4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

RC_Cola · June 6, 2016, 4:59pm

Let’s take a common man’s view of how our country is performing sans all the glitter and gold that Mr. Dar tells us that Pakistan economy is producing under his able tutelage.

I am a common man and this is how I see the current budget of Pakistan presented by Economics Whiz Kid who is a beacon of hope for entire Ummah as recently suggested by N$ on his Skyped cabinet meeting only few kms away from his palatial abodes.

Information gleaned from PMLN’s Govt’s Finance Ministry “speaks volumes” for the data integrity but for discussion’s sake let’s decipher the officially reported numbers (source: Economic Survey) covering aspects which a common man like me can understand:

**GDP (Gross Domestic Product) **

Pakistan 4.7% Actual vs. 5.5% Target (Underperformed by 0.8% - Target Missed by 15%)

Let’s see how our neighbors performed:

India 7.5%, Bangladesh 6.6%, and Sri Lanka 5.0%

Production sectors

Agriculture: Overall negative growth -0.04 percentage points

Industry: Improved 1.4 percentage points

Services: Contributed 3.35 percentage or 70% + to overall GDP

What contributed in Services Sector is due to higher government spending on Salaries, Pension, and Defence. If you were thinking major push has come from creation of jobs or businesses then think again – we are fixated on conspicuous economy and it is this revolutionary Govt’s fourth Budget 

FDI – Foreign Direct Investment

Target was $3.34 Billion and this Govt., achieved $1.0 Billion (Target missed by whopping 70%)

There had been virtually no plan of current Govt., in last four years, to attract FDI; if they were hoping in Agri based products then one can see; and also it is way more than Lahore – Islamabad Motorway.

If anything; Pakistan dropped by another two points in 2015 on the World Bank’s ease of Doing Business Index from 136 to 138 out of 189 countries. Such a illustrious achievement of “Experienced” team that N$ boasted about in 2012.

And how can they achieve $150 Billion exports as outlined in Vision 2025 – Would this Govt., be able to achieve 24% annual growth in Exports all along – claptrap redefined!

Now let’s see Exports:

Falling – falling and falling continuously

Exports have been contracting each month for the last 18 months.

Period July 2015 to March 2016 $15.6 billion

Period July 2014 to March 2015 $17.9 billion.

Decline of 12.9%. So much for experienced team that N$ touted as consisting of whiz kids.

Not only this; but perhaps this is also a unique achievement of “Experienced Geniuses" of N$ team that perhaps for first time in the history of the country the exports would be lower at the end of any government’s tenure than what it inherited from much disclaimed Govt., of PPP. What an accolade to have by experienced team of economics gurus!

What steps were taken by this government to increase exports in the period when Bangladesh has become 2nd biggest exporter of textiles after China. And Faisalabad is doing just fine; in the able hands of geniuses like Abid Sher Ali, Talal Chaudhry and Rana Sanullah – ok that was a swipe one has to take when spokesmen of Govt., are such beacons of accomplished and not to forget experienced leadership!

Revenue Collection:

Overall growth is 18.9% during July 2015 to April 2016 when compared to same period last year.

How: Growth in collection of indirect taxes (21.7%) was almost 50% more than the rate for direct taxes (14.4%) is something which only an accountant can suggest not an economist. Another bravo for experienced team, basically this means that keep on squeezing out from end users pockets.

As is well established, indirect taxes such as customs duty, which showed the highest growth of 32.5% during the current financial year, adversely affect the poor disproportionately and increase inequality in a society furthering the gap between haves and have nots as briefly touched upon in the thread opened by Jolie re What is Democracy?.

Not only that; but when you raise reliance on customs duty it will naturally isolate Pakistan and obviously it is anti-export bias, thus making it extremely difficult for it to be part of the global value chain like other fast developing countries such as Vietnam, Bangladesh, Sri Lanka, and so many more.

Can Mr. Ishaq Dar self proclaimed whiz kid of Economics and supposedly Pride of Entire Ummah as touted by N$ from his mansion in London tell us how has Pakistan fared on the following indices such as those of World bank in last three illustrious years?

