MTDF 2005-06 to 2009-10: Rs 2.042 trillion required to sustain 8.2% GDP growth
By Khalid Mustafa
ISLAMABAD: Pakistan’s GDP growth on the basis of price factor will increase to $110 billion in 2004-05 from the $96 billion in 2003-04, Dr Akram Sheikh disclosed at a press briefing on Friday.
He said that the target for GDP growth based on the price factor in the next fiscal year has been set at $123 billion. Mr Sheikh said that to sustain the GDP growth of 7 to 8 percent from 2005-06 to 2009-10, the government had to finalise the Medium Term Development Plan which envisaged investment of Rs 2.042 trillion under the PSDP during the next five years. However, the PSDP size will nearly triple from Rs 202 billion in 2004-05 to Rs 597 billion in 2009-10 which means that the rate of growth in GDP will grow from 3.1 percent in 2004-05 to 6.3 percent in 2009-10.
In response to a question he said that GDP growth would be between 7 percent to 8.2 percent from 2005-06 to 2009-10 showing an average rate of growth in GDP of 7.6 percent. He said government revenues were expected to increase from 13 percent of GDP in 2004-05 to 14.8 percent in 2009-10.
While speaking about the balance of payments, he said that the balance of payments projection for the NTDF had been made keeping in view the long-term objective of reducing external dependence by increasing the sources of external finance that were stable, sustainable and had a positive effect on growth. The main elements of the strategy were the diversification of exports, a stable exchange rate, the consistency of economic policies, export competitiveness and trade liberalisation.
Imports and exports are forecast to grow by 13.6 percent per annum and 14.9 percent per annum respectively in nominal dollar terms during the MTDF. He said that as a result the trade account was projected to be in deficit by $5.2 billion in 2009-10 against the deficit of $3.5 billion in 2004-05. The current account deficit in 2009-10 is estimated to be 2.4 percent of GDP against the 1.7 percent in 2004-07. The foreign capital requirements are expected to increase from $3.985 billion in 2004-05 to $6.691 billion in 2009-10. “The financing of these requirements will be made through the disbursement of medium and long term loans, capital and foreign investment and exceptional financing. He said under the MDTF, the government would provide housing facilities to citizens and provide clean drinking water. He said that under the MTDF the government would allocate Rs 351 billion to promote the knowledge-based economy. One of the main objectives of the MTDF 2005-10 is to establish a just and sustainable economic system in order to achieve the millennium development goals which also include a reduction in poverty.
He said at present, one-third of the country’s population lived below the poverty line. The MTDF target of poverty reduction of 21 percent by 2010 has been established within the framework of the MDG’s target of 13 percent by 2015. The poverty reduction strategy of the MTDF consists of four basic themes which include high pro-poor growth, social development, good governance and the protection of vulnerable groups.
He said that to sustain the GDP growth of 7 to 8 percent, the government has formulated a national Energy Security Plan also.