Adviser expects FY2020 growth estimate to worsen further

ISLAMABAD: Adviser to Prime Minister on Finance Hafeez Shaikh expected growth estimate for the last fiscal year to further worsen, expressing doubt over the data compilation, people familiar with the matter said on Thursday.

Sources said the adviser, during a meeting of the monetary and fiscal policies coordination board, expressed doubt over data provided for policy formulation.

Provisional GDP growth stood at negative 0.4 percent for 2019/20, but the revised estimates might further aggravate, the adviser said, citing initial estimate of 3.3 percent for FY2019 having revised down to 1.9 percent.

The finance adviser took exception on lack of reliable data on unemployment by the Pakistan Bureau of Statistics (PBS), according to the sources.

The government failed to appoint chief statistician at the PBS in last two years.

The finance adviser underscored the need for building capacity of PBS for providing reliable data, which he said will help in effective policymaking.

“The government is committed to follow macroeconomic fundamentals through effective policy making and targeted reforms with an aim to achieve sustainable and inclusive growth trajectory,” Shaikh said in a statement.

Finance adviser emphasised on active role of this board for designing policies to address economic challenges like inflation, stagnant exports and resource mobilisation.

The adviser urged the role of public-private partnership, which can help the government in resource mobilization.

“PPP (public-private partnership) authority should come up with a comprehensive plan of resource mobilisation for socioeconomic development of the country,” he said.

“The mandate of this high-powered board is to review the overall economic situation and coordinate policy actions in an effective manner to achieve on desired targets of key economic indicators.”

Shaikh said the economy is on path of recovery. He also highlighted the various policy measures adopted to achieve high economic growth and job creation.

SBP Governor Reza Baqir said the efforts of ministry of finance for making technical committee to design joint macro-economic framework would help in making effective monetary and fiscal policy being the prime objective of the forum. The policy rate has been kept unchanged at 7 percent due to improved business confidence and growth outlook.

“The current accommodative stance of monetary policy will support economic recovery,” said Baqir. “Inflationary pressure is also expected to ease out in coming months due to various policy and administrative measures of the federal and provincial governments.”

Adviser for Commerce and Investment Razak Dawood said exports were $ 3.6 billion while imports were $ 6.9 billion during the first two months of FY20/21, which reduced the trade deficit.

“However, the performance of exports remained subdued in August due to the supply chain effect owing to unprecedented monsoon rains,” said Dawood.

“Exports will register sharp improvement in September. Current account balance is in surplus, which will have positive impact on the exchange rate stability of the currency.”

Deputy Chairman Planning Commission Jehanzeb Khan apprised the meeting that coronavirus affected the confidence of both consumer and investors.

“However, the stimulus package of the government and recent accommodative monetary policy are providing impetus to investment and growth,” said Khan.