REVITALIZING PAKISTAN’S ECONOMY The US-Pakistan Diamer Basha Dam Project Business Opportunities Meeting Remarks by Pakistan Minister of Finance Mohammad

REVITALIZING PAKISTAN’S ECONOMY

The US-Pakistan Diamer Basha Dam Project Business Opportunities Meeting

Remarks by Pakistan Minister of Finance Mohammad Ishaq Dar

October 8, 2014 Washington, DC



ECONOMIC DEVELOPMENT

Good News in Pakistan! Economic Growth: 4.14% in FY 2013-14 as compared to 3.7%

in FY 2012-13. This is the highest growth in the last six years; Per Capita Income: increased to $1386 in FY 2013-14, up

3.5% from previous year; Industrial Sector: grew 5.8% in FY 2013-14, aided by

increased availability of electricity and better management of available gas supplies, and the highest in the last six years;

Inflation: dropped from 12% average over past years to 8.6% during FY 2013-14.



FBR Revenues: up by 16.4%, rising from Rs.1946 billion to Rs.2266 billion during FY 2013-14;

Fiscal Deficit: down from 8.2% of GDP in FY 2012-13 to 5.7% in FY 2013-14, the single largest fiscal adjustment in one year;

Development Spending: recorded at Rs.441 billion in FY 2013-14, a 23% increase over FY 2012-13 and exceeding revised target of Rs.425 billion.

Credit to Private Sector: increased from Rs.19 billion in FY 2012-13 Rs.379 billion for FY 2013-14, a growth of 19 times;

Government Borrowings from State Bank of Pakistan: reduced to Rs.303 billion, merely 21% of last year’s level;



Exports: were recorded at $25.13 billion during FY 2013-14 an increase of 2.73%;

Imports: were recorded at $45.11billion during FY 2013-14, showing a negligible increase of 0.35%;

Remittances: rose to $15.83 billion during FY 2013-14, showing an increase of 13.7%;

Exchange Rate: during this calendar year alone, the rupee has appreciated by 7%, after having pushed up to Rs.110 a US Dollar in November 2013. This is the single most important indicator of economic stability;



Official Foreign Exchange Reserves: foreign exchange reserves of the country have entered safe territory and no longer pose any risk to the economy. As on 25th September, 2014, the reserves stood at $13.3 billion comprising $8.6 billion of the State Bank and $4.6 billion of scheduled banks;

Karachi Stock Exchange Index: has continuously scaled new heights and stood at 30,224 on 15th July, 2014, showing an increase of 52%. Market capitalization increased from Rs.5.04 trillion to Rs.7.14 trillion and for the same period, showing an increase of 42%, while in dollar terms it amounted to a 41% increase.



Incorporation of New Companies, has increased to 4587 during FY 2013-14, showing an increase of 16%.

Pakistan is successfully promoting business!


OTHER RESULTS

Raising of $2 billion through Euro Bonds (first time in 7 years); Successful auction of 3G-4G licenses, raising nearly $1.2

billion with additional licenses still available for sale; Resumption of program lending by The World Bank and ADB,

through which we accessed $ 1.5 billion during the year; Successful revival and resumption of the privatization

program, divesting the shares of United Bank Limited (about $400 million) and PPL (subscription Rs.30 billion – which is highest ever in our stock market history at Rs.15.3 billion.


MAJOR INITIATIVES: EXPORTS

GOP has incentivized the export industry by: Offering drawback to exporters on enhanced

exports. Reducing the mark-up rate for Export Refinance

from 9.4% to 7.5%. Reducing Rates for Long-term Financing Facility (3 to

10 years) to textile sector for upgrading technology from 11 % to 9%.


OTHER INITIATIVES

We have listed public securities for trading in the stock exchange;

Pro-poor expenditures, through the National Income Support Program, have witnessed a phenomenal increase from Rs.40 billion in FY 2012-13 to Rs.118 billion in FY 2013-14 (a nearly 3 fold increase).


OUR GOVERNMENT’S VISION FOR 2018

GDP to grow gradually to around 7%; Inflation to remain in single digits i.e. no more than 8%; Fiscal Deficit to be brought down to 4%; Foreign Exchange Reserves to be built up to $20+ billion; Investment-GDP Ratio to be increased to 20%; Industrial sector to grow by 8%; Public Debt to be brought down to less than 55% of GDP; Tax-GDP Ratio to be increased to 15%; Exports to be increased to $32 billion.


