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Economic forecast 1991-93.



Pakistan's population in 1993 will increase to 123.02 million. Nearly two thirds of Pakistan's population is under forty. Employment prospects, for a rapidly growing labour force, are bleak. Unemployment is likely to rise to 7% in the near future (it was 2% in the mid-seventies). The development process could benefit from eager, young participants. A dissipating alternative is the growth of an army of frustrated, disillusioned angry young men and women. Accordingly, it would be economically necessary, and politically beneficial, to adopt policies which revolve around the need for human resource development.

Population of Pakistan
Year Million
1988-89 108.67
1989-90 112.03
1990-91 115.50
1991-92(*) 119.08
1992-93(*) 123.02

Source: (*)EF-Estimates

Pakistan population growth rate has risen in almost every decade since the country's creation. The government will find it difficult to maintain, let alone improve, provision of social services if people continue to increase by 3.50 million a year. Religion is not an obstacle, since other Muslim countries have succeeded in reducing their population growth rates.

The next population census is due in 1991 and it is believed that the growth rate of population would not have come down despite all efforts. The rate of population growth here at 3.1 per cent is one of the highest in the world. The problem has much to do with lack of a clear-cut policy direction as with half hearted implementation of essentially inadequate family planning programmes. It is necessary to pursue the latest strategy which treats population planning as part of the wider mother and child health care programme.

GDP growth at Constant Factor Cost
 Rs. (%)
Year Billion Increase
1986-87 84.73 5.1
1987-88 88.88 6.2
1988-89 93.14 4.8
1989-90 97.08 5.2
1990-91 102.41 5.5
1991-92(*) 107.61 5.0
1992-93(*) 113.52 5.5

Soucre: (*)EF-Estimates

The Annual Development Programme projected a growth rate of GDP of 5.5 per cent in 1990-91 comprising 4.8 per cent in agriculture 7.7% in manufacturing and 5.2 per cent in other sectors of the economy. The ADP envisaged a fixed investment of Rs. 171.1 billion (public sector 82.6 billion and private sector 88.5 billion). These targets are unlikely to be attained. The main factors affecting growth were stoppage of aid from October 1990 and 41 per cent oil price increase due to Gulf crisis. The likely growth rate in 1990-91 may be 5.0 per cent.


The growth rate in agriculture in 1990-91 will be around 4.3 per cent against the actual growth of 5.5 per cent in 1989-90.

Targets of Agriculture Production
 (Million Tonnes)
 1988-89 1989-90 1990-91
Wheat 14.20 14.29 15.80
Rice 3.16 3.22 3.48
Sugarcane 33.74 35.49 38.00
Cotton (bales) 8.40 8.56 9.00

Source: (*)Estimates

In wheat 1989-90 crop fell short of the year's target of 15.5 million tonnes by 7.8 per cent. The current target is 15.8 million tonnes which is 10.3 per cent more than the actual production in 1989-90. Targets of rice, cotton and sugarcane are quite ambitious. Last year Rice was 15.4 per cent behind target.


Wheat may exceed its target of 15.8 million tonnes in 1990-91 with enhanced support price of Rs. 108 per 40 kg. as against Rs. 96 per 40 kgs. for last seasons crop. The demand of wheat for the year 1990-91 has been estimated at 14 million tonnes. While requirement for seed and feed stands at 10 per cent of the total production. Under present circumstances wheat production of atleast 15.25 million tonnes from the coming crop would be needed in order to meet domestic needs and create some surplus for the reserves.


A production target of 3.48 million tonnes has been set for 1990-91, which is 7.1 per cent higher compared to the crop of 3.22 million tonnes harvested in 1989-90. Sowing of the 1990-91 crop in the Punjab and Sindh is over. The production target of basmati has been placed at 1.05 million tonnes, 9.5 per cent lower than 1.16 million tonnes produced in 1989-90. The production of irri during 1990-91 is projected to increase by nearly 18 per cent to 2.43 million tonnes from 2.06 million tonnes produced last year. According to the all Pakistan final estimates for the 1989-90 crop released by the Ministry of Food and Agriculture, growers harvested a crop of 3.22 million tonnes last year which was 15.4 per cent short of the production target of 3.64 million tonnes set for that year. It, however, represented an increase of 0.6 per cent over the preceding year's harvest of 3.20 million tonnes. Area under the crop increased by 3.2 per cent from 2.042 million hectares in 1988-89 to 2.107 million hectares in 1989-90. The increase in overall area is attributable to increase in acreage under rice in the Punjab and Balochistan.


