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ISLAMABAD: The Annual Plan Coordination Committee (APCC) that met here with Deputy Chairman of Planning Commission Prof Eshan Iqbal accorded approval to the country’s biggest ever development budget of Rs1.310 trillion for next fiscal year, 2014-15, with projected GDP growth of 5.1 percent and inflation target of 8 percent.
The development budget of Rs1.310 trillion may further increase by Rs10-15 billion in the meeting of National Economic Council (NEC) that is to meet on May 29 with Prime Minister Mian Nawaz Sharif, which will also be attended by the chief ministers of four provinces.
The Rs1.310 trillion development budgets will include federal development component of Rs525 billion and provincial component of Rs650 billion with Rs135 billion to be generated by Wapda, NTDC and Pepco for some vital projects as against the consolidated development budget of Rs1.150 billion for the ongoing fiscal 2013-14.The projects that had been launched based on political considerations in the past have been abolished. And on top of it, the development allocations for the members of Parliament have also been done away with.
The amount of Rs40 has been allocated for Pakistan Railways, Rs48 for nuclear energy, Rs36 billion for PM initiative for less developed areas that include allocation of Rs15 billion for Balochistan, Rs8 billion for Sindh, Rs4 billion for KP, Rs3 billion for AJK, Rs4 billion for FSATA and Rs2 billion for Gilgit-Baltistan.
The APCC has allocated Rs260 billion for water and powers sector (Rs166 billion for power sector and Rs84 billion for water sector), Rs1.5 billion for MDGs and community sector, Rs51 billion for education and Health, Rs163 billion for transport and communication.
However, for communication sector alone Rs113.576 billion has been allocated for ongoing 57 schemes and Rs8.356 billion for new schemes in communication sector. For New Islamabad Airport, a new approach road of worth Rs16 billion, APCC has allocated Rs10 billion for next financial year and for ongoing road project for the same airport Rs2 billion allocation has been proposed. In IT sector for a project of paramount importance — Cross Border Fibre Cable (CBFC) valuing RS 4.4 billion, a meagre amount of Rs20 million for next budgetary year has been allocated. And for a project pertaining to E-governance valuing Rs1 billion, an amount of Rs100 million has been allocated for 2014-15. However, in IT sector for 17 ongoing projects of worth Rs5.5 billion, APCC has allocated Rs447.5 million for next fiscal year.
The APCC also approved the projected GDP growth of 5.1 percent as had earlier been worked out by National Account Committee (NAC) and did not come up with any divergence of opinion. The projected target of GDP of 5.1 percent has been worked out keeping in view the projected growth of agriculture by 3.3 percent, industry 6.8 percent and services 5.2 percent. Nominal GDP is targeted to grow by 13.5 percent and GNP per capita is projected at Rs160,443.
The working paper for APCC meeting for economic performance and prospects of which copy is available with The News also admitted saying that the growth target are subject to risks like deterioration in energy availability, extreme weather fluctuations, non-implementation of envisaged reforms growth and fiscal profligacy.
Agriculture growth: In the Annual Plan 2014-15, the agriculture sector is targeted to grow by 3.3% on the basis of expected contributions of important crops (1.5 percent), other crops (4.5%) cotton ginned (5%), livestock (3.8%), (fishing 2%) and forestry (2%). Industrial sector: The industrial sector has exhibited some signs of recovery during the current fiscal year by surpassing the target of 4.8 percent. It is expected that it would sustain its growth momentum and will grow even further to 6.8 percent during next financial year 2014-15. The mining and quarrying sector is projected to grow by 6.5 percent, the manufacturing sector is expected to grow by 6.9 percent on the growth rate of large scale manufacturing sector at 7 percent, small and household manufacturing at 8.4 percent and slaughtering at 3.6 percent. The likely growth of the large scale manufacturing is based on the assumption of relatively better energy supply, increase in capacity utilization in key industries and rise in demands as well. The working paper also advocates that growth in construction sector would help growth in allied industries such as cement, steel, glass, paints and varnishes.
Services sector: The services sector is target is grow at 5.2 percent with contributions of transport, storage and communication of 4.5 percent, wholesale and retail trade of 6.1 percent and finance and insurance of 5.8 percent. The revival in the commodity producing sector will support growth in services sector via recovery of transport and finance sub-sectors especially after the better wheat and sugarcane crops and revival of the LSM.
Saving and investment: The investment is targeted to improve from current level of 14 percent of GDP to 15.7 percent. The increase in investment will be primarily contributed by the private sector while public sector will continue to support the private sector. Fixed investment has been projected to increase from 12.4 percent to 14.1 percent of GDP. Foreign direct investment (FDI) new inflow has decreased from $5.4 billion in 2007-08 to just $654 million in July-April 2013-14, which is 2.4 percent lower than the meagre $670 million in the corresponding period of last year.
