In a major dip in the economic growth, Pakistan's economy grew at an average rate of 3.29 percent in the fiscal year 2018-19 against an ambitious target of 6.2 percent set in last year's budget, the Pakistan Economic Survey revealed on Monday.
The government unveiled the Economic Survey 2018-19 -a report card displaying all economic indicators and how the Imran Khan-led government performed in its first year in power.
Advisor for Finance Abdul Hafeez Shaikh who unveiled the Economic Survey at a press conference ahead of the announcement of budget on June 11, said burgeoning debt has become a major burden for Pakistan's economy.
"The previous governments took Rs 31,000 billion loans in the last 10 years, he said. Now we have to pay Rs 3,000 billion as interest on those loans.The country has also accumulated around $100 billion external loans which included $9.2 billion in the tenure of the present government that took charge in August 2018", he said. The advisor admitted that new loans were being used to pay off old debt.
He said the government this year spent Rs 2.3 trillion beyond its revenues by printing new currency which created inflation."If you spend trillions beyond your income, you will need to borrow, print money and increase prices. These all lead to increased inflation, he said.
"National entities like Pakistan Steel Mills, Pakistan International Airlines, Pakistan Railways, and others were running into losses and governed had to spend Rs 1,300 billion to keep them operational which put a lot of pressure on the economy", he said.
Shaikh also stated that the stability of the economy was the first priority which would be done by generating more resources and austerity."I don't want to create panic by giving the correct picture of the economy", he said, adding that more details will be presented in the budget speech.
The survey showed that the government missed targets set for the outgoing fiscal including 6.2 percent growth, as the economy grew by merely 3.29 percent. The agriculture sector grew by 0.85 percent against the target of 3.8 percent. The industrial sector grew by 1.4 percent against the target of 7.6 and the manufacturing sector was down by 0.3 percent. The large scale manufacturing showed a negative growth of 2 percent against the target 8.1 while the service sector grew by 4.7 percent against the target of 6.5. The construction sector achieved a growth of 7.6 percent against the target of 10 percent.
The fiscal deficit was recorded at 5 percent of the GDP compared to 4.3 in the corresponding period last fiscal.
However, Shaikh dismissed the dismal performance by saying the previous budget target was set by the government of Pakistan Muslim League- led by Nawaz Sharif and they were unrealistic.
Advisor on Commerce Razzak Dawood, who was with Shaikh, said that due to some difficult decision made by the government the trade deficit during current fiscal was reduced from USD 73.6 billion to USD 32 billion.
He said that de-industrialization had stopped due to policies of the government and that the new Free Trade Agreement (FTA) was also finalized with China which will help the industry.
Minister for Power Omar Ayub said that power generation improved due to better management. He said there was $80 billion investment opportunity in power generation and distribution sector.
Chairman Federal Bureau of Revenue (FBR) Shabbar Zaidi said that government was trying to increase the tax base and he urged the rich to pay more taxes.