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Hafeez Pasha says actual GDP growth is 1.9pc

By Khalid Mustafa
February 08, 2020

ISLAMABAD: Dr Hafeez Pasha, a top economist, has questioned the working of the financial managers of the incumbent regime in borrowing the loans from the State Bank of Pakistan (SBP) and calculating the GDP in last financial year 2018-19.

“The government has done a strange act which was never happened in past as it borrowed last year Rs3,000 billion from the State Bank and in advance before the year to end it has cleverly borrowed Rs1,200 billion prior to going into IMF programme knowing the fact that IMF bans the government from getting loans from the SBP. And more interestingly, he said, the said Rs1200 billion amount is included in the Rs11,000 billion of debt so far piled by the government.

Dr Pasha said that GDP growth figure of 3.3 percent is not right rather it was 1.9 percent and during the current financial year it would be hovering between 1.2 or 1.3 percent. He said that according him and his team’s estimates in last year one million people got unemployed and this year about 1.2 million will lose their jobs as the economy will further be contracted this year.

He said 2 million people used to enter into labour force, but now the ground reality speaks otherwise as in first two years of PTI government, about 2.2 people are estimated to lose their jobs. He said his working about GDP is based on unbiased research. He said that the country is experiencing severe kind of stagflation which means high inflation and lowest rate of production and employment.

While talking to The News, Dr Pasha said that in last year six sectors of economic went down and showed negative growth owing to which the GDP growth stood at 1.9 percent, not at 3.3 percent. “This has never happened in the past when six sectors of economy remained in negative zone,” he said.

He also disclosed that the Pakistan Bureau of Statistics (PBS) has surprisingly worked out the growth in prices of gas and electricity by 40 percent but showed the increase in production of electricity at just 2 percent which is enough to show this institution has no capacity to work out correct numbers about economy.

The News sent a questionnaire to spokesman for Finance Ministry Omer Hameed who initially said that the ministry is going to respond to Dr Pasha’s assertions, but after two hours informed that the ministry will not respond to it. The spokesman, however, said that Adviser to PM on Finance and Revenue Dr Hafeez Shaikh in a private channel talk has responded to Dr Pasha and that is the response from the government. So The News has also added in last potion of the story the version of Dr Hafeez Shaikh which he gave to a private channel.

Dr Pasha while mentioning the current inflation that stands at 14.6 percent, claimed that PBS figures are biased as it say that in 17 cities the price of flour is Rs47 per kg which is far from reality. He said inflation stands at 21 percent. However, he said, food inflation stands at 25 percent, whereas the wholesale price is 14 percent and retail level price is at 11 percent. He said inflation will not go down. However, he said, the government can endeavour to reduce the pace of increase in inflation.

To a question, he said that after going into IMF programme, the government has taken 6-7 steps in one go which should have been taken in three years time. He said that the government has increased the electricity and gas prices manifold with 40 percent devaluation of Pakistan rupee against US dollar and slashing down the development budget by 30 percent. He said these said steps have resulted into massive slowdown in economy.

He said the government must pay heed to agriculture sector and to reduce the sugarcane cultivation immediately and increase the cotton production. He said the government needs to increase exports and to this effect the government should reduce the electricity tariff by erasing taxes, surcharges and fuel adjustment cost which have been imposed in addition to 7.5 cents per unit and restore the zero-rated status to exports industry. He mentioned that military establishment has not increased its budget s but the civil government has unfortunately increased its expenditures.

Dr Abdul Hafeez Shaikh in a private channel without mentioning Dr Pasha’s name said the PBS is an institution which works out the numbers of GDP, inflation, imports, exports, and reserves. He emphasised that in last year the growth was 3.3 percent and in the current year the GDP growth will surpass 3 percent. He said everyone is speaking about the growth and its number these days. “There is a need to understand what does the growth mean,” Dr Shaikh said. He said that in his view growth means improvement in lives of common people.

Dr Abdul Hafeez Shaikh said that in last five years of PML-N government there was a growth but after getting out of IMF program. He said when one uses the credit card of one’s father and spends the money and purchases everything, then it can be said that the one who spends the money lavishly has good growth but it is the father who receives credit card bills. “That’s what exactly happened to Pakistan in last five years and the then government borrowed loans in the name of growth and spent them.” He said that those countries which have shown the quality growth is just because of their exports and in Pakistan the governments used to spend borrowed money in consumption not on exports and this is the existing government which is trying from pillar to post to focus on exports so that people could get maximum jobs.