Pakistan Development Update, April 2015
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Washington, DC
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The Pakistani economy faced four major
domestic shocks as of April 2015: (i) a political sit-in by
opposition parties in Islamabad that lasted between August
and December and raised significant political uncertainty;
(ii) the September floods in Punjab that affected
agricultural crops; (iii) the postponed sale of Oil and Gas
Development Company Limited (OGDCL) equity shares in
November that reduced its expected privatization proceeds
and foreign direct inflows (FDI); and (iv) the terrorist
attack in a school in Peshawar that heightened security
concerns. However, supported by a favorable slump in
international oil prices, and steady implementation of
structural reforms by the government, the economy is
improving. Preliminary data for the first half of FY15 show
growth picking up, driven mainly by strong performance in
the agriculture and services sectors. Despite the floods
last year, growth improved in the cotton, wheat, and rice
crops. The services sector was boosted by transport,
storage, communications, finance, and insurance. On the
demand side, growth continues to be driven by private
consumption partly fuelled by high remittance inflows.
Credit to the private sector continued to grow, but slightly
less rapidly than last year: as a percentage of GDP, it fell
to 13.4 percent in January 2015 compared with 14.1 percent
in January 2014. Pakistan is on track to meet a fiscal
deficit target of 4.8 percent of GDP in FY15. The newly
elected government appears to be committed to fiscal
discipline and has made fiscal consolidation the cornerstone
of its economic program supported by the IMF, the World Bank
and other donors. At present, Pakistan is facing three
sources of risk: first is the prospect of an early reversal
of the fall in oil prices. Second is the repeat of political
events of the first half that keep FDI flows and private
investment low; and also affects foreign reserves,
privatization program and growth prospects. An uncertain
political environment undermines investor confidence and
depresses economic activity. Third is the continuation of a
troubled domestic energy sector that continues to endure a
long-due complex inheritance on its circular debt. Given
past trends and the current growth rate, poverty is expected
to continue to fall and shared prosperity to improve in this
and the next fiscal year. However, a large mass of the
population is clustered around the official poverty line, so
that small improvements in household real consumption can
translate into substantial movement in poverty in either direction.
Palabras clave
ACCOUNTING, AMORTIZATION, AUCTION, AUCTIONS, AVAILABILITY OF CREDIT, BAILOUT, BALANCE OF PAYMENT, BALANCE OF PAYMENTS, BALANCE SHEETS, BANK BORROWINGS, BANK DEPOSITS, BANK FINANCING, BANKING INSTITUTIONS, BANKING SECTOR, BANKING SYSTEM, BASIS POINT, BASIS POINTS, BID, BIDS, BOND, BOND INDEX, BONDS, BROAD MONEY, BUDGET DEFICIT, BULLET REPAYMENT, CAPACITY BUILDING, CAPITAL ADEQUACY, CAPITAL MARKET TRANSACTIONS, CAPITAL MARKETS, CAPITALIZATION, CASH RESERVE, CASH TRANSFER, CASH TRANSFERS, CENTRAL BANK, COLLECTION PROCESSES, COMMERCIAL BANKS, COMMODITY