The production target for the 1990-91 crop has been placed at 9 million bales, higher by 5.1 per cent against 8.56 million bales produced in 1989-90, with the Punjab producing 7.8 million bales and Sindh harvesting 1.2 million bales. Favourable weather conditions in Sindh and Punjab have resulted in better growth of cotton plants. The area-wise target has reportedly been achieved in the Punjab and Sindh. According to the final estimates released by the Ministry of Food and Agriculture for the 1989-90 crop, production during 1989-90 increased by 2.1 per cent to 8.560 million bales from 8.385 million bales produced in 1988-89, despite a 0.8 per cent decrease in area from 2.619 million hectares in 1988-89 to 2.598 million hectares in 1989-90.

Due to bumper harvest this season, the country expects to have an exportable surplus of slightly over 2 million bales from the new crop. The Annual Plan has set an export target of 3 million bales for this year which is 76.5 per cent higher compared to 1.7 million bales exported in the whole of 1989-90. In the first four months of 1990-91, about 0.172 million bales have reportedly been exported as against 0.037 million bales exported in the comparable period last year.


The production target for the 1990-91 crop has been fixed at 38 million tonnes, 7.1 per cent higher compared to 35.49 million tonnes produced in 1989-90. The Ministry has revised down the production of the 1989-90 crop from 36.19 million tonnes estimated earlier to finally estimated 35.49 million tonnes. At this level, the 1989-90 crop showed an increase of nearly 3.4 per cent against the target of 34.33 million tonnes set for that year but a decline of 4 per cent against the 1988-89 harvest of 36.98 million tonnes. Cane crushing throughout the country is in full swing. Production of sugar during the current season is expected to be about 1.9 million tonnes.

Pakistan would not be able to achieve Seventh Plan targets for crop production. Target and achievement in this regard are given in the following table:

Crop Production in 1988-89 and Target for the Seventh Plan
 (000 tonnes)
 Target Achievements
Crop 1992-93 1988-89
Wheat 16,380 14,419
Rice 4,220 3,220
Maize 1,470 1,204
Others 1,350 (*)1,035
Cotton (Lint) 1,649 1,383
Sugarcane 40,320 36,976
Tobacco 93 74
Rape and Mustard 340 249
Pulses 250 177
Fruits 5,000 (*)3,586
Potato 750 645
Onion 750 (*)633
Vegetables 3,175 2,627

(*)(1987-88) Source: Seventh Five Year Plan and Ministry of Food, Agriculture and Cooperatives.


The manufacturing sector, which provided a basis for over 6% GDP growth per annum in 1980s, after suffering a temporary set-back in 1988-89, recovered sharply in 1989-90. This is reflected by about 7.7% increase in large scale manufacturing value added in 1989-90. It is expected that the achievements during the year supplemented by the additional capacity scheduled to come on stream, will result in about 7.4% growth in large scale manufacturing value added in 1990-91.

As a result of above Rs. 46.8 billion investment in the large scale manufacturing during the last two years, large number of new units (including BMR) are expected to be completed in 1990-91. The additional capacity is scheduled in industries such as textile, sugar, vegetable ghee, jute goods, paper and board, electric meters, sanitary wares, floor coverings, plastic moulds, polythene bags, audio cassettes etc. The fast developing industrial estate at Godoon-Amazai (NWFP) constitutes another bright feature of industrial development in 1990-91. Some of the main projects likely to go into production would cover new fields like video cassette players, food choppers and mixers, fruit juice extractors, steel ingots etc. Besides opening new frontiers of production, the establishment of industries at Gadoon-Amazai also signifies regional dimensions as it would generate economic benefits in a relatively less developed part of the country.


