The National Economic Council (NEC) in its 2-day meetings, in
Islamabad last week, approved 2 development programmes, 3 years short-term plan
(2001-2004) and a long-term 10 years programme covering the period between
2001-2011. The meeting presided over by the Chief Executive Gen. Pervez
Musharraf also lifted moratorium imposed earlier by the NEC on processing new
The 3-year Development Programme (2001-2004) includes total
Public Sector Development Programme (PDSP) of Rs. 460 billion and 10 year
allocation (2001-2011) of Rs. 2450 billion. The meeting discussed 8 sectoral
strategies and programmes including water resources, Agriculture, Transport,
Communication, Energy, information technology, Science and technology, Social
sector and physical planning and housing. The 3-year plan will be part of
overall 10-year development strategy.
After the meeting of National Economic Council, Deputy
Chairman Planning Commission Shahid Amjad Chaudhary, and secretary Planning
Division Muttawkal Kazi told pressmen that the objectives of the 2 plans are to
accelerate economic growth, reduce unemployment and resultantly minimize
poverty. The growth will be financed through donors as well as domestic
resources. Forty per cent of development projects would be financed through
foreign assistance and 60 per cent by domestic resources.
The other objectives are that the private sector should play
a vital role in export-led growth; enhance competitiveness by improving the
productivity and quality of exportable goods; the country should build a strong
base for long-term self-sustaining growth and institutionalize social capita for
During the 3-year period GDP growth rate is estimated at 5
per cent an average. Trade deficit would be reduced to 6 billion dollars in
2003-2004 from over 1.5 billion estimated during the current financial year,
development expenditure to 4.1 per cent of GDP from 2 per cent in 2000-2001.
Revival of the economy and regeneration of the growth
process, productivity enhancement, job creation for unemployed and poverty
reduction is the main thrust of the programme. The planning division prepared
three year development programme for 2000-03 in September last year to maintain
economic stability by containing fiscal and current account deficits and
inflation growth, reduce poverty on a sustained basis and achieve increasing
self-reliance. The main targets like GDP, Agriculture, fiscal deficit, and
development expenditure and manufacturing has almost been revised and reduced in
the proposed new three Year Development programme 2001-04 as protected in the
previous three years programme 2000-2003.
The driving force behind the macroeconomics framework for
2001-04 is to focus policy and resources on lifting the economy by its own
bootstraps. Its successful implementation will reinforce national economic
independence by eliminating the need to access extraordinary external resources
(including those from IMF) and by the boosting national morale in general and
business confidence in particular
The programme will lay down the basis for sustained economic
growth by reducing fiscal deficit from 5.2 per cent of GDP in 2001 to 3 per cent
in 2003-04. This will be accomplished by increasing revenue rather than reducing
development expenditures. Revenues will go up by about Rs. 100 billion each year
beyond the base year target of Rs. 585 billion. Development expenditures has
been planned to rise from 3.3 per cent of GDP (Rs. 115 billion) to 4.1 per cent
of GDP (Rs. 193 billion). The external account deficit will go down from 20 per
cent of GDP in 2000-01 ($1.2billion) to 0.8 per cent in 2003-04 ($0.65 billion).
Trade deficit will be reduced from $ 1.3 billion to 0.6 billion, which will
require a steady growth of 10 per cent per annum. External and internal debt
levels will be stabilised through accelerated privatization, by securing
improved terms with the creditors, and by cutting unnecessary current
expenditure. A gas-led energy development strategy is being put in place to
reduce the country's dependence on imported fuels.
The national savings rate is envisaged to increase from 13.5
per cent of GDP in 2001 to 16.2 per cent in 2004, which will help in reducing
dependence on external resources. The 2001-04 macroeconomic framework call for
strong fiscal adjustment while the balance of payment takes into account a
possible funding arrangement with the IMF including rescheduling in the context
of its Poverty Reduction and Growth Facility. However, if the $ 4 billion
programme of privatization proceeds as planned and direct purchases in the
market continue at the present level, a fall-back position exists with regard to
the balance of payments, said the planning commission in the draft programme.
In accordance with the policy objectives embodied in the
2001-04 macro framework, the development expenditures would grow at about 19 per
cent per annum. Out of a three-year total of Rs. 492 billion, Rs. 294 billion
will be utilized by the Federal Ministries, Rs. 25 billion has been allocated
for special Areas and Special Programmes and Rs. 173 billion has been kept for
the provinces. The allocation takes into accounts the requirements of on-going
schemes and attempt to provide space for new schemes.
The new initiatives of poverty reduction and information
technology claim 18 per cent of the budgetary outlays, transport and
communication gets 14.5 per cent, energy 12 per cent and water resources 11 per
cent. Most important would be launching of major projects in the provinces by
the federal government.
To achieve the agriculture growth target of 4 per cent per
annum, availability of improved seeds, fertilizers, credit and other inputs
especially water to farmers will be ensured. Fifty per cent of additional water
would be utilised for increasing cropping intensity. Special wheat, oil seeds
and pulses promotion programme will be initiated to broaden the agriculture base
and to reduce import of these items.
Manufacturing sector is expected to grow at the rate of 5.9
per cent per annum, with the large-scale manufacturing growth fixed at 6.2 per
cent. The sector would be strengthened with export orientation. Emphasis would
be on development of Small and Medium Enterprises.
Over the next three years, it has been planned to increase
gas production from 2722 mmcfd in 2000-01 to 3200 mmcfd in 2003-04. Electricity
generation has been planned to increase by 14.4 per cent, increasing the
installed capacity from 17710 mw in 2000-01 to 19052 mw in 2003-04, showing an
average annual increase of 4.6 per cent.
The emphasis on maintaining realistic growth and stable
prices (average annual inflation rate of 5.2 per cent) will help reduce poverty
by increasing income per capita from Rs. 24,359 ($ 420) to Rs. 26,941 ($ 465) in
constant 2001 prices. Increasing the investment rate from 15.5 per cent to 17
per cent will create 2.5 million new jobs, the best means of reducing poverty
and empowering people.
Services sector as a whole is planned to grow at an average
rate of 5.1 per cent per annum. The main contributors of value addition in this
sector are transport and communication and trade.
During 2001-04, human development will advance side by side
with economic growth and development. The percentage of population unable to
secure minimum necessary 2150 calories per day will be brought down form 30 to
25 per cent and the human poverty index will improve from 44 to 35 per cent.
In education, the most important target is to significantly
enhance female literacy rate from 39 to 47 per cent, primary school enrollment
from 83 to 94 per cent, elementary school enrollment from 57 to 66 per cent. The
number of scientists and engineering per thousands population will be raised
from 116 to 295.
Around 75 per cent of the reform in civil services,
judiciary, police, local governance, education as well as economic and financial
governance will be implemented by 2001-04. The governance issues are
multidimensional yet their resolution does not require significant financial
resources, says the draft.
The Planning Commission observed that poor governance
basically leads to inefficient utilization and distribution of resources, and
the purpose of good economic management is always focused on maximization of
returns and reduction of cost. Not only that good governance leads to economic
gains but also increase public satisfaction as well as give its civil society a
sense of participation. It also reduces distribution cost of social and economic
services. In the context of Pakistan, which has been suffering from inefficient
and corrupt practices of the past, declining rates of growth in the economy,
rising unemployment and acute shortage of internal and external finances, the
best hope lies in institutional reform and restructuring of the existing system