OVERVIEW OF THE ECONOMY

Global Economic Review financial conditions, and growing geo-economic

polarization.
The global economy is experiencing the
accumulative effects of the severe and relentless The sharply shrinking global financial
shocks - especially, the lingering ongoing conditions could have an intense impact on
Russia-Ukraine war, the ever-worsening impacts credit conditions and public finances,
of climate change, the long-reaching after- particularly in emerging markets and developing
effects of the COVID-19 pandemic, the economies. It would result in large capital
escalating monetary tightening, and growing outflows, a high-risk premium, an appreciation
policy challenges - have driven many countries in the dollar, and major declines in global
perilously close to crisis. Several economies are economic activity amid lower confidence,
currently experiencing the highest-ever inflation household spending, and investment. In such
due to strong consumer demand, persistent severe circumstances, there is a possibility of
supply disruptions, and surging commodity stagnant per-capita income. The world is,
prices. To achieve price stability and maintain therefore, entering a phase where economic
stable expectations, central banks have growth remains slow in comparison to historical
responded with sharp policy tightening to bring standards, financial risks have risen, and yet
inflation closer to their targets. The tentative inflation has not decisively turned the corner.
early signs of a soft landing for the global
economy at the beginning of 2023, which The sharp contraction of global monetary policy
included ease in inflation and stable growth, since early 2022 has intensified fiscal and debt
have faded due to continual high inflation and vulnerabilities and resultantly constrained fiscal
recent turbulence in the financial sector. space in many countries, especially in sub-
Saharan Africa, Latin America, the Caribbean,
The International Monetary Fund (IMF) has and South Asia. The borrowing costs have
forecasted global growth at 2.8 percent in 2023 sharply increased, and the strong dollar has
and expected to see a modest recovery to 3.0 pushed up the debt-servicing burden of dollar-
percent next year. The risks associated with the denominated debt. Financing constraints have
outlook are highly skewed towards the been limiting the ability of governments to invest
downside, with more chances of a sharp in education, health, sustainable infrastructure,
economic slowdown. In an alternative scenario, energy transition and acceleration of progress
with a more stressed financial sector, there is a towards sustainable development while pushing
possibility of deceleration of global growth to the growing number of countries into near debt
about 2.5 percent in 2023. IMF foresees the default.
growth to remain around 3.0 percent over the
next five years. The baseline forecast of 3.0 With continued uncertainty, policymakers are
percent until 2028 makes it the lowest medium- focusing on preserving macroeconomic stability
term growth projection since 1990 and is quite through tight monetary and fiscal policies while
below the average of 3.8 percent from the two being mindful of the risks associated with
previous decades. The weak global outlook financial stability. At the same time, they are
indicates the need for tight policy stances to accelerating structural reforms to strengthen
combat inflation, the fallout from deteriorating potential growth and enhance resilience,
Pakistan Economic Survey 2022-23

inclusion, and social safety net. In the near term, Pakistan received an unprecedented episode of
when fiscal space permits, countries should torrential rains followed by flash flooding in July
prioritize targeted and temporary support to - August 2022 that affected 33 million people.
protect the most vulnerable from still-high food Importantly, Sindh and Balochistan received six
and energy prices with cash transfers. In and seven times more rain than normal,
emerging markets, fiscal consolidation is respectively. With flood basins saturated with
necessary to continue to be anchored on a water, the natural drainage system was
downward debt path, supported by revenue overwhelmed, and a vast area of rich farmland
mobilization and expenditure containment and human settlements was flooded, and the
measures, while strengthening social protection. consequences were disastrous. The floods
In low-income, fragile, and conflict-affected submerged one-third of the country in water,
countries or states, the lack of fiscal space to more than 1,700 people were dead and 8 million
protect the vulnerable needs the support of the were displaced. An estimated 8.4 - 9.1 million
international community and global cooperation. more people could be forced into poverty as a
direct consequence of this catastrophic. The
Pakistan Economic Review losses amounted to 4.8 percent of GDP. The
The geopolitical situation, difficult financial recovery and reconstruction needs are projected
environment, and high inflationary pressures at 1.6 times the budgeted national development
have all had a substantial impact on the prospects expenditure for FY2023.
for global growth. All these factors posed
The present government came into power in
significant economic risks for Pakistan's April 2022 with a broad-based agenda for
economy as well. Devastating floods and moving towards sustainable macroeconomic
political unrest further aggravated the situation. stabilization which is primarily focused on
Thus, FY2023 has been a challenging year for rationalization of expenditures, removing
Pakistan's economy. In FY2022, Pakistan’s
unproductive subsidies to reduce burden on the
economy witnessed a high growth rate of 6.1
budget; significant cuts in expenditures to reduce
percent, however, it was unsustainable as it was the budgetary deficit; increasing the tax and non-
largely driven by domestic demand, which was tax revenue of the government; and a tight
stimulated by expansionary fiscal policy and
monetary policy to fight inflation. The
ended up with a high fiscal and current account
government has improved the Benazir Income
deficit. Subsequently, the economy signaled Support Programme (BISP) and other
excessive demand and overheating. programmes to enhance transparency so that the
At the beginning of the FY2023, the economy poor and vulnerable groups may be protected.
confronted four major challenges that posed Public-private partnerships have been
threats to Pakistan's socio-economic growth. encouraged as private investments are the main
These challenges include regaining sustainable source of funding for economic development.
macroeconomic stability, reducing poverty, The importance of sound governance,
fiscal consolidation, and addressing weaknesses managerial and systemic mechanisms were also
in the external account. The overall vision of the emphasized to ensure that the social sector
government is to achieve high and sustainable investments remain cost-effective; thus,
GDP growth with price stability over the focusing on output-oriented service delivery.
medium term. The government is committed to These measures along with recent trends in most
implementing home-grown macroeconomic and macroeconomic variables suggest that the
structural reforms for creating job opportunities disciplined implementation of the
and reducing the poverty. The government is macroeconomic stabilization program has
trying to rebuild confidence of investors by started paying dividends in current fiscal year.
addressing macroeconomic imbalances through The efforts contributed to containing the fiscal
an optimal policy mix. At the same time, it is deficit at 3.6 percent of GDP during the first
protecting poor people through adequately three quarters of FY2023, a decrease from the
funded social safety nets and targeted subsidies. 3.9 percent of GDP recorded in the

