Economic Forecasts

Pakistan’s economy is expected to post a healthy growth of four percent during the current year after the democratic government in Islamabad took a series of steps to put the economic house in order, despite high oil prices and uncertain global eeconomic outlook, Finance Minister Dr Abdul Hafeez Shaikh said Wednesday.

Dr Shaikh, who is heading a team of top Pakistani economic managers to the annual spring IMF-World Bank meetings, said “although the 4 percent growth rate is below Pakistan’s potential, it is the best” in recent years.

Makhdoom Amin Fahim, the federal commerce minister, said on Saturday that local businessmen will also go India for a single country exhibition soon on the pattern on The India Show. Speaking at the inaugural ceremony of The India Show at the Expo Centre, Lahore, he said that now the Pakistan-India trade relations would move forward reciprocate basis.

“Both governments are determined to ensure normalisation of trade and economic relations and the Indian exhibition is part of the efforts being put in this direction,” Fahim asserted.

Pakistan will start repaying its loans, starting from a $7.6 billion repayment, from today (Friday), of which $417 billion would be paid to the International Monetary Fund (IMF). Next $433 million will be paid on May 29 and $140 million will be paid by June 30. A total amount of $1.2 billion will be paid during the current fiscal year, which includes $990 million of the Standby Agreement (SBA) loan and $210 million from previous IMF loans.

Pakistan’s foreign exchange reserves eased marginally to $16.90 billion in the week ending Jan. 6, from $16.92 billion the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan (SBP) fell to $12.82 billion from $12.88 billion a week earlier, while those held by commercial banks rose to $4.08 billion, compared with $4.04 billion the previous week.

Pakistan has been called on to utilise its political and diplomatic ties to boost its trade with the Economic Cooperation Organisation (ECO) nations to support its domestic value-added textile industry.

The ECO is an intergovernmental regional organisation for promoting economic, technical and cultural cooperation among its 10 member states – Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.

Pakistan’s economy and the financial sector are now at a stage where they can support and benefit from a vibrant and efficient debt market.

The size of private debt, or Term Finance Certificates (TFCs) in Pakistan, remained around Rs 74 billion (0.5% of GDP), which is paltry as compared to the outstanding domestic government debt of Rs 4.64 trillion (31.4% of GDP). There is clearly underexploited capacity available to support economic growth.

Pakistan’s economy may expand slower than forecast after floods devastated the nation’s southern region, a finance ministry official said.

The economic growth rate may be 0.5 percentage point lower than the government target of 4.2 percent according to initial estimates, the official, who was speaking to reporters in a background briefing, said in Islamabad today.

Dr Warner E Liepach, Country Director Asian Development Bank (ADB) has suggested Pakistan’s economic managers see beyond the current situation as the country has decided not to seek IMF programme for the time being.

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