The half yearly data of fiscal year 2011-12 depicts an improvement in overall macroeconomic activity, particularly in agriculture and service sector, according to the Poverty Reduction Strategy Paper (PRSP) Midyear Progress Report.
The 27th PRSP Midyear Progress Report was released here on Monday by the Ministry of Finance that monitors pro-poor budgetary and non-budgetary expenditures.
According to the report stable weather conditions have resulted in a better yield of rice and cotton crops while services sector has also registered an increase due to growth in trade and profitability of banking sector. The risks to macroeconomic activity during the first half of FY2011-12 mainly stemmed from the external sector and fiscal imbalances, it said adding the Budget deficit was limited to 2.5 percent of GDP during H1- FY 2011-12 – lower than the 2.7 percent deficit registered in H1-FY 2010-11. Nevertheless, strict fiscal discipline is required to achieve the targeted deficit during the latter half of FY 2011-12, it added.
The Pro-poor expenditures substantially increased till the second quarter of FY 2011-12. Overall Year on Year (YoY) increase of 90.46 percent was recorded, from Rs 482,815 million in H1-FY 2010/11 to Rs 919,564 in H1-FY 2011/12.
A significant increase in expenditure has been observed in all the sectors including Market Access and Community Services, Human Development, Rural Development and Governance. The maximum YoY increase was witnessed in Peoples’ Works Programme II. There was reduction in expenditures in Benazir Income Support Program (BISP), Pakistan Bait-ul-Mal (PBM) and Natural Calamities and Disasters. The remarkable growths in subsidies however lead to an overall positive growth in Social Safety Nets while on the provincial level, all the provinces depicted an increase in PRSP expenditures, except Sindh owing to decrease in education expenditures. The composition of expenditures changed during the period under review while the percentage share of development expenditures increased by 3.03 percentage points during the first half of FY2011-12 against the same period in FY2010/11.
The expenditures in education sector showed a minor growth as compared to previous trends, it said adding this obviously was a matter of concern since the education expenditures were already limited. However, the Health sector expenditures increased substantially. Overall transfers for protecting the poor and vulnerable registered a negative growth of 13.7 percent in grants and 21.4 percent in beneficiaries during H1 of FY 2011/12 when compared with the same period last year. During H1 of FY2011/12, Rs 24.96 billion (78 percent) of the grants were of the budgetary mode and Rs 6.84 billion (22 percent) were of the non-budgetary mode against 86 percent and 14 percent respectively during the same period of PFY.