As many as seven new cement plants expected to go into production in the private sector by 1991 which will increase the existing production capacity by 2.05 million tonnes annually. This will help Pakistan substitute imports needed to meet the growing domestic demand. These projects are being set up at an estimated cost of Rs. 7.185 billion. There are at present 20 cement factories in the country with an annual production capacity of 7.417 million tonnes. Of these 15 factories having annual production capacity of 5.842 million tonnes are in the public sector and five factories with a capacity of 1.575 million tonnes are in the private sector.

Vegetable Ghee

Vegetable ghee is to attain a production level of 756,000 tonnes in 1990-91 against actual production of 718,000 tonnes in 1989-90. As many as 15 vegetable ghee units are likely to be commissioned in the next two years to 1992-93. The installed capacity of vegetable ghee is likely to reach a level of 1.80 million tonnes in the next two years. According to reports, a study conducted by Ghee Corporation of Pakistan has identified an annual growth of 8 per cent in the demand/consumption of vegetable ghee and cooking oil in Pakistan.

In the light of this growth rate, future demand for vegetable ghee and cooking oil has been projected to increase to 1.068 million tonnes in 1989-90 and further to 1.345 million tonnes by 1992-93. As against this, the existing installed and sanctioned capacity was in the region of one million tonnes. This shows that deficit in supplies from domestic production, would increase from an estimated 68,000 tonnes in 1989-90 to 345,000 tonnes by 1992-93. Thus, roughly 40 new units with a capacity of 9,000 tonnes each, shall have to be sanctioned or alternatively, a part of the additional capacity may be realised through expansion of existing units.

Cotton Textile

Production of yarn in 1990-91 is estimated to touch 1158 million kgs. as against 925 million kgs. in 1989-90. The Government of Pakistan has decided to treat from henceforth ring spinning frames as machinery not manufactured locally for the purposes of grant of duty exemption when imported for BMR only. For this purpose Central Board of Revenue have amended SRO 456(1)88, dated June 26, 1988 and SRO 461(1)88 dated June 26, 1988 under which auto cone winders would also be treated as machinery not manufactured locally for the purposes of grant of duty exemption when imported for initial installation, BMR or expansion.


Pak Steel operated at 60 per cent capacity and suffered a loss of Rs. 950 million during 1989-90. However, production has started increasing from September 1990 and it was 75,300 tonnes or 82 per cent capacity utilization during November 1990. During December it is expected to achieve about 90 per cent capacity utilisation. It is hoped that the current financial year will end with an overall average of 74 per cent capacity utilisation and the target of the estimated sales of Rs. 9,500 million will be achieved. It has been planned to increase the capacity of Pakistan Steel from 1.1 to 1.5 million tonnes per year in short term by 1992-93 at an estimated capital investment of Rs. 1,500 million including Rs. 862 million in foreign exchange. The capacity will be further increased to 3 million tonnes per year in the long term. The phased expansion programme is in line with the market demand which is presently 2.5 million tonnes per year by 1996 at the growth rate of 7 per cent per annum.


The government is determined to disinvest industrial units and at present 150 industrial units in the public sector are to be disinvested in three phases. For sugar mills, investors will have to obtain permission for setting up sugar mills. Sanctions given to new sugar by previous government were cancelled. A rural industrial policy was announced by the IJI government allowing several concessions to investors for setting up industries in the rural areas.

The State Bank has enhanced the limit of small loans for business purposes from Rs. 2 lakh to Rs. 3 lakh. Under the Small Loans Scheme, the industrial sector will also qualify for small loans. According to a communication sent to all commercial banks, industries with fixed assets (excluding land and buildings) the original value of which does not exceed Rs. 2 crore (instead of Rs. one crore) will qualify for small loans. The small Loan Scheme is in operation since 1972.

