Govt unveils economic survey, misses key targets

Sandra Loyd

ISLAMABAD: Pakistan’s economy will diminish the most in years while its financial deficit will likely broaden to 9.4 pc of gdp by the end of the FY20, according to the Pakistan Economic Survey 2019-20

“The country’s provisional gross domestic product (GDP) growth rate for FY20 will likely contract 0.4pc instead of growing 3.3pc as previously forecast,” Advisor to PM on Financing Abdul Hafeez Shaikh informed a press conference while revealing the budget on Thursday.

This contraction would be the inmost in years.

“The economic contraction depicts the challenges that the Pakistan Tehreek-e-Insaf (PTI) government faced in its second year in power and the miseries caused by the Covid-19 that started battering the world in December 2019.”

The IMF and World Bank had actually previously predicted that the economy will diminish by approximately 2.6 pc.

The consultant stated the IMF and World Bank were making bleaker presumptions keeping in view the seriousness and period of the coronavirus pandemic. “In my view, we will have a better estimation when this year ends on June 30.”

He highlighted the federal government’s swift and definitive policy actions considering that the start of the existing , consisting of resource mobilisation, conclusion of the International Monetary Fund (IMF) program, austerity procedures, and financial policies assisting stabilise the economy.

The consultant specified that these procedures assisted the economy to reverse big external and internal imbalances. He stated that substantial improvement in external accounts was made as the bank account and trade deficit experienced a significant contraction.

“Foreign reserves steadily improved. There was an increase in foreign direct investment (FDI). The credit rating profile also improved. Fiscal performance remained strong during the first three quarters of the outgoing fiscal year, on the back of consolidation efforts and targeted reforms.”

The consultant stated the Covid-19 has actually pressed the global economies towards an economic downturn. Pakistan has actually likewise been impacted by the unmatched health and economic shocks brought on by the break out of coronavirus. Throughout the existing , Pakistan’s economy has actually gone through a sharp contraction as growth is taped at unfavorable 0.4 pc.

“To mitigate the socio-economic impact of the pandemic, the government announced a stimulus package of Rs1.24 trillion, and offered further relief measures through the State Bank of Pakistan. The policy rate was also cut by 5.25pc to 8.0pc,” he stated. “The monetary and fiscal policy interventions have been made to restore the economic activity in this difficult time and to reduce negative effects on poverty and unemployment.”

The farming sector taped a growth of 2.67 pc versus the target of 3.5 pc, nevertheless, the commercial and services sectors experienced unfavorable growth rates of -2.64 pc and -3.4 pc, respectively, pulling the general growth rate down, the consultant specified.

Sheikh stated production contracted by 22.9 pc year-on-year in March 2020 however added that “fiscal deficit was still manageable from July-March 2020 at 4pc of the GDP while last year it was 5.1pc of the GDP” in the exact same duration.

“The government has taken loans to tackle the burden of the debt left by previous governments,” stated Shaikh. “Pakistan returned Rs5,000 billion in debt – the loans of past years.”

“Tax collection target for FY20 was ambitious and the government doesn’t want to collect it aggressively in a Covid hit economy. When the economy recovers, we hope tax collection will rise due to economic recovery.”

Shaikh stated the PTI federal government did not green-light any extra grants for any federal government department for a year. “We have entered the area of primary surplus. We controlled government expenditure. Our primary expenditure was less than our revenue which may be a first in the country’s history.”

The financing consultant restated that PM Imran’s vision was that every decision benefits the basicpublic “A large amount was allocated to benefit the lower class. Rs152 billlion were set aside for the merged areas.”

For the upcoming , the federal government has actually authorized a low-economic growth strategy, recommending that the nation will not run out economic injuries in the next too. The following charts highlight the economic trajectory of key indications in the preceding .

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