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 Overview of the Economy

corresponding period last year. Likewise, in -2.94 percent in industrial sector, and 0.86
July-March FY2023, the primary balance percent in services sector. The GDP at current
achieved a surplus of Rs 503.8 billion (0.6 market prices recorded Rs 84,658 billion,
percent of GDP), against the deficit of Rs 447.2 showing a 27.10 percent growth over the
billion (-0.7 percent of GDP) experienced last previous year Rs 66,624 billion (US$ 341
year, attributed to a slowdown in the growth of billion). The per capita income decreased from
non-markup expenditures. The current account US$ 1765 to US$ 1568 in FY2023. This
turned to a surplus of US$ 750 million in March deceleration was attributed to the significant
2023 and US$18 million in April 2023 marking depreciation of PKR and the contraction in
the first monthly current account surplus since economic activity. For FY2023, the Investment-
2020. The current account deficit is likely to to-GDP ratio stood at 13.6 percent as compared
decelerate from as high as US$ 17.5 billion in to 15.6 percent in FY2022. The estimates of
FY2022 to around US$ 3.7 billion by the end of Gross Fixed Capital Formation (GFCF) stood at
the out-going fiscal year. However, Pakistan’s Rs 10093.5 billion showing an increase of 8.1
economy still faces pressures from an uncertain percent compared to FY2022. The industry-wise
global security situation, higher inflation driven disaggregation of GFCF by the general
by a spike in food prices, the bewildering stock government suggests an increase of 17.7 percent,
market, perceptible contraction in large-scale 89.2 percent, and 5.9 percent in public
manufacturing, lower than anticipated foreign administration & social security, education, and
inflows, and burgeoning absolute financing human health & social work, respectively.
requirements. Resultantly, abatement of
inflationary pressure remained persistent and Agriculture: Pakistan faced a heavy monsoon
depicting price stubbornness. spell in July-August 2022 which damaged two
main sub-sectors, i.e., crops and livestock.
Executive Summary Moreover, the damage in the agriculture sector
had a spillover effect on the industry and allied
Growth and Investment: The severe
services sectors. As a result, domestic
macroeconomic imbalances, flood damages,
production remained below the required levels,
domestic supply shocks, and international
raising the prices of all essential food items to a
economic slowdown have dampened the
historic high. The total damage in the agriculture
economic growth to just 0.29 percent in FY2023.
sector amounts to approximately Rs 800 billion
Following the budget announcement in June
(US$ 3.725 billion). Restoring the livelihoods of
2022, positive economic expectations and the
smallholder farmers and livestock keepers was
performance of key indicators resulted in the
urgent and time-sensitive for meeting the
government projecting GDP growth of
upcoming Rabi cropping season 2022-23 and
approximately 5.0 percent in FY2023. However,
preventing further losses to livestock assets and
the economy lost momentum in the first quarter
production. To meet the domestic demand for
of the ongoing fiscal year due to the severe
food items, the government took up the matter
downturn in the global economy and flash floods
immediately and allowed the import of essential
of July-August 2022 and as a result the economy
food items on a fast-track basis from neighboring
suffered from significant domestic supply
countries. The Rabi 2022-23 remained
disruptions. The flood damage is estimated at Rs
challenging for the peasants of Sindh and
3.2 trillion (US$14.9 billion), the loss to GDP at
Balochistan, particularly being the most flood-
Rs 3.3 trillion (US$15.2 billion), and recorded
affected areas. To lessen the miseries of flood
need for rehabilitation of damages at Rs 3.5
affectees and revival of the agriculture sector,
trillion (US$16.3 billion). On the international
the government announced Kissan Package-
front, the prolonged Russia-Ukraine conflict
2022.
adversely affected global growth and inflation
remained unexpectedly high. Despite the flash floods in 2022, damage to
Kharif crops, and the high base effect of last
In FY2023, Pakistan's GDP grew by 0.29
year’s growth of 4.27 percent, the agriculture
percent, with 1.55 percent growth in agriculture,
sector recorded a growth of 1.55 percent during

