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Key Economic Data 
  2004 2003 2002 Ranking(2004)
Millions of US $ 96,100 82,300 73,300 44
GNI per capita
 US $ 600 520 480 160
Ranking is given out of 208 nations - (data from the World Bank)

Books on Pakistan

Update No: 051 - (25/04/10)

A halved president
Zardari finally had to sign the bill which strips him of most of his powers. Without his ability to dissolve Parliament and the authority to appoint the country’s powerful armed services commanders, Zardari is now little more than a titular head of state. He has to rely on his control over the PPP to exercise control over the government. The bill was agreed with Nawaz Sharif’s PML: among other things it removes the ban on Prime Ministers serving more than one term, a step which favours Nawaz whose ambition is exactly the prime ministership. At the same time the bill maintains the immunity of the President while in office. Apart from hopefully marking the end of a bitter struggle between Zardari and Nawaz Sharif, which absorbed much of the government’s energy over the last two years, the bill also marks the rise in power and influence of Prime Minister Gilani, already more respected than the President because of his mediation skills and his image as a moderate. He now has most of the powers taken away from the president. The conflict with the judiciary is not over yet: the Attorney General resigned in protest in April, because the Law Minister was refusing to cooperate in the case of money-laundering which has been re-opened against Zardari. Although the president has immunity, the Supreme Court argues that the investigation has to continue.

Sluggish reform
Real GDP growth forecasts are now mostly between 2-3% for both the current and coming fiscal years. Significant investment in the electricity generation sector is now coming from USAID, Asian Development Bank, European Investment Bank, World Bank, GTZ. USAID in particular is considering to make ‘transformational’ large scale investments in Pakistan’s energy, water and agricultural sectors, with a medium and long-term impact over the next 10-15 years. The government’s own effort to address the energy crisis continue to be hampered by scandals and political infighting: in April a deal with French form GDF Suez over the import of LNG gas was blocked by allegations of corruption. The growing international propensity to intervene in rescuing Pakistan risk of course generating dependency and weakening the resolve of the political elite in addressing the structural problems of the Pakistani state. The World Bank reminded this to everybody in April, stressing how despite pledges that the fiscal deficit would not exceed 4.9% of GDP this year, it is now forecast to reach 5.3%. Progress towards raising the tax/GDP ratio to 15%, as promised by the Pakistani government, is nowhere to be seen and the ration still stands at 9.2% this year. The Federal Board of Revenue is now trying to implement the VAT, but is facing huge problems because of the dysfunctionalities of the Pakistani state. The verification of invoices and cross-matching of reported sales and purchases is proving very difficult in the presence of an antiquated paper-based system and a modernisation seems difficult to achieve by July, when full VAT implementation is supposed to start.

Better at managing than at reforming
If the government has not been very good in addressing issues which threaten powerful vested interests, it has been better at dealing with macroeconomic problems. Pakistan's current account deficit for example is improving faster than initially forecast, as exports are recovering somewhat. The central bank has now lowered its forecast for the 2009/10 current account deficit to 3.2-3.8% of GDP, down from the previous 3.7-4.7%. In reality, the rising oil prices are likely to push the current account deficit high again in the coming months. In general, however, the economic climate seems to be improving, as is the mood of investors. The Karachi Stock Exchange has passed the 10,500 mark again in April, mainly due to the renewed interest of foreign investors in the Pakistani oil and gas sector.   



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