Finance Minister Senator Ishaq Dar on Tuesday said the efforts to ensure improvement in the energy sector had been launched and the government would clear the Rs 500 billion circular debt within the next two months to enable the power sector to perform.
Presenting the details of Economic Survey 2012-13 at the Planning and Development Ministry Auditorium, Dar lambasted the PPP government for the poor show during the past year and said the previous government provided subsidies amounting to Rs 1,400 billion in the energy sector, but even that could not resolve the energy crisis.
He said that the government would try its best to resolve the energy problem in the shortest possible time. He said that another major problem in the energy sector was line losses and non-payment of bills and the government would make every effort to overcome them.
Dar said the budget deficit target was fixed at 4.7 percent of the Gross Domestic Product (GDP). However, he said, this deficit was likely to reach at 8.5 percent of the GDP by the end of fiscal year 2013-14.
“Foreign exchange reserves of the country have come down to $6.2 billion from over $10.5 billion. Public debt which was Rs 3,000 billion in 1999 has touched the figure of 13,250 billion and expected to reach at 14,000 billion by the end of this fiscal year 2012-13,” the minister said, adding that the GDP growth during last five years of the PPP government averaged three percent against the required rate of seven percent and during the fiscal year 2012-13, the GDP growth target was missed and recorded at 3.6 percent, against a target of 4.3 percent.
Dar termed macroeconomic situation of the country in “serious danger” and said due to rising poverty, militancy in the country was also increasing.
He announced that new government was faced with a serious challenge of putting the economy on the right track.
He said the agriculture growth target was set at 4.1 percent and growth in agriculture sector stood at 3.3 percent, services sector growth was targeted at 4.3 percent and but only 3.7 percent was achieved, however, industrial growth witnessed positive trend and against a target of two percent, its growth was recorded at 2.8 percent.
Calling the investment to GDP ratio pathetic, Dar said it should be increased to 20 percent of the GDP. He said the investment to GDP ratio was targeted to be enhanced to 13.3 percent and it amounted to 12.6 percent, similarly, national saving ratio stood at 12.8 percent against a target of 13.5 percent. Current account deficit crossed its limit of $2 billion and was expected to reach at $2.9 billion by June 30, 2013.
The minister said Fiscal Responsibility and Debt Limitation Act (FR&DLA) had placed a limit of keeping public debt at least 60 percent of the GDP and at present, the public debt had reached 62 percent of the GDP, which was a violation of the act.
Dar also informed that due to the power shortages, Pakistan was loosing at least two percent of the GDP growth annually and the government would try its best to minimise it to a bearable level.
The circular debt has crossed Rs 500 billion mark and the Ministry of Finance is releasing Rs 13 billion to Rs 15 billion per month that was not enough to reduce the load shedding duration.
He announced that the Ministry of Finance would now streamline this and adequate funds would be provided for generation of power in the country.
Dar said a comprehensive plan was being finalised to reduce power theft and line losses so as to put the power sector on sound footing.
To a question, Dar said to bridge the gap between selling price of power and purchase price, some Rs 6 per unit increase in power tariff would be required.
This is despite that fact that the caretakers had increased power tariff by Rs 5.80 only a week ago.
Calling energy crisis one of the major causes of low performance of the economy, Dar said the growth rate during the outgoing fiscal year stayed at 3.6 percent against the target of 4.3 percent.
“The average growth rate for the past five years remained as low as 3 percent, which is alarming when compared to the 2.1 pc growth in the population,” he said.
He said almost 2 percent of the GDP growth was lost due to the energy crisis that aggravated due to circular debt and line losses.
Dar said fiscal deficit was also alarming. Against the fiscal deficit target of 4.7 percent during the outgoing financial year, it is projected to touch 8.5 percent; he said, adding that the actual deficit figures could be finalized late tonight.
He said there had been shortfall of about Rs 350 billion in revenue collection, while investment target of 14.9 percent could not be achieved as only 14.2 percent investment was recorded.
The minister said the agriculture sector witnessed growth of 3.3 percent against the target of 4.1 percent while the services sector witnessed 3.7 percent against a target of 4.3 percent.
He hoped that despite challenges, the government had the ability to put the economy on the right track. He said that there was need for structural reforms and the government would have to take some painful decisions to streamline the economy.
The finance minister said the government had past experience of coping with challenges as it remained successful in putting the economy on the right track during the sanctions period.
He said the previous government did not conduct labour force survey in 2011-12 and 2012-13, however, it would definitely be conducted in year 2013-14.
PPP had first Shaukat Tareen and than Abdul Hafiz Sheikh both concidered to be top Pakistani finanacial guru's .
One opened his own SILK Bank and the other lined his pockets with gold and silver.
What a shame.
And the current incharge was minister for some 2 odd years, and now he runs muti-billion dollar Real Estate business in Dubai (in the name of his off-springs). This creed belongs to the same class of character.
Great. what can be done- nothing, just get adjusted to the conditions and prepare yourself, mentally and in any other ways to bear the load shedding, high inflation, high unemployment , high illeteracy, high deficits by the government and Allah knows what else. It will take about 5 years to marginally reduce the power outages and about 20 years to eliminate the load shedding , assuming improvements making gets started right now. The biggest hurdle to these improvements is that the government has no money and the Sherif brothers, refuse to collect taxes from rich people, as a matter of fact, Nawaz sherief, perhaps the richest man in Pakistan paid only 5,000 ruppees in taxes.
Spot on Brother, and as the others said they won't bring the looted money back to Pakistan!!!!!!
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