iii
Pakistan Economic Survey 2022-23

FY2023. The decline in important crops stood at percent. The reduction in fertilizers offtake is
3.20 percent. Two important crops, i.e., cotton due to the high prices of Phosphatic and Potash
and rice, were badly damaged by the floods. A fertilizers in the international/domestic market.
decline of 41.0 percent was observed in cotton Punjab’s share in urea offtake is 67.7 percent,
which resulted in the production of 4.910 million followed by Sindh (24.4 percent), KP (4.4
bales as compared to 8.329 million bales last percent), and Balochistan (3.5 percent). Subsidy
year. Similarly, rice witnessed a decline of 21.5 in the form of cheap natural gas and the budgeted
percent in production standing at 7.322 million subsidy was given on RLNG for two urea plants
tonnes as compared to 9.323 million tonnes last and imported urea by the government during
year. The loss in important crops to some extent FY2023.
has been compensated by growth in the
production of wheat (5.4 percent), sugarcane During FY2023 (July-March), the agriculture
(2.8 percent), and maize (6.9 percent). The lending financial institutions have disbursed Rs
production of wheat, sugarcane, and maize stood 1,222 billion, which is 67.2 percent of the overall
at 27.634 million tonnes, 91.111 million tonnes, annual target and 27.5 percent higher than Rs
and 10.183 million tonnes, respectively, 958.3 billion disbursed during the same period
compared to 26.209 million tonnes, 88.651 last year. Furthermore, the outstanding portfolio
million tonnes, and 9.525 million tonnes last of agricultural loans has increased by Rs 80.2
year. An increase of 0.23 percent has been billion and reached Rs 712.9 billion at the end of
witnessed in other crops due to an increase in oil March 2023 compared to Rs 632.7 billion at the
seed production by 53.15 percent. Cotton end of March 2022, witnessing 12.7 percent
Ginning, having a share of 0.97 percent in growth. In terms of outreach, the number of
agriculture and 0.22 percent in GDP has declined outstanding borrowers reached 3.04 million in
by 23.1 percent due to a decrease in cotton March 2023.
production.
Manufacturing and Mining: The proliferation
Livestock, having a share of 62.68 percent in of risks, including the global economic
agriculture and 14.36 percent in GDP, grew at slowdown and flood damages, coupled with the
3.78 percent compared to 2.25 percent during SBP's restrictive policies such as high-interest
last year. The fishing sector, having a share of rates, import restrictions, and the closure of LCs
1.39 percent in agriculture value addition and to correct the balance of payments and control
0.32 percent in GDP, grew at 1.44 percent inflation, has created headwinds for businesses,
compared to 0.35 percent during last year. The consumer confidence, and investment. Thus, the
forestry sector, having a share of 2.23 percent in industry weighed down by various domestic and
agriculture value addition and 0.51 percent in external factors leading to a slowdown in its
GDP, grew at 3.93 percent against 4.07 percent performance in FY2023. LSM remained on the
last year due to an increase in Timber negative side, at negative 8.11 percent during
production. Water availability during Kharif July-March FY2023 against the growth of 10.61
2022 declined to 43.3 million-acre feet (MAF) percent in the corresponding period last year.
from 65.1 MAF compared to Kharif 2021. Rabi The four sectors witnessing growth include
season 2022-23 water availability stood at 29.4 Wearing apparel, Leather Products, Furniture,
MAF, recording an increase of 7 percent over and others (Football).
Rabi 2021-22.
The mining and quarrying sector remained
Overall domestic production of fertilizers during negative at 4.4 percent during July-March
FY2023 (July-March) decreased by 8.3 percent FY2023 against the dip of 7.0 percent last year.
over the same period of FY2022. In addition, the The development of the mining sector has been
import of fertilizer also decreased by 26.2 hindered by inadequate infrastructure, lacking
percent, therefore, the total availability of technology, and insufficient financial resources.
fertilizer decreased by 11.2 percent during Production of major minerals such as coal,
FY2023 (July-March). The total offtake of dolomite, barium sulphate, limestone, rock salt,
fertilizer nutrients witnessed a decrease of 15 and ocher witnessed a growth of 17.6 percent,