National Savings: National savings are expected to improve from12.8 percent of GDP in 2013-14 to 14.2 percent in 2014-16.Fiscal policy: The working paper suggests that fiscal policy during 2014-15 will build upon the gains of current fiscal year and will focus on catalyzing economic growth and ensuring fiscal prudence, curtailing the fiscal deficit by mobilising more revenue, controlling current spending through switching to more targeted subsidies and prioritizing development spending for critical sector realising stated objective.
Now development of PSE ( public sector entities) reform strategy for 30 firms among 65 PSEs approved for privatisation by the Council of Common Interests (CCI) in under-active consideration: The ongoing restructuring of PSEs and envisaged outright or partial privatisation of some PSEs will save substantial amounts in spending on account of unplanned bailouts to these entities.
Monetary policy: The strategy of the monetary policy during 2014-15 will ensure price stability and provide support to economic growth by improving implementation of monetary policy and the operational framework. Monetary expansion for the year 2014-15 will be in line with the projected growth of 5.1 percent and CPI inflation at 8 percent to keep money supply growth in the vicinity of the targeted level and to encourage private sector credit. This will also help in keeping price stability and strengthening the growth prospects of the economy.
Inflation: Keeping in view the rationalisation of subsidies, monetary overhang and rising demand, inflation for next financial year has been projected at 8 percent. Inflation has increased to 8.7 percent during July-April 2013-14 from 7.8 percent in the same corresponding period of last year. Inflation is likely to be around 8.5-8.8 percent.
Capital market: The government in next fiscal year will aim at deepening and diversifying the capital market and integrating it with the major regional and global market. The working paper says that improvement in economic indicators will help improve the capital market.
Trade account: The exports for 2014-15 are projected to grow by 5.8 percent to $27 billion from $25 billion estimated for 2013-14. Imports during 2014-15 are projected to increase by 6.2 percent to $44.2 billion from $41.6 billion estimated for 2013-14. The trade balance is projected to be in deficit by $17.2 in 2014-15.
Currant account balance: The currant account is expected to be in deficit by $2.8 billion in 2014-15 (1.1% of GDP) as against a deficit of $2.6 billion (1 percent of GDP) estimated for 2013-14.Financial Account: Net capital inflows during 2014-15 are expected to stay at the level of $5.6 billion against $ 4.9 billion estimated for 2013-14.
The development budget of Rs1.310 trillion may further increase by Rs10-15 billion in the meeting of National Economic Council (NEC) that is to meet on May 29 with Prime Minister Mian Nawaz Sharif, which will also be attended by the chief ministers of four provinces.
The Rs1.310 trillion development budgets will include federal development component of Rs525 billion and provincial component of Rs650 billion with Rs135 billion to be generated by Wapda, NTDC and Pepco for some vital projects as against the consolidated development budget of Rs1.150 billion for the ongoing fiscal 2013-14.The projects that had been launched based on political considerations in the past have been abolished. And on top of it, the development allocations for the members of Parliament have also been done away with.
The amount of Rs40 has been allocated for Pakistan Railways, Rs48 for nuclear energy, Rs36 billion for PM initiative for less developed areas that include allocation of Rs15 billion for Balochistan, Rs8 billion for Sindh, Rs4 billion for KP, Rs3 billion for AJK, Rs4 billion for FSATA and Rs2 billion for Gilgit-Baltistan.
The APCC has allocated Rs260 billion for water and powers sector (Rs166 billion for power sector and Rs84 billion for water sector), Rs1.5 billion for MDGs and community sector, Rs51 billion for education and Health, Rs163 billion for transport and communication.
However, for communication sector alone Rs113.576 billion has been allocated for ongoing 57 schemes and Rs8.356 billion for new schemes in communication sector. For New Islamabad Airport, a new approach road of worth Rs16 billion, APCC has allocated Rs10 billion for next financial year and for ongoing road project for the same airport Rs2 billion allocation has been proposed. In IT sector for a project of paramount importance — Cross Border Fibre Cable (CBFC) valuing RS 4.4 billion, a meagre amount of Rs20 million for next budgetary year has been allocated. And for a project pertaining to E-governance valuing Rs1 billion, an amount of Rs100 million has been allocated for 2014-15. However, in IT sector for 17 ongoing projects of worth Rs5.5 billion, APCC has allocated Rs447.5 million for next fiscal year.
