Located towards the North West of the

Indian Sub continent, Pakistan is the 3rd

fastest growing economy of Asia, next
only to China and India. In the recent
years, Pakistan's economy has shown
incredible growth prospects, especially in
the recent decade. In the present age,
the economic boost of Pakistan is such
that it is considered as the third seeded
nation in terms of the fastest GDP. With
the various reformed foreign policies
aiding the business, Pakistan is on the
verge of increasing upgraded labor force.
Know all about Pakistan economy as you
browse through this site
economyofpakistan.com

The economy of Pakistan is opening up

to various new prospects of growth and
development. Economyofpakistan.com
warmly welcomes you to visit this web
resource where you get detail info on the
history of Pakistan's economy, present
economical condition, the employment
scenario in the country, the revenue
earned and lots more.
Search through economyofpakistan.com to get all the essential information about Pakistan to update your
knowledge.

Agriculture and Livestock in Pakistan's Economy

Agriculture Crops Agriculture Crops
Wheat Rice
Sugarcane Fruits and Vegetables
Cotton Tea

Industry in Pakistan
Energy Fisheries in Pakistan
Electricity
Mining
Electricity Production
Minerals in Pakistan
Electricity Consumption
Coal in Pakistan
Alternate sources of power
Manufacturing Construction
Textile industry in Pakistan

Pakistan had an important parallel economic sector in the early years. This sector included a thriving black market,
a large illicit drug industry, and illegal payments to politicians and government officials to ensure state contracts.
Corruption rose in the 1980s, partly as a result of the massive infusion of United States aid, some of which went to
the Pakistani government to pay the cost of supporting refugees fleeing after the 1979 Soviet invasion. These were
some of the Factors affecting the economy in the early years of Pakistan.
policy-making,relying on foreign assistance,unequal distribution of wealth and embracing failed foreign economic
policies are the major Factors affecting the economy in the early years of Pakistan. No effort ha been made
towards planning and policy-making to set priorities on scientific lines keeping in view the county’s requirements.
During first 15 years, there was practically no long-term planning. The whole business was conducted based on
annual plans and budgets. The leading factor considered necessary for development has been foreign aid.
Consequently, the country was burdened with foreign debt.
The major correlates of poverty includes real per capita GNP, real wages in manufacturing, per capita availability of
food grains, remittances and subsidies. The growing level of per capita income, real wages, agricultural
productivity and the flow of remittances have been the most important Factors affecting the economy in the early
years of Pakistan. There was increase in income inequality, resulting in an increase in poverty, and remittances,
which have shown a consistent downward trend in recent years.

For more information about the Factors affecting the economy in the early years, log onto our website,
economyofpakistan.com.

Reforms in Pakistan's Economy

Sensible economic policies helped in the transformation of

Pakistan's economic landscape. Consistency, continuity
and transparency of policies enabled the country to
achieve growth and development. Reforms in Pakistan's
Economy included reduction in the cost of borrowing by
government and investing heavily in the country's infra-
structure. High growth created a surge in energy demands.
Public sector organizations in hydel and nuclear electricity
were increased to bridge the gap in demand and supply of
electricity.

Reforms in Pakistan's Economy saw the country entering an effective circle of investment, growth, job
creation, poverty alleviation and technological advancement. The focus was mainly on agriculture, small and
medium industry, oil and gas exploration, and information technology. Financial sector reforms in Pakistan's
Economy were also initiated and private domestic banks were allowed to set up their shops along with the
nationalized commercial banks. Professional managers and boards of directors consisting of reputable
persons from the private sector to manage and oversee the nationalized commercial banks were brought in.
The Central Bank was granted autonomy and the control of the Ministry of Finance over banking institutions
was diluted. Excess labor was shed off through voluntary golden hand shake schemes and unprofitable
branches were closed down.

The middle and lower middle class were also benefited from the Reforms in Pakistan's Economy. They got
access to banking services and enjoyed car loans, mortgages, credit cards and consumer durables. Small
farmers started using chemical fertilizers, certified seeds, insecticides, small implements and hiring tractor
services. Small and medium entrepreneurs expanded their fabrication and manufacturing capacities.