iv
 Overview of the Economy

42.2 percent, 53.6 percent, 10.6 percent, 12.4 increase in the same period of FY2022. In
percent, and 15.4 percent respectively during contrast, non-markup current expenditures grew
July-March FY2023. However, some witnessed by 7.7 percent during July-March FY2023
negative growth such as natural gas 9.3 percent, against the substantial increase of 32.1 percent in
crude oil 10.2 percent, chromite 12.6 percent, the comparable period last year. The restricted
magnesite 50.0 percent, gypsum 5.0 percent, growth during July-March FY2023 has been
sulphur 25.0 percent, soapstone 43.2 percent, observed mainly due to the decline in
and iron ore 51.6 percent. expenditures on subsidies and grants and is
consistent with the government’s efforts to
Fiscal Development: The government is ensure fiscal consolidation.
committed to reducing the fiscal deficit to ensure
fiscal sustainability and macroeconomic FBR net provisional tax collection increased by
stability. There are two major challenges, i.e., 16.1 percent to Rs 5,637.9 billion against Rs
the first is to support vulnerable segments of 4,855.7 billion in a similar period last year. In the
society; and secondly, the difficult task of wake of a challenging economic environment,
meeting expenditures on rising interest current performance indicates effective
payments. For this purpose, the budget of the implementation of administrative and
outgoing fiscal year outlined a strategy for fiscal enforcement measures.
consolidation. It entailed reducing unnecessary
spending and improving tax revenues. These The fiscal consolidation efforts are on track and
efforts helped in containing the fiscal deficit to reaping the benefits in terms of better fiscal
3.6 percent of GDP during the first three quarters accounts during the first nine months of the
of FY2023 against 3.9 percent of GDP recorded current fiscal year. It is therefore expected that
in the same period of last year. Similarly, the FY2023 would observe a considerable decline in
primary balance posted a surplus of Rs 503.8 fiscal deficit as compared to last year. In
billion (0.6 percent of GDP) during July-March addition, the efforts to improve financial
FY2023 against a deficit of Rs 447.2 billion (- planning through PFM reforms will provide
0.7 percent of GDP) last year owing to a additional impetus to the government’s efforts to
slowdown in the growth of non-markup further reduce the fiscal deficit over the medium
expenditures. term.

Total revenues increased by 18.1 percent in July- Money and Credit: The economy faces many
March FY2023 against the growth of 17.7 headwinds on account of rising government
percent in the same period last year. Both tax borrowing costs and capital outflows which
and non-tax collection contributed to an increase exacerbated fiscal and balance of payment
in overall revenues. Tax revenues (federal and pressures. To control persistent inflationary
provincial) witnessed a growth of 16.5 percent pressures and external sector imbalances, SBP
on the back of a significant rise in FBR tax continued with monetary tightening and the
collection despite various economic challenges policy rate cumulatively increased by 725 bps
at the domestic and global levels. Non-tax during July-April FY2023.
revenues grew by 25.5 percent in July-March
FY2023 on the back of higher receipts from During July-March FY2023, broad money (M2)
petroleum levy, markup (PSEs and others), witnessed an increase of Rs 1,193.7 billion
royalties on oil/gas, and passport fee. (growth of 4.3 percent) as compared to Rs 698.4
billion (growth of 2.9 percent) during the same
The growth in total expenditures reduced to 18.7 period last year. Within M2, the Net Foreign
percent in July-March FY2023 from a 27.0 Assets (NFA) of the banking system decreased
percent increase observed in the same period of by Rs 2,060.6 billion as compared to a decline of
last year. Within total expenditures, current Rs 1,197.7 billion last year. On the other hand,
expenditures increased grew by 25.3 percent the Net Domestic Assets (NDA) of the banking
primarily driven by a 69.1 percent growth in sector increased by Rs 3,254.2 billion as
markup payments as compared to a 0.7 percent

