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‘Economic recovery benefits transferring far and wide’

KARACHI: Benefits of economic recovery in Pakistan are being transferred across the board as sources of income are growing and that are reflective in many parts of the economy, a PM aide said.

Special Assistant to the Prime Minister on Finance and Revenue Waqar Masood doesn’t believe macroeconomic indicators are detached from the ground reality.

In a telephone interview, Masood recapped the economic indicators that showed speedy growth recovery and advocated their reflection of “what is really happening”.

Pakistan has seen record crops of wheat, rice and sugarcane during the current fiscal year. Wheat grew 8.1 percent, rice 13.6 percent, and maize 7.3 percent. Sugarcane recorded the second-highest ever production at 22 percent after eight years.

Since vast majority of labour force belongs to agriculture sector, he said flourishing crops mean improving income of farmers. Manufacturing sector is showing robust recovery with large scale manufacturing sector posting sharp spike. Annual industrial sector’s growth was primarily driven by a record growth of 9.2 percent in large scale manufacturing.

When agriculture sector and industries are performing that indicate for example logistics, banking and insurance businesses are also growing, he added.

Service’s sector growth was mainly driven by growth of 8.3 percent in wholesale and retail trade segment and 7.8 percent in finance and insurance sector.

Remittances showed double-digit growth. Around 90 percent of remittances come in $500 or so and that means recipients from the lower or middle-income group are largely benefiting. In 11 months, remittances grew 29 percent to $26.7 billion.

Besides, tax revenue is increasing and that means there are economic activities to boost the revenue. The Federal Board of Revenue recorded double-digit growth in the first 10 months of the current fiscal year and crossed the target by more than Rs100 billion. The net provisional collection grew by 14.4 percent to Rs 3.7 trillion from Rs3.3 trillion a year earlier.

“Considering the last year’s growth contraction and previous rates, the 4 percent growth rate of this fiscal year is an achievement,” Masood said. However, we don’t think the growth rate is sufficient. We want to create employment opportunities and for that the economy needs 6 percent growth for years to come.”

That also means continued and inclusive growth.

“It should not be like snake and ladders play or boom and bust cycle. We want to create enabling environment through encouraging private sector investment,” said Masood, who is an eminent economist and long associated with the civil bureaucracy. “At the same time, we don’t want to wait trickle-down effects to take place and we have bottom-up approach.”

The PM special assistant said people are creating doubt that economic growth targets are ambitious. “I think that there is a potential to go beyond that. Growth is driven by consumers, farmers and people.”

Masood doesn’t see any risks to the International Monetary Fund’s (IMF) loan program for Pakistan. He denied any chance of discontinuation of IMF program on differences over its implementation.

“There are differences and they are in every review. We have an arrangement with the IMF to keep targets in focus instead of minor adjustments,” he said.

Masood said prices are increasing because of high international commodity prices. “However, the government is keeping their impact on public at its minimal.”

The economist said access to credit is a challenge in agriculture and small and medium enterprise sectors.

“We want to bring the basic change. The government provides guarantee to banks to participate in the financial inclusion,” he said. “Provinces welcome improvement in access of farmers to credit. Two provinces are close with us. Sindh and Balochistan welcome us as it is about economic empowerment of people.”