Budget 2007
With contacts in Finance Dept of Govt.Of Pakistan i was able to get a copy of the Budget of 2007-
2008 which is still being formated, although its a very long list so i ll mentions some silent features
which are listed below & are quite exciting:

• The budget 2007-08 has a total outlay of Rs 2.315 trillion, including Rs 1880 billion for
current expenditure and Rs 835 billion for development programme. The overall size of the
 budget is 40.7 percent higher than current year's Rs 1.098 trillion, budget documents
suggest.
• CED(central excise duty) on cement has been decreased to boost construction activity from
Rs750 per tonne to Rs 250 per tonne.
• The government has declared 50% decrease on taxes on cooking oil and Vanaspati Ghee,
Wheat and Agriculture products, which will release load from the people of Pakistan and will
help the people to survive.
• The defense budget for 2006-2007 was 250.2 billion which is decreased to 50.2 billion for the
year 2007-2008, as security of the country is very important but people of this country are
more important.
• Oil and Gas prices have been reduced, Petrol from 57.70 to 30.32, Diesel from 38.73 to 15.45
and LPG / CNG from 35.32 to 10.21 per KG, which is approximately a 50% decrease in the oil
prices.
• Power and electric supply rates have also been revised and Govt. has declared 70% reduction
in Electricity for consumer 30% reduction for commercial electricity and 90% reduction for
industrial sector which will help boost the economic development with cheap power and
electric supply.
• Expenditure on running civil administration at Rs.126.9 billion is 23.1 percent higher than
current year’s estimates of Rs.103.1 billion on account of various relief measures provided by
the Government.
• Pensions of the government servants have also been raised. Those government servants who
retired before May 1, 1977, their pensions are up by 60 percent.Those who retired after May
1, 1977, their pensions are up by 65 percent. Also Senior Citizen fund has been established
for those who are tax payers will be entitled to senior citizen fund after the age of 50.

Economic Aid to Pakistan

The organizations like the International Monetary Fund

(IMF), World Bank (WB) and Asian Development Bank
(ADB) provides economic aid to Pakistan in the form of
loans and grants. These governing bodies help Pakistan
with long-term loans. Besides, oil rich countries and
developed countries also help Pakistan bilaterally. So,
know more about International Monetary Fund, World
Bank and Asian Development Bank who together provide
economic aid to Pakistan at economyofpakistan.com

The International Monetary Fund is a global organization that aids its member countries in facilitating
international trade, promoting monetary cooperation and employment, securing financial stability and helping
to reduce poverty. It has its headquarters in Washington D.C. in the United States of America. World Bank
helps the countries for post-war reconstruction, post-conflict rehabilitation needs and during humanitarian
emergencies.

There are two agencies of World Bank called International Bank for Reconstruction and Development (IBRD)
and International Development Association (IDA). It helps its member countries to sustain the growth of the
nation and alleviate poverty. The major sectors of the country where World Bank provides help are agriculture
and rural development, environment, health sector, financial sector, labor and social protection, trade,
transport, law and justice and water resources.

Asian Development Bank was set up to provide economical and social help to all the Asian and Pacific
countries. Technical loans help and loans are provided to the countries for the development of the nation. The
bank aims at the welfare of the people of Asia and Pacific regions. According to media and other sources, it is
revealed that the economic aid to Pakistan from the Asian Development Bank will be more than $6 billion
during the plan of 2006-2009 for different development and success strategies.

Economyofpakistan.com offers insight into the economic aid of Pakistan. For further information, you can
browse through the following links:

Recent Economic History of Pakistan

Pakistan's economy has been expanding rapidly. The

Recent Economic History of Pakistan shows GDP
growth in Pakistan. The economy also received a boost
from strong growth in investment. The GDP growth reflects
that the service economy has been benefited from
unexpectedly high levels of investment.

International oil prices and domestic inflation were high,

and this could undermine macroeconomic stability.
Measures taken included substantial privatization, reforms
in the banking and utility sectors. The need to raise levels
of foreign direct investment and exports to counteract the
negative trends at work in the economy was a focus of
policy in the Recent Economic History of Pakistan.

Industrialization, however, had failed to create sufficient jobs for the rapidly expanding urban population.
Construction and service-sector activities, especially in trade, transportation, and government, were expanded
and provided more employment than industry. Nonetheless, underemployment remained prevalent throughout
the economy. An outdated infrastructure was another problem seen in the Recent Economic History of
Pakistan. Frequent electricity shortages, for example, hampered industrial development and production.