The Government is formulating a new policy to encourage foreign investment in Pakistan. A committee, headed by the Governor of State Bank of Pakistan has been set up in this regard to submit its recommendations.

In order to stimulate the interest of sponsors in power projects (local/foreign) following steps have been taken: * WAPDA provides guidance and

necessary information to the potential

investors in order to promote and

encourage the preparation of these

projects. A standard Power Purchase

Agreement form has been prepared

for the guidance of the private parties.

A brochure describing the policy and

incentive framework has also been

published. This brochure sets out the

guidelines for the preparations,

evaluation and investment projects. * The sponsors are required to provide

equity investment to cover at least 25

per cent of the cost of the projects.

The foreign donors like World Bank,

USAID, Overseas Development

Agency of the U.K. (ODA) etc. have

provided about $ 500 million in a

co-financier fund called Private Sector

Energy Development Fund (PSEDF)

for providing loans to the private

parties. This fund is administered by

National Development Finance

Corporation (NDFC) in which World Bank

has agreed to take the role of lead

donor. A loan amounting to 30 per

cent of the cost of the project is

allowed out of this fund to be given to

the private investors.

Oil Exploration

The government signed a number of oil exploration agreements lately. Some are as follows: * Block 17 (Dadu-Nawabshah-Hyderabad)

given to Texaco and OGDC. * Block 20 (Sukkur and Khairpur) given

to OMV-Hardy Oil and OGDC. * Block 22 (Sukkur-Jacobabad) given

to OMV, Austria, PPL Hardy Oil and

OGDC. * Block 25 (Dadu-Larkana) given to

OMV, Austria, PPL Hardy Oil and

OGDC. * Block 26 (Jacobabad-Kucchi-Kalat)

given to OMV Austrial, PPL, Hardy

Oil and OGDC. * Block 34 (Zhob-Loralai) given to

British Gas, PPL, OGDC and Tullo of

Ireland. * Block 35 (Dera Ghazi Khan Bannu

and Kohat) given to PPL and OGDC. * Block 36 (D.I.Khan Mianwali) given to

Lasmo and OGDC.

Since low refining capacity was big constraint in oil drilling, the government has decided, to establish two new oil refineries. One refinery with a capacity of 30,000 bpd. in the private sector will be established at Badin and the other of 84,000 bpd. at Multan by Parco.

Besides, a technical appraisal is being undertaken to expand PRL by 15,000 bpd. and similarly expansion of Attock Refinery is also being considered. The storage capacity is also proposed to be doubled in the next five years.


National Fibres Limited

Nation Fibres Ltd. a unit of Federal Chemical and Ceramics Corporation (FCCCL) at Karachi plans to expand its capacity from 12000 tonnes a year of polyester fibre to 34000 tonnes/year by 1994. NFL is presently meeting 20 per cent requirement of polyester fibre demand of textile sector of the country while 55 per cent requirements is met by other local manufacturers in private sector while the rest is met through imports. Its designed production capacity was 8400 tonnes/annum which after debottlenecking by its engineer rose to 12000/tonnes per annum. The plant is currently producing 14500 tonnes/annum which is 120 per cent of its improved designed capacity.

Hydrocracker Project

Hydrocracker Project already approved by the ECNEC to be completed within three years in Karachi under private sector in collaboration with the Crescent Petroleum Company of Sharjah and others will cost nearly Rs. 7.00 billion. The project would help reduce import of various petroleum products and also solve the pollution problem of the country, as it would produce diesel and other petroleum products with little sulphur. The proposed project, which is a sophisticated refinery, using latest technology, will also produce 30,000 tonnes of hydrocracker annually which can be used in the fertilizer industry. The present yearly requirement of motor gasoline, high octane blending component, kerosene and diesel in the country is over 6.6 million tonnes, of which only three million tonnes is met by the three existing refineries. The hydrocracker project when completed, will reduce the deficit by nearly 1.2 million tonnes.

