ISLAMABAD: Federal Minister for Planning and Development Asad Umar has said that the government has envisaged a 4.8 percent gross domestic product (GDP) growth target for financial year 2021-2022.
Responding to a question at a press conference on Friday, Umar also highlighted the problems being faced by investors and bureaucrats due to ‘an environment of fear’ created by the National Accountability Bureau (NAB).
He said the governance matters as a result of the fear created by certain NAB actions have “almost frozen”, adding that the government had requested the opposition parties in the parliament to bring a new legislation on the NAB but the opposition parties did not cooperate with the government.
He said that now the government has decided to bring a “necessary legislation” in relation to on its own.
Highlighting the achievements of government, Umar said, in the nine months of the current fiscal year, IT exports showed a growth of 46 percent.
He said the country has witnessed a strong growth during the fiscal year, and it is expected that the remittances would shoot up from $21.7 billion to $29.1 billion by the year end, an increase of 34 percent in a year.
He said if we combine the 3.94 percent GDP growth and the increase in remittances, it will take the gross national product (GNP) growth to 6.5 percent, which is the “highest” GNP growth in the last 16 years.
He further said remittances played an important role in helping the country’s economy grow, and it is important that we should give overseas Pakistanis the right to vote.
Shedding light on why the government is expecting a 4.8 percent GDP growth in fiscal year 2021-22, he said that the government has invested in the agricultural sector, which will greatly benefit the economy.
He said cotton crop was badly affected last year and this year, however, the government has now bought good quality seeds, and the demand for cotton has increased in the international market since.
He said the government has set 10.5 million bales cotton production target for the next year.
“And so, after consultations with all the provinces, we have concluded that Pakistan can produce 10.5 million bales of which four million from Sindh, six million from Punjab, and the rest from other provinces.”
He said that the livestock sector has also been adversely impacted by the coronavirus, but in the next fiscal year, it will move towards normalisation, and growth will be visible in this sector, too.
The minister said electricity consumption is expected to grow by six percent, and after the government announced a package for the industries, their power consumption has gone up 15 percent during the current fiscal and it will grow further in the next year.
Growth is also expected in gas, coal, construction, and among several other sectors.
This year exports stood at $25.2 billion, and in the next year, exports will move up to $26.8 billion,“ he added.
The minister said that the country’ local gas production - first time in a decade - is to increase by 200 million cubic feet per day (MMCFD) in the next year.
Answering a question about the reasons behind increase in gas production, the minister said, that it is a result of the past four to five years developments in the sector and it will help reduce the country’s import bill.
The minister said this year’s $25.2 billion worth of exports are the country’s highest figures in the last 10 years.
He said next year’s target for exports - $26.8 billion - would be the highest in the history of the country.
“The remittances might not grow like this year, but they are expected to move up from $29.1 billion to $31.3 billion - an expected increase of $2 billion in the next financial year,” he said.
The minister said the government is aiming at taking up the exports and expanding the IT sector, he said, adding: “The IT exports increased by 46 percent.”
The Public Sector Development Programme (PSDP) stood at Rs650 billion for 2020-21, which has been increased to Rs900 billion for the next fiscal year, a huge increase of Rs250 billion.
He said that during the ongoing year, the government failed to utilize Rs650 billion allocated for PSDP spending but one major reason was the fear of the NAB as officials concerned showed hesitation to sign various files.
Giving an overview of the development spending for the next fiscal year, he said it envisages road infrastructure projects including Hyderabad-Sukkur motorway.
The packages announced for Karachi, and select districts of Sindh and Balochistan, and Gilgit-Baltistan will be financed through the PSDP, the federal minister said.
Similarly, funds will be provided from the development plan for the construction of dams.
Rs28 billion will be allocated for health, Rs37 billion for the Higher Education Commission, and Rs5 billion has also been set aside for skills education programme.
The planning minister said the current account deficit for the next fiscal year has been estimated at 0.07 percent.
He said the government has set investment target of 16 percent of the GDP.
He said the government will start up to Rs1,000 billion projects in the next year on the basis of public private partnership.
Asad Umar said that the government has spent Rs100 billion on Covid-19-related projects and in the next year, a few hundred million dollars will be spent on the purchase of coronavirus vaccines.
He said that agriculture growth target is set at 3.4 percent, industrial growth target at 6.8 percent, and services sector growth target at 4.7 percent. Reuters adds: For the year ending next month, Pakistan has said it is on course to achieve 3.94% GDP - more than double the IMF’s view and roughly triple the World Bank’s projection.
“This growth is an indicator that the revival that has started is continuing its momentum,” Umar told a news conference in Islamabad.
The government has met with scepticism over its forecast for the current financial year, which it has raised from a previous 3% and an original target of 2.1% set in the last budget.
The IMF is estimating GDP growth for 2020/21 at 1.5%, while the World Bank puts the expected expansion at 1.3%.
Pakistan has also revised down its GDP data for the financial year that ended last June to show a contraction of 0.47% from one of 0.38%.
The government says its policies to handle the economy during the pandemic have worked well as the country opted for a complete lockdown for a very short period of time.
“This is growth that has come from the production sector and not from consumption,” Umar said.
Ratings agency Fitch said Pakistan’s economy appeared to have weathered the pandemic shock well relative to its peers. It said provisional data pointed to GDP growth of 3.9% in the current financial year, after a contraction of 0.5% last year.
“We forecast GDP growth will stabilise at 4.0% in FY22, supported by a continued strengthening of domestic consumption and resilient manufacturing and construction activity,” it said in a statement.
But it said that the current COVID-19 third wave could disrupt the positive momentum into FY22 and that the risks from the pandemic persisted amid a sluggish vaccine rollout.
Pakistan has received 1.2 million doses so far under the COVAX programme, enough to vaccinate 600,000 people in a country of 220 million. It has secured around 18 million doses in all, mainly by buying vaccines from China.
In view of the growth momentum, the central bank on Friday kept its main interest rate at 7%, days ahead of the annual budget announcement. The government is facing challenges over the fiscal deficit and an ambitious revenue-collection target under an IMF programme.
Umar said the budget will allocate 900 billion Pakistani rupees ($5.8 billion) for public sector development, up around 250 billion Pakistani rupees from last year.
The South Asian nation of 220 million people agreed on a $6 billion IMF stabilisation programme in 2019, months after Prime Minister Imran Khan’s government delayed it.
GDP growth stood at 5.8% before Khan took office in 2018 with inflation below 4%. The inflation rate was in double digits last month.
Copyright Business Recorder, 2021