State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has said that the electricity and gas distribution sector witnessed a negative growth in 2005-2006, pointing a serious issue of huge operating expenses in the form of increased input costs of gas and oil and large line losses due to security situation in Balochistan.
Giving a presentation on the SBP Annual Report (2005-2006) to the National Assembly Standing Committee on Finance and Revenue on Wednesday, she said the decline in performance of Wapda and OGDC contributed to negative growth during 2005-2006.
The low contribution towards GDP also included performance of SNGPL, SNGCL and Independent Power Producers (IPPs), as "we cannot isolate Wapda while working out growth in overall power distribution system."
The growth in the value-addition by agriculture retarded due to below target harvests for a number of key crops like cotton, sugarcane and wheat led to a fall in the value addition by the crops sub-sector.
Even the modest 2.5 per cent growth in agriculture was made possible only by an exceptional showing by the livestock sub-sector, which offset the negative value addition by crops.
In contrast with the commodity-producing sector, the services sector maintained its growth momentum, registering an impressive 8.8 percent growth, which is not only much higher than the 6.8 percent annual target, but also higher than the high growth of 8 percent seen in 2005.
Referring to the annual report, she said that it was the deceleration in growth of a key sub-sector - large-scale manufacturing (LSM) that pulled down the aggregate industrial growth during 2005-2006. Growth in LSM production dropped from 15.6 percent in 2005 to 9.0 percent in 2006 and, as a result, industrial growth dropped to 5.9 percent during 2006, substantially lower than both, the 9.5 percent target for the year, and the 11.4 percent growth achieved in the preceding year.
The deceleration in LSM growth is attributable to a number of factors, including the impact of the relatively poor cotton harvest, capacity constraints being faced by some major industries, as well as a small slowdown in demand amidst rising interest rates.
Most of the remaining industrial sub-sectors also witnessed below target performance, she added.
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