A big problem in the Recent Economic History of Pakistan was high budget deficit. It had adverse implications
on the nation's balance of payments, inflation and exchange rates, capital formation, and financial stability.
The government had privatized public-sector industrial enterprises, financial institutions, and utilities. And a
structural adjustment program was designed to increase revenues, control spending, and stabilize monetary
growth.

For more information about the Recent Economic History of Pakistan, visit our website,
economyofpakistan.com.
Salient features of the Budget 2006-07 anounced by Mr Omar Ayub Khan, Minister of State for Finance
(errors or omissions are regretted)
Omar Ayub Khan State minister for Finance delivers the budget speech.
At the outset he recalled the devastating Oct 8 earthquake and its widespread implications but at the same
time the resolve and determination of a nation which displayed exemplary faith, unity and discipline to face the
crises.
He said, the budget reflects all these qualities of the Pakistani nation which not only faced the aftermath of the
devastating earthquake but also handled the other crises mainly the soaring world oil prices with astute
economic policies.
The budget 2006-07 has a total outlay of Rs 1.315 trillion, including Rs 880 billion for current expenditure and
Rs 435 billion for development programme. The overall size of the budget is 19.7 percent higher than current
year's Rs 1.098 trillion, budget documents suggest.
The next year's defence expenditure has been estimated at Rs 250.1 billion against current year's revised
estimate of Rs 241 billion and budgeted allocation of Rs 223 billion.
The current expenditure in 2006-07 is projected to be four percent lower than current year and would stand at
70 percent of total size of the budget compared with 74.5 percent during the current year.
The estimate for next year's revenue collection has been put at Rs 860.374 billion. Tax revenue target has
been fixed at Rs 840.9 billion against current year’s revised estimates of Rs 715.7 billion.
The total resource availability for the next year is Rs 1.0997 trillion, up from current year's revised estimate of
Rs 980 billion. For the next year, absolute revenue collection estimate has been put at Rs 705 billion, which is
9.6 percent higher than current year.
The budget 2006-07 has estimated Rs 378 billion transfers to the provinces under net proceeds of the federal
divisible pool against current year's revised estimates of Rs 331 billion, showing an increase of about 19
percent or Rs 47 billion higher.
For the next year, revenues from investments are projected at Rs 16 billion against Rs 51 billion for the current
year, showing a decrease of over 300 percent, perhaps because of disinvestment of government shares in
public sector entities.
The estimates for next year's foreign inflows has been put at Rs 239 billion which is 12.7 percent higher than
the current year.
An amount of Rs 504 billion has been earmarked for general public service which include interest payments,
debt servicing and superannuation allowances. This accounts for about 57.3 percent of total current
expenditure.
The public sector development programme (PSDP) allocation for next year has been put at Rs 415 billion,
which the budget documents claim were 38.7 percent higher than revised estimates of current year. The
government estimates to collect Rs 75 billion from privatization proceeds next year compared with current
years, revised estimates of Rs 90 billion. About Rs 70 billion higher than targeted receipts in privatization
proceeds has helped the government to maintain a 4.2 percent fiscal deficit during the current year. The
budget 2005-06 had projected privatization proceeds at Rs 20 billion. The government is targeting to borrow
Rs 140 billion from the banking sector to meet its budgetary deficit during the next fiscal year. Current year's
revised estimates for bank borrowing have now been put at Rs 66.8 billion.
The target for next year overall revenue collection has been estimated at Rs 1.083 trillion, which is 16.8
percent higher than the current year. This would include a tax revenue of Rs 840.9 billion, up by 17.5 percent
higher than current year and non-tax revenue at Rs 241.89 billion, up by 6.4 percent over current year’s
budgeted estimates of Rs 227.3 billion.
Of these taxes, target for direct taxes has been put at Rs 272 billion against current year's revised estimates
of Rs 235 billion, showing an increase of 15.7 percent. The target for indirect taxes has been put at Rs 569
billion compared with current year’s revised estimate of Rs 481 billion, showing an increase of 18 percent.
The target for non-tax revenue has been put at Rs 242 billion, compared with current year's revised estimates
