KARACHI, March 5: Economic performance of the Prime Minister Jamali’s coalition government will come under critical review of the State Bank of Pakistan in its second quarterly report to be released next week.
A presentation of the draft report of government’s economic performance during October-December 2002 is being made on Thursday before the State Bank’s Central Board of Directors meeting in Hyderabad. After approval by the board, the State Bank is expected to release this report to the parliament next week, and make it public simultaneously.
The report, analysing economic performance during July-December 2002 with the focus on economic activities during October to December 2002, will make an interesting reading in context of the observations made by the State Bank in its first quarterly report covering July-September 2002 period.
In that report, the State Bank had observed that the induction of the newly elected government had generated expectations in some quarters that fiscal discipline, institutional restructuring, social economic policies and good governance practices pursued during the last three years will give way to more populist policies.
Prime Minister Mir Zafarullah Khan Jamali and his few cabinet colleagues, soon after the formation of government, had pledged to give relief to the common man. Committees were formed to review tariff structures of electricity, energy and consumer items.
Finally, the cabinet offered a Rs5 billion relief package for 25,000 poorest of poor families to enable them buy food. The richest in the country get many times more by way of subsidy on exports, tax reliefs and concessions on repayment of their unpaid bank loans.
Populist policies, according to the State Bank, would have been the “most unfortunate”. According to the central bank’s perception, Pakistan’s economy in the last three years had achieved stability, eased itself from pressures of external sector payments, gained credibility in financial markets and is now poised for take off towards highest growth. The State Bank forcefully pleaded for the continuation of the ongoing economic reforms in the CBR, Wapda and the KESC with “vigour and seriousness”.
The State Bank’s second quarterly report is being released immediately after Prime Minister’s Adviser on Finance Shaukat Aziz has offered a detailed presentation of the economic performance during July 2002 to January 2003 when agriculture is reported to have shown 2.7 per cent growth and industry 6.5 per cent.
Shaukat Aziz in his press conference on Monday expressed the government’s resolve to push up growth rate from 4.5 per cent in the current fiscal year to 6 per cent. He also expressed the government’s determination to raise per capita income by 42 per cent, reduce poverty level from what he said 30 per cent at present to 22.5 per cent in next five years. To achieve all this, he was confident of investment going up to 18 per cent from the existing 15 to 16 per cent of the GDP, and also pushing up saving rate to 16 per cent. Fiscal deficit is targeted to narrow down to 3 per cent, and ratio of public debt is poised to come down to 76 per cent from the existing 97 per cent of GDP.
Nonetheless, there is a looming threat US attack on Iraq, which according to the minister, has already set in uncertainty when world economic outlook is already subdued, world trade shows sluggish trend and an apprehension of international oil prices shooting up to 40 dollars a barrel mark.