Finance Minister Miftah Ismail expects the economy to grow by more than 3.5 percent this fiscal year, down from a 5 percent initial projection, reported by Bloomberg on Saturday.
Miftah predicted inflation, running at the highest in 47 years and the second highest in Asia, was close to its peak and would average 15 percent for the year, the report added.
Luxury goods restrictions may last longer than currently envisaged, according to the minister. Miftah aims to accelerate the country’s growth by barring unchecked imports of anything from home appliances to cosmetics, as well as the resulting chronic dollar shortage.
The minister stated that he intended to end a “boom-and-bust cycle” that has been going on for decades and assist the country to finally learn to live within its resources. The outlook has been complexed further by the aftermath of record floods, which might have an economic impact of at least $10 billion, adding to Miftah’s already long list of difficulties, which includes political unrest and soaring inflation.
According to the latest reports, economic loss from floods has been escalated from $10 billion to $12.5 billion.
— editorji (@editorji) September 5, 2022
Less than a week ago, the International Monetary Fund (IMF) gave Pakistan a $1.16 billion lifeline to avoid imminent default. The country also secured pledges for a total of $9 billion in investments and loans from Qatar, Saudi Arabia, and the UAE.
Miftah said he expected a $1 billion investment in listed state-owned companies to materialize in about a month.
Since taking up his post in April, Miftah has made efforts to narrow Pakistan’s yawning trade gap and current account deficit a priority. Pakistan’s imports need to be equal to the dollar inflow from exports and from remittances provided by citizens living abroad, according to the minister.
Textiles account up the majority of Pakistan’s export revenue, and much of the country’s cotton crop was swept away. The government has agreed to allow the textile industry to import as much cotton as is required to keep the looms working.
Following price increases caused by shortages, Islamabad is currently importing tomatoes and onions from Afghanistan, Iran, and Turkey.
Miftah’s expectations versus estimations
On one side, the minister shared that he expects the economy to grow by more than 3.5 percent this fiscal year. On the other side, Miftah estimated at least $10bn worth economic loss which is 2.5 percent of GDP due to flash flooding. He has covered a long list of difficulties and damages to the infrastructure and systems.
PTI spokesperson on Economy and Finance Muzammil Aslam also tweeted about this contradiction between Miftah’s expectations and estimations. “Wondering Miftah boss methodology to reach growth estimate of 3.5 percent. On one hand he estimated $10bn worth of GDP has shaved which is 2.5 percent of GDP and on top he still expects 3.5 percent higher GDP from last year. Meaning $24bn worth value addition,” he said.
There is a conflict between what the finance minister is expecting and estimating. It clearly shows that the finance ministry needs to come up with new strategies in order to cope with the devastations caused by floods.