Finance Ministry projects negligible current account deficit

ISLAMABAD: After failing for striking consensus on macroeconomic projections with planning ministry, the Ministry of Finance has projected a negligible current account deficit within next five years which many experts believe as highly unrealistic targets keeping in view the massive gaps on external accounts.

The Ministry of Finance has also ignored the technical advice of the Planning Commission despite this fact that the macroeconomic projection is domain of the Planning Commission under the rules of the business for running the government affairs. Although, both the sides were tight lipped but the sources said that consensus could not strike and now it was decided that the Planning Commission would also give presentation before taking any final decision on macroeconomic projections.

The Ministry of Finance and Planning held high level meetings to evolve consensus on macroeconomic projections over the next five years from 2018-19 to 2022-23 and Advisor to Ministry of Finance Khaqan Najeeb made presentation on the major targets. In a flawed strategy, the ministry is projecting that the current account deficit which peaked to 6.1 percent of the GDP or $18 billion in 2017-18, was expected to slash down in coming years and could touch below 1 to 1.5 percent of the GDP in coming years.

So far the macroeconomic targets envisaged under 12th Five Year Plan proposed by Ministry of Planning and macroeconomic framework placed by Ministry of Finance is not on same page, although, meetings had already kick-started to devise unanimity on major economic targets.

The macroeconomic framework is domain and responsibility of Planning Commission under the rules of business but the fiscal framework is responsibility of Ministry of Finance. So both the sides along with other stakeholders including Ministry of Commerce, FBR, SBP and others will have to sit together to evolve consensus on economic targets and ensuring ownership for delivery on all fronts.

According to macroeconomic framework under 12th Five Year Plan from 2018-19 to 2022-23 prepared by the Planning Commission, the government wants to achieve an average growth rate of agriculture sector to the tune of 1.6 percent in five years period with 2.4 percent in 2018-19, 3.7 percent in 2019-20, 3.9 percent in 2020-21 and 4.1 percent in 2022-2023.

The important crops envisages an average growth rate of 2.6 percent in five years period from 2018-19 to 2022-23 with expected negative growth of 0.8 percent in 2018-19, 3.2 percent in 2019-20, 3.5 percent in 2020-21, 3.5 percent in 2021-22 and 3.5 percent in 2022-23.

The live stocks envisages average growth rate of 3.8 percent in five years period up to 2022-23 with 3.4 percent in 2018-19, 3.8 percent in 2019-20, 3.8 percent in 2020-21 and 4 percent in 2022-23.

The industrial growth on average will achieve growth rate of 6.8 percent in five years period with 3.7 percent in 2018-19, 5.8 percent in 2019-20, 7.1 percent in 2020-21, 8.4 percent in 2021-22 and 9.2 percent in 2022-23. In the industrial sector, the manufacturing sector was envisaged achieving average growth rate of 6.9 percent in five years with 3 percent in 2018-19, 5.8 percent in 2019-20, 7.4 percent in 2020-21, 9.1 percent in 2021-22 and 9.4 percent in 2022-23. The large scale envisages average growth rate of 7 percent in five years period starting from 2.1 percent in 2018-19, 5.5 percent in 2019-20, 7.5 percent in 2020-21, 9.7 percent in 2020-21 and 10 percent in 2022-23.

The commodity producing sector will achieve average growth rate of 5.4 percent under 12th Five Year Plan with 3.1 percent growth rate in 2018-19, 4.8 percent in 2019-20, 5.6 percent in 2020-21, 6.4 percent in 2021-22 and 6.9 percent in 2022-23.

The services sector is targeted to achieve an average growth rate of 6.1 percent in five years period with 4.9 percent in 2018-19, 5.8 percent in 2019-20, 6.2 percent in 2020-21, 6.5 percent in 2021-22 and 7.1 percent in 2022-23.

The average GDP growth in five years is targeted at 5.8 percent with 4.2 percent in 2018-19, 5.4 percent in 2019-20, 6 percent in 2020-21, 6.5 percent in 2021-22 and 7 percent in 2022-23.