OUR GOVERNMENT’S VISION FOR 2018

Current Account Deficit to be brought down to -2% of GDP;

Foreign Direct Investment to be increased to $5.5 billion;

Expending around 4% of GDP on education and health;Poverty Alleviation and Support to vulnerable sections

of the society;Providing Energy to secure Pakistan’s full potential for

growth.


PROMOTING ENERGY FOR PAKISTAN

First Goal: Sufficient and Affordable Energy New power projects adding megawatts in Pakistan:

Two Coal Power Plants of 660 MW each at Port Qasim; Two Coal Power Plants of 330 MW each in the Thar Desert; Two Coal Power Plants of 660 MW each in Punjab; Two Wind Power Projects of 250 MW in Sindh; Ten Wind Power Projects of 660 MW each in Balochistan; Chashma Civil Nuclear Power Project of 600 MW; Keyal Khawar Hydro Power Project of 122 MW; Allai Khawar Hydro Power Project of 122 MW; Two Karachi Nuclear Coastal Power Projects of 2117 MW; Chichoki Malian of 525 MW.



Increasing Reliability of Power Brown-outs being reduced through various efforts: Refurbishing and rehabilitating existing power plants to increase output; Promoting major new power projects, such as the Dasu Hydropower Project and

Diamer Basha Dam Project to significantly add capacity; Investing in new transmission and distribution networks; Promoting operating efficiencies and investing in maintenance; Promoting energy efficiency and renewable energy initiatives.

Increasing Natural Gas Supply: enhanced supplies through increased exploration/production, imports both overland and sea. E.g., Construction of terminal at Port Qasim to import LNG, which will likely

receive 200 MMCFD of LNG within one year.



Ongoing major power plant investments: Signed loan agreement with the World Bank for Dasu Hydro

Power Project Phase-I (2300 MW), Phase-II of the project will be of 2200 MW;

Progressed in acquiring land for Diamer Basha Dam & its associated 4500 MW hydropower project;

Fast-tracked the 969 MW Neelum-Jhelum hydropower project;

Upgraded generation units of the Mangla Power Station; and Upgraded the 747 MW Guddu Power Project.



Our Energy Policy is aimed at improving the energy mix to avoid the need for frequent tariff increases; aligning tariffs with costs; and at attracting private investments in transmission and distribution to improve efficiency of our system.


OBJECTIVES: INFLATION, TAXATION AND SOCIAL PROTECTION

INFLATION goals: To keep inflation in single digits i.e. below 8%, our

Government is making all out efforts to: Curb non-developmental government spending; Limit government borrowing; Decrease tax rates; Reduce power cuts and energy cost; Lower interest rates through effective monetary policy; Remove supply side bottlenecks through increased

agricultural output and reduced wastages.


OTHER INITIATIVES: TAXATION

TAXATION goals: Gradually withdrawing tax exemptions over the next 3

years, not only to add to our revenues but also to make our tax system transparent and corruption-free, and ultimately bring market entry barriers down.


INFRASTRUCTURE

INFRASTRUCTURE goals: Regional connectivity initiated through in-country

North-South corridor projects to be completed in the next 4 years: Karachi-Lahore Motorway, Gwadar-Ratodero Motorway, Faisalabad-Khanewal-Multan Motorway, andPak-China Economic Corridor from Gwadar to Kashghar

through motorway and railway. This economic corridor will give the much-needed boost to our reviving economy.


SOCIAL PROTECTION

SOCIAL PROTECTION goals:The National Income Support Program, which

comprises of Benazir Income Support Program, and Prime Minister’s Youth Program, will enhance social protection efforts. We are working to combine the synergies of these programs to make them more effective.


CONCLUSION

We are a resilient nation facing political, social, economic, and security challenges, yet we are optimistic and confident of our country’s future and remain committed to our vision for the country.


Thank you!

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REVITALIZING PAKISTAN’S ECONOMY The US-Pakistan Diamer Basha Dam Project Business Opportunities Meeting Remarks by Pakistan Minister of Finance Mohammad