ISLAMABAD, June 6: The government has set the inflation rate at eight per cent, GDP growth rate at 7 per cent, Rs1369.2 billion total investment, Rs1202.9 billion national savings and a trade deficit of $4.16 billion during the fiscal year 2005-06.
According to Annual Plan 2005-06, the 8.4 per cent growth rate contributed by bumper cotton and wheat crops and manufacturing sector in 2004-05 would not be possible next year due to inflationary pressure and fears that this year’s performance of agriculture and manufacturing sectors would not repeat itself. “So realism demands that the GDP growth for next year is placed at 7 per cent,” it stated.
The agriculture sector is envisaged to grow by 4.8 per cent against the growth rate of 7.5 per cent achieved in 2004-05.
The value-addition of major crops is targeted to grow by 6.6 per cent compared to the current 17.3 per cent. Cotton, sugarcane and wheat production have been targeted at 15 million bales, 50.095 million tons and 22.139 million tons respectively. Rice and maize production are targeted at 5 million tons and 2.905 million tons respectively.
The manufacturing sector is expected to grow by 13 per cent next year as compared to its current 15.4 per cent growth rate.
The electricity, gas and water supply sector as a whole is projected to grow at the rate of 3.5 per cent next year, which is higher than the estimated current growth of 2.1 per cent. The services sector as a whole is estimated to grow by 6.8 per cent with the main contributions from transport and communication, wholesale and retail trade, finance, insurance, and social, community and personal services.
SAVINGS AND INVESTMENT: The total investment is targeted at Rs1369.2 billion (18 per cent of the GDP) next year. About 68.5 per cent of fixed investment would be covered by the private sector and remaining 31.5 per cent by the public
sector.
Next year, the national savings are expected to grow by 21.8 per cent from Rs987.9 billion (15.1 per cent of the GDP) to Rs1202.9 billion (15.9 per cent of the GDP).
TRADE DEFICIT: It is expected that 2005-06 may experience an increase in the trade deficit due to higher imports than exports. The trade deficit is estimated to touch the $4.16 billion figure.
The imports are anticipated to increase due to increased payments for capital goods, raw material and edible oils.
In 2005-06, remittances have been projected at $4.020 billion against $4 billion in 2004-05. With a deficit of $4.16 billion on trade account and surplus of $1.461 billion on invisible account, the current account deficit is estimated to go up to $2.699 billion (2.19 per cent of the GDP) in the next financial year from the current deficit of $1.912 billion (1.75 per cent of the GDP).
Gross aid disbursements are estimated to decrease from this year’s $2.246 billion to $1.428billion next year. The capital requirement is estimated to increase from the present $3.985 billion to $4.624 billion next year.
Other capital including foreign direct investment and portfolio investment is expected to increase from the current $210 million to $260 million next year.
During the next financial year, the fiscal policy is expected to remain consistent with the fiscal stance already adopted by the government, while, the prospect of the capital market is expected to be good.
