Header image design: Hussain Afzal

Economic Survey 2022-23: Dar argues against rupee devaluation as he unveils govt’s report card

  • Finance minister says Pakistan was faced with severe economic challenges when current govt took over last year
Updated 08 Jun, 2023 05:59pm

After having set a target of 5% growth, Finance Minister Ishaq Dar unveiled on Thursday the Pakistan Economic Survey 2022-23 that showed GDP increase at a lowly 0.3%.

In what can easily be termed as one of the toughest years for Pakistan’s economy, Dar had his work cut out when he took over from Dr Miftah Ismail as finance minister last year.

What he saw during the next few months were devastating floods, a lingering programme with the International Monetary Fund (IMF) and months of political turmoil.

As he unveiled the outgoing fiscal year’s economic scorecard, Dar said Pakistan has already taken the tough reforms it needed.

“Any government that comes through polls can undertake tough political reforms,” said Dar. “We implemented them at the cost of political capital even though we took over mid-way.

“Despite all the constraints, including external and internal factors, we achieved GDP growth of 0.29% (provisionally). Agriculture, industry and services registered growth of 1.5%, -2.9% and 0.86%, respectively,” he said.

GDP growth (targeted and achieved)

Agriculture sector

Industrial sector

Services sector

He argued against rupee devaluation in his press conference, saying those who advocate the currency’s fall also need to see if exports have risen in the last three to four years.

“You look at the Real Effective Exchange Rate and tell me what the rupee value should be. Two economists from Bloomberg have said the same thing,” he said, referring to a recent note that argued the rupee could appreciate if political turmoil in Pakistan ended, and the pending review with the IMF was revived.

Rupee’s performance this fiscal year

“The economy has been marred by loss of confidence.

“But I can tell you that hoarders of dollars will end up losing money. The currency is undervalued due to artificial reasons and we are addressing the problems.

“We have taken administrative measures to curb smuggling of wheat and urea as well as foreign exchange,” he stressed.

Dar said the focus now needs to be on economic stabilisation.

“In 2013, when we assumed power, our aim was to ensure we address 3 Es — economy, energy, extremism.

“Now, we have expanded it to 5 Es — export, equity, empowerment, environment, energy.

“Similarly, had we not regained control (last year in April), the economy would have been in a far worse shape than it is now.”

Dar said Pakistan’s economy contracted in FY20, calling it a “base effect” for higher growth in the subsequent years.

“When the government took over last year, we were facing severe challenges. Our fiscal space had shrunk, and inflationary pressures remained high. The current account deficit was sky high, whereas our financing needs were also rising,” said Dar.

“Our biggest concern is Pakistan’s external account.”


Dar said the more relevant figure for inflation would be ‘core inflation’, which has been lower than the headline CPI number.

Inflation during FY23

“Higher international commodity prices, global supply-chain disruptions, damage to major and minor crops due to floods, currency depreciation, currency price adjustment are the major factors responsible for high inflation,” said Dar.

Current account deficit

Dar said despite making external debt payments, Pakistan has powered through and honoured its commitments.

“The cumulative current account deficit from July to April has improved. In the last 10 months of FY23, it has now reduced to $3.3 billion. This was very painful but much needed to protect sovereign commitments.”

The current account deficit has remained at a sustainable level, he said.

“We still have another two months to go,” said Dar.

Current account deficit

SBP-held foreign exchange reserves

Dar said the Pakistan Stock Exchange (PSX), formed after the merger of three markets in Islamabad, Lahore, and Karachi, has seen its market capitalisation erode in the last few years.

“Its market cap has gone down from $100 billion.”

PSX’s performance

Foreign Direct Investment

Dar said foreign direct investment (FDI) in Pakistan stood at $1,523 million in last 10 months of FY22, an amount that reduced to $1,170 million in the current fiscal year.

“The decline is due to the Ukraine war, Covid-19 and financial turmoil,” he added.

FDI in Pakistan

GDP per capita

GDP per capita over the years

SBP’s key policy rate

Dar said after SBP’s independence in setting the key interest rate, there is nothing a government can do.

“I may have a different opinion on it because this is a vicious cycle (of higher policy rate and low economic growth). Because of higher inflation, we have had to see higher policy rates.”

SBP’s key policy rate

Some key economic indicators as % of GDP

“The government prioritised national interest over political capital, and took measures to avert the looming threat of default.”


1000 characters
Arshad Jun 08, 2023 04:35pm
thumb_up Recommended (0) reply Reply
Ali Asghar Jun 08, 2023 04:37pm
"Now we have expanded it to 5 Es, export, equity, empowerment, environment, energy" Mr. Dar, Where does "economy" exist in your aim now?
thumb_up Recommended (0) reply Reply
AmirSh. Jun 08, 2023 06:14pm
State of economy in Pakistan is in shambles. All economic indicators have doomed and inflation is sky rocketing. Unfortunately, all powerful quarters in our beloved motherland fighting to satisfy their mountain high egos. A miracle is needed to solve these problems. Sad, very sad, indeed very sad!
thumb_up Recommended (0) reply Reply
Shehzaib Javaid Pasha Jun 08, 2023 06:47pm
Broaden the tax base, trim the non- development expenditure, continue with controlled CA deficit with strong price control mechanism would slide the inflation down leading to cut in discount rate, which would subsequently translate to reduction in debt servicing cost, triggering cushion in cash flows to catalyze growth.
thumb_up Recommended (0) reply Reply
KU Jun 08, 2023 07:56pm
A joker at his best, entertaining everyone in the face of impending doom. We are living through gradual extinction and everyone is in deep slumber or unable to even twitch.
thumb_up Recommended (0) reply Reply
Tulukan Mairandi Jun 08, 2023 10:42pm
The country is doomed to default and for famine. While these numbers are not surprising, What's surprising is the establishment is actively supporting this failed regime. In the run up to these disastrous numbers (reality is much worse actually as these are made up numbers), PTI was deliberately crushed..
thumb_up Recommended (0) reply Reply
Rebirth Jun 09, 2023 04:22am
The worst economic performance of any government in our entire history. The only other example was the PTI in its first year, when we had our first ever negative growth. This one was just as bad but the IMF saved them (and so did they) by reporting a 0.3% growth. As far as anyone in Pakistan is concerned, with 35% inflation, they also had negative growth. It’s hard to imagine anyone can possibly vote these people in power again or even wish for them to return from exile once they go back abroad. Those already outside are better off staying there. In spite of these insurmountable challenges of incompetence that no one has to face except us because of our politics, our reduced per capita income shows that we have a 400 billion dollar economy, which places us a few billion away from nations like UAE and Egypt. Their per capita income is higher. At this rate, we may even get close to Bangladesh. Our nominal GDP would double if our economy was documented and we had a higher tax-GDP ratio.
thumb_up Recommended (0) reply Reply