ISLAMABAD: While unveiling the Economic Survey 2022-23, a day before the budget, Finance Minister Ishaq Dar dwelt on a rose-tinted assessment of his previous tenure and proceeded to claim that there is a Plan B in the event that the International Monetary Fund (IMF) does not declare the staff level agreement a success.
Addressing a press conference along with other members of the economic team at the launch of the Economic Survey on Thursday, Dar maintained that the GDP growth rate of 0.29 percent is a realistic achievement on the face of flood and global commodity prices’ increase and other factors and could not have been more than this. Dar described the external account as the biggest challenge.
He added that the Economic Survey highlights key economic indicators, development policies, strategies as well as trends in the sectoral success of the economy.
When asked about what is the government’s Plan-B, he said that the country has assets of trillions of dollars and added whether the programme is completed or not, it would end in June 2023.
However, he hurriedly added that completing the 9th review is important as its completion would open inflows of the WB “RISE project” and the AIDB programme.
Dar said that the budget numbers have been shared with the Fund and there is nothing in the budget that could be objectionable as fiscal deficit is being reduced and growth and revenue are being increased.
When asked whether he would go into negotiation with the Fund for the next programme after June 2023, he said that it will be the prerogative of the government that comes to office after winning the election. When asked the government is left with only two months in office but is presenting the budget for the entire fiscal year, Dar’s response was that it is the constitutional responsibility of the government to present the budget for the entire fiscal year.
The finance minister said that some global negative indicators also played a role in this economic impasse, including a decline in the global GDP growth rate and global inflation. Dar said that the growth rate of world trade also decreased and Pakistan being part of the global village was also affected by it.
He said that a policy difference between him and the IMF does not make a difference and everyone must respect it. The finance minister said that political instability has been one of the major factorsof the economic impasse besides a negative global GDP growth rate and a surge in global inflation.
The minister said that the government’s objective is to restore macroeconomic stability and the country has been put on the path of development of fiscal year 2017 level and claimed the real effective exchange rate is Rs244 and not Rs285. He said that difference of Rs45 was consequent to the uproar about the IMF programme, negative market perception as well as low foreign exchange reserves and some “hidden hands” involved.
He also claimed of arresting the declining trend of the economy and now it would be put on the path of development.
The finance minister said that the circular debt of the energy sector after an increase of Rs129 billion per annum accumulated to Rs1,148 billion during 2018 and subsequently, with an increase of Rs330 billion in the following three years touched Rs2,467 billion.
He said that public debt from 63.7 percent of GDP in 2018 was increased to 73.9 percent of the GDP, reflecting an increase of around 10 percent. As a result, he maintained that a major chunk of revenue collection is being spent on interest payments.
He added that the interest payment in 2017 was less than Rs1,800 billion. He said that an increase in debt was unsustainable and what was more damaging was that the government has reversed sovereign commitments after sensing success in the vote of no confidence in the Parliament.
He said flood was another factor for the dismal economic performance during the current fiscal year as floods caused economic and infrastructure loss of $30 billion to the county.
He said that the government IMF programme should have been completed in 2022 but was not done because of the failure of the previous government to honour commitments. He said that the government has paid a heavy political cost for the revival of the IMF programme and implemented painful and difficult economic reforms in the power and gas sectors besides the fiscal side. He said that the government has taken steps to comply with the conditions of the IMF.
Dar added that the government has reduced $5.5 billion commercial debt and one billion dollar bonds and is taking measures to stop smuggling of wheat, fertiliser and dollar to the neighbouring country.
Dar said that average core inflation is 18 percent while adding that a number of factors have been responsible for higher inflation including global supply chain disruption etc.
The finance minister said that the FBR revenue collection number of May end indicates 16.1 percent increase in revenue collection and against the target of 7,00,000, 9,12,392 new taxpayers have been brought into the tax net. He said remittance and exports have declined by 13 percent and 12.1 percent respectively, whereas, imports have contracted by 29.2 percent.
He said that going forward GDP target is 3.5 percent and to achieve this, incentives for agriculture, industry, and IT exports would be announced today (Friday) in the budget for the next fiscal year. He said that the 5Es – exports, equity, environment, e-Pakistan, and energy would be pursued to achieve development.
Copyright Business Recorder, 2023