Pakistan Economic Survey 2021-22 launched; Ballooning balance of payments deficit dampens growth story; Weak economic management of PTI govt resulted in deterioration of exchange rate, high inflation; Gas supply for all industries resumed; Imports grew 48pc and exports by 28 pc
Ijaz Kakakhel Islamabad
The coalition government on Thursday unveiled the Pakistan Economic Survey 2021-22 which revealed a growth rate of 5.97 per cent against a target of 4.8 per cent.
The Economic Survey usually launched a day before announcing the annual budget, which is scheduled to be presented in national assembly today (Friday). The finance minister Miftah Ismail unveiled the Economic Survey 2021-22, alongside Planning Minister Ahsan Iqbal, Power Minister Khurram Dastagir, State Minister for Finance Ayesha Ghous Pasha in a press conference in Islamabad.
Miftah Ismail highlighted the performance and targets achieved or missed during the outgoing fiscal year when the Imran Khan-led government was in power for the first nine months that started on July 1, 2021, and will end on June 30, 2022.
The government achieved the most important economic target GDP growth and hence, it was less surprising that other goals were achieved as well. “The situation in Pakistan has remained the same whenever the country records growth it, unfortunately, gets into the crisis of current deficit,” said finance minister.
“The same has happened this time as well, the recent 5.97% growth recorded during the outgoing fiscal year 2021-22, according to new estimates, has pushed Pakistan towards the balance of payments and current account deficit crisis,” the minister lamented. He further highlighted imports have increased by 48% as compared to the last fiscal year, while the exports also moved up but noted that the trade deficit stood at $45 billion. The Finance Minister said that years before, the exports were around half of the imports. However, the export-to-import ratio stands at 40:60 now, he said, adding that Pakistan could only finance 40% of its imports through exports and for the rest, it had to rely on remittances or loans which makes the country stuck in a balance of payment crisis.
“We also need inclusive growth. We have always facilitated the elite so they can boost the industry and benefit the economy. This is one strategy, but when we give privileges to the elite, then our import basket increases,” he said. A rich person spends a lot on imported items as compared to a low-income person, he said, adding that the government should financially empower the low-income groups to boost local production. “If we do this, then maybe our domestic and agriculture production would increase, but it will not move up our import bill. This growth will be inclusive as well as sustainable,” he said.
The finance minister added that since the energy prices are too high in Pakistan, therefore, the local industry is “uncompetitive and also shuts down at times”.
Miftah Ismail said the gas supply for all industries has resumed after being shut for some time, noting that the supply to industries would not have been stopped had the PTI government entered long-term agreements. The previous government did not make long-term plans, forcing Pakistan to buy energy and oil at expensive rates, which is worsening the economy of the country.
“And this is not PML-N, JUI-F, PPP, or the coalition government’s economy whose economic situation is worsening; it is the state of Pakistan that is seeing an economic turmoil,” he said. The finance minister, while talking about the foreign direct investment, said it was around $2 billion in 2017-2018, but it stood at around $1.25 billion in the first nine months of the outgoing fiscal year.
Miftah said the trade and current account deficits have increased as compared to 2017-18 the fiscal year when PML-N’s government ended as an “incompetent” ruler was imposed on Pakistan.
“Unfortunately, the weak economic management of the previous government has resulted in the deterioration of the exchange rate, high inflation and widened the twin deficits, thus bringing Pakistan to the verge of a financial crisis,” he lamented. Miftah Ismail went on to say that the present coalition government has inherited a fragile economy with a current account deficit of $13.8 billion in the first 9 months of the year, a fiscal deficit of 3.8 percent of GDP expected to increase to 7.0 percent by June, total public debt at Rs 44,366 billion (end March 2022), inflation at 11.3 percent and depleting forex reserves. “The government is taking measures to extend relief to the less well-off citizens through Benazir Income Support Programme,” he noted.
This overall growth came on the back of 4.40pc growth in Agriculture, 7.19pc growth in Industries, and 6.19pc growth in Services against targets of 3.5pc, 6.5pc and 4.7pc, respectively.