47. Pakistan Economic Survey 2011-12 - Consultancy Services in ...

Executive SummaryDemutualization would result in increasedtransparency at stock exchanges and greaterbalance between interests of various stakeholdersby clear segregation of commercial, regulatoryfunctions and separation of trading rights andownership rights. Demutualization is wellestablishedglobal trend and almost all stockexchanges worldwide operate in demutualized setup. The enactment of this law has brought Pakistancapital market at par with other internationaljurisdictions like India, Malaysia, Singapore, USA,UK, Germany, Australia, Hong Kong, Turkeyamong others. It will help expand market outreach,attract new investors, improve liquidity and enablestock exchange to attract international strategicpartners.Inflation: Price stability remained the priority ofthe government. The Government has constituted aNational Price Monitoring Committee headed bythe Finance Secretary with representatives ofFederal Ministries and Provincial departments. TheCommittee meets every month. In addition, theCabinet and the Economic Committee of theCabinet monitors the prices of essential items andtake corrective measures to ensure that pricesremain under check. These efforts have yieldedresults. Inflation has declined for the thirdconsecutive year. CPI was 10.8 percent duringJuly-April, 2012 from a high of 25 percent inOctober 2008. It was in single digit in December2012. This has been achieved despite sharpincrease in international oil prices, effect ofupward adjustment in the administered prices ofelectricity and gas, supply disruptions due todevastating floods of 2010 and heavy rains of 2011and bank borrowings. Food and non-food inflationaveraged 11.1 percent and 10.7 percentrespectively against 18.8 percent and 10.8 percentin the same period of last year.Trade and Payments: The Government pursuedvigorously to secure concessional duties packageon 75 items from the European Union. The WorldTrade Organization approved the package thisyear. It is expected that this will boost Pakistan’sexports to EU, one of the major trading partner ofPakistan. Exports witnessed a strong performancelast year attaining the highest level ever of $ 25billion showing a growth of 30 percent. It reflectedboth the price and quantity effect. Despite eurozone crisis, impacting the demand for Pakistangoods, Pakistan has successfully maintained itsexports at last year’s until April this year. Exportsduring July-April 2012 were $ 20.5 millioncompared to $ 20.46 billion last year. The AfghanTransit Trade Agreement (APTTA) hasencouraged formal trade between Pakistan andAfghanistan and the volume has risen to around $2.5 billion annually. Efforts are underway toformalize Free Trade Agreements and PreferentialTrade Agreements with many countries. It willhelp boosting Pakistan’s exports. Efforts are also inhand to normalize trade relations with India.Imports grew by 14.5 percent and stood at $ 33.1billion during July-April 2012. The current accountdeficit stood at $ 3.4 billion in the same period. Itwas largely as a result of high oil prices and importof fertilizers. Continued support from currenttransfers in the form of workers’ remittanceshelped in containing current account balance.Pakistan has witnessed some geographicaldiversification in exports. During 2005-06, 47.2percent of the country’s exports were concentratedin five markets (USA, UK, Germany, Hong Kongand U.A.E.) of the world and remaining share ofall other countries was 52.8 percent. Thisconcentration is on continuous decline since 2005-06 and recently the share of these five marketsstood at 35.7 percent whereas the share of all othercountries increased to 64.3 percent during July-December 2011-12. This improvement ingeographical diversification was mainly the resultof Strategic Trade Policy Framework (STPF-2009-12) introduced by the government and the resultingincrease in exports to China, Afghanistan andBangladesh.Pakistan’s foreign exchange reserves reached to $16.5 billion at the end-April 2012 compared to $17.0 billion at end-April 2011. The exchange rateaveraged at Rs. 85.50/US$ during July-April 2010-11, whereas it averaged at Rs. 88.55/US$ duringJuly-April 2011-12. The Pak Rupee depreciated by3.4 percent during July-April 2011-12 over thedepreciation of 2.2 percent in July-April 2010-11period.Public Debt: Pakistan’s public debt stood atRs. 12,024 billion as of March 31, 2012. Duringv