It was reported last year that the economy was poised to take off. Various papers laid along with the Budget strengthen our belief as the results show that the Pakistan is on the way of achieving its various economic and financial targets. During the year under review the economy of the country forged ahead and achieved many targets it had set for itself in various sectors of economy.

It is a first step, during a long and hard journey, full of pits and falls, to our goal of a happy, economically prosperous and financially independent Pakistan where people live in happy environments free from wants and are able to walk shoulder to shoulder with other nations of the world with their heads high.
As it was expected the last four years economic discipline and tight rein on the economy together with strategic planning has now started bearing fruit and by grace of Allah the Almighty it is evident in the various sectors of the economy.

GROWTH

Fiscal year 2003-2004 saw global economy emerging from its recent gloom. Pakistan economy too has emerged as major respondent to this phenomenon and has picked up at the speed which is on the one hand is far ahead of global average as well as all anticipations local or foreign and achieved far better results than planned.

The resurgent Pakistani economy showed continued growth for the second year in row with real GDP growing by 6.4% against last year 5.1%. Industrial sector grew by 13.1% and Services sector by 5.2%. However, agriculture sector somewhat lagged behind just 2.6% against 4.1% last year but it was more than offset due to the rising prices o the commodity which produced during the current year and fueled economic activity. The growth pattern has more to do with the relative strength of domestic sector rather than the impact of global factors.

A sharp acceleration in per capita income was witnessed which grew @ 13.9% during the last two years and 4.03% during this year. The per capita income in dollars term increased from $526 in 1999-2000 to $652 in 2003-2004. Investment picked up 18.1% of GDP against 16.7% last year both private and public sectors showing improvement.

INFLATION

As stated above the price of the food items rose during the year which contributed to higher inflation during the year comparing to last year and stood at 5% against 3.3% last year.

FISCAL DISCIPLINE

Pakistan has been suffering from fiscal imbalance for many years like many other developing countries. Total revenue is estimated at Rs. 780.3bn during the year under review as against 720.8bn last year, an increase of 8.3%, against estimated expenditure of Rs. 957.7bn, an increase of 6.6% of last year. Thus, the fiscal deficit has been reduced to 4%.

The public debt ratio to GDP, which reached 89% in 2000-2001, has declined to 70% in March 2004. However the rupee component of debt grew by 3.6% while the foreign exchange component rose by 1.9%. Public debt was 317% of the total revenue in 1979-80, 505% by the end of 1980s and 627% by the end of 1990s, which has now declined to 488% by the end of March 2004.

TRADE, BALANCE OF PAYMENT & FOREIGN EXCHANGE RESERVE

During July-April 2004 exports showed growth of 13.1% and stood at $ 10,001.0M achieving 82.7% of the export target for current fiscal year. Imports grew by 19.0% to $ 12,012.4M. Notwithstanding a slow down in the flow of remittances, the current balance (excluding official transfers) during July March 2004 was in surplus, third year in running, at$ 1369M against $ 2706M for the same period last year. Foreign exchange reserve crossed $ 125.5Bn, sufficient to finance about a year’s import.

This strong build up of foreign exchange has further strengthened the Pak rupee which has remained stable during the period under review.

CAPITAL MARKET

Recent years trend in the capital market of being among the best performing stock exchanges of the world continued. KSE 100 index crossed 5600 points in April 2004, market capitalization increasing from Rs 555bn ($9.5bn) in January 2003 to increase 1463.0bn ($25.0bn) in April 2004 an increase of 159% the KSE 100 index touched the all time high of 5620.7 points on April 19 2004. A record turnover of a billion shares was also seen twice in the year on August 8 2003 and April 15 2004.

DEBT SERVICES

Pakistan witnessed two extraordinary events during the current year. On January 9 2004 Pakistan prepaid $1.17bn of high cost external debt to the Asian Development Bank. Secondly, Pakistan strategic re, entry into the international capital market by floating a euro bond of $500 M on February 12 which was oversubscribed by four times which on the one hand enable tightest possible pricing as well as it is a vote of confidence by the international investor on the Pakistan economic policies.

HUMAN RESOURCES & SOCIAL FACTORS

The first chapter on any book of a country’s economy starts with population or human resources. The development of human resources need strong social programme for education, health and vocational training. Unfortunately, this chapter has been neglected in the past with devastating results. So far so our enemies called us impoverished and illiterate. Now that the government has started giving attention to this sector the overall improvement are taking place though the rate is not sufficient, government cognizant of that, as it has started giving a better treatment to this sector in the present budget with increased allocation in eduction, health and other social sectors.

POVERTY ALLEVIATION

Poverty has many faces. Low income resulting in lack of access to basic needs such as education, health, clean drinking water and proper sanitation. While the government is paying attention to other factors the low income is core issue and it is result of wide spread unemployment which has not been checked and arrested for almost decades. Now the government has taken steps to create jobs and in the next year more than a million jobs are expected. Yet it is not sufficient more efforts are required.

CONCLUSION

The overall review of the present economic situation, if compared with the last few years, gives a very encouraging picture. But the strategic policies behind this have to be continued to achieve yet better result leading to a better life for our future generations.