ISLAMABAD: The government spent over Rs3.33 trillion in 17 pro-poor sectors of economy in three years but many of the key targets set in the poverty reduction strategy paper (PRSP-II) could not be achieved due mainly to high inflation, weak economy, repeated floods, war on terror and overall security situation.
This is the crux of a report released by the ministry of finance covering three years of the PRSP-II – financial years 2008-09 to 2010-11. It said the economy registered lower growth mainly due to the massive floods that hit the country in two consecutive years. “The catastrophic floods were huge and their devastating consequences were witnessed in the form of sharp decline in
nearly all macroeconomic indicators”.
The report said the impressive performance of the services sector was the only stimulant in an otherwise declining economy. “Inflation remained in double digit in three consecutive years”. The external sector showed an overall improvement on the basis of exports and buoyant remittances. Rise in global petroleum prices had serious implications for the already large fiscal deficit.
It said a total of Rs1.246 trillion was incurred on pro-poor sectors in fiscal year 2010-11, registering a growth of over 12 per cent against Rs1.11 trillion in fiscal year 2009-10 and Rs977 billion in 2008-09.
“Total transfers through all (social safety net) programmes showed a net decrease of 11 per cent in terms of grants and 8 per cent in terms of beneficiaries during financial year 2010-11 as compared to 2009-10,” it said, adding that the total number of beneficiaries of these programmes was 5.83 million in 2009-10 but fell to 5.43 million in 2010-11. It was 4.36 million in
2008-09.
Owing to turbulent political and economic environment, the GDP growth rate stood at 2.4 per cent in 2010-11. “Pakistan’s macroeconomic indicators showed a declining trend mainly because of the disastrous floods and its involvement in war on terror”.
Agriculture sector acutely suffered as the growth rate shrank to 1.2 per cent in 2010-11. “Inspite of its considerable significance, the agriculture sector remained neglected by the policymakers”
The services sector, on the other hand, played a vital role in the economic progress during the last few years and has consequently emerged as one of the driving forces of economic growth, displaying the highest trajectory trend of 4.1 per cent in 2009-10 against 2.9 per cent in 2010. “Although, the progress of services sector in 2009 and 10 was nearer to the projected rate but it achieved the projected figures in fiscal year 2011. The performance of some subsectors in services sector has not
been very encouraging as finance and insurance witnessed a negative growth from 2008-10 to 2010-11”.
Also, the wholesale trade after showing good performance in 2009 declined drastically in subsequent two years, failing to meet the projected growth rate.
On top of that, during the three years the inflationary pressures intensified and caused serious threats to macroeconomic stability. Inflation was observed at 17.03 per cent in 2008-09, then fell to 10.10 per cent in 2009-10 but again witnessed a rise of 13.7 per cent in 2010-11 against the projected rate of 5.5 per cent.
“The total investments made in the last few years as a percentage of GDP have fallen short in reaching the envisaged targets.”
Investments as a percentage of the GDP fell to 13.4 per cent in 2010-11 from 18.2 per cent in 2008-09”. On the contrary, the national savings a percentage of GDP showed some resilience and market a growth of 13.6 per cent in fiscal year 2010-11 against 13.1 per cent in 2009-10. Despite this increase in growth rate, the “national savings fell short of the targeted rates” by a wide margin. For example, the national savings at 13.6 per cent in 2011 were against a target of 17.6 per cent.
On the other hand, the population growth rate was on a continual rise since the last three years notably from 168.2 million in 2008-09 to 175.3 million in 2010-11.
The pro-poor expenditure as percentage of GDP surpassed the targets in all the three years including those in the current expenditure, although pro-poor development expenditure fell short by 0.36 percentage points in fiscal 2010-11 against the target of 2.2 per cent of GDP.
In these three years, the actual expenditures as percentage of GDP exceeded the PRSP-II targets in nine pro-poor sectors while in six sectors it remained below the projected figures during 2009-10 and 2010-11. The areas that could not achieve their targets included education, agriculture, social security and welfare, Pakistan Baitul Maal and Benazir Income Support Programme.
In the health sector, the ratio of actual expenditure to GDP remained above targets in first two years (2009 and 2010) but declined to 0.59 per cent in 2010-11.
The total disbursements under the social security and other welfare in 2010-11 declined to Rs17.6 billion from Rs20.3 billion in 2009-10. “The number of beneficiaries under BISP increased in three years from 1.76 million in 2008-09 to 3.08 million in 2010-11 but it failed to meet the projected number of beneficiaries covered in the BISP programme”.