v
Pakistan Economic Survey 2022-23

compared to Rs 1,896.2 billion during the same various commodities futures contracts including
period last year. gold, crude oil, and US equity indices worth Rs
3.49 trillion were traded on Pakistan Mercantile
During July - March FY2023, private sector Exchange Limited.
credit increased by Rs 302.3 billion as compared
to Rs 1,199.3 during the same period of last year. Inflation: The CPI inflation for the period July-
On average, it has posted a growth of 3.3 percent April FY2023 was recorded at 28.2 percent as
as compared to a growth of 15.7 percent last against 11.0 percent during the same period last
year. Slow domestic economic activities year. The other inflationary indicators like
discouraged private sector credit offtake during Sensitive Price Indicator (SPI) recorded at 31.7
July-March FY2023. The contraction of loans percent as against 16.9 percent last year. The
has been observed in both the working capital Wholesale Price Index (WPI) recorded at 34.0
and fixed investment loans during the period percent in July-April FY2023 compared to 22.9
under review. Accordingly, working capital percent same period last year. The inflationary
loans reached Rs 113.4 billion during July- pressures are emanating from weaker exchange
March FY2023 against Rs 608.7 billion during rates, supply disruptions created by flood
the same period last year. On the other hand, damages, higher global food prices, and broader
fixed investment loans decreased to Rs 147.5 tariff reforms for both electricity and fuels. The
billion against Rs 333.1 billion last year. government is taking administrative actions,
policy reforms, and relief measures to control the
Capital Markets and Corporate Sector: The prices of essential items. The government is
performance of major international stock committed to maintain the strategic reserves of
markets remained volatile during the outgoing wheat, sugar, and pulses. District Price Control
fiscal year, mainly due to global financial Committees are also monitoring the prices of
conditions. During July-March FY2023, the essential items to ensure their availability at
Morgan Stanley Capital International Emerging reasonable prices.
Market (MSCI-EM) Index declined by 1.0
percent, which is an index of 24 emerging stock Global inflationary pressure intensified during
markets. An increase has been observed in the recent years while during the last couple of
S&P 500 of the US (8.6%), CAC 40 of France months, the global supply chain has shown little
(23.6%), BSE Sensex 30 of India (11.3%), PSEi improvement. The international commodity
Composite of the Philippines (5.6%) and FTSE price outlook is favorable, which may offset the
Straits Times of Singapore (5.1%). Contrarily, negative impact of currency depreciation. In
the Shanghai Composite of China, VN30 Index addition, the better crop outlook due to timely
of Vietnam, Hang Seng of Hong Kong, and measures, i.e., Kissan Package, expected
Kuala Lumpur Composite Index of Malaysia political stability, and the stable exchange rate
declined by 3.7 percent, 14.0 percent, 6.7 would help to achieve price stability. The
percent, and 1.5 percent, respectively. inflation rate in the medium term, i.e., FY2024
and FY2025 will be normalized due to the high
The KSE-100 index registered a decline from base effect as well as improvement in the
41,540.8 points to 40,000.8 points from 30 June agriculture sector, expected favorable global and
2022 to 31st March 2023. The Index closed at its domestic environments.
highest point of 43,676.6 on 17th August 2022,
whereas its lowest closing point was 38,342.2 on Trade and Payments: The balance of payments
17 January 2023. As of 31st March 2023, the position during July-March FY2023 remained
number of listed companies stood at 526, with a under pressure mainly due to adverse global
market capitalization of Rs 6,108 billion. During shocks and domestic developments. The
July-March FY2023, corporations raised Rs 99.0 international commodity prices are still above
billion by issuing 20 debt securities. While 117 the pre-pandemic level, having weighed on the
previous corporate debt securities worth Rs external account. Moreover, the tightening of the
826.6 billion remain outstanding. Moreover, global financial environment has made it
during July-March FY2023, 2.96 million lots of difficult for emerging markets like Pakistan to

vi
 Overview of the Economy

access international financial markets. for Islamic investments. The government

Consequently, Pakistan’s foreign exchange successfully issued Shariah- Compliant
reserves and exchange rate came under pressure. Sukuk instruments amounting to around Rs
Furthermore, the devastating flood in July- 401 billion.
August 2022 has further aggravated the gloomy
▪ Within external debt, inflows from
economic conditions.
multilateral sources and foreign commercial
The current account deficit (CAD) contained by banks remained major sources of gross
76 percent and was recorded at US$ 3.3 billion external inflows. Under the 7th and 8th review
during July-April FY2023, against a deficit of of the IMF programme, US$ 1,166 million
US$ 13.7 billion in the same period last year. was disbursed, while US$ 1,500 million was
The improvement in CAD was on the back of a received from Asian Development Bank
substantial decline in imports by 23 percent in under the ‘Building Resilience with Active
July-April FY2023. Despite a contained CAD Countercyclical Expenditures (BRACE)
and lower materialization of multilateral programme. Asian Infrastructure Investment
inflows, SBP’s foreign exchange reserves Bank (AIIB) co-financed the BRACE
witnessed a decline mainly on the account of program to the tune of $ 500 million. In
amortization of official loans and liabilities addition, $ 1,900 million in loans from
during July-April FY2023 and reached a level of commercial banks were also refinanced.
US$ 4.5 billion by the end of April 2023. Due to ▪ The government rolled over US$ 3,000
the external account pressure on the foreign million in deposits each from China and
exchange markets, the average monthly PKR Saudi Arabia which were utilized towards
against USD depreciated by 27.8 percent during budgetary support.
July-April FY2023.
▪ Saudi oil facility amounting to around US$
Public Debt: Total public debt was recorded at 900 million was utilized (around US$ 100
Rs 59,247 billion at end-March 2023. Domestic million each month).
debt was recorded at Rs 35,076 billion while ▪ The government repaid international
external public debt was recorded at Rs 24,171 commercial loans to the tune of US$ 5,541
billion or US$ 85.2 billion. million, out of which US$ 4,541 million
were bank loans, whereas US$ 1,000 million
The public debt portfolio witnessed various
was international Sukuk maturity.
positive developments during July-March
FY2023, some of which are highlighted as The government’s strategy to reduce its debt
follows: burden to a sustainable level includes a
commitment to run primary budget surpluses,
▪ Within domestic debt, the government relied maintain low and stable inflation, promote
on long-term domestic debt securities for measures that support long-term sustainable
financing its fiscal deficit and repayment of economic growth, and follow an exchange rate
debt maturities. regime based on economic fundamentals.
▪ The Government repaid Rs 310 billion Additionally, the government is also committed
against its debt owed to the SBP. The to ensuring fiscal discipline through revenue
cumulative debt retirement against SBP debt mobilization and expenditure rationalization and
stood at Rs 2.0 trillion since July 2019. maintaining debt sustainability over the medium
term.
▪ In addition to the existing 5-year Ijara Sukuk
instrument, the government introduced 3- Education: According to Labor Force Survey
year and 1-year Ijara Sukuk instruments in 2020-21, literacy rate at national level remained
January 2023 and February 2023 62.8 percent. The literacy rate has increased in
respectively. The target is to diversify all provinces, Punjab (66.1 percent to 66.3
shariah compliant instrument base and give percent), Sindh (61.6 percent to 61.8 percent),
more options to investors with an appetite Khyber Pakhtunkhwa (52.4 percent to 55.1

