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Monday June 16, 2025

Provisional GDP for FY25 worked out to be 2.7%, less than target of 3.6%: PM calls for swift FBR reforms with focus on digitisation, automation

Committee approved provisional growth of GDP at 2.68% during ongoing FY2024-25

By Ag App & Mehtab Haider
May 21, 2025
Prime Minister Shehbaz Sharif is presiding a meeting in Islamabad on April 3, 2024. —Facebook/ Mian Shehbaz Sharif
Prime Minister Shehbaz Sharif is presiding a meeting in Islamabad on April 3, 2024. —Facebook/ Mian Shehbaz Sharif 

ISLAMABAD: Prime Minister Shehbaz Sharif on Tuesday ordered the immediate and effective implementation of ongoing reforms in the Federal Board of Revenue (FBR), with a strong focus on digitisation and automation of the tax system.

The prime minister, while chairing a high-level review meeting here, emphasized the need for decisive action to correct, what he described, as 70 years of mismanagement in the tax system.

PM Sharif stated that while maximum facilitation would be provided to honest taxpayers and businesses, those involved in tax evasion would face strict legal action without any concessions.

The prime minister acknowledged the efforts of FBR and its supporting enforcement agencies in enhancing tax revenue and appreciated their work as commendable. The meeting reviewed the introduction of a National Targeting System aimed at curbing sales tax evasion. This system will use e-tags and digital devices to track vehicles transporting goods and will be supported by an e-Bilty mechanism issued through the FBR system.

Digital monitoring systems will be installed at major highways and cities’ entry points to reduce smuggling and save time for commuters. The meeting was informed that a Customs Targeting System was also being introduced at ports and airports to automate the monitoring of imports and exports.

The system will use artificial intelligence and integrate with domestic and international databases to combat smuggling and tax fraud. Officials also briefed the meeting on plans to train FBR staff on the new systems and outlined a phased roll out beginning with a pilot project in a major city.

Sectors such as cement, hatcheries, poultry feed, tobacco, and beverages will come under stricter sales tax surveillance. It added that monitoring mechanisms similar to those used in the sugar industry were being extended to tobacco, beverage, steel, and cement sectors. The prime minister directed that all measures be implemented promptly, effectively, and in a sustainable manner.

Meanwhile, with the persistence of economic stagnation amid a combination of low growth and inflation, Pakistan’s economy has failed to materialise its real GDP growth target, having far-reaching negative impact on employment generation and rising poverty.

According to the last population census held in 2023, the population growth rate stood at 2.55 percent per annum, so a growth rate of around 2.7 percent is not going to bring real solace to common Pakistanis.

Pakistan clinched a growth rate of 2.68 percent, equivalent to almost population growth, in the aftermath of striking a deal with the IMF in the current fiscal year, compared to 2.4 percent last year. However, inflation dropped rapidly and showed deflationary trends, standing at 0.8 percent in April 2025 on a month-over-month basis.

The size of Pakistan’s economy in dollar terms stood at $411 billion in the outgoing fiscal year compared to $373 billion in the last financial year. The per capita income in dollar terms stood at $1,824 in the current fiscal year compared to $1,680 in the last financial year.

The growth rate of 2.7 percent was not consistent with ground realities, as in the first three quarters (July-March) the average GDP growth rate was estimated at 1.8 percent, while for the fourth quarter (April to June) it was assumed that the growth rate would increase to 5.3 percent. So in this way, the total growth rate clinched 2.7 percent.

The growth rate of 2.7 percent was largely achieved through improved livestock, electricity, and gas generation, with double-digit growth of 28.8 percent. With the assumption of 6 percent positive growth in construction in the last quarter, increased imports and higher government spending helped to jack up the growth rate.

The farm sector declined sharply and achieved a slightly positive growth rate of 0.52 percent in the current fiscal year compared to the impressive growth of 6.4 percent in the last financial year. It demonstrates that farmers belonging to the neglected agricultural sector are facing acute economic difficulties. The farm sector, especially major crops and large-scale manufacturing (LSM) showed dismal performance but amazingly the livestock in agriculture sector and small scale manufacturing performed well, raising many eyebrows that when large scale manufacturing faced difficulties how small industry could perform.

According to an official announcement made after the National Accounts Committee (NAC) meeting held on Wednesday under the chairmanship of the Secretary, Planning Ministry, the National Accounts Committee (NAC) approved Q3 and annual estimates for the financial year 2024-25. Updated growth rates during Q1 and Q2 of 2024-25 are 1.37 per cent and 1.53 per cent, as compared to 1.34 per cent and 1.73 per cent presented in the 112th meeting of the NAC respectively.

GDP has shown a provisional growth of 2.40 per cent during Q3 FY2024-25. The final and revised growth rates for FY2022-23 and FY2023-24 are -0.21 per cent and 2.51 per cent, respectively.

The provisional growth rate of GDP for FY 2024-25 is 2.68 per cent. The size of the economy has reached US$411 billion in FY 2024-25, whereas per capita income is $1,824.

The committee also approved the provisional growth of GDP at 2.68 per cent during ongoing FY2024-25. The provisional growth rates in agriculture, industry and services are 0.56 per cent, 4.77 per cent and 2.91 per cent respectively.

On the basis of latest figures of the national accounts aggregates for FY2024-25, the overall size of the economy stands at Rs114.7 trillion i.e. US$410.96 billion as compared to Rs105.1 trillion i.e. US$371.66 billion. Further, per capita income in Rupees is 509,174 i.e. US$1,824. However, the series of per capita income from 2016-17 onwards will be revised after the receipt of backward and forward projections of population from the sources on the basis of 2023- Population Census.

The committee approved the revised first and second quarter estimates for 2024-25. Overall, GDP for Q1 and Q2 for FY 2024-25 witnessed revised growth of 1.37 per cent and 1.53 per cent, respectively, compared to the 1.34 per cent and 1.73 per cent estimated in the 112th NAC meeting.