Economic Growth

In preparation for the new fiscal year, the National Economic Council (NEC) approved a development budget of Rs.2.709 trillion to achieve an ambitious GDP growth target of 3.5 percent. With a renewed focus on development plans, investment figures and economic productivity, the government is optimistic about the achievability of this target. The World Bank on the other hand, not so much. In its new Global Economics Prospects report, it predicts a drastically different growth rate of just two percent, casting doubt on the government’s plans for prosperity.
The PML-N-led NEC projected a growth rate of 3.5 percent based on a budget allocation that is at least 24 percent higher than that of this year. In this, what remains to be unclear is what our revenue streams may be to support an Rs.2.709 trillion budget. We are knee-deep in debt and have been on the verge of collapse for the past few months. The IMF programme has been stalled since November and will ultimately run out by the end of this month with $2.5 billion in funds yet to be released. These funds have the potential to avert a balance of payments crisis but poor policy reforms, record inflation, low reserves and fiscal imbalances have made it very difficult to get the funds released.
Pakistan has also become an investment-starved country as most international organisations and companies are wary of the depreciating value of the rupee. In comparison to the start of the year, the currency depreciated by 20 percent, threatening not only investment prospects but the value of our exports and imports. On top of this, inconsistent policy reforms have rendered our industries rather ineffective, with only a select few like the IT sector performing to the standard desired. Keeping these conditions in mind, the country will truly need a transformational plan for development and economic planning that, unfortunately, authorities are either not equipped enough to provide or simply do not have the time to do so because they are busy fighting political battles.
Of course, other factors like the lasting effects of the 2022 floods, limited resources, a global recession and high inflation do play a huge part in all of this, but this does not take away from the fact that the government needs to devise a clearer, more realistic, plan that not only focuses on expanding revenue streams but unlocking financing, increasing the value of the rupee, reviving economic output and creating a balance between reforms and matching citizens’ expectations.

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