DOP Plant

Saudi Pak board of directors approved financial assistance of Rs. 66 million in foreign currency for setting up a chemical plant in Lahore, 580 tonnes of maleic anhydride and 10,000 tonnes of di-octyle phthalate per annum. The new plant will help in future to substitute import of some chemicals which are used in paints and plastic industry. The project is also being co-financed by NDFC, Asian Development Bank and Common Wealth Development Corporation (CDC). The joint venture provided financial assistance in foreign currency loans as well as local currency to meet needs of the industrial projects.

Dawood Hercules Urea Projects

The existing capacity of Dawood Hercules urea project would be doubled with the setting up of a new 635,250 tonnes fertilizer plant at a cost of Rs. 7.5 billion near Lahore. The project at Chichoki Malian in Sheikhupura district would be completed in three years, saving foreign exchange worth 125 million dollars annually. The government has prepared an action plan to meet the gap of about 0.06 million tonnes of nitrogen and 0.155 million tonnes of phospherous fertilizer in the supply and demand. The fertilizer demand is projected to rise from 1.74 million tonnes in 1988-89 to 2.33 million tonnes by 1992, while the existing production capacity in the country is about 1.26 million tonnes a year.

National Chemical Industries (Pvt.) Limited

PICIC approved this project which envisages setting-up of a plant at Gadoon Amazai to produce direct dyes to be used in textiles. PICIC sanctioned loan amounting to Rs. 18.00 million in local currency. The plant would operate on 3 shifts a day working for 300 days in a year. The project would be capable of producing 300 tonnes of direct dyes at 100% capacity operations. It would create job opportunities for 126 persons and would contribute Rs. 33.25 million per annum towards GNP. The total cost of the project has been estimated at Rs. 30.12 million. The manufacture of dyes is a specialized field of a Chemical Industry. It has a very vast and versatile uses and there are more than 1000 odd commercial dyes manufactured in the dye industries which are broadly classified according to the chemical structure and its application.


Total fixed investment in 1990-91 is projected to remain at Rs. 171.1 billion with a public sector fixed investment programme of Rs. 82.6 billion and private sector investment of Rs. 88.5 billion. As a proportion of GDP the total investment is estimated to reach 18.9 per cent from 18.1 per cent in 1989-90. Private sector is expected to take the lead, encouraged by the simplification of approval procedures easing of regulatory restraints and fiscal concessions.


A policy of extensive denationalisation and privatisation is under implementation. Under this policy money of all hues could be brought out and that no question would be asked about how it was acquired. The area of privatisation has now been extended to state trading organisations like Cotton Export Corporation, Rice Export Corporation and Trading Corporation. Hitherto it was restricted to state owned industries and commercial banks.

Federal Commerce Minister Malik Naeem has been quoted in the press recently as saying that his ministry had taken up a study to carry out a phased disinvestment of the Rice Export Corporation (RECP). In the meanwhile, the sub-committee constituted by the Disinvestment Committee headed by Lt. Gen. (Retd) Saeed Qadir, is reported to have moved fast with its recommendations for disinvestment or rather disbandment of these organisations by transferring their specialised trading activity to the private sector.


The Government allowed setting up of a new airline in the private sector. The Civil Aviation Authority will invite application for this purpose. The new airline will operate beside the Shaheen Air Services and provide competition in air transport. Banks are being privatised and private sector has been allowed to set up banks. Muslim Commercial Bank has already been sold to Munsha Group. As many as 30 applications have been filed with the State Bank of Pakistan for sanction of commercial banks in the private sector. It is felt that recently established investment banks may be converted into full fledged commercial banks. Life insurance sector has also been opened for the private sector.


Trade deficit is likely to widen from the present Rs. 42.384 billion in 1989-90 to Rs. 50.0 billion in 1990-91 mainly due to increase in oil price. Year wise position of deficits is given in the following table:

Yearly Imports & Exports and Deficits
 Imports Exports Deficit
1985-86 90.9 49.5 -41.4
1986-87 92.4 63.3 -29.1
1987-88 112.5 78.4 -34.1
1988-89 135.8 90.2 -45.6
1989-90 148.8 106.5 -42.3
1990-91(*) 165.0 115.0 -50.0
1991-92(*) 181.0 117.0 -64.0


Exports during 1989-90 showed a rise of 18.1 per cent. Exports would not be able to maintain the present growth due to loss of Middle East market and overall slump in the world trade due to Gulf War. Accordingly a growth of 10% has been estimated that will give an export figure of Rs. 181.0 billion in 1991-92.