vii
Pakistan Economic Survey 2022-23

percent), and Balochistan (53.9 percent to 54.5 System (IDSRS) will help the government in
percent) in the current year. There are 247 effectively dealing with public health
universities in the country with 57,204 thousand emergencies in the future. The Extended
teachers in both public and private sectors Programme for Immunization (EPI) and TB
functional in 2020-21, while 35.14 percent of Control Programme have also been effective as
faculty members are Ph.D., degree holders. can be witnessed by the increase in treatment
During FY2023, the government allocated Rs coverage under both programmes. The
44.71 billion to HEC for the implementation of government has also intensified its efforts to
154 development projects (138 ongoing & 16 ensure nutrition security in the country, as the
new approved projects) of Public Sector formulation of a Multi-sectoral National
Universities/HEIs. Nutrition Policy (MS-NNP) has been initiated
with the support of nutrition partners. This
In the first phase of the National Curriculum of policy aims to mainstream nutrition in national
Pakistan, the Single National Curriculum (SNC) socio-economic development plans and improve
for Grade Pre-I-V has been developed and the country's nutrition status.
textbooks have also been prepared. Moreover,
the work on Teacher Training Modules (TTMs) Population, Labour Force, and Employment:
and Assessment Framework is also developed. Pakistan is the 5th most populous country in the
To enhance national harmony, peace, stability, world. According to the National Institute of
and socio-economic development in the country, Population Studies (NIPS), the estimated
Madaris are facilitated and getting affiliated with population of Pakistan is 229.22 million in 2022
the Board of Intermediate and Secondary of which 84.69 million reside in urban areas,
Education as well as the Board of Technical whereas 144.53 million live in rural areas and the
Education for SSC / HSSC and in technical and population density is 287 per Km. Pakistan’s
vocational education examinations for the rapidly growing population means an increasing
Madaris’ students. Different measures are taken demand for food, schools, health facilities, jobs,
up at the federal and provincial levels to raise the and infrastructure, and it put pressure on the
standards of education in terms of quality government for providing these services at an
education. The present government is putting its equal pace. The government is trying to
efforts and resources into the education sector overcome the issue of high population growth
with an aim to introduce a uniform curriculum, and fertility rate through different programmes
capacity building of teachers, establishment, like media campaigns, the establishment of
renovation, and up-gradation of schools and Family Welfare Centers (FWCs), Reproductive
colleges, mainstreaming of religious education, Health Services Centers (RHSCs), and Mobile
skill development, and promoting awareness. Services Units.

Health and Nutrition: The government is The Population and Housing Census is a vital
particularly focused on ensuring quality and national exercise linked with the provision of
equitable access to health and nutrition services data for key policy-making matters. PBS is
for the people. The country has stayed conducting the first-ever digital Population and
committed to meeting global targets of good Housing Census in 2023.
health and well-being under the third Sustainable
Development Goal (SDG). The performance of Pakistan has a large labour force that stands
various health and nutrition indicators and among the top 10 largest labour forces in the
targets shows a mixed picture. The government world. According to Labour Force Survey (LFS)
has also been trying to enhance financial 2020-21 employed Labour force increased to
allocations to the health sector to improve 67.25 million in FY2021 as compared to 64.03
service delivery. The PSDP allocation for the million in FY2019. The government has
health sector during FY2023 was 2.8 percent of launched different programmes under the
the total development budget and 0.05 percent of umbrella of the “Prime Minister's Youth
GDP. Initiatives such as efforts to develop Development Programme” for improving
Integrated Disease Surveillance Response employment opportunities for youth. These