Ease of Doing Business
Trading Across Borders
Human Development Index (refer to earlier thread by myself)
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Transparency  
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In current world; every department in a small private business benchmarks against competitor to see how they are performing but in our “democracy” only illicit practices of electoral fraud and once in five year exercise of “voting” is enough to tell the common man – Sab Set Hai – Army hamari dushman hai warna tou hum ney Switzerland ko bhi beat kar dena tha.

Well Done N$ – and your “experienced” team consisting of geniuses for another twaddle!

I will definitely again vote for your party in 2018 (Maryam Safdar) and 2023 (Maryam Safdar) and 2028 (Mehrun Nisa Safdar) and so on and so forth…

RC_Cola · June 6, 2016, 8:34pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

The above is what was official version of the sitting Government with virtuoso heading every Ministry from Interior, to Defence, to Foreign Affairs, to Information and last but not least Finance 

This one is more from analytical point of view as to how and why the set targets have failed and will fail again.

Above performance was in spite of favourable exogenous factors, such as falling commodity prices in the international market that brought down inflation and created much needed fiscal space to the tune of $7.5 Billion just in Oil imports, the revolutionary PML-N government has missed most targets in the outgoing fiscal year, including GDP and exports. The GDP growth, according to leading economic researchers, has not gone up above 3 percent.

The projected GDP growth rate of 4.7 percent is due to **over-stated growth in 10 out of 18 sectors **and lower estimates of loss in cotton production; the cotton was actually 34 percent down according to ginning sources.

Although the measures announced to alleviate the sufferings of agricultural sector are eye-catching, they are not as substantial as they may appear. Fertilizer prices have gone down in international market by 40 percent and the government transferred just 5 percent of it to the farmers. Instead of reducing fertilizer price by Rs400, it should have been reduced by Rs1000. The government should simply be importing more fertilizer which is 15/20 percent cheaper than domestically produced.

Reduction in tubewell tariff is fine, if various levies are waived and peak-hours’ tariff is also reduced. But, given the steep rise in productivity and crash of prices in international market, these measures may not help much to infuse higher productivity and efficiency in our agriculture. It requires fundamental agrarian reforms in agrarian relations, social structure and revolutionising the means of production to acquire greater productivity which Pakistan is lacking when compared to most agri focused economies.

Decline is also visible in most of the industrial sectors due to loss of purchasing power of rural population and decrease in almost all types of exports and closure of Pakistan Steel Mills. Indeed automobiles, construction, cement, etc., did show good amount of progress. Even the power generation is behind last year’s quantum of electricity. *The circular debt in the power sector continues to hover around Rs640 billion. Ahan – really? the same Debt that was paid off to the tune of Rs500 Billion when N$ came into power and it was one of his cornerstone slogan during election campaign. Out of which 180 Billion is still unaccounted. *

The losses in Public Sector Enterprises remain to the tune of Rs600 billion in the absence of restructuring. The incentives to boost exports are positive, but a too narrow a base of the structure of our exports will keep our balance of trade vulnerable.

Our debt profile is getting most precarious with each passing year and we are going to face the burnt when Paris Club’s rescheduling ends and the cost of debt servicing may go up to $13.6 billion by 2017-18 at the end of the tenure of the current government. Currently foreign debt is one-third of our total debt as domestic debt climbs up to two-thirds of our total debt while it was half the total in 2010. It may be noted that the foreign debt is much cheaper (@1.9%), except for the high cost Euro bonds, and domestic debt is much costly (@10.7%).

Thanks to a cheaper official interest rate of 5.75, the private banks make hey by borrowing on half the rate they invest in treasury papers. What is not understandable is that why do the monetary policy and the State Bank continue to provide such an easy money making leeway to the private banks who prefer to invest in government securities rather than in productive businesses? Annual cost on debt is now Rs1.3 trillion—92% on domestic and 8% on foreign. No strategic measures were announced to tackle this trap, despite proposing a ceiling.

