**Will Anarchists try to show some performance in KPK as well to improve socio-economic indicators of this unfortunate province ?
Or will continue with their dream selling agenda and luring emotional youth and middle class by painting the same rosy pictures of past election campaign …
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WB says Pakistan’s economic recovery stems from solid reforms
- October 12, 2014
**WASHINGTON: The World Bank has acknowledged that Pakistan’s promising economic progress achieved in the FY 2013-14 stemmed from its solid reform programme, and envisaged a steady growth momentum in the medium term.
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The re-emergence of GDP growth - 4.1 percent, the highest in seven years - was a key feature of the year, a WB report on South Asia’s Economic Opportunity.
Dynamic services and manufacturing sectors supported by better energy availability and improved investor expectations were the primary drivers, the Bank says.
“The promising progress stemmed from the government’s solid economic reform programme. This in turn was reinforced by an IMF Extended Fund Facility (EFF) and two World Bank Development Policy Credits with a focus
on restructuring the energy sector, fostering private and financial sector developments, and improving social protection and revenue mobilization.”
The risk of a balance of payment crisis was minimized with a “significant strengthening” of the reserve position.
The report assesses that this success stemmed mainly from strong remittance and significant foreign capital inflows, which also brought stability in the foreign exchange market. Strong fiscal consolidation was achieved and the fiscal deficit was contained.** Price stabilization followed, with average inflation remaining in single digits.**
Sectorally, industrial growth was based on a sharp turnaround in construction, electricity generation, and gas distribution, and a better performance of **large-scale manufacturing.
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Agricultural growth, however, was slower than in the previous year. Services contributed about **60 percent of growth **through relatively better performance in wholesale and retail trade, as well as transport, storage, and communication (which together account for half of services’ value added).
Increased remittance, capital, and financial inflows supported a build-up of reserves. Remittance touched US$15.8 billion.** The capital and financial account registered a sizeable surplus of US$ 7.07 billion in FY2013/14, compared to just US$ 0.8 billion in FY2012/13.
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The previously loose fiscal stance underwent a significant correction. The government reduced the fiscal deficit to 5.5 percent of GDP in FY2013/14 from 8.3 percent in FY2012/13. Tax revenues increased by almost 1 percent of GDP and expenditures were compressed by 1.3 percent of GDP.
Improved business confidence brought a strong recovery in credit to the private sector, after five lackluster years. Lower demand for commercial bank credit by the government, due to a lower fiscal deficit, provided necessary space to the private sector to borrow from the banking system.
Price stability - with CPI inflation at a single digit - was preserved. Better supply conditions, reduced external vulnerability and fiscal consolidation contributed to the softening of underlying inflationary pressures.
The structural reform agenda made promising progress. The government reduced power subsidies by adjusting power tariffs toward cost recovery levels.
In order to overcome the inter-corporate circular debt issue, the stock and flow of payables at all levels of the energy sector will now be identified by a technical and financial audit; a roadmap to limit the accumulation of new arrears and reduce their stock has been designed.
**In June, the government completed capital market transactions by selling shares of United Bank Limited (UBL) and Pakistan Petroleum Limited (PPL). It also auctioned 3G telecoms licenses.
**The FY2014/15 budget launched a three-year package of revenue measures to expand the tax base, eliminate tax exemptions for higher incomes, adjust the sales and excise tax rates for special categories, and raise additional revenues equivalent to more than 1 percent of GDP.
The budget also reduced statutory tariff slabs from **eight to six, **which will subsequently be brought to four in the medium term. It expanded the scope and significantly increased the benefits of the Benazir Income Support Programme (BISP) cash transfer programme while introducing conditional cash transfers to support school enrolment.