The APCC also approved the projected GDP growth of 5.1 percent as had earlier been worked out by National Account Committee (NAC) and did not come up with any divergence of opinion. The projected target of GDP of 5.1 percent has been worked out keeping in view the projected growth of agriculture by 3.3 percent, industry 6.8 percent and services 5.2 percent. Nominal GDP is targeted to grow by 13.5 percent and GNP per capita is projected at Rs160,443.
The working paper for APCC meeting for economic performance and prospects of which copy is available with The News also admitted saying that the growth target are subject to risks like deterioration in energy availability, extreme weather fluctuations, non-implementation of envisaged reforms growth and fiscal profligacy.
Agriculture growth: In the Annual Plan 2014-15, the agriculture sector is targeted to grow by 3.3% on the basis of expected contributions of important crops (1.5 percent), other crops (4.5%) cotton ginned (5%), livestock (3.8%), (fishing 2%) and forestry (2%). Industrial sector: The industrial sector has exhibited some signs of recovery during the current fiscal year by surpassing the target of 4.8 percent. It is expected that it would sustain its growth momentum and will grow even further to 6.8 percent during next financial year 2014-15. The mining and quarrying sector is projected to grow by 6.5 percent, the manufacturing sector is expected to grow by 6.9 percent on the growth rate of large scale manufacturing sector at 7 percent, small and household manufacturing at 8.4 percent and slaughtering at 3.6 percent. The likely growth of the large scale manufacturing is based on the assumption of relatively better energy supply, increase in capacity utilization in key industries and rise in demands as well. The working paper also advocates that growth in construction sector would help growth in allied industries such as cement, steel, glass, paints and varnishes.
Services sector: The services sector is target is grow at 5.2 percent with contributions of transport, storage and communication of 4.5 percent, wholesale and retail trade of 6.1 percent and finance and insurance of 5.8 percent. The revival in the commodity producing sector will support growth in services sector via recovery of transport and finance sub-sectors especially after the better wheat and sugarcane crops and revival of the LSM.
Saving and investment: The investment is targeted to improve from current level of 14 percent of GDP to 15.7 percent. The increase in investment will be primarily contributed by the private sector while public sector will continue to support the private sector. Fixed investment has been projected to increase from 12.4 percent to 14.1 percent of GDP. Foreign direct investment (FDI) new inflow has decreased from $5.4 billion in 2007-08 to just $654 million in July-April 2013-14, which is 2.4 percent lower than the meagre $670 million in the corresponding period of last year.
National Savings: National savings are expected to improve from12.8 percent of GDP in 2013-14 to 14.2 percent in 2014-16.Fiscal policy: The working paper suggests that fiscal policy during 2014-15 will build upon the gains of current fiscal year and will focus on catalyzing economic growth and ensuring fiscal prudence, curtailing the fiscal deficit by mobilising more revenue, controlling current spending through switching to more targeted subsidies and prioritizing development spending for critical sector realising stated objective.
Now development of PSE ( public sector entities) reform strategy for 30 firms among 65 PSEs approved for privatisation by the Council of Common Interests (CCI) in under-active consideration: The ongoing restructuring of PSEs and envisaged outright or partial privatisation of some PSEs will save substantial amounts in spending on account of unplanned bailouts to these entities.
Monetary policy: The strategy of the monetary policy during 2014-15 will ensure price stability and provide support to economic growth by improving implementation of monetary policy and the operational framework. Monetary expansion for the year 2014-15 will be in line with the projected growth of 5.1 percent and CPI inflation at 8 percent to keep money supply growth in the vicinity of the targeted level and to encourage private sector credit. This will also help in keeping price stability and strengthening the growth prospects of the economy.
Inflation: Keeping in view the rationalisation of subsidies, monetary overhang and rising demand, inflation for next financial year has been projected at 8 percent. Inflation has increased to 8.7 percent during July-April 2013-14 from 7.8 percent in the same corresponding period of last year. Inflation is likely to be around 8.5-8.8 percent.
Capital market: The government in next fiscal year will aim at deepening and diversifying the capital market and integrating it with the major regional and global market. The working paper says that improvement in economic indicators will help improve the capital market.
Trade account: The exports for 2014-15 are projected to grow by 5.8 percent to $27 billion from $25 billion estimated for 2013-14. Imports during 2014-15 are projected to increase by 6.2 percent to $44.2 billion from $41.6 billion estimated for 2013-14. The trade balance is projected to be in deficit by $17.2 in 2014-15.
Currant account balance: The currant account is expected to be in deficit by $2.8 billion in 2014-15 (1.1% of GDP) as against a deficit of $2.6 billion (1 percent of GDP) estimated for 2013-14.Financial Account: Net capital inflows during 2014-15 are expected to stay at the level of $5.6 billion against $ 4.9 billion estimated for 2013-14.
