LAHORE: Former federal finance minister and PTI Senator Shaukat Tarin has predicted that Pakistan would register a negative Gross Domestic Product (GDP) growth after dismissing the government’s claim of achieving GDP growth in the range of 1.5 percent; saying that “the country was showing negative growth in large scale manufacturing (LSM), agriculture and other sectors, and under these circumstances, a positive GDP growth was not possible.”
He expressed these views while addressing a press conference here on Thursday; he was accompanied by PTI leader Jamshed Iqbal Cheema. While quoting the latest official figures, the former federal minister pointed out that LSM registered -5 percent growth in the last six months while exports and remittance showed a decline of -16 percent and -19 percent, respectively, in December last.
“Moreover, for the first time, Foreign Direct Investment (FDI) showed a significant decline in December 2022 as compared to the corresponding month a year ago; recently the foreign investors withdrew their investment to the tune of US 17 million dollars from the country. Hence, money was not coming into Pakistan, rather it was leaving. As per the latest survey, foreign investors believe that Pakistan was on the wrong path and these sentiments have been reflected in the FDI figures,” he added.
Tarin hopes govt will help country avert ‘default’
“This has created a huge financial gap and thus the government was relying on heavy borrowing to plug it; in the last six months alone the incumbent government has borrowed Rs 6.5 trillion. In comparison, in its three-and-a-half-year tenure, the PTI government borrowed Rs 19.3 trillion, but at that time the GDP had increased by 74 percent,” he said.
Tarin accused the coalition government of destroying the country’s economy; “the regime change operation has proved detrimental for our economy”.
He said that when their government was removed, the inflation stood at 12 percent and now it was touching 25 percent.
“Businesses were closing in the country and the people’s income was decreasing while the shortage of dollars was delaying foreign payments and subsequently hurting our trade,” he added. “Right now, banks were refusing letters of credit (LCs) due to a shortage of dollars; LCs worth US 4-5 billion dollars were pending due to which 5,700 containers were idle at the ports. Moreover, payments to shipping lines, foreign airlines, and profit remittances to the tune of 1.5 billion have been suspended.
While dismissing the claims of the State Bank of Pakistan’s governor that the inflow of dollars would increase from next week, the former minister disclosed that no inflows were coming into the country at the moment; “all (institutions and countries) have attached their inflows with the resumption of the International Monetary Fund (IMF) programme”.
Talking about the IMF programme, he averred that all were saying, including the IMF and the donor countries, that Pakistan should implement the programme. He pointed out that the IMF was saying that our revenues were low while expenses were high; “earlier, the government had committed with the IMF that the fiscal deficit would come down to around 4.6 percent, but our revenues have declined and expenses have doubled due to hike in the energy cost by Rs 123 billion per month.
Hence, the IMF was asking the government to increase taxes to fill the financial gap. Moreover, they have an objection over the variation in the exchange rate of rupee and thus demanding of the government a market-based exchange rate,” he added.
Copyright Business Recorder, 2023
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