Cotton yarn occupied first position on the export list for 1989-90 from its second position in the previous year. Its exports in this year amounted to Rs. 17,916.7 million, 88.2 per cent of the total export during 1989-90 consisted of 23 items viz. Cotton yarn (16.8%), cotton fabrics (11.3%), Raw Cotton (9.0%), articles of apparels clothing & accessories (excl. knitwear) (7.9%), leather (5.6%), knitwear (5.5%), rice (4.8%, carpets carpeting and mats (4.6%), synthetic textile fabrics (4.3%), leather clothes and accessories (3.9%), towels (2.6%), sports goods (excl. toys) (2.2%), fish and fish preparations (1.9%), textile made-up (excl. towels and bedwears) (1.6%), surgical instruments (1.4%), fruits vegetables & preparation thereof (1.1%) molasses (1.0%), guar and guar products (0.8%), tarpaulin and other canvas goods (0.6%), footwear (0.5%), raw wool (0.3%), petroleum products (0.2%) and tobacco and tobacco manufactures (0.2%).

Imports showed a rise of 9.6 per cent during 1989-90. During the current financial year the share of consumer goods increased to 19.1 per cent from 17.2 per cent and raw material to consumer goods to 41.4 per cent from 39.1 per cent. Import of raw material for capital goods decreased to 7.0 per cent from 7.3 per cent and capital goods 32.5 per cent from 36.4 per cent during this period.

Major buyers of Pakistani goods in 1989-90 were USA (13.2%), Japan (9.2%), West Germany (8.0%), U.K. (6.8%), Italy (4.8%) and Hong Kong (4.3%). Major Imports were from USA (13.8%), Japan (12.6%), Kuwait (10.7%), West Germany (7.7%), U.K. (5.3%), Saudi Arabia (4.5%) and China (3.9%).


The balance of payment deficit is expected to widen to $1980 million in 1990-91 as compared to deficit of $1652 million in 1989-90. Earlier the deficit widened from $1593 million in 1987-88 to $ 1934 million in 1988-89. The widening of the gap was due to steep decline in home remittances and widening deficit in services. The following table gives the actual picture of the Balance of Payment position.


Pakistan's relation with the US had never been so tense in the past. The aid has been suspended from October 90. It may be recalled that President Bush under Pressler Amendment refused certification of Pakistan's nuclear programme this year. In recent talks with U.S. ambassador Robert Oakley, Pakistan's Foreign Minister Sahibzadah Yaqoob Khan emphasised that Pressler Amendment was wrongly applied to Pakistan as it does not possess any nuclear device. American interest has tremendously waned in Pakistan after the pull-out of Soviet troops from Afghanistan and the emergence of Gulf situation. In the wake of this development, the US unfair pressure on pakistan to open up its peaceful nuclear programme for inspection and suspension of American aid, particularly its military hardware component, Pak US relations have touched a new low which presently have little sign of improvement.

Islamabad denies having or making nuclear weapons and regards the 1985 Pressler Amendment as grossly unfair because it applies only to Pakistan and not to its traditional foe India which exploded a nuclear device in 1974. Washington's main worry is the belief that Islamabad resumed enriching uranium at its Kahuta plant to levels needed for unclear weapons this spring, breaking a 1988 pledge. Pakistan says its nuclear programme is peaceful and geared to meet its future energy needs.

The current (1991) year's aid amounting to about a billion dollars - half economic and half military - has already been suspended with the military half totally withdrawn and the economic half reduced to 208 million dollars, which too is liable to lapse in July if the presidential certification is not issued.