of Rs 307 billion, showing a reduction of about 21 percent. This also includes Rs 115 billion revenue estimates
from properties and public departments, about Rs 4 billion less than current year.
The government has estimated zero collection on account of petroleum development levy compared with
current year's revised collection of Rs 20 billion to cap oil prices. However, it would collect Rs 18 billion
development surcharge on natural gas.
The government expects Rs 239.3 billion resources from foreign sources compared with current year's revised
estimates of Rs 234 billion. This includes Rs 213.4 billion from foreign loans and Rs 26 billion grants. Foreign
loans also include Rs 76.4 billion project loans, Rs 76.5 billion programme loans, Rs 30.2 billion foreign
currency bonds and others. Foreign grants during current year amounted to Rs 45 billion, according to budget
documents.
The government has also allocated Rs 89 billion subsidy for Wapda, KESC, Utility Stores, cement, other such
commodity operations against current year's revised estimates of Rs 64 billion, showing an increase of over
28 percent.
To ensure sugar prices at 27.50 per kg, an allocation of Rs 7 billion subsidy has been made for the next year.
The government has also decided to sell pulses at Rs 10 per kg less rates through Utility stores through
import of 300,000 tons of Channa and 10,000 tons of Mash pulse. For this, Rs 2.5 billion subsidy has been
provided for next year.
For next year, the government will not charge petroleum development levy on diesel.
For cement prices, the government has allocated a subsidy to maintain a lower price in the next year through
an amount of Rs 720 million.
As such, in overall terms, the relief and subsidy would consume about Rs 109 billion, compared with current
year's Rs 83 billion
From 1.7.2006 all government employees to get 15% increase in dearness allowances.
20% raise in pension for pre 79 retired; 15% for post-77 pensioners
Raise in pension from Rs.1000 to 1300 under EOBI scheme.
Compensation for widows of Government servants by increasing it from 30,000 - 50,000.
Minimum wage in private sector raised from Rs. 3000 to Rs. 4000
Teacher’s special qualification allowance introduced, rationalized i.e. Rs. 500, Rs. 700 and Rs. 1000 according
to individual's qualification.
Raise in salary of railway employees.
Wife and children of employees who died during service to get lump sum compensation and a comprehensive
relief package. This includes members of LEAs.
Saving schemes' returns increased on all schemes including prize bonds. Return of national saving schemes
have been increased by 0.5% to 1.5%
Conveyance allowance is being increased by 50% for grade 1-16 Govt. employees.
Threshold in respect of worker’s Profit Participation Fund has been increased from Rs. 6,000 to Rs. 12.000.
For Government employee’s compensation package shall be provided in the range of Rs. 200,000 to Rs.
1,000,000 according to their grades.
For salaried employees income tax exemption base has been increased from Rs. 100,000 to Rs, 150,000.
Likewise for salaried employees, range of Tax rates has been decreased which was 3.5% - 30% previously,
now it has been revised downwards in the range of 0.25% - 20%.
For senior citizens (above 65 years) income up to Rs. 400,000 is exempt. Now this age limit has been brought
down to 60.
To control prices of pulses Rs.2.5 billion subsidy is being allocated to importers of pulses in private sector.
Prices of all food items will be stabilized. Utility stores have started to provide sugar at Rs. 27.50 per KG.
To control prices, price mechanism law will be strengthened. Price magistrates are being appointed for this
purpose at district level.
Livestock sector is thriving and has achieved 8 % growth rate. Very soon there will be white revolution in this
sector.
Last year local tractor manufacturing has increased 3 fold. To meet increasing demand import of tractor is
being exempted from custom duty.
Rs. 1.0 billion is being allocated to start program for rehabilitation of poultry industry.
Rs. 7.8 billion investment program is being started to increase agricultural production. Initially this program
shall be implemented in 1000 villages.
Rs. 1.0 billion shall be allocated for better utilization of water resources.
Government is starting a program for efficient water resource management which will control wastage of
water.
Government shall spend Rs. 12.3 billion to provide cheap fertilizer to farmers.
In Real Estate sector, 2% CVT is being introduced to keep check on speculation and control prices.
Last year 0.1 % Tax was imposed on cash withdrawal of Rs. 25,000 or more from banks. Now, this tax rate is
being enhanced to 0.2%
0.02% CVT has been introduced on sale of shares