Despite challenges: Growth rate at all-time high 5.8pc in 13 years

ISLAMABAD: Planning and Development Minister Ahsan Iqbal and Adviser to the Prime Minister on Finance Miftah Ismail on Thursday unveiled the Pakistan Economic Survey 2017-18 projecting all-time high growth rate of 5.8 percent in 13 years.

The projected 5.8 percent growth rate means the government will still miss its 6 percent target. Adviser to the Prime Minister on Revenue Haroon Akhtar, Minister of State for Finance Rana Muhammad Afzal and Economic Adviser Finance Division Ejaz Ali Wasti were also present on the occasion.

The Gross Domestic Product (GDP) recorded 13-year highest growth of 5.8 percent during the outgoing fiscal year (2017-18), indicating success of the government’s growth-oriented initiatives and prudent economic policies introduced for the economic development of the country.

“Had we not gone through political crisis, which created uncertainty, we would have exceeded the growth target of 6 percent during the outgoing fiscal year,” said Ahsan. Ahsan said despite these challenges, the government succeeded in achieving 5.8 percent growth rate, and expressed the hope that the momentum would continue in years to come.

The minister advised against political adventurism if the country had to be put on the path of development and progress. He said Pakistan had made great strides in improving its economic outcomes and reducing its macroeconomic vulnerability in the recent years.

As a result, he said the economic growth continued to gain traction albeit at varying speeds across the sectors, founded on the government’s commitment to higher growth and low inflation.

The GDP continued to grow above 5 percent in each of the last two years and 4 percent in each of the three preceding years. This achievement is remarkable, as it has been accomplished in the face of global head winds.

“We have turn the economy around. The measures introduced by the government have put the economy on path of sustainability,” the minister added. He said growth was not only endorsed by the government, but also by world organisations including the World Bank, which was an encouraging sign.

He said Pakistan’s growth rate remained stagnant at only 3 percent during the period from 2008 to 2013, while now it had achieved 5.8 percent growth. He said the government had ensured construction of 1,750 km motorways during previous five years and the country had even surpassed the neighboring country in that regard where total length of motorways is around 1,400 km.

The minister said during the next fiscal year a big portion of development funds had also been earmarked for the China Pakistan Economic Corridor (CPEC) projects. He said so far a huge investment of $29 billion had been made on various projects of CPEC, while more investment was expected in the second phase of CPEC in sectors including energy, infrastructure, and Gwadar port development.

Miftah Ismail said the macroeconomic indicators had shown satisfactory performance during the outgoing fiscal year as Gross Domestic Product (GDP) growth rate was recorded at the all-time high in 13 years at 5.8%.

He said all the economic indicators had shown positive growth, while the government succeeded in containing inflation rate at 3.8% while the current year will end with around 4.5 %," he said, adding the deficit which was 8.2 % in 2013 will remain at 5.5 % by the end of current fiscal year.

He said revenues of Federal Board of Revenue (FBR) will be around Rs3935 billion by the end of year, while the revenues in 2013 were only Rs1980 billion. However, the net debt to GDP ratio, he said had increased from 60.2 % to 61.4 % now.

He said the external debt to GDP ratio remained 20.5% which was low as compared to the ratio of 21.14 % in 2013.

"Our current expenditures have declined while development expenditures have increased considerably," he said. "We have added 12,000MW power to the national grid in five years. We completed the long-awaited projects such as Neelum Jhelum Power Project and Lowari Tunnel project, which were lingering for decades and we also concluded Tarbela-IV project."

The adviser said these development expenditures were now giving dividends as the country witnessed the highest growth rate of 5.8 % in 13 years. He said the weak point remained the declining exports during the first four years; however, with the start of current calendar year these had captured upward trend, as during March only 24% growth of exports was recorded compared to same month of the year 2017.

According to the survey, the highest growth of 3.81 percent in agriculture sector in last 13 years was achieved on the back of initiatives taken to improve the sector such as expansion in credit to agriculture sector along with Kissan Package, provision of better quality seeds including hybrid and high yield varieties and timely availability of agriculture inputs including fertilizer, pesticides etc.

Large Scale Manufacturing (LSM) also recorded a growth of 6.13 percent highest in 10 years. Industrial sector growth improved by 5.80 percent, highest in ten years. Manufacturing grew by 6.24 percent highest in 11 years. The performance of services sector witnessed a stable growth of 6.43 percent in last two years, while the Mining and Quarrying sector grew by 3.04 percent in FY 2018 as against -0.38 percent last year.

Fiscal sector continued to perform well during the first half of current fiscal year as strong growth in revenues relative to expenditures helped in containing the fiscal deficit to 2.3 percent of GDP during first half of FY2018 as compared to 2.5 percent of the corresponding period last year.

Total revenues grew by 19.8 percent to reach Rs2,384.7 billion (6.9 percent of GDP) during July-December, FY2018 against Rs1,990.6 billion (6.2 percent of GDP) in the same period of FY2017. The impressive performance both in tax and non-tax revenues attributed to this significant rise in total revenues.

According to the survey, during the current fiscal year, CPI increased to 4.6 percent which was the highest since the start of current fiscal year. It came down to 4.4 percent in January 2018 while in March 2018 it fell eight month low to 3.2 percent on account of subdued food prices, which offset the impact of rise of petroleum prices.

The average inflation during first nine months of the current fiscal year (July-March FY 2018) has been contained at 3.78 percent which was lower than the level observed during the same period of last year recorded at 4.01 percent.

During July-March FY2018 Exports reached $17.1 billion compared to $15.1 billion in July-March FY2017, registering a growth of 13.1 percent. Pakistan's imports were up by 15.7 percent in the first nine months of the current fiscal year, rising from $38,369 million during FY2017 (July- March) to 44,379 million, showing an increase of $6,010 million in absolute term.

To slow down imports, an additional regulatory duty was imposed to curtail the inflated imports. Meanwhile, total public debt stood at Rs22,820 billion at end of December 2017, while total debt of the government was Rs20,878 billion.

Total public debt recorded an increase of Rs1,413 billion during the first six months of current fiscal year. According to the survey, the government scrutinized pro-poor expenditure in 17 sectors through the Medium Term Expenditure Framework (MTEF) under PRSP-II.

The provisional expenditures for July-December FY 2017-18 have been estimated at Rs1,134.1 billion as compared to Rs1,017.5 billion of the corresponding period last year. The number of BISP beneficiaries increased from 3.73 million in FY 2012-13 to 5.6 million as on December 31, 2017.

BISP’s annual disbursement increased from Rs16 billion in FY 2008-09 to Rs121 billion in FY 2017-18. The quarterly cash grant enhanced from Rs3,000 per family in FY 2012-13 to Rs4,834 in FY 2016-17.