Moody's growth projections

Moody's has scaled down growth projections for Pakistan by up to 0.9 percent. Instead of the 2.9 percent projected earlier the rating agency now reckons growth would be no more than between 2 to 2.5 percent.
Moody's earlier growth projection was based on an assessment by government authorities in general and the advisor on finance in particular who consistently maintained that the rate for the ongoing year would surpass 3 percent. On 23 November 2019 the advisor is on record as having stated that "the growth trajectory is positive and I can assure you that we can easily surpass the 2.4 percent growth target, we would achieve economic growth rate of over 3.5 percent in this fiscal year." The higher rate, Sheikh argued, would be on the back of higher Public Sector Development Programme (PSDP) spending, which would be over 950 billion rupees this year. Secondly, the provincial PSDP that amounts to over one trillion rupees would lead to economic growth."
Unfortunately this optimistic projection was at odds with the 2.5 percent projection in the budget for the ongoing year, supported by the International Monetary Fund (IMF) and reconfirmed in the first mandatory review report of the IMF uploaded in December 2019 on its website. The staff level agreement reached on 12 May 2019 with the IMF stipulated and, without doubt, took into account the budgeted allocations, including for federal and provincial PSDPs, and explicitly stated that "the forthcoming budget for fiscal year 2019-20 is a critical first step in the authorities fiscal strategy....prudent spending growth aimed at preserving essential development spending, scaling up Benazir Income Support Programme and improve targeted subsidies with the goal of protecting the most vulnerable segments of society."
Notwithstanding the optimism displayed by the economic managers with respect to the growth rate for the current year, an optimism that may have been targeted to make market sentiments more favourable, the fact remains that the onslaught of the Coronavirus has derailed all growth projections and rendered them null and void.
While Moody's has scaled down Pakistan's growth rate by a little less than one percent maximum however more informed economists in the country are lowering it further to between one to 1.5 percent maximum. This lower projection is based on an assessment of the success (or otherwise) of the government's intent to keep specific industries running, including construction industry, which would require decisions that may challenge the decisions taken by the civilian/military teams dedicated to the control of the spread of the virus. Thus by merely extending fiscal and monetary incentives may or may not ensure that shut down industrial units would reopen and function smoothly leading to rising output as a consequence.
The Prime Minister would do well to acknowledge that under the IMF programme economic activity in the country had already been stifled, and this was in spite of the pro industrial fiscal and monetary packages periodically approved; but with the pandemic beginning to rage in Pakistan any attempt to keep sectors/sub-sectors running would be a challenge that would have to take note of not only balancing between the economy and physical welfare of the people but also do that within the confines of the IMF programme and the FATF strait jacket.
To conclude, uncertainty continues to reign in Pakistani decision-making circles, as in the rest of the world, and disturbingly the only thing certain today is that we have yet to reach the threshold of certainty in the spread of the virus.