Inflation-hit Pakistan shows 0.29pc GDP as industry posts negative growth

Industry reports -2.94pc growth against last year’s 6.83pc n Agriculture sector shows 1.55pc growth against last year’s 4.27pc n Manufacturing growth: 3.91pc (10.86pc last year) n LSM growth (Jul-Mar, FY2023): -8.11pc (10.61pc last year).

Finance minister presents Pakistan Economic Survey 2022-23 n Dar says govt averted default in face of serious inherited challenges n Planning minister calls outgoing fiscal year an year of force majeure.

ISLAMABAD   -   Federal Minister for Finance and Reve­nue Senator Moham­mad Ishaq Dar Thurs­day formally launched the 'Pakistan Econom­ic Survey 2022-23', the pre-budget document by sharing key econom­ic indicators and the performance of differ­ent economic sectors during the outgoing fis­cal year.

The Economic Survey 2022-23 shows that all economic targets missed by a wide mar­gin during outgoing fis­cal year as the country’s GDP growth record­ed at only 0.29 percent against the target of 5 percent.

Addressing the launching ceremony of the Economic Sur­vey along with his eco­nomic team, Finance Minister Ishaq Dar said that fiscal year 2022-23 was a tough and challenging year for the economy due to external as well as internal reasons. However, the government tried to effective­ly cope with the situation and res­cued the crippling economy and averted the default. He said that the declining trend has stopped and now efforts are underway to revamp the economy and bring fi­nancial stability to the country. 

He made it clear that the in­cumbent government would not enter into the new Internation­al Monetary Fund (IMF)’s pro­gramme, as it would be unfair and undemocratic. “It will be the right of the new government after the election to decide about the new IMF’s programme,” the Finance Minister clarified. He was opti­mistic that the 9th review with the IMF would be completed suc­cessfully as the government had taken tough decisions by increas­ing gas and electricity prices and announcing revenue generation measures by paying huge politi­cal costs. He said that the ongo­ing IMF programme would be completed by the end of June this year. Pakistan would receive $700 million from the World Bank and Asian Infrastructure Investment Bank after revival of the IMF pro­gramme. He once again recalled that PML-N was the first govern­ment in Pakistan’s history to com­plete the IMF programme during its previous tenure 2013-18.

Ishaq Dar informed that the gov­ernment would increase the sala­ries of the civil servants and pen­sions keeping in view the higher inflation rate in the country. He has also hinted at increasing the mini­mum wage in the country. Quoting foreign publication, he said that the actual dollar value is in the range of Rs240s, as the currency is under value. He said that dollar value was declining in October last year but suddenly it started increasing from Rs217 to Rs280 due to hidden fac­tors including external as well as internal. He asked the people not to invest in dollars and gold as the lo­cal currency would appreciate.

Talking about the Economic Sur­vey, the Finance Minister said that GDP posted a growth of 0.29 per­cent, terming it a realistic one. However, the GDP growth target was 5 percent. The government has missed all other targets by a wide margin. Agriculture sector has recorded growth of only 1.5 percent against the target of 3.9 percent. Service sector has shown 0.9 percent growth as against the target of 5.1 percent and a con­traction of 2.9 percent in the in­dustrial sector against the 5.9 per­cent growth target.

The finance minister once again criticised the previous govern­ment of PTI for its economic per­formance. He informed that when the incumbent government took charge in April 2022, the fiscal space was shrank, current account deficit was widening, inflation was on the higher side and financing needs were increasing. The coun­try was about to default. Howev­er, the incumbent government had taken tough decisions and paid all sovereign payments on time and averted the default. He informed that the government had repaid $6.5 billion against previous loans in the last few months including $5.5 billion commercial banks debt and bond worth one billion dollars. He once again clarified that all the payments would be made on time.

Comparing 2018 and 2022, the finance minister said that the av­erage fiscal deficit stood at 5.8 per­cent during five years (2013-18) of the PML-N government as com­pared to average deficit of 7.9 per­cent in PTI’s four years tenure (2018 to 2022). “Please, I would like to remind you that our 5.8 per­cent deficit stood when we were running two operations against terrorists. Otherwise, it would have been 4.8 percent”. Similar­ly, the trade deficit stood at $39.1 billion in 2022 from $30.9 billion in 2018. The current account defi­cit has reached 4.7% of the GDP at $17.5 billion. The foreign direct in­vestment has slumped to $1.9 bil­lion and the public policy rate is 13.75 percent, he said. He added that the public debt increased 10 percent. The volume of public debt had increased to Rs49000 billion in 2022 from Rs25000 in 2018. The interest payment has increased to Rs7000 billion in 2023 from only Rs1800 billion in 2018.

“I think the final nail in the cof­fin was Pakistan’s credibility and rate was shaken,” said the finance minister. He added that if Pakistan makes a “sovereign commitment” then it should be treated as a “per­sonal promise”. “When you felt that your government was going to be ousted, you backtracked on your commitments,” said the Finance Minister. He further said that un­precedented floods had also dent­ed the economy as the country suf­fered a loss of around $30 billion.

Ishaq Dar said that the govern­ment’s vision is to restore macro­economic stability and achieve an inclusive and resilient growth tra­jectory. He said the government has now given a roadmap of five Es for the next year. He said ex­ports, equity, empowerment, en­vironment and energy will serve as a driving force for the economy. He went on to say that Pakistan’s economy took a downward slope from world’s 24th largest econ­omy in 2018 to 47th position in 2022. The government, he said, expected the GDP growth of 3.5pc for the next fiscal year. “PSDP ex­pectation is no less than Rs1600 billion for provinces,” he added. The federal PSDP would cross the mark of Rs 1.15 trillion, he said. IT export target had been set at $15billion for the next five years with $4.5billion for the next year, he said. “We have set a target to shift energy to 20pc green ener­gy by 2025 and 30pc by 2030,” he added. It would save us, he said, primary energy by 15-20pc.

Planning and Development Minister Ahsan Iqbal said the out­going fiscal year was a year of force majeure, adding that Paki­stan’s economy had to face three accidents. “First accident is the $50billion trade deficit; second pertained to no release of devel­opment budget in the last quar­ter; and third was concerned with unprecedented loss of $30billion by floods,” he added.

He said that targets and numbers had no correlation, adding that this must be taken into account. “The government increased the higher education budget from Rs 26 Bil­lion to a historical high of Rs60 bil­lion,” he added. He said Rs80billion had been spent on projects related to the future of Pakistan under the PM’s initiative programme.

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