ADVISOR to Prime Minister on Finance Dr. Abdul Hafeez
Sheikh has expressed the optimism to surpass the economic growth rate target of 2.4% during the current financial year due to higher development spending and incentive package for textile sector. Speaking in a television programme, he said that relatively higher economic growth rate would be achieved by ensuring that Rs. 950 billion Public Sector Development Programme including private spending component was fully spent during the year.
Dr. Abdul Hafeez Sheikh is known for his balanced approach to issues and candid and fair analysis of the economic conditions of the country, therefore, one must believe him when he sees an increase in the targeted economic growth rate. The economic team of the Government, led by Dr Hafeez Sheikh, is making hectic efforts to stimulate the economy and there are indications that some of the initiatives have started bearing fruit. Development spending, if not slashed further during the year and releases are as per schedule, has the potential to help realize the objective. The fact that the development expenditure becomes one of the first casualties of tightening of belts doesn’t spark much confidence that the spending would remain on course. Similarly, it has to be weighed in the final analysis whether the textile sector has the ability and capacity to contribute additionally more than Rs. 300 billion, which the Government is providing in the form of incentives, to the national exchequer or GDP growth during the year especially when there are projections of cotton crop remaining below the target. There were also reports that large scale industries slumped 5.9% in the first quarter of this fiscal year amid tight monetary and fiscal policies. However, according to the latest report of the State Bank of Pakistan, economic activity was strengthening in export-oriented and import-competing sectors while inward-oriented sectors continued to experience a slowdown in activity. Specifically, the large-scale manufacturing (LSM) is showing gains in electronics, engineering goods and fertiliser sectors and a decline in auto, food and construction-allied industries of steel and cement. It is hoped that the Government would take measures to reverse the negative trends and also give deeper thought to the valid complaint that the higher interest rate was one of the major hurdles in the way of investment.
