April 27, 2002	Saturday	Safar 13, 1423

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ISLAMABAD, April 26: Pakistan continued to falter on the economic front during 2000-2001 with an increase in the poverty index and decline in the GDP growth rate, shows the Economic and Social Commission for Asia and the Pacific (ESCAP) survey 2002.

The survey was launched by the director, Dr Mehboobul Haq Development Center, Dr Sarfraz Qureshi, at the United Nations Information Center (UNIC) at a Press conference here on Friday.

According to the ESCAP survey titled “Economic and Social Survey of Asia and the Pacific 2002, Economic Prospects: Preparing for Recovery,” the poverty in Pakistan has reached to an alarming level of 35-39 per cent of the population, while the GDP growth rate decreased to 2.6 per cent in 2001 from 3.9 per cent in the previous year.”

“The agricultural output contracted by 2.5 per cent in 2001 compared to a healthy expansion of over 6 per cent in 2000.”

The survey said the target growth rate of 4 per cent GDP for 2002 could be achieved with a rebound in agricultural output, a sustained performance in the exports and manufacturing and a less constraining debt service burden.

However, the survey warned the economic picture could be clouded by adverse development of an exogenous nature, including those related to domestic and external security and political conditions.

About inflation in Pakistan, the survey said the consumer prices registered an increase of 4-6 per cent during 2000-2001. In terms of external trade, the rate of growth in earnings declined from about 10 per cent in 2000 to under 8 per cent in 2001, though Pakistan managed to sustain its export momentum.

“Traditional items such as rice, raw cotton, leather and non traditional products including chemical and pharmaceuticals continued to spearhead Pakistan’s export receipts. Cotton products contributed over $2.1 billion and rice over $0.5 billion to the total export value of $9.2 billion in 2001.”

In terms of capital flows, the survey said, Pakistan experienced a decline in FDI and a sizeable outflow from the equity market in 2001.

“However, the country’s foreign exchange position strengthened significantly as a result of current account surplus and a debt relief package from the Paris Club,” it said adding “external reserves increased from $1.4 to $4.8 billion during June 2000 to December 2001.”

The survey noted that Pakistan faced a serious external debt situation in 2001 with the debt to GDP ratio standing at over 44 per cent. “However, it was successful in debt rescheduling with creditors both within and outside the Paris Club.”

In consequence, the debt-service ratio was brought down from 20 per cent of export earnings in 1999 to 17.5 per cent in 2001, the survey said. It further said the local currency depreciated by almost 20 per cent relative to the dollar in 2001 despite the fact that the State Bank of Pakistan followed a relatively restricted monetary policy to limit inflationary pressure as well as to stabilize the exchange rate.

The ESCAP noted that in Pakistan, efforts had been focusing on broadening the tax base, improving tax compliance, minimizing the level of corruption, streamlining the tax laws and strengthening tax administration.

“Introduction of agricultural income tax and streamlining of the General Sales Tax is expected to help enlarge the tax base.”

“The launching of a tax survey resulted in the issue of 187,000 new national tax numbers of which almost 72 per cent belonged to persons who had never registered before,” it said adding “the broadened tax base has been the most important element of tax reforms, which would help develop a tax culture.”

“Greater assistance to taxpayers was expected through the establishment of the office of the Federal Tax Ombudsman.”

Pakistan had failed to make significant progress towards achieving the Millennium Development Goals (MDGs) covering all the major areas related to the well-being of the people including poverty alleviation, education, health gender equality and the environment, statistics in the ESCAP survey revealed.

“Pakistan, along with Bangladesh, Kazakhstan Mongolia, Sri Lanka and Nepal could not provide the data of percentage of the population below the one-dollar poverty line in 2000.”

However, according to the available statistics for Pakistan, the survey noted, during 1990, 47.8 per cent population lived on less than $1 per day which reduced to 31 per cent during 1996.

However, according to the percentage of the population below the poverty line, the number of the poor had increased to 33.5 per cent in 2001 as compared to the 22.1 per cent in 1991, the survey observed. The survey said the child mortality in Pakistan continued to remain high with 110 deaths per 1,000 live births during 2000 as compared to 158 in 1990. For infants, the child mortality rate in 2000 was registered at 85 per 1,000 live births.

The child mortality and infant mortality rates in Pakistan from 1990-2000 were highest in the South Asia region second only to Afghanistan. The rural poor, according to the ESCAP survey report, increased from 23.6 per cent in 1990 to 34.8 per cent in 2000. Similarly, the population of urban poor increased to 25.9 percent in 2000 from 18.6 per cent in 1990, the survey said.

The survey noted that in early 2001, the ESCAP Secretariat had forecast that the GDP growth in ESCAP developing countries would decline by around 1 percentage point to 6.0 per cent in 2001 and there would be slight rise in inflation in those economies.

However, it said the forecast proved to be off the mark and GDP declined by 3.9 percentage points in the developing countries while inflationary presumes were marginally more subdued than had been forecast.

The poorer GDP outcome in 2001 was associated with a sharp downturn in world trade growth from over 12 per cent in 2000 to only one per cent in 2001. As at early March 2002, signs of a global and regional upturn are mixed although evidence of a gentle recovery is becoming more discernable, the survey said.