- Finance minister reviews past-year's performance while unveiling Economic Survey 2020-21
- Says country now dependent on international food prices
- Needs economic growth of 6-7%, adds Tarin
Finance Minister Shaukat Tarin unveiled the Economic Survey 2020-21 on Thursday, reviewing economic performance as the country battled the pandemic as well as the contraction witnessed in the previous year.
Pakistan will end this fiscal year with a surprise growth figure of 3.9%, beating several earlier projections that fell in the range of 1-2%. The V-shaped recovery, Tarin said, comes on the back of several fiscal and monetary measures that were introduced during the outgoing fiscal year.
"Smart lockdowns was a great idea," said Tarin, who replaced Hammad Azhar, as the country's finance minister earlier this year. "Several countries did not follow the same policies, and suffered."
Addressing the topic of inflation, Tarin said Pakistan has become a net food importer, and is now dependent on international prices of commodities.
"The country is now importing wheat, sugar, palm oil among others."
Pakistan recorded inflation of 8.8% during July-May of the outgoing fiscal year as food prices remained a major issue for the country. With the pandemic and closure of several businesses, many were plunged into poverty.
However, he credited remittances, and the recovery of the manufacturing sector as Pakistan registered a V-shaped recovery.
"We did not pass on the impact of rising crude oil prices to the consumers," said Tarin as he addressed reporters in Islamabad.
The finance minister, the current government's fourth in less than three years, also said focus will remain on growth as the economy is steered towards stabilisation. The ex-banker also highlighted the role of Pakistan's IT sector, saying that it will be promoted in the coming fiscal year.
"The IT sector is growing by 40%. We want to see growth of 100% in the coming year. Our focus is on increasing exports, and we will give several incentives, as you will see in the budget (on Friday)."
To a question, Tarin said countries usually increase their tax revenue by focusing on indirect taxation first. However, as Pakistan moves forward, focus will be on consumption and income tax.
"Usually, developed countries focus on indirect taxation first. As Pakistan adopts more technological-savvy measures, direct taxation will increase as well," said Tarin, referring to policymakers' inclination to focus on withholding taxes, and indirect taxation to increase revenue.
"The tax authority will be reformed."
Review of 2020-21
As per the economic survey, GDP is projected to have grown at 3.9%. The investment-to-GDP ratio declined from 15.3% to 15.2 % in 2020-21.
Manufacturing sector also saw a high growth of 8.7% against contraction of 7.4 % last year. Meanwhile, agriculture sector achieved its growth target, as it grew by 2.8% in the current year against 3.3% in 2019-20.
Furthermore, services sector, which was worst affected in 2020 due to the coronavirus pandemic, revived as it posted 4.4% growth against a negative growth of 0.5% last year.
The government also collected Rs4,170 billion in revenue (July-May 2021), the highest ever in Pakistan's history.