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STATE BANK REPORT 2012 PORTRAYS A DISMAL ECONOMIC SCENARIO
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668
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Visits
668
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December 30, 2011
In its recent annual report , the State Bank has termed the National economy as quite deteriorating, the State Bank has expressed its deep apprehensions over government’s failure to attain the desired targets set for FY-2012 regarding GDP, inflation, financial deficits, and current defects. It has also expressed that following the decrease in investments, lack of energy, lawlessness, and crumbling infrastructure, Pakistan lagged in economic progress with investments touching a lowest mark in 35 years. In its report the State Bank has also declared the Rental Power Projects (RPP) as wrong imprudent moves and hence total failures. It has also lamented over the alarming fact that institutions running in heavy losses were gobbling much required and fast depleting National resources, among whom PIA, Pakistan Railways, and Pakistan Steel Mill were some leading and prime examples of some of the most gross management and bad governance. Their poor performance was equally polluting other business and industrial development of the Country, and has stressed on the (political and democratic) leadership to take effective prudent measures to ameliorate the situation at earliest.
In its report for the FY-2010-11 the State Bank also expressed its dismay at the failure to attain most of the targets set during previous FY-2010-11, and calculated the GDP at 3% -4% as opposed to government’s targeted 4.2%. Similarly the inflation rate would be 11.5% -12.5% as opposed to the targeted 12%. Financial deficit stands possibility of 5.5% - 6.5% as opposed to targeted 4%. Current deficit is expected to be 1.5%-2.5% instead of strived 0.6%. The State Bank report also termed the economy of previous FY-2011 ending on 30th June 2011 , was also never rosy GDP remained 2.4% as opposed to government’s projection at 4.5%. In a similar vein the agro-related targets remained at 1.2% instead of targeted 3.8% while revenue generation from services-related sector also remained a dismal 4.1% instead of expected 4.7%, targeted. Inflation was rampant with 13.9% against a projected 1`3.2%, while tax revenue also fell quite short at less than 1.6%. Government had targeted tax revenue at 11% of GDP, out of which only 9% was realized. Budget deficit also increased 2.6 % above the hoped limits.
The report also explains that 20% of prime agro land was inundated in recent floods, hindering productivity, while in its aftermath labor and financing of agriculture from start was also hampered. According to estimates, more than 6.6 million of manpower remained unemployed for three months while an investment stock of U$.2.6 billion (1.2% of GDP) was wasted. The global reaction over this colossal loss was less than anticipated. In its report, State Bank has also disclosed that during FY-2011 Pakistan’s financial position remained well under pressure, with budgetary deficit standing equivalent of 6.6% of GDP, as compared to 4%. Worst of all, failure to implement RGST, inclusion of services and agriculture in tax net, gradual removal of subsidies. However despite all this anomaly there was a positive side to it all that government had succeeded in restricting its expenditure as compared to 2010. During the fiscal year 2011 expenditure accounted for 18.9% of GDP, as compared to 2010’s 20.5%. Massive financial deficit directly affected Pakistan’s loans
Considering the fact that 32.8% of revenue went for interest on governmental; loans, it was/ is apparent that government’s ability to utilize financial policy for a conducive growth rate. Yet Pakistan’s foreign loan is still within normal limits, especially in the scenario of intense problems being faced by Eurovision. Since energy plays a pivotal role in production, the State Bank Report has dedicated an entire chapter to the subject. It has been detailed that government took three important steps to contain the menace of energy problem, which included ‘RPPs’ , Rs120 billion allocation for energy for industrial sector, and increase in electricity tariff. However the condition remained equally problematic. The report has termed the RPPs as highly unconducive and untimely projects due to the fact those circular debts; electricity was less utilized than anticipated.
The report is sufficient to make all realize the economic, plight and problems of Country, and also highlights ways to ameliorate these problems. Many of the problems highlighted are not new or special as they are a common factor for many past years /decades. These include such factors like decreased investment trends, lack of energy lawlessness, and deteriorating infrastructure of various major and lifeline institutions , which have been /are the main cause of Pakistan’s lagging in economy. Unfortunately no past government made any dedicated efforts to redress these anomalies, and the tradition still lingers. One such glaring example can be discerned by the fact that rate of investment has fallen down to its lowest in 37 years. Yet it is an amazing fact that every government indulged in merrymaking and corruption of rampant order, despite the presence of these destructive policies and tidings.
In short the State Bank report is a perfect prediction of all impending disasters, and the situation calls for immediate and strong steps to rectify the situation it should be remembered that in a democratic setup, political leadership is the focus of masses, as they are responsible for entrusting the leadership to resolve any crisis, which can be tackled with little or slightly tough hurdles.
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