On the taxation side, Mr Dar has tried to ease the taxation restraints on the exporters and tighten the grip on non-filers. But, he has not taken any strong measures to reverse the ratio of direct and indirect taxes. While indirect taxes continue to be in the range of 63 percent (1914-15), the share of withholding tax in income tax has gone above 60 percent. The policy continues to be of burdening the poor and avoid taxing the rich.

*The gaps in taxation continue to widen. The income tax on corporate sector is merely 3.7 per cent of the GDP—60 percent of the companies registered with SECP who file returns show no profit. While industry takes the 73 percent of the burden, agriculture sector hardly pay one per cent in taxes. As the salaried and professional sections remain hard pressed, the traders being PML-N constituency continue to evade or avoid taxes.
*
It is too late for the PML-N government to push an agenda of reforms for the mid-term. In the next two years of its tenure, the government will not be able to achieve 7 percent of GDP growth, 21 percent investment to GDP ratio, nor will it be able to raise the ratio of taxes to GDP to 14 percent, as announced by the finance minister in his mid-term future plan till 2019.

The failure of the government is visible in introducing a just taxation system and put the economy on a sustainable course. With the current low levels of investment, savings and taxation as a percentage of the GDP, there is no scope for a dynamic and organic growth and development. It neglected human resource development and social sectors while pursuing a “highway model”.

As costs on debt-servicing and over-extended security agendas continue to rise, there is no fiscal space left for the people to have hope in their future and they are left at the mercy of paltry handouts introduced during the last government.

Basically, when interest rates creep up globally, what will N$'s Govt., do - borrow comparatively lower rate of loan to retire more expensive loans and keep on raising the Indirect Taxes and siphoning off that money to their companies in Panama, Isles of Mann, British Virgin Islands!

Well done PMLN - we honestly do deserve you guys! Keep on making Pakistan more prosperous year by year and keep on keeping masses so poor that worth of Qeemey Waley Naan can buy their one vote - maybe in next elections if voters demand more - do add raita or chutney with it and another 5 years will be yours!

kakaballi · June 7, 2016, 6:40am

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

At least link the sources of the copy-paste.

Sachaydino · June 7, 2016, 12:52pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

Are you challenging the intelligence of Pepsi I mean RC Cola?

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RC_Cola · June 7, 2016, 2:50pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

As higher intellect members above have different style of contributing to the subject- I will make another post as a layman - as I am one and in the same breath will also term it (4th failure of PMLN) as conspiracy of Army, Yahoodi, PTI, US, UK, Foreign Powers, and any other latest favorite target conspiracy name of Pak “intelligentsia” (absolutely pun intended) as the reason for 4th consecutive failure of N$'s Govt’s budget.

Perhaps the only reason why numbers are again fudged is to fulfill the condition for international donor / aid agencies by showing that Economy outperformed IMF’s estimate of 4.5%

Pakistan Economics under Dar Sb is and will magically dodge demand pull inflation - I guess Dar will rewrite principles in macroeconomics - another cost for those of us who have to shelve out our books and buy new books written by Dar & N$ re macroeconomics .

I guess it’s time to formally invent a new subject DarEconomics as it’s called in SPDC (Social Policy and Development Centre).

Sector Target Achieved Variance Actual Actual Variance Additional Notes
GDP Growth 5.50% 4.70% -0.80% 3.10% -2.40% Actual is based on opinions of think tanks and independent economists covering the region.

Agri 3.90% -0.19% -4.09% - -
Livestock 4.10% 3.63% -0.47% - -
Manufacturing 6.10% 5.00% -1.10% - -
Large Scale
Manufacturing 6.00% 4.60% -1.40% - - Last year it gerw by 2.4%
Construction 8.50% 13.10% 4.60% - - Obviously It has to be - otherwise how will foundaries be profitable
Transport &
Communication 6.10% 4.10% -2.00% - -

Sector Target ($B) Achieved ($B) Variance Shortfall in %
Exports 3.34 1.00 -2.34 -70%

Sector Target Achieved Variance Actual Actual Variance Additional Notes
Cotton
Output* 13.9 10.1 -27.3% 9.1 -34.5% Actual is based on Ginning Industries estimates.
*in Million Bales

