IMF’s Projection | Editorial

THE IMF (International Monetary Fund) has projected that Pakistan’s growth rate will fall to 4.7% in fiscal year 2019 from 5.6% in 2018. In its regional economic outlook update for the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region, the IMF noted that an increase in macroeconomic vulnerabilities and domestic policy slippages have weakened Pakistan’s economic outlook. In January, the IMF said it expected growth rate in Pakistan to pick up in 2018-19.
The latest projection for Pakistan’s economic performance is much below 6.2% growth target set by the government for next year in its latest budget. Only the other day the National Security Committee expressed satisfaction over five- year economic growth but wanted certain measures to tackle the potentially destabilising factors. These factors have not been enumerated but it is understood that gains cannot be sustained unless we increase tax-to-GDP ratio; expand tax-net; address widespread tax evasion; phase out exemptions and undue incentives for different categories of individuals, companies and industries; drastically reduce non-developmental expenditure and meaningfully enhance exports and realistically cut imports to bridge yawning trade gap. Agriculture contributes 21% of the GDP but the prospects are not good if changing weather patterns are taken as a sign. Long dry spells and alarming drop in water level in reservoirs mean less availability of water for crops besides low hydel power generation. Pakistan’s economy is presently semi-industrialised and textile dominates the scene despite immense potential to diversify the industrial base of the country. But the most important destabilising factor, which could affect the growth target in the next financial year, is political instability and the spectre of a hung parliament as a weak government would not be able to take bold measures needed to address economic ills of the country. The present government, at the cost of its popularity, took some steps to treat the malaise but remained unsuccessful due to political instability. What we have been witnessing during last few years is a clear testimony that economy becomes the obvious target of political destabilisation. There is, therefore, logic in propositions that all political parties should sign a Charter of Economy, committing themselves to unhindered continuation of economic policies and programmes irrespective of who comes into power.

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