Before the aspirations and optimism of the federal budget for the next fiscal year, there has to be a reckoning. The annual Economic Survey, which gives an overview of the performance of the economy over the previous year, showed once again that the government’s projections were far from being met. In presenting the survey, Finance Minister Ishaq Dar said that the GDP for the year was 5.28 percent, far short of the target of 5.7 percent. Still, the growth was the largest the country has experienced in the last 10 years and shows that the investments pouring in through the China-Pakistan Economic Corridor are having an effect on the economy. That inflation clocked in well below expectations, at just over 4 percent as opposed to the predicted 6 percent is another sign of the strength of the economy. The industrial and services sectors continue to boom, with both registering growth of more than 5 percent and the service sector now contributes to 60 percent of our total GDP. It is a sign of a maturing economy when there is so much expansion in the service sector. Ishar Dar was upbeat throughout his presentation, pointing out that the total volume of the economy had crossed $300 billion for the first time. And there is certainly reason to be happy, with the government’s focus on growth now paying dividends.
Still, any jubilation needs to be tempered. There are some worrying signs in the figures presented by the finance minister. The trade deficit widened to $24 billion, with exports only bringing in $21.76 billion. This is mostly due to the extra capital expenditures we have paid to import heavy machinery for CPEC-related projects and the hope is that those investments will pay off in the future. But much of those imports have been paid for through loans and if we are to be able to repay them then it is vital that our export base is expanded as soon as possible. Dar was also happy that the government met its budget deficit target of 3.8 percent but the figures barely tell the story. The Federal Board of Revenue was not able to come close to the amount it projected to collect in the form of income taxes. The shortfall was made up by removing power subsidies and increasing indirect taxes, which are regressive and disproportionately hurt the poor. Dar didn’t have much to say about the informal sector either, which by some estimates is close to half of the documented economy. The revenue lost through the black economy means that the government continues to balance the budget on the backs of the poor. The budget for the upcoming year is likely to give us more of the same, as the government focuses on growth without ensuring that growth is equitable. This is why, although there are reasons to be pleased with the performance of the economy, we now need to ensure that the benefits are felt by all.