viii
 Overview of the Economy

programmes are expected to promote the norm dealing with the electricity demand-supply gap,
of job creation rather than job seeking in youth the government, in 2016, imposed a moratorium
and will increase the chances of better on new imported fuel-based power projects.
employment opportunities not only in the
domestic market but also in the international The Russia-Ukraine war has destabilized the
market. global economies with more devastating
consequences on the energy market. However,
Transport and Communication: Modern the government’s vision is expected to improve
transportation and communication infrastructure the domestic energy outlook significantly. With
plays a pivotal role in attracting investments and three Thar coal-based power plants added during
achieving economic development in a country. the current fiscal year, their total installed
Recognizing the significance of the transport and capacity has reached 3,300 MW. Furthermore,
communication sector's contribution to the installed capacity of six nuclear power plants
economic growth, the government is actively is 3,560 MW. As such, from July-March
pursuing the development of infrastructural FY2023, the total installed capacity and
facilities aimed at enhancing market access both generation of electricity stood at 41,050 MW and
within the country and across borders. The 94,121 GWh, respectively. During July-March
efforts in this regard are focused on building FY2023, the installed capacity of hydel, nuclear,
road, rail, and sea transportation linkages, renewable, and thermal sources stands at 25.8,
reviving railways as a socially and financially 8.7, 6.8, and 58.7 percent, respectively. On the
viable organization, increasing the road density other hand, electricity generation from hydel,
in rural and urban areas, equipping the ports and nuclear, renewables, and thermal remained at
airports with modern cargo handling techniques, 28.6, 21, 4.2, and 46.2 percent, respectively.
and improving the operational capacity Moreover, out of the total electricity
according to the requirement of a growing consumption of 77,745 GWh, household,
economy. The PIA, Pakistan Railways, NHA, Industrial, agriculture, and commercial sectors
PNSC, Port Qasim Authority, Karachi Port, and consumed 47.2, 28.0, 8.1, and 7.8, respectively.
communication sector players such as Pakistan
Post and PBC has played a critical role in The total demand for petroleum products
meeting the infrastructure needs of the country remained at 13.1 million tonnes (declined by
during FY2023. The work on CPEC has also 21.9 percent), whereas the transport sector alone
been revived to foster regional connectivity and consumes about 78.5 percent of petroleum
various infrastructure projects are underway. products. As such, the outgoing fiscal year
mainly witnessed a decrease in demand for
Energy: Demand for energy increases due to the motor spirit, high-speed diesel, and furnace oil,
expansion of economic activities, population comprising about 95 percent of total demand. To
growth, and rapid technological change. meet this demand, petroleum products, and
However, energy supply bottlenecks and crude oil imports remained at 6,118.3 thousand
reliance on imported fossil fuels can be critical MT and 5858.4 thousand tonnes, respectively.
for the economic outlook of any country. With On the other hand, the natural gas consumption
this context, the government has envisioned amounted to around 3,267 MMCFD from July-
optimizing the utilization of indigenous energy March FY2023, which included 626 MMCFD
sources including hydel, solar, wind, and thar- RLNG. From total coal consumption of 15,416.5
coal. During the outgoing fiscal year, the thousand tonnes, power, brick kilns, and
government approved the Framework cement/other sectors consume 47.3, 21.5, and
Guidelines for Fast Track Solar Initiatives 2022 31.1 percent, respectively.
to promote and develop cost-effective local
renewable energy sources. Primarily, this Information Technology and
framework covers Solar PV Energy Substitution Telecommunication: Information Technology
for Expensive Imported Fossil Fuels, Solar PV has become a crucial facilitator in the
Generation on 11 kV Feeders, and Public development of a knowledge society and
Buildings Solarization. Furthermore, after knowledge economy, playing a significant role

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Pakistan Economic Survey 2022-23

