ISLAMABAD: Despite several domestic and international challenges, the country's economy is gradually moving towards building basis on sound footings as suggested by the economic indicators. Not only the country's foreign exchange reserves reached an all time high of $17.38 billion because of huge remittances sent by overseas Pakistan, the other economic indicators have shown positive growth during the period, sources in the Ministry of Finance said while commenting on the three-year performance of the current government.
The government has been focusing on 'New Growth Strategy' with an aim to raise growth above its historical average of 4.9 percent, source said adding main argument in the new growth frame work is that growth should be market-led and not government-led.
"Private sector should be the main driver of growth with public sector ensuring timely implementation of market reforms to promote competitiveness, they added.
On monetary front, the government envisaged a significant tightening of fiscal and monetary policies to bring down inflation and strengthen the external position adopting several structural measures in the fiscal and financial sectors including strengthening of social safety net.
The sources said that keeping in view the risk of inflationary pressures, the State Bank of Pakistan raised its policy rate 12.5 percent on May 2010 to 14 percent on 30 November 2010, adding the rate remained unchanged for the time being due to the risk to inflation and economic growth.
The source said that during FY10, country's current account deficit contracted sharply by 62.1 percent, mainly due to contraction in the trade account and rise in the invisible account surplus and as a result the country's foreign exchange reserves were recorded all time high.
Improvement in inflow of remittances through Pakistan Remittances Initiative (PRI) stood at $6.12 billion during July-January 2011 as compared to $5.19 billion during the same period of last year.
The sources termed the surplus of $26 million in external current account during July-December (2010-11) as marked improvement over earlier projections.
The sources said that due to economic slow down in 2008-09, the government was forced to enter into a Stand-By Agreement (SBA) with International Monetary Fund, which benefitted the country's macroeconomic growth as is evident from sector-wise growth.
The agriculture sector grew form 2 percent in FY09 to 3.8 percent in FY10, the manufacturing sector grew from 5.2 percent in FY09 to 5.6
percent in FY10 while the real GDP grew from 1.2 percent in FY09 to 4.1 percent in FY10, the sources added.
In order to maintain fiscal discipline, the government focused on prudent expenditure management and better resource mobilization through the introduction of Reformed General Sales Tax (RGST) that has been submitted to the Federal parliament.
It also focused on Harmonization of Tax Administration and Strengthening Risk Based Audit.
A major development, the sources said, was the announcement of 7th NFC award after the gap of 19 years. Besides the government introduced austerity plan, restructuring of public sector enterprises, power sector reforms and debt management strategy.
Focusing on agriculture development, the government introduced crop support price policies which benefitted the economy.
The import of fertilize increased by 133 percent, hence the total availability of fertilizers also increased by 25.3 percent during FY10 from 4.4 percent in FY08.
The government also allowed import of agriculture machinery at zero tariffs to facilitate farmers while it launched a project "Land and Water Resources Development Project" to bring more land under cultivation and help alleviate poverty.
Benazir Tractor Scheme, Awami Zarai Scheme and Rural Development Scheme were other important developments for promoting agriculture sector.
The government also took initiatives for the development of manufacturing sector of the country through technological up-gradation, provision of sophisticated machines, equipment, tools and spares in common facility centers and machine pools, Computer Aided Design (CAD), and Computer Aided Manufacturing (CAM) facilities besides promoting research and development.
The other initiatives included launching of Benazir Income Support Programme to help the poorest of the poor of society for which the amount of Rs.70 million was allocated for the FY10 to target 5 million families.
The second phase of National Internship Programme was launched to create decent employment and human resource development.
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