News Analysis |
The Finance Ministry of Pakistan has launched the Pakistan Economic Survey 2017-18, which claims that Pakistan has made great strides in reducing its macroeconomic vulnerability in the recent years and, achieved the highest economic growth of 5.79% in last 13-years and 4 percent in each of the three preceding years.
Pakistan may not have achieved most of its targets, but it managed to score healthy growth in different sectors of the economy.Interior minister, Ahsan Iqbal, claimed that the government would have achieved the growth of 6.2 % if Pakistan had maintained the political stability.The government has undergone severe criticism over its decision to present the budget for the full fiscal year, despite having no mandate to do so.
The public debt to GDP ratio has reached 66.3% from 64% in the previous regime, according to Economic Survey of Pakistan.
Prime Minister’s Adviser on Finance and Revenue, Dr. Miftah Ismail, in a press conference along with Ahsan Iqbal, attempted to justify this apparent illegal and undemocratic act. He said the government has to pay salaries and finance government projects for a full fiscal year, not only 3-4 months. Therefore, since expenditure allocation is for a full year, the government will have to announce the budget for full-year.
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Mifta may have downplayed the barrage of criticism, but, he failed to satisfy with his reply. Did prior governments not announce the budget only for interim governments? Did they not pay for the ongoing expenditures, salaries, and pensions?The ongoing crises in PML-N have put the government under severe strain.
In the very beginning, it says that Pakistan has reduced its macroeconomic vulnerability, and according to International Monetary Fund (IMF), “the near-term outlook for economic growth is broadly favorable. Real GDP is expected to grow by 5.6 percent in FY 2017/18, supported by the improved power supply, investment related to the China-Pakistan Economic Corridor (CPEC), strong consumption growth, and the ongoing recovery in agriculture.
Inflation has remained contained.” However, it fails to mention or show the grave concerns regarding “the weakening of the macroeconomic situation, including a widening of external and fiscal imbalances, a decline in foreign exchange reserves, and increased risks to Pakistan’s economic and financial outlook and its medium-term debt sustainability”.
The government has undergone severe criticism over its decision to present the budget for the full fiscal year, despite having no mandate to do so.
Twin deficit and high public debt remain a major threat. The public debt to GDP ratio has reached 66.3% from 64% in the previous regime, according to Economic Survey of Pakistan. Also, it must be noted that since then, the government has accumulated more debt which makes it 70.1% of GDP.
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The central government’s debt was Rs 14,984.7 billion, which has increased to Rs 22,906 billion in February 2018. This is the increase of almost 52.86 % in PML-N’s tenure.
Twin deficit and high Public Debt remains a major threat. Public debt to GDP ratio has reached 66.3% from 64% in the previous regime. Total public debt stood at Rs 22,820 billion at end December 201, while total debt of the government was Rs 20,878 billion. Total public debt recorded an increase of Rs 1,413 billion during first six months of the current fiscal year. This is the increase of almost 60 % in PML-N’s tenure. But, the government claims the success in its Medium Term Debt Management Strategy as the Average cost of gross public debt reduced by over 100 basis points and Refinancing Risk of domestic debt portfolio reduced from 64.2 percent in 2013 to 55.6 percent in 2017.
Recently, Pakistan’s economic position has improved due to a surge in exports, growth in imports may have declined, but trade deficits remain high and the SBP’s liquid foreign exchange reserves declined by the US $ 4.5 billion during July-March FY2018. Moreover, trade deficit amounted to $22.3 billion on the backdrop of a surge in import bill by 16.6 percent and reached to the US $ 40.6 billion which overshadowed the increased in exports and workers’ remittances. Current account remained 3.8% of GDP in the current fiscal year.
All important remittances [which are a great cushion in absence of enough exports to bridge the balance of payments (BoP) and support reserves], registered a significant growth of 3.6 percent during July-March FY 2018. Though it had declined by 2% last year. The government expects to achieve the target of $20.6 billion this year.
The commodity sector recorded a growth of 4.84 % growth in services sector remained at 6.3 % which accounts for 60.23% of the total GDP.
Most of the figures, however, reflect the improvement in the overall performance of the economy and position of PML-N can be declared marginally better than PPP’s tenure of 2008-2013.
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A notable improvement is witnessed in the energy sector, under the CPEC initiative. Thirty-five (39) projects with cumulative capacity of 12,230 MW have been added in tenure of PML-N, claims the Pakistan Economic Survey 2017-18.
Under the heading of population, labor force and employment, no figure of unemployment was given. It only mentions that government has started a revolutionary program- ‘Prime Minister’s Youth Programme ‘for the socio-economic development of youth to combat unemployment in the country.
During the FY2018, per capita income has increased by 0.5% to $1641 which is based on provincial figures of population census held in March 2017 i.e. 207,7774,520.
Sectoral contribution
Agriculture sector recorded a remarkable growth of 3.81 % and exceeded its targeted growth of 3.5 percent and also last year’s growth 2.07 percent. The government claims that this is the highest growth in last-13 years.
The growth was based on improvement in crop sector of 3.83 % against the last year’s growth of 0.91 %. Although wheat and maize witnessed the decline of 4.3% and 7.04% respectively, cotton showed remarkable growth of 8.72 %.
It only mentions that government has started a revolutionary program- ‘Prime Minister’s Youth Programme ‘for the socio-economic development of youth to combat unemployment in the country.
Moreover, Livestock recorded a growth of 3.76 percent compared to 2.99 percent period last year. The Fishing sector grew by 1.63 percent compared to 1.23 percent last year. Forestry sector posted a positive growth of 7.17 percent on account of higher timber production reported by Khyber Pakhtunkhwa.
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The manufacturing sector witnessed 6.24 % growth on the back of stellar performance of large-scale manufacturing (LSM) during the first eight months of the current fiscal year as it touched its 11-year peak of 6.13pc.
According to Economic Survey of Pakistan, industrial sector growth also improved to 5.8 percent which is highest in last 10 years. Textile sector maintained an average share of about 60pc in national exports. The commodity sector recorded a growth of 4.84 % growth in services sector remained at 6.3 % which accounts for 60.23% of the total GDP.
Out of the GDP growth of 5.79 %, the service sector contributed 3.85 percent points compared to 3.83 percentage points last year, and out of the commodity producing sector, agriculture sector shared 0.73 percentage points to overall GDP growth as compared to 0.41 percentage points last year, while industrial sector contributed 1.21 percentage points in FY 2018 as compared to 1.14 percentage points of last year.