The decision laid down conditions and controls for plant-production practices on small farms, improving marketing opportunities for local products
uae2 hours ago
The only bright spot is offered by the increased inflow of home remittances, as of now. The current account deficit, or CAD, has widened to a record $3.39 billion over 10-monhs ended April, 30, State bank of Pakistan, or SBP, the central bank, reported this week. CAD was just $466 million in the like period of fiscal year-2011. At this level, the CAD in fiscal year-2012 works out at 1.7 per cent of the GDP rather than 0.3 per cent in the like period of last fiscal.
SBP estimates the current GDP at $198.13 billion on the basis of the economy’s performance during July-April of fiscal year-2012. The GDP in the like 10-months last year was $ 175.64 billion.
What is restraining the GDP growth, a widening trade gap and a growing CAD? Several factors. But the key elements of this poor show is foreign inflows that has quickly dried up in the last four years of the present government’s rule. Poor security situation and the ongoing war on terror, too, hit FDI and foreign inflows. On the top of it, EU-US financial crisis and economic problems on the back of their reduced imports from countries like Pakistan are a major aggravating factor.
The quarterly repayment of IMF credits under Stand By Arrangements (SBA) that started in February will go on during the rest of current and next fiscal. Each repayment is around $400 million. The transaction, each time, directly hits the external balances and value of the Pakistani Rupee. Rupee has depreciated more than 45 per cent since March, 2008 when the present government took office.
The domestic economy, particularly the Large Scale Manufacturing, or LSM, too, has moved between a negative to a less than one per cent growth. High cost of production, high bank lending rates and energy crisis have blighted the economy and commercial operations. Inflation has been up at around 12 per cent, eating into the consumers purchasing power, as food prices shoot up more than 16 per cent a year.
The trade deficit (TD) particularly widened this year, as exports stayed low. Imports, meanwhile, galloped ahead due to a rise in oil, commodity and food prices. The TD widened to $ 17.65 billion , or 45 per cent, over the 10-month period of fiscal year-2012. TD was $12.17 billion in the like period of fiscal year-2011.
The factor contributing to this situation was the fact that exports stayed at a lowly $ 19.39 billion — down from $20 billion in the like period of fiscal year-2011. This works out to a 3.48 per cent reduction. Imports rose to $37.042 billion, up from $ 32.262 billion, in the like period of last year.
Oil & Petroleum products alone cost $12.582 billion, up 43.52 from $8.767 billion in the like period of last year. The services sector recorded a deficit of $2.347 billion during July-April 2012, widening 91.6 per cent, compared to the last fiscal’s like period, when it was $1.225 billion. It widened $1.22 billion, SBP reports.
The 10-month period of this fiscal saw services exports decline $816 million to $4.101 billion, against $4.917 billion in the like period of last fiscal. At the same time, import of services rose five per cent, reaching $6.448 billion against imports of $6.142 billion, or an increase of $ 306 million from the same period last year. These costs are increasing on the back of larger imports of services required by the government, transport, travel, and IT.
A matter of concern for the business, financial sector and the economy is the fact that net foreign investment inflows declined by $1.031 billion, or 64.7 per cent, to a net inflow of just $563 million in the 10-month period. It was $1.595 billion in the same period of fiscal year-2011, SBP analysis indicates. FDI alone, in the same period, was down 48.8 per cent as it fell to just $666.7 million, compared to $1.296 billion, in the same 10-months of fiscal year-2011. Home remittances, sent by oversea Pakistan, including those from UAE, GCC, Saudi Arabia, US and UK, rose 20 per cent during the current 10-months, compared to the same period last year, as these rose to $10.88 billion, up from $9.046 billion in corresponding period.
Views expressed by the author are his own and do not reflect the newspaper’s policy
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