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ECONOMY OF PAKISTAN: 2012-13

Main Focus. Economy of Pakistan Federal Budget: 2012-2013 Economic Challenges: 2013 Fiscal Policy Suggested Charter of Economy. ECONOMY OF PAKISTAN: 2012-13. Presentation by. Prof. Dr. Khawaja Amjad Saeed.

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ECONOMY OF PAKISTAN: 2012-13

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  1. Main Focus • Economy of Pakistan • Federal Budget: 2012-2013 • Economic Challenges: 2013 • Fiscal Policy • Suggested Charter of Economy ECONOMY OF PAKISTAN: 2012-13 Presentation by Prof. Dr. Khawaja Amjad Saeed Founder Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan (2003----), Member Governing Council, International Federation of Accountants (IFAC), New York (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of Cost and Management Accountants of Pakistan (1997-2000), President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96), Pro Vice-Chancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996) & Senior Faculty Member of Hailey College of Commerce, University of the Punjab, Lahore (1965-73). Earlier he served in Corporate Sector in Pakistan for eight years (1958-65).

  2. WELCOME TO OUR PROGRAM • PRESENTATION FRAME • Economy of Pakistan • Constitution of Pakistan 1973: Economic Matters • Federal Budget: 2012-13 • Pakistan: Economic Challenges: 2013 • Economic Management Matrix • Fiscal Policy • Suggested Charter of Economy

  3. 1: ECONOMY OF PAKISTAN Components

  4. 1-1: AGRICULTURE Components

  5. 1-2: MANUFACTURING Components

  6. 1-3: SERVICES Components

  7. 2: Constitution of Pakistan 1973: Economic Matters

  8. 3: Federal Budget: 2012-13

  9. 3-1: FEDERAL REVENUE BUDGET: 2012-13

  10. 3-1: FEDERAL REVENUE BUDGET: 2012-13

  11. 3-2: Federal Annual Development Plan 2012-2013 *Earthquake Rehabilitation & Reconstruction Authority

  12. 3-2: Federal Annual Development Plan 2012-2013

  13. 3-2: Federal Annual Development Plan 2012-2013

  14. 3-3: Provincial Allocation: 7th National Financial Award

  15. 4: PAKISTAN: ECONOMIC CHALLENGES: 2013 • A: Economy Challenges 2012 • Business Environment: Deteriorating • Foreign Investment: Declining • Exchange Rate: Depreciating • Inflationary Pressure: Building Up • Foreign Exchange Reserves: Depleting • Industrialists relocating their Industries Abroad • Electricity and Gas Shortages: Aggravating • Relations with International Financial Institutions Including IMF: Deteriorating • Exports Growth: Turning Negative • Mysterious Growth in Remittances: Continuing • Economy Remaining the off radar Screen of the Government

  16. 4: PAKISTAN: ECONOMIC CHALLENGES: 2013 • B: Measures with Question Mark • 7th NFC Award • 1. New NFC Award diverted bulk of Federal Government Resources to Provinces at a time when they were needed more: • To Finance Growing Interest Payment • Security Related Expenditure • Bailing out of PEs with losses • Paying WAPDA/PEPCO to Finance their Inefficiencies • Tax System: • Failure to Reform Taxation System and Broadening Tax Base to Generate more Tax Revenues.

  17. 4: PAKISTAN: ECONOMIC CHALLENGES: 2012 • B: Measures with Question Mark • 3. Petroleum Products • These are doubly taxed: • Exchange rate depreciation has increased the landed cost of oil. • Petroleum Development Levy (PDL) is levied on Inflated basis to mobilize more resources.

  18. 4: PAKISTAN: ECONOMIC CHALLENGES 2013 • C: 2013 Outlook • Outlook for 2013 is Likely to Further Deteriorate. • Political uncertainty with adverse consequences on the economy. • Fiscal indiscipline hallmark of the Government during election year. • Mobilization through taxation will take the back seat. • Reliance on Non-Tax Revenues would increase further. • Expenditure is expected to rise further with budget deficit likely to be in the range of 6% 6.5% of GDP. • Economy will remain out of focus of the political leadership. • Energy shortage (electricity and gas) to aggravate further. • Politics is likely to dominate economics.

  19. 4: PAKISTAN: ECONOMIC CHALLENGES: 2013 • D: Expected Trends 2013 • 1. GDP Trend : 3-4% • 2. Domestic Investment : Not expected to Pick up • 3. Unemployment and Poverty are likely to rise further • 4. Inflationary pressure to rise on account of senseless increase in government administered prices • 5. External balance of payments to come under pressure due to following: • a. Flat, even negative export growth • b. Search in payment to the IMF • c. FDI to witness a sharp decline • d Sharp depreciation of exchange rate • e. Public debt is likely to worsen on account of large fiscal deficit.

  20. 4: PAKISTAN: ECONOMIC CHALLENGES: 2013 • E: Consequences • National Security at Stake • Miss-Governance to Continue • In Search of a Direction

  21. 5: ECONOMIC MANAGEMENT MATRIX

  22. 6: FISCAL POLICY • Objectives • Full Employment • Resource Mobilization • Resource Allocation • Maintenance of Economic Stability • Income Re-Distribution • Canons of Taxation: Adam Smith • Equity • Certainty • Convenience • Economy • Other Canons • Flexibility • Situation

  23. 6: FISCAL POLICY • 4. Income Tax Rates 2013 • Individuals • - Non-Salaried - 5 brackets (10% -----25%) • - Salaried – 5 brackets (5.0% -----20%) • - Exempt upto Rs. 4 Lac • Companies • - Public, Private& Banking Companies 35% • - Small companies 25% • 3. Dividend received by all tax payers 10% and 20% on banking company from its assets management company • 4. Property income • - Rs. 150,000 exempt • - Rates 5% -----10% • 5. Capital gains • With holding period less than six months 10% • More than six month but less than 12 months 8%

  24. 7: SUGGESTED CHARTER OF ECONOMY • Domestic Resource Mobilization • Income Tax by All • Self Reliance for Financing • ADP Financing • Provincial Govt Budgets • Public Enterprises Losses • Good Governance & Corporate Governance • Inflationary Impact: Salary increase • CBA----PSA • NPLs • Professionals Role • Holistic approach to Economic Development with equitable distribution of wealth and income across the board THANK YOU FOR ATTENTIVE LISTENING. ASK ANY QUESTIONS.

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