23 May 2004	Sunday	03 Rabi-us-Saani 1425

ISLAMABAD, May 22: Pakistan's GDP is projected to grow by 6.8 per cent in 2004-05, owing to a rise in investment to 19.3 per cent of GDP, exports and imports going up by eight per cent and 12 per cent respectively.

The inflation is projected to increase at the rate of 4.5 per cent against four per cent of this year and national savings to drop to 18.2 per cent of GDP against 19.8 per cent of the current year, it was learnt.

These projections along with macroeconomic framework were approved here on Saturday by the annual plan coordination committee (APCC) presided over by finance minister Shaukat Aziz.

Official documents made available to Dawn suggest higher growth targets have been set owing to a significantly higher rate of 6.4 per cent achieved during current fiscal against a budget target of 5.3 per cent.

This growth rate will have to be achieved through larger investment both in public and private sectors including foreign private investment.

TRADE ACCOUNT: It is expected that 2004-05 would experience a deterioration in the trade balance due to high growth of imports than exports. Exports (FOB) are projected to grow by 8 per cent form $12.158 billion in 2003-04 (provisional) to $13.130 billion while imports (FOB) are forecast to increase by 12 per cent from $12.913 billion during current year to $14.462 billion in 2004-05.

AGRICULTURE: The agriculture sector is targeted to grow by 2.7 per cent, a target based on existing position of major and minor crops, livestock, fishery and forestry. It is, however, premised on the expectations of improved water availability, adoption of water-saving techniques and changes in cropping patterns to cope with any drought situation.

The output of major crops is targeted to grow by three per cent compared to 2.8 per cent achieved in 2003-04. The target of cotton has been set at 10.7 million bales compared with 10.05 million bales in 2003-04. The wheat production is targeted at 20.8 million tons against the achieved level of 19.8 per cent during the current fiscal.

The sugarcane production is targeted at 50.9 million tons as against the achieved level of 53.4 per cent this year. Rice and maize production are projected at 5.1 million tons and 2.2 million tons against achievement of 4.8 million tons and 1.8 million tons of the current year.

Minor crops are targeted to grow by 1.7 per cent which was achieved during the current year while livestock subsector is expected to grow by 2.8 per cent and milk and meat to grow by three per cent and 3.1 per cent respectively.

MANUFACTURING: The manufacturing sector is expected to grow by 14.9 per cent. The higher growth rate of this sector is premised on the growth of large scale manufacturing at 19 per cent and small and household manufacturing by 7.6 per cent and 3 per cent respectively. There is no projection for SME sector growth.

SERVICES: The services sector as whole is projected to grow by 5.7 per cent. The main contributors would be value addition in transport and communication, wholesale and retail trade and banking and insurance.

INVESTMENT: The total investment is targeted at Rs1162.4 billion during 2004-05 and would be higher than the investment of Rs987 billion estimated for 2003-04. As a ratio of GDP, total investment is targeted to reach a level of 19.3 per cent against the level of 18.1 per cent achieved this year. The increased flow of investment is based on assumption of a favourable investment climate for foreign as well as domestic investors free from all types of irritants.

INVISIBLE ACCOUNT: Prospects for invisible balance will continue to be governed by the behaviour of workers' remittances. For 2004-05, remittances have been projected at $3.3 billion against $3.7 billion during 2003-04. Allowing for other invisible receipts and payments, the surplus on invisible account is anticipated to decline to $1.263 billion from $2.368 billion during 2003-04.

CURRENT ACCOUNT BALANCE: With a deficit of $1.332 billion on the trade account and a surplus of $1.263 billion on invisible account, the current account deficit is estimated at $69 million (-0.1 per cent) of GDP in 2004-05 from a surplus of $1.613 million (1.7 per cent of GDP) in 2003-04.

CAPITAL ACCOUNT: Gross disbursements of official development assistance are expected to increase to $1.784 billion in 2004-05 compared to $1.354 billion this year. Since there will be no Saudi oil facility this year, a surplus of $333 million is likely to occur in the overall balance in 2004-05 as compared to $2.096 billion during 2003-04. Hence the gross reserves will reach at the level of $12.368 billion in 2004-05 compared to $12.208 billion this year, an increase of 1.3 per cent.

FISCAL POLICY: It will remain consistent with the stance already taken by the government. Its objective would be to reduce the fiscal deficit to a level below four per cent of GDP by containing current expenditure through budgetary control and enhanced PSDP and thus reducing reliance on external and domestic borrowings.