Inflows of remittances surged
Improved external balance of payments
Increased foreign exchange reserves Exports growing at double-digit rates
Where Are We Now ?
Number of New Employment (in millions) -
2.23
2.96
5.54
Reduction in Poverty
Area
2000-01
2004-05
Changes (% Points)
Overall
32.1
25.4
-6.7
Rural
39.0
31.8
-7.2
Urban
Others
Construction Agriculture Commerce
200,000 150,000 100,000
Personal Consumer Loans Manufacturing excl. Textiles
50,000
Textiles
(5200,0010-2000)2
2002-2003
Fiscal Transparency
Capital Market Reforms
Financial Sector Reforms
Industry & Investment
Reforms
Deregulation &
Privatization
Pakistan’s economy has made significant progress during the last six years
2003-2004
2004-2005
Textiles Manufacturing excl. Textiles Personal Consumer Loans Commerce Agriculture Construction Others
Rising Profitability Driving Growth Profits of Listed Companies
Strong commitment to reform agenda
Fiscal Responsibility & Debt Limitation Act
Tax Reforms
Governance Reforms
Agriculture Sector Reforms
Major economic reforms
Source: Bloomberg
Improving budgetary position
Overall fiscal deficit (% of GDP)
0
(1)
(2)
(3)
(2.4)
(4)
(3.7)
(3.3)
((6) (7) (6.1)
(5.4)
(8)
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 200506(T)
• 2000-onwards: Two-pronged Strategy followed
– Policies pursued to strengthen macroeconomic environment – Introducing wide-ranging structural reforms
Policies pursued to strengthen macroeconomic environment
2001-02
2002-03
2003-04
2004-05
New Jobs Created
Labour Force Survey
Employment (in millions)
FY 00
36.82
FY 02
39.05
FY 04
42.01
FY 06 (Q1)
47.55
Source: Labour Force Survey, FBS
• Reducing “Twin Deficits” • Keeping inflation low • Building foreign exchange reserves • Maintaining stability in exchange rate • Maintaining consistency and continuity in policies
250
Source: KSE
200
Banks
PKR (bn)
150
Fuel & Energy
100
Non
Energy
50
Non
Banks
0
2001
2002
2003
2004
2005
Profit After Tax (all sectors) except Fuel & Energy and Banks Fuel & Energy Banks
Transparent and predictable economic policies
Reform policies institutionalized, ensuring continuity
Fiscal and current account deficits lowered
Declining domestic and external debt burden
(T)
(E)
Source: Federal Bureau of Statistics
Per Capita Income ($)
Per Capita Income Continues to Rise
800 736
700 652
600
582
526
501
503
500
400 1999-00
2000-01
Source: Federal Bureau of Statistics
3900 3600 3300 3000 2700 2400 2100 1800 1500 1200
900 600 300
0
3,495
1,677
820
922
403
543
475
182
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 (T)
Currency stabilization and buoyant stock market reflects optimism in the Pakistan economy
Exchange rate (PKR/USD)
Pakistan’s Karachi Stock Exchange Index - 100
Overall interest payment ratios have improved
Interest Payments (As % of Total Revenue)
60.0
51.2 47.0
42.4 39.3
40.0
28.8
24.7
23.3
20.0
0.0 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Source: Ministry of Finance
Low inflation has provided monetary flexibility
Inflation (%) (Base year 2001 = 100)
10.0
9.3
9.0
8.0
8.0
7.0
6.0
5.7
5.0
4.4
4.6
4.0
3.6
dodssAAmoppmvveuuiniiserrbbtrrfsirrreetcaaaiddcnnsintttbbirnvyyeeuevcccFFseoottDDsunnmtIIroomeaaemmnnneyyddnt tin
Confidence of the private sector restored
513
309
347
553 392
624 404
721 461
791 519
902 591
979 690
200
0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 200506(T)
Source: Ministry of Finance & CBR
Source: Ministry of Finance
Growing Revenue Collection helps boost up the economy
Increase Revenue Collection (Rs. Billion)
1000 800 600 400
CBR Revenue
469
3.5
3.1
3.0
2.0
1.0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-
06(T)
Source: FBS
Month-wise Trend in Inflation
%
12
11.5 11 Supply Side Actions
• Challenges of the 90s