1. Southern Regional Committee The Institute of Chartered Accountants of Pakistan Macro Economic Aspects of the Budget Syed Masoud Ali Naqvi Friday, 10th June 2011 Convention Centre, Defence Authority Country & Golf Club, Karachi.

2. Macro-Economic Aspect of the Budget Budget at a glance

3. Macro-Economic Aspect of the Budget Budget at a glance

4. Macro-Economic Aspect of the Budget Budget at a glance

5. Macro-Economic Aspect of the Budget Budget at a glance

6. Macro-Economic Aspect of the Budget Overall Reconciliation For Budget 2010-11 (Rupees in Billions)

7. Macro-Economic Aspect of the Budget Overall Reconciliation For Budget 2010-11 (Rupees in Billions)

8. Macro-Economic Aspect of the Budget Key Objectives for the Budget 2010-11

9. Macro-Economic Aspect of the Budget Economic Analysis

10. Impact of Budget on Economy Key Objectives for the Budget 2011-12

11. Macro-Economic Aspect of the Budget Budget 2011-12

12. Macro-Economic Aspect of the Budget Key Challenges • Increase in Poverty  • Continued Power Crisis  • Security situation and war against terrorism  • High inflation  • Social Distortions  • Low domestic resource mobilization • Low and declining productivity • Lower growth • Inadequate investments and savings rate • Reduction in FDIs

13. Macro-Economic Aspect of the Budget Key Challenges • Increasing reliance on external and domestic borrowings – sustainability • Struggle with macro-economic stabilization due to unsustainable fiscal policies • Legacy of Economic Distortions • Pressure of Demography • Ailing Public sector Enterprises • External shocks on natural disasters Earthquake, Floods, High Petroleum prices, high commodity prices

14. Macro-Economic Aspect of the Budget Hardware – Infra-structure gaps Diagnosis of coverage, quality and efficiency Assessment of long-term targets for physical infra-structure Institutional mechanism for improved services delivery Financing arrangements Cost of doing business

15. Macro-Economic Aspect of the Budget Software • Organization of institutions • Incentives • Markets • Cities and Countries in line with global experience • Innovation in use of resources and assets to generate greater productivity • Policies to manage resources that align with global standards and best practices • Innovation and entrepreneurship at all levels in all sectors and in all regions

16. Macro-Economic Aspect of the Budget Growth Framework Pakistan has no choice but to move in this new direction because the traditional growth model with its emphasis on public investment and government involvement in economic activity has not yielded the high growth rates the country needs to absorb the expanding young labour force. Furthermore, the government faces domestic and foreign financing constraints and it simply cannot afford any longer to undertake large-scale capital expenditures. If adopted, the New Growth Framework has the potential to transform the Pakistan economy into one that can compete effectively with the other high-growth developing economies of the world. --- Dr. Mohsin S. Khan, Former Director, IMF

17. Macro-Economic Aspect of the Budget Quality of Life

18. THANKYOU !

19. Presenter’s contact details SYED MASOUD ALI NAQVI Country Senior Partner KPMG TaseerHadi & Co. +92 (21) 3568 5847 mnaqvi@kpmg.com www.kpmg.com.pk