IMF-WB commend


June 07 - 13, 2004



The large scale manufacturing sector, generally known for negative growth, has taken a turnaround by hitting an aggregate growth rate of 15 percent during the current financial year.

The growth was even surprising while looking at certain sectors especially, the textile, automobile, cement which have achieved a feat of over 80-86 percent growth reassuring that the economy has really taken a kick start.

Automobile sector has, however, taken a lead by displaying 86 percent growth during first ten months of the fiscal 2003-04. Automobile production has gone up from 36,430 units during the first seven months of 2002-03 to 60,673 units in the same period of the current financial year. According to official figures about growth in auto sector, car production went up by 65.90 percent, jeep 123.83 percent, Light Commercial Vehicles 3.69 percent, trucks 7.37 percent, buses 5.67 percent, tractor 51.29 percent and motorcycles 67.37 percent.

Similarly, the cement sector which had made impressive results, is approaching to a situation where industry runs at full of capacity. Currently, the cement units are near 87 percent of capacity utilization indicating the rapid growth in the development projects in the country.

Though the textile sector has shown a low growth rate as compared with other sectors yet in terms of exports, it is about to make history by hitting the mark of $10 billion dollar in the remaining two months of the financial year. As against the export target of $8.7 billion, the textile industry has already surpassed the target and the total exports during first nine months were estimated at $8.9 billion. The pattern of export performance shows that it will be an epoch making year in the history of the textile sector by attaining an unparallel export of $10 billion this year.



The Iron and Steel production also registered a growth of 9.27 percent. A break-up of different products in steel industry shows that pig iron/metal indicated 12.67 percent, cast/rolled billet 12.13 percent, hot rolled coils/plates 0.34 percent, cold rolled coils remained unchanged. Glass sheet production increased by 10.66 percent, cement 14.41 percent, bicycles 6.72 percent, motorcycles 17.71 percent and motor tubes 10.80 percent.

Sugar went up by 20.83 percent, cigarettes 10.32 percent, cotton yarn 2 percent, cotton cloth (mill sector) 13.71 percent, cotton cloth (non-mill sector) 4.98 percent, jute goods 11.94 percent, sacking 37.25 percent, paper and board-paper 11.84 percent, printing 17.76 percent, packing 13.33 percent, chip board 0.89 percent, soda ash 3.54 percent and caustic soda 13.21 percent.

In the fertilizer sector, urea production increased by 4.77 percent, ammonium nitrate 10.60 percent, nitrogen phosphate 31.29 percent and fertilizer phosphate 98.80 percent.

The financial sector also played a significant role by enabling the large manufacturing sector to achieve impressive growth reflected in the increased off-take by the private sector from the banking sector. According to an estimate, the off-take was almost double in the first nine month of the current financial year.

The commercial bank loans to industries increased to Rs233.6 billion from July-March as against Rs83.2 loans disbursed during the same period of the previous year.

According to a report, the production during first 8 months of the current financial year has increased by 15 percent as compared to 6.3 percent during the same period of the last year.

Banking sector also supported the textile industry for heavy investment especially on imports of machinery and equipment worth $2 billion in the textile industry to meet the growing exports.

Growth in large-scale manufacturing sector was in fact a strong indicator that the policies and decisions taken by the economic managers have started producing the desired results, which have also been acknowledged both by the IMF as well as the World Bank.

A recent IMF statement while appreciating the strong economic growth says that Pakistan is clearly on the right course, however, the significant gains in the fight against poverty are not yet visible. IMF has expressed the hope that given the authorities' track record over the last few years, IMF was optimistic that strong growth will continue, setting the stage for a reduction in poverty. Ultimately, Pakistan's growth outlook will depend on the authorities' ability to continue with sound fiscal and monetary policies and to maintain the momentum of advancing broad-based structural reforms to foster private sector development in the country. Strengthening implementation capacity will be crucial to improving public service delivery to the poor as well as adequate resources being provided to key social sectors.

IMF has supported Pakistan's economic reform program. Pakistan has decided to discontinue with IMF after completion of PRGF in December 2004. This will be a very important milestone for Pakistan following a long history of financial assistance from the IMF; these compliments were paid in the IMF statement.