*- Apologies for horrendous formatting as source file is in MS Excel and pasting does not go well - and I am not well versed in editing the posts in this forum.
*

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RC_Cola · June 7, 2016, 3:27pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

Since the cat is out of the bag now - here is another piece :) Advance apologies to both types of PML & DarEconomics apologists; open and veiled ones:)

ISLAMABAD:
Pakistan’s economy grew at a pace of 3.1% in the outgoing financial year, an independent think tank claimed on Monday repudiating a claim by the government’s economic managers that the GDP growth rate was 4.7%.

The claim by the Social Policy and Development Centre (SPDC) has dealt a second major blow to the credibility of the Pakistan Bureau of Statistics (PBS) in less than a week. Earlier, the Policy Research Institute of Market Economy showed in a report that the BPS was understating the inflation rate.

Post-budget politicking: Flawed policies hurting Pakistan: Imran Khan

“GDP growth rate is 3.1%, not 4.7%” in fiscal year 2015-16, according to the SPDC report. Former interim prime minister and world-renowned economist Moeen Qureshi is the patron of SPDC, while former finance secretary Saeed Qureshi and former State Bank governor Dr Ishrat Husain are on its board.

*While launching the Economic Survey of Pakistan on June 2, Finance Minister Ishaq Dar boasted the GDP grew at the rate of 4.7%, which was the highest in the last eight years. Conversely, the SPDC claims the provisional growth rate was 3.1% — the lowest rate in seven years.
*
The SPDC said it was the third consecutive year that the PBS exaggerated the GDP growth rate. In June 2014, the PBS brought down the relatively high growth rate achieved in 2011-12 from 4.4% to 3.8%. “This was done to demonstrate that the GDP growth rate of 4% in 2013-14 was the highest in the last six years,” according to the report.

According to the SPDC estimates, the growth rate in 2015-16 had been overstated in 10 out of the 18 sectors of the economy. “Almost 60% of the overstatement is in the services sector.”

Budget woes: ‘Federal budget will negatively impact industries in K-P’

Against the official claim of only 0.2% negative growth in agriculture, the sector actually contracted 2%, it said. Similarly, industry grew at a pace of 5.5% against the government’s claim of 6.8%. Moreover, the SPDC stated that the services sector’s growth was 4.1%, implying a GDP growth rate in 2015-16 of 3.1% against the official claim of 5.7%.

The SPDC underlined that its claim that the economy grew at a pace of only 3.1% was consistent with findings of over last four decades that in a year when the agricultural sector declines, the GDP growth rate never exceeds 4%.

The agriculture sector is important for Pakistan not only because it accounts directly for 21% of GDP but also 60% of the manufacturing is agro-based and over 40% of trading and transport is of agricultural products, said the SPDC.

The think tank noted that electricity generation increased by only 2% and with this little increase in output, the economy cannot grow at the rate of 4.7%.

Finance Minister Dar is increasingly coming under pressure to reform the PBS. He admitted during a recent news conference that there were some legitimate questions about the working of the PBS because nobody ever raised such questions about the working of the Securities and Exchange Commission of Pakistan and State Bank of Pakistan.

Budget 2016-17: PBIF chief calls budget ‘over-optimistic’

Last month, the finance minister had offered to engage international experts to resolve the controversy over calculation of GDP but no meaningful effort has since been made in that direction.

The SPDC also noted that private investment also dropped in the outgoing financial year despite an improvement in the security situation, extraordinarily low interest rates and greater access to credit. The government has missed the investment target for 2015-16.

It was of the view that Chinese investment is substituting foreign direct investment (FDI) from other countries instead of complementing it. The net flow of FDI remained only $1 billion during the first 10 months of 2015-16 against the annual target of $3.3 billion.

Published in The Express Tribune, June 7th, 2016.

