March 4, 2003	Tuesday	Zul Hijjah 30, 1423

ISLAMABAD, March 3: All major economic indicators have performed well during the first half of 2002-03, making the job of the government possible to achieve 4.5 per cent GDP growth target, says Prime Minister’s Adviser on Finance Shaukat Aziz.

“In fact the 4.5 per cent GDP growth target is expected to surpass in 2002-03 due to practising prudent economic and financial policies,” Shaukat Aziz said, while realising a “Mid-Year Review of Economic Performance” at a news conference here on Monday.

Giving the details, he said the performance of agriculture, had been encouraging and there were indications that a 2.7 per cent growth target for the sector was likely to be exceeded. The size of rice and sugarcane were expected to be higher by 8.9 per cent and 7.6 per cent, respectively, compared to the last financial year. The size of rice crop was estimated to be 4.228 million tons, while sugarcane crop was estimated at 51.65 million tons. As a result of countrywide heavy rains, a bumper wheat crop with more than 20 million tons was expected.

“In other words wheat production is now expected to be higher by more than 10 per cent over the last year,” Mr Shaukat said. Cotton crop on the other hand was expected to be 4.7 per cent lower than the last year, mainly on account of short supply of canal irrigation water in early Kharif season.

Cotton production is expected to be 10.1 million bales as against 10.6 million bales of the last year.

The adviser said the industrial production during the first half of the current financial year grew by 8.5 per cent. Overall inflation stood at 3.5 per cent in seven months and remained below the annual target of 4 per cent.

Mr Shaukat said that money supply grew by 9.4 per cent during the first half of 2002-03, as against the whole year target of 10.8 per cent. The important development in monetary sector has been the sharp pick up of the private sector credit, which stood at Rs68.7 billion in the first half compared to Rs39.8 billion in the corresponding period last year.

Stock market, the adviser on finance said, remained buoyant and the Karachi Stock Exchange had been regarded as the best performing market in the world during 2002 and during the first half of the current financial year.

The net tax collection stood at Rs238.6 billion against the target of Rs238.0 billion, thus surpassing the target by Rs637 million. As against the target growth of 14 per cent, net tax collection grew by 51.1 per cent.

The Public Sector Development Programme (PSDP) stood at Rs56 billion during the first half of the current fiscal year against the full-year target of Rs134 billion. As against the target of Rs161 billion, social sector and poverty related expenditure was Rs66.5 billion — almost 41 per cent of the annual target and was up by 45 per cent over the corresponding period last year.

The adviser told reporters that fiscal deficit remained under control during the first half of 2002-03. As against the mid-year target of Rs106.7 billion (or 2.8 per cent of the projected annual growth), the overall fiscal deficit stood at Rs75 billion or 1.8 per cent of the GDP.

As regards balance of payment positions, exports grew by 19.1 per cent and stood at $6.41 billion, thus achieving 59.4 per cent of the export target for the year. Imports also grew by 19.6 per cent and stood at $6.85 billion during the first seven months of 2002- 03. Non-food non-oil imports grew by 22 per cent and machinery imports are up by 42 per cent, showing the signs of pick up in the domestic economic activity.

Trade balance stood at $711 million and has deteriorated by 24 per cent. But current account balance continues to remain in surplus. During the first half of the current fiscal year, current account balance (without official transfers) registered a surplus of $1.2 billion as against a surplus of $297 million in the same period last year. With official transfers the surplus in current account jumped to $1.7 billion.

As against the whole year target of $2.8 billion, remittances sent by the overseas Pakistanis have already crossed $2.5 billion in seven months and are likely to reach $4.3 billion by June 20 this year, the adviser on finance claimed.

He said foreign investment had also picked up and it stood at $615 million in the first seven months as against $181 million in the same period of last year. The foreign direct investment (FDI) stood at $593.5 million against whole year target of $360 million. The portfolio investment registered an inflow of $21.4 million as opposed to an outflow of $44 million in the same period last year. “We believe that the overall foreign investment will touch $1 billion during the current financial year,” Mr Shaukat said.

Domestic debt during the first seven months (July-January) of 2002-03 increased only by Rs11.9 billion or 0.7 per cent over end-June 2002. When compared with the periods of 1990-99 when domestic debt grew at an average rate of 16 per cent per annum, growth of 0.7 per cent in the fist seven months is a remarkable achievement, the adviser claimed.

Taking about external debt, he said that foreign debt and foreign exchange liabilities had also reduced by $200 million during the first half of the current financial year. However, in terms of net debt and liabilities, Pakistan has made a considerable progress during three and half years periods. As against $36.9 billion in end-June 2000, the net debt and liabilities have now been reduced to $28.67 billion by end- December 2002 — a reduction of $8.23 billion.