in economic progress. The government is facilitation of foreign investment and

actively pursuing the ‘Digital Pakistan Vision’ to collaboration.
promote a digital economy, leading to economic
prosperity and empowerment of citizens. It aims Social Protection: BISP, a targeted
to enhance the quality of life and economic well- unconditional cash transfer programme, is being
being of people by ensuring affordable, implemented by focusing on poor women with
accessible, and high-quality IT services for all. long-term objectives including the fulfillment of
According to Kearney’s Global Services SDGs, i.e., eradicating extreme chronic poverty
Location Index (2021), Pakistan ranked second and empowerment of women. The government
globally as the most financially attractive of Pakistan provided Rs 400 billion to the BISP
location for offshore outsourcing of IT and ITeS, to execute the Social Protection programmes
As of March 2023, there are 5,109 registered IT during FY2023. BISP is currently disbursing
and ITeS companies under the Pakistan Software payments to around 9.00 million beneficiaries
Export Board (PSEB), representing exporters. under Benazir Kafaalat Programme. During
During the July-March period of FY2023, IT July-March FY2023, Rs 128.90 billion have
exports amounted to US$ 1.94 billion, slightly been disbursed under this programme. BISP has
lower than the previous year's US$ 1.95 billion disbursed Rs 69 billion to 2.76 million families
during the same period. IT exports constitute the in flood-affected areas to help them recover their
largest proportion (35.1 percent) of all services financial losses.
sector exports. In the first three-quarters of
FY2023, Pakistani freelancers contributed to BISP is also implementing a Wheat Seed
foreign exchange earnings through remittances, Subsidy programme for eligible farmers to reach
with IT earning US$ 156.9 million and non-IT 185,928 farmers with a disbursement amount of
earning US$ 112.9 million, totaling US$ 269.8 Rs 5000/- per acre according to their verified
million. During the same period, PSEB added area. Till 31 March 2023, an amount of Rs 2.94
seven Special Technology Parks (STPs) to billion has been disbursed to 122,687 farmers
enhance infrastructure facilities across various out of a targeted 185,928 farmers. Under Benazir
cities in Pakistan, while IGNITE established Taleemi Wazaif Programme, 11.8 million
eight National Incubation Centers (NICs) in children have been enrolled so far whereas 3.0
different cities, supporting startups and women million children have been enrolled during July-
entrepreneurs. So far, NICs have successfully March FY2023. So far, Rs 63.3 billion have been
incubated over 660 startups out of 1,317 creating disbursed since inception of the Programme out
more than 126,000 jobs, attracting investments of which Rs 23.4 billion have been disbursed
worth Rs 15.43 billion (US$ 74 million) and during July-March FY2023.
generating combined revenue of Rs 9.13 billion. Pakistan Poverty Alleviation Fund (PPAF) is
As of March 2023, the total telecom continuing to support communities by
subscriptions in Pakistan, including mobile and providing access to improve infrastructure,
fixed lines, reached 197 million, with a energy, health, education, livelihoods, finance,
teledensity of 83.2 percent. The telecom sector and developing resilience to disasters. PPAF
contributed approximately Rs 139 billion disbursed an amount of Rs 1.6 billion during
(Provisional) to the national exchequer during July-March FY2023 through its Partner
July-December FY2023. The future economic Organizations in 149 districts across the country.
transformation of Pakistan relies on harnessing Pakistan Baitul Mal (PBM) is providing
the potential of the IT and telecom sectors. To financial assistance to the destitute, widows,
achieve this, key initiatives of the government orphans, invalid, infirm, and other needy persons
include the establishment of special technology at the district level. For FY2023, Rs 6.04 billion
zones, expansion of broadband and 5G is provided to PBM for its core
networks, promotion of e-commerce and e- projects/schemes.
governance platforms, enhancement of
cybersecurity and data protection measures, and During July-March, FY2023, expenditures
amounting to Rs 2.94 billion were incurred on

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 Overview of the Economy

16,231 scholarship cases, while Rs 691.51 Forest, biodiversity, and wildlife resources have
million was disbursed as marriage grants of Rs also suffered from the adverse effects of climate
200,000 per worker benefiting 4,377 workers' change. Besides, these resources are under
families. The WWF has also disbursed Rs tremendous pressure owing to changes in land
780.96 million as a death grant of Rs 600,000 per use and habitat destruction. Due to population
worker – covering 1,425 cases of mishaps all increase, the consumption of fuelwood and
over the country. During July-March FY2023, timber extraction has increased.
an amount of Rs 35.27 billion has been disbursed
by EOBI. Pakistan is currently facing extremely high
levels of air pollution with some urban areas
The social protection system of Pakistan is reaching hazardous pollution levels across the
having enormous potential to handle poverty and year. National Clean Air Policy (NCAP) was
vulnerability issues and it is imperative to launched in March 2023. The objective of this
improve coordination between different policy is to improve air quality in the country by
agencies. It is important to establish a national reducing pollution. Pakistan presented an idea of
social protection framework to synthesize the Loss and Damages Fund during COP 27 and
federal and provincial initiatives, and to avoid later pushed for a consensus agreement on it,
duplication and wastage of resources. which was successfully adopted. The
establishment of the fund reflects Pakistan’s
Climate Change: Climate change poses serious ability to not only speak and deliver for itself but
challenges to social, environmental, and also raise the voice for developing countries at
developmental activities, and leads to migration the international level. Pakistan’s representation
within and across national borders. The effects as the Chair of the G-77 and China has marked
of global climate change in Pakistan are already the country’s important position at the
evident in the form of the growing frequency of international negotiations and Pakistan’s
droughts, floods, erratic weather behavior, presence at COP-27 was greatly recognized and
changes in agricultural patterns, reduction in appreciated globally.
freshwater supply, and the loss of biodiversity.

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