 3. Record forecast for Rs 1,083b
• Current Revenue
• 4. Special Allocations ADP
• - Programs Rs 34b
• - Areas Rs 17b
• - ERRA Rs 50b

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6 GROWTH IN FEDERAL GOVERNMENT REVENUE
Year Rs b Growth Index
2005-06 1,096 214
-05 900 175
-04 791 154
-03 721 141
-02 624 122
-01 553 108
1999-00 513 100
Source Excerpted from Pakistan Economic Survey
2005-06, Statistical Appendix, Table 4.3.
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7 CORPORATE INCOME TAX RATES
Year Public Company Private Company Bank
2004 35 41 44
2005 35 39 41
2006 35 37 38
2007 35 35 35
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8 ENERGY
A Needed 1. Cheap 2. Abundant 3.
Environmental Friendly
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• B Electricity Use
• 1. Households 43
• 2. Industry 28
• 3. Agriculture 12
• 83
• 4. Commerce 07
• 5. Others 10
• 100

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• C Energy Perspective MW
• Short Term
• 2007 1,000
• Medium Term
• 2008-2010 45 Power Plants 8,600
• Long Term
• 31 Projects (Hydel Nuclear) 19,150
• 28,750

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• Impact
• Job Creation
• - Direct 08 Lac
• - Indirect 16 Lac
• 24 Lac

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• D Installed Generation of Electricity Capacity
  
• 1. Wapda
• (Hydel 58 Thermal 42) 58
• 2. IPPs 30
• 3. KESC 09
• 4. Nuclear 83
• 100

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• E Issues MW
• 1. Untapped Hydel Potential 50,000
• 2. Line Losses
• 3. Solar Energy
• 4. Wind Energy
• 5. Austerity/Consumption Planning

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9 CHINA FACTOR

• 1. Population Currency
• 1.3b Renminbi (Yaun)
• 2. Language
• Mandrin
• 3. World Ranking other Economic Data
• Exports 4th
• GNP 6th
• Per Capita 960

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• 3. World Ranking other Economic Data
• Inflation 0.8
• Unemployment 2
• 4. Strengths
• 1. High Domestic Market
• 2. Food Self Sufficiency
• 3. Mineral Resources
• 4. Diversified Industrial Sector
• 5. Low Wages

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• 6. Rapid Sustained Growth
• 7. Growing Exports
• 8. Hong Kong as a Financial Sector
• 9. Heavy Investment in Communication and in IT
  Sectors
• 5. Weaknesses
• 1. Corruption
• 2. Underemployment
• 3. Geographical Disparities
• 4. Poor transportation

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• Export-Destination
• 1. USA 22
• 2. HK 18
• 3. Japan 18
• 4. Taiwan 13
• 5. South Korea 10
• 6. Germany 06
• 7. Others 13
• Total 100

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• 6. Contributions to Pakistan
• 1. Karakrum Highway
• 2. Heavy Mechanical Complex
• 3. Chasma Nuclear Plant
• 4. Gawader

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• 7. Upcoming Investment
• 1. Five years Linkage
• 2. Private Sector Industrial
• Estate in Punjab
• - Gawader
• - Refinery
• - Other Investment
• - 32 Point joint statement

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10 PAKISTAN-ECONOMY FINAL REVIEW

• Positive
• 1. GDP Growth 7
• 2. KSE Bullish
• 3. FDI Robust
• 4. Consumer Credit from Growing
• 5. Poverty Alleviation 10 down
  Levels since 2000

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• Negative
• 1. Income Distribution Skewed
• 2. Trade Gap Widening
• 3. Growth Non Sustainable
• Source Edited from IBP Newsletter, November 2006.

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