The suspension of U.S. aid has more long-term implications. But cash purchases of some defense equipment, particularly more urgent spare parts and funds needed for commodities like soyabean may have some immediate financial fall-out as 80 million dollars PL-480 credit also generates rupee resources for the budget.

A $100 million ANZ loan for NRL and PSO has been arranged. This is the first Murabaha facility of its kind to be used to finance imports into Pakistan. The Murabaha financing is being arranged to finance oil imports thus deferring the payment for such imports for a period of 365 days from the date when payment would normally have been made. Of the US $100 million Murabaha facility, US $60 million has been extended to NRL and US $40 million to PSO. The mark-up rate to be charged on this loan will be at the LIBOR rate.


Pakistan is expecting the rupee exchange rate to stabilise at about Rs. 23 a dollar during the next financial year against an average rate of Rs. 21.50 per dollar during the current financial year. Helped by this stabilisation in exchange rate, the country hopes to export goods worth about 5.75 billion dollars during 1990-91 against an expected export of about 5.5 billion dollars during 1989-90.

The government has resolved to increase the present level of exports to $ 8.0 billion in the next two to three years. Recently leather industry has been allowed extra incentive for boosting exports of leather and leather goods.

Also, the country hopes to restrict the growth of imports to about 9 billion dollars with the help of a stable rupee against an import bill of 8.23 billion dollars expected in the current financial year. The trade deficit is likely to be widened from the present $2364 billion in 1989-90 to $2.480 billion in 1990-91 mainly due to high oil prices and expanding import bill. The exports have also been adversely affected to Gulf War.


Inflation rate would remain below 8 per cent during the fiscal year 1990-91 as against 6.0 per cent during the fiscal year 1989-90.
Year %Increase
1985-86 4.4
1986-87 3.6
1987-88 6.3
1988-89 10.4
1989-90 6.0
1990-91 8.0
1991-92 9.0

There is likely to be all round price rise due to 41 per cent increase in the domestic oil prices effective November 13. Subsequently price of cement was increased from Rs. 80 to Rs. 115 per bag of 40 kg. The ghee manufacturers have also increased the price of ghee by Rs. 2 to 3 per kg. The budgetary deficit has greatly widened. The inflation is likely to finish around 8 to 9 per cent.


It is feared that remittances during 1990-91 will decline about 20 per cent due to repatriation of Pakistani workers from Kuwait and Iraq. Government is considering various measures to cover the deficit which will adversely affect Pakistan's balance of payment position. Remittances from abroad occupy a significant place in country's economy. From US $136 million 1972-73 reached to the record high level of US $2,886 million in 1982-83 surpassing the merchandise export earnings by 10 per cent in that year. Since then a declining trend in home remittances of the overseas workers came mainly due to slowing down of the development activities in the Middle East because of Iraq-Iran War. The share of Middle East in total remittances to the country fell from 85 per cent in 1983-84 to 68 per cent in 1988-89.


An across the board increase of Rs. 200 was allowed to the government servants in November 1990 below Grade 15. This increase was also given to the employees in the private sector. Wage Board for the newspaper industry raised wages of newspaper employees from 33 per cent to 149 per cent in the basic pay scales of the employees. Along with the review of basic pay scales House Rent allowance, General Transport allowance. Charge allowance, Washing allowance, Hill allowance and many other allowances have been revised and enhanced. The Award would be implemented from April 15, 1990. Implementation Tribunal for |Newspaper employees (ITNE) has also been constituted under the Chairmanship of Justice Fazle Mehmood of Lahore High Court to ensure its implementation.

According to APNS the annual impact of the award would be about Rs. 200 million. An estimate of an additional Rs. 120 million has been imposed retroactively for the last 8 months bringing the total impact of Rs. 320 million. In fact wage compensation and benefits for newspaper employees are already amongst the highest in the country.
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Article Details
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Title Annotation:Pakistan's economic growth
Author:Haidari, Iqbal
Publication:Economic Review
Article Type:Cover Story
Date:Jan 1, 1991
Previous Article:Karachi stocks during 1990.
Next Article:Denationalisation policy needs reconsideration.

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