The government on Tuesday acknowledged that GDP growth target for the current fiscal year will be missed by a whooping 2 percent and would remain 4.2 percent and attributed the slowdown to stabilisation. "The GDP growth would remain 4.2 percent for the current fiscal year," said Minister of State for Revenue Hammad Azhar during a meeting of the National Assembly Standing Committee on Finance.
The minister said that slowdown in GDP growth is due to stabilisation required to mend the precarious economic situation created by the policies of the previous government. Pakistan Muslim League-Nawaz-led administration injected $25 billion in to the market to maintain the exchange rate at a particular level during the last five years. As a result, the country' current account deficit increased from $ 2.5 billion to $19 billion during the tenure of previous government.
When the present government came into power, the most immediate need was to arrange $12 to $13 billion financing gap and if the government would have accepted International Monetary Fund (IMF) conditions, the country would have faced stagflation and super inflation and now there is some leniency in the Fund conditions. Additionally, the minister stated that Rs 400 billion circular debt was created by the previous government during the last eight months and gas companies' operation went in deficit during the last two years of the previous government.
Responding to the members' questions about revenue shortfall in the current fiscal year, he said the government suffered a Rs 100 billion revenue shortfall from telecom sector following suspension of tax collection on mobile phone cards, Rs 150 billion due to adverse revenue measures by the previous government in its last budget and impact of Rs 25-30 billion revenue impact was already incurred from adverse revenue measure in the caretaker tenure. He said that no government achieved revenue collection target during the last one decade.
The minister was also critical of previous government's claim of achieving 5.8 percent GDP growth and stated the number has recently been revised downward by the Pakistan Bureau of Statistics (PBS) to 5.2 percent. He further stated that GDP growth was mainly driven by the deficit and public sector development spending while present government is trying to achieve private sector-led growth instead of PSDP-led growth. He said the government introduced the finance bill amendment in September to compress the phenomenal increase in imports and boost the exports whose results have began to show now with reduction in trade deficit. There is also 12.22 percent growth in remittances and all these things are going to help the government deal with the current account deficit in the coming months.
The members of the committee Ahsan Iqbal, Aysha Ghaus Pasha and Nafeesa Shah criticised the government policies and did not agree that the country has come out of the financial crisis. They stated that State Bank of Pakistan (SBP) reports are showing that all the vital indicators are heading towards slide. The committee members wanted the role of standing committee similar to the Senate standing committee with regard to making recommendations to the finance bill. Presently, the NA standing committee has no power to make any recommendations to the finance bill.