ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani welcoming the participants of the annual meeting of the National Economic Council (NEC) said that since start of our government in 2008, we have faced serious economic challenges. The world-wide economic recession also caused slowdown of our economic activities.
However, he said, our government has been able to restore and maintain economic stability in the country. At the onset of current fiscal year, he maintained, we were looking forward to reap the benefits of economic stabilisation and to regain the momentum of economic growth to a higher level.
We were unfortunately hit by the most devastating flood in the recorded human history. The flood spreading over 50,000sq kms affected around twenty million people in 82 districts. The Damage and Need Assessment Report, prepared by the World Bank and Asian Development Bank estimated an overall loss of around Rs 855 billion to the economy. He said the worst affected sector was agriculture that suffered loss of around Rs 429 billion, followed by housing (Rs 135 billion), Transport and Communications (Rs 113 billion) and financial sector (Rs 57 billion), he added.
Gilani said to provide immediate relief to the affected people, we had to modify our priorities. The federal government had to enforce a cut of Rs 100 billion in its development budget. The provincial governments also managed savings in their respective budgets to provide rescue, relief and rehabilitation work. He opined that the flood caused a massive dent to our agriculture sector. Rice and cotton crops were the worst hit. Rice production was down by 30 percent, while cotton crop recorded are reduction of 11 percent. We had targeted growth rate of Agriculture Sector at 3.8 percent but it actually grew by only 1.1 percent, thus negatively impacting our GDP to grow by only 2.4 percent against the target of 4.5 percent.
Gilani said that a few persistent issues also caused slow recovery of our economy. Some of these are: power shortages, subsidies and resultant circular debt, and bleeding public sector enterprises. However, on the external front, we did make some important achievements. Our exports during the current fiscal year are estimated to be around 24.6 billion dollars, which is the highest level in our economic history.
Similarly, he added, we expect workers' remittances around 12 billion dollars, which is also a record. We have been able to maintain a stable exchange rate and the current account deficit is estimated to be much lower this year in spite of high oil prices. The Prime Minister observed that these enormous challenges have not deterred our resolve to implement the 7th NFC Award in true spirit.
During the current fiscal year we transferred more than Rs 300 billion additional resources to the provinces by cutting the Federal Government resources. The Prime Minister expressed his hope that the Government further undertook to implement the 18th Amendment and most of the functions of devolved ministries have been passed on to the provinces. The remaining functions are in the process of devolution. Gilani appreciated the CCI which has been deciding all such matters with consensus. We believe in mutual consultations with the provinces and other stakeholders. We believe in mutual consultations with the provinces and other stakeholders. This is reflected in the policy decisions we have taken so far. While dealing with all these challenges, PM said, we must take measures to put the economy in higher gear so that we are able to provide job opportunities to the youth, raise industrial and agricultural productivity to reduce poverty, and ensure better future for our countrymen. We are holding NEC meeting in these crucial times. It is important for all of us to take stock of the current economic situation and agree on certain broad directions in which the economy should move.
He said that our focus in future should be on private sector development by creating an enabling environment and necessary facilitation. The New Growth Framework envisaged by the Planning Commission will play a pivotal role towards this end in collaboration with the provincial governments, he added. Referring to the next year's PSDP, he said that we should focus on completion of on-going schemes so that people can benefit from our development programme without delay. I also request the provincial governments to accord high priority to completion of on-going projects and not spread the resources thinly on new proposals. We can start on new projects wherever the resources give us space to do so. Gilani said that he has been monitoring the performance of various sectors of economy and has been urging the Planning Commission to address regional in-equity and sectoral imbalances.
Gilani has asked Minister for Finance and Planning to make significant allocation to social sector programmes focusing on poverty alleviation. He expressed hope that the upcoming proposals will adequately cater for underdeveloped regions including those of Gilgit-Baltistan, AJK and Fata. Similarly, PM expected sizeable allocation for high impact strategic projects such as Diamir Bhasha Dam, Nuclear power generation and National Highways. The Prime Minister said that the Economic Growth Framework, Annual Plan 2011-12 and PSDP 2011-12 should be in line with the Government's policy of balancing economic stabilisation with growth. In the end he expressed his hope that new financial year PSDP will bring in a new economic up cycle of inclusive growth.-PR