PRICES, CONCESSIONARY TAX, CONSUMER PRICE INDEX, CONTINGENT LIABILITIES, COUNTRY RISK, COUPON, COUPON BOND, CREDIT BUREAU, CREDIT GROWTH, CURRENT ACCOUNT DEFICIT, DEBT RATIOS, DEBT SERVICE, DEBT SERVICING, DEBT SERVICING COST, DEPOSIT, DISCOUNT RATE, DOMESTIC BANKING, DOMESTIC BORROWING, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKET, DOMESTIC DEBT, DOMESTIC INTEREST RATES, DOMESTIC MARKET, DOMESTIC PRICE, DOMESTIC SECURITY, DURABLES, ECONOMIC REFORM, EMERGING MARKETS, EQUITY MARKET, EQUITY MARKETS, EUROBOND, EXCHANGE COMMISSION, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXPORT GROWTH, EXPORT PERFORMANCE, EXPORTERS, EXTERNAL FINANCING, FINANCIAL CRISIS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENTS, FINANCIAL STATEMENTS, FISCAL BURDEN, FISCAL CONSOLIDATION, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL DISCIPLINE, FISCAL POLICY, FIXED INCOME, FLOATING DEBT, FOREIGN ASSET, FOREIGN CURRENCY, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN EXCHANGE MARKET, FOREIGN EXCHANGE RESERVES, FOREIGN PORTFOLIO INVESTMENT, FUND INFORMATION, GLOBAL ECONOMY, GOVERNMENT BONDS, GOVERNMENT BORROWING, GOVERNMENT BORROWINGS, GOVERNMENT GRANTS, GOVERNMENT PAPERS, GROSS DOMESTIC PRODUCT, GROWTH RATE, HOLDING, HUMAN RESOURCE, INCOME LEVELS, INCOME TAX, INFLATION, INFLATION RATE, INFLATION RATES, INFLATIONARY EXPECTATIONS, INFLATIONARY PRESSURES, INFORMATION TECHNOLOGY, INFRASTRUCTURE DEVELOPMENT, INFRASTRUCTURE FINANCING, INSURANCE, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATE SPREADS, INTERNATIONAL BANK, INTERNATIONAL BOND, INTERNATIONAL BOND MARKET, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKETS, INTERNATIONAL DEVELOPMENT, INTERNATIONAL FINANCIAL STATISTICS, INTERNATIONAL MARKET, INTERNATIONAL MARKETS, INTERNATIONAL TRADE, INVENTORIES, INVESTING, INVESTMENT ASSETS, INVESTMENT CLIMATE, INVESTMENT PORTFOLIO, INVESTOR CONFIDENCE, ISLAMIC BANKING, ISLAMIC BANKS, ISLAMIC BOND, ISLAMIC BOND ISSUANCE, ISLAMIC BONDS, ISLAMIC FINANCIAL MARKET, ISLAMIC LAW, ISLAMIC MARKET, ISSUANCE, LENDER, LENDERS, LIABILITY COMPOSITION, LIMITED LIABILITY, LIQUIDITY, LIQUIDITY MANAGEMENT, LIVING STANDARDS, LOAN, LOAN PORTFOLIO, LOCAL CURRENCY, LONG-TERM ASSETS, LONG-TERM GOVERNMENT SECURITIES, MARKET VALUE, MARKET YIELD, MATURITIES, MATURITY, MICROFINANCE, MICROFINANCE SECTOR, MONETARY FUND, MONETARY POLICY, NATIONAL SAVING, NON-PERFORMING LOANS, NONPERFORMING LOANS, OIL PRICE, OIL PRICES, OUTPUT, PENSIONS, PERMANENT DEBT, POLITICAL UNCERTAINTY, PORTFOLIO INVESTMENT, PRIVATE INVESTMENT, PRIVATE SECTOR CREDIT, PRIVATIZATION, PRIZE BONDS, PUBLIC DEBT, PUBLIC INVESTMENT, PURCHASING POWER, REFORM PROGRAM, REMITTANCE, REMITTANCES, REPAYMENTS, REPO, REPO RATE, RESERVE, RESERVE REQUIREMENT, RESERVE REQUIREMENTS, RESERVES, RETURN, RETURN ON ASSETS, RETURNS, SECONDARY MARKET, SECURITY CONCERNS, SETTLEMENT, SINKING FUND, SOLVENCY, SOVEREIGN BOND, SOVEREIGN YIELD, SPOT MARKET, STATE BANK, STATUTORY LIQUIDITY, STOCK EXCHANGE, SUKUK, T-BILLS, TANGIBLE ASSET, TAX, TAX COLLECTION, TAX EXEMPTIONS, TAX RATE, TAX RATES, TIME DEPOSITS, TRADE BALANCE, TRADE REGIME, TRADING, TRANCHE, TRANSACTION, TRANSACTION COSTS, TREASURY, TREASURY BILL, TREASURY BILLS, TREASURY RATE, TREATY, TURNOVER, UNDERLYING ASSET, UNFUNDED DEBT, YIELD CURVE