There can be only one of the above statements an absolute truth (in the bold above); either devout disciple (Ishaq Dar) of "Could be" Amir ul Momineen aka N$ is telling the truth or SPDC. Either Pakistan's Economy grew by highest percentage in last 8 years or lowest in last 7 years - The Circus of LOL continues!

waleedhbk · June 8, 2016, 12:49pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

The Greatest Economist of Pakistan Mr Ishaq Dar at it again lulz](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=lulz)

Southie · June 8, 2016, 2:20pm

re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

Economists have predicted 10 out of the last 3 recessions or something like that.

RC_Cola · June 11, 2016, 6:51am

Re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

Reference main points in current budget: forwarded as received- covered major fallacies in the budget

Asad Umar’s speech in parliament house on budget 2016 - 2017 - Video Dailymotion

RC_Cola · June 13, 2016, 3:55pm

Re: 4th Consecutive Ace of PMLN Govt - Another Brilliant Budget (Official Figures)

Governments all around the world are critiqued as budget has far reaching effects on the country's future course of direction and in every country Governments are criticized for areas in which they are underperforming.

Current Government of Pakistan cannot have their way and not discussed because it somehow sowed the seed in the brains of its supporters that whenever there is criticism; let’s make the debate a Nawaz Sharif vs. Imran Khan one.

If the current claim of GoP for GDP Growth was 4.7% and SDPC terms it as 3.1%; then discussion should revolve around; which sectors under performed as compared to GoP’s claim – it is not Imran Khan or Fazl-ur-Rehman or Asif Zardari that created independent think tanks and economists and they have no stake in politics – please get out of this mentality of everything good happens because of GoP and everything bad that happens is a conspiracy against them.

There is a reason and rationale; why this Govt., needs to questioned and critiqued as in its first year of power; it not only lied to general public re GDP Growth Rate of 4.1% when it was actually 3.3% (lower than even PPP’s last year of 3.7%) and wen got caught termed it as typographical error – which in itself is a horrendous and most basic mistake that even school going children learn in grade 5 how to proof read ad correct– but concept of proof reading has not reached; SBP, Federal Bureau of Statistics and Ministry of Finance as yet and they present papers to IMF without proof reading for the release of next tranche.

Let’s set aside 4.7% vs. 3.1% debate for a second and focus on what matters to an average common man and how the following will translate into harder times in next year; simply because there will be demand pull inflation and major indicators are:

Propensity to save is down, with holding taxes on services are up, exports are down, agrarian sector is down, direct foreign investment is down, service sector is down, unemployment is up, underemployment is up, taxpayers out of tax net (undocumented / parallel economy) are up, indirect taxes are up, imports are up, and loans are up, taxes on energy are up to just name a few things which everyone understands.

In which economics these signs are showing an upward trend for an underdeveloped economy of 200 million people?

OK - even if I not term the budget as good, bad or ugly.

All I know is that gap between Pakistan and other countries was already huge; and if we look at growth rates of other countries then with this kind of performance the gap will further widen.

We missed the golden decade of 1990's due to PMLN & Establishment gang-up against PPP and several economies laid the foundation then when our country was primed for take-off but greed of power and conspiracies won and Pakistan lost; are we going to miss out another decade and play petty politics and not even come to the point where issues and strategy needs discussions.

Textile sector has been under so much pressure since last many years (10/11 at the minimum) and we have given the advantage on a silver platter to our main competitor which is exporting textile worth $15 billion and has reached number # 2 rank after China. Our Govt is busy playing “If Government of Pakistan failed – so what; PTI also failed in KPK, PPP also failed in Sindh” – Grow up!

People who turn any ISSUE based thread into Nawaz vs. Imran vs. Zardai etc need to be banned.

** Editing/Deleting ** the posts wont cut it, warning them wont do anything either. This is becoming major reason for derailment of threads and also quality of any debate going down the drain.

If this continues; many will stop posting and who knows how many may already have stopped contributing thus defeating the whole premise of discussion.

Identifying Govt’s failures is not a PTI propaganda; Pakistani nationals have a right to speak about what is going wrong and what mess a common man is being pushed into and they do not need to be PPP or PTI or any party’s supporter to do that. Being Pakistani should be enough- period!