Pakistan Beats Key Growth Targets in FY21

Finance Minister Shaukat Tarin called on Prime Minister Imran Khan in Islamabad on Thursday and presented him to Pakistan Economic Survey 2020-21.

The Pakistan Tehreek-e-Insaf (PTI) government unwrapped the economic survey of its third year in power.

During a press briefing, Tarin announced special incentives for important ministries such as housing and construction.

The finance minister said that in terms of growth rate, Pakistan was ahead of targets set by the government and IMF for the outgoing fiscal year

“The Covid-driven survey revealed that when Covid-19 started, the working population was 55.74 million and this figure dropped to 35 million meaning nearly 20 million people were laid off

Due to the prudent policies of Prime Minister Imran Khan, the working population has been restored to 53 million people meaning that gap of only 2.5 million people remains.

Despite obstacles, decisions taken by this government, and the incentives given by this government, showed a prominent growth.

Remittances clocked in at a record high, surpassing $26 billion during the year under review. The minister said they are expected to amount to $29 billion.

Crude oil price rose 119% and the government did not pass on the price to consumers.
However, the wheat price rose 29% and had to raise it 29% as well.

Tarin mentioned that the government was trying to control inflation. “We have to enhance production; hence, the budget focuses on agriculture.”

Agriculture

Tarin mentioned that the government was trying to control inflation. “We have to enhance production; hence, the budget focuses on agriculture.”

“We have to become net exporter so we can control market prices,” he added.

Sharing plans for the next fiscal year the minister said that the government will introduce cold storages and commodity warehousing to decrease margins of a middleman.

“We need administrative measures such as price control,” he emphasised.

The finance minister said that the Pakistan Stock Exchange (PSX) is the fourth-best capital market in the world and best in Asia.

Pakistan raised $2.5 billion in the international market. Demand was $5.3 billion but we went for $2.5b
“Debt is not a good thing but it is, however, necessary,” he said.

Tarin said that the government tried to enhance surplus capacity. Broadband subscribers have hit 100 million users with 48% penetration rate.

Development programmes

Ehsaas programme is one of the best programmes introduce worldwide. 15 million families have so far benefited from this programme.

Emergency cash was given to all these families. Prime Minister introduced the Kamyab Jawam programme and 8500-9000 people have registered so far.

During the fiscal year under review, one billion trees have been planted. All credit rating agencies reaffirmed their support, which means the stabilisation programme has succeeded.

“Now we have to move towards growth,” Tarin reiterated.

Industries

Lower segments would be given top priority in growth strategy.

Read more: Rs26.5 billion Ehsaas supplementary budget approved

“Our focus will be on SMEs and exports,” the minister revealed. Amount of loans given to 6-8 million SMEs clock in at 1.8 million.

“We will shift from traditional exports and transform it along with fixing large scale manufacturing sector.”

The strategy also includes the dire need for a paradigm shift to increase exports. The Commerce Ministry has been directed to identify sectors that need relaxation.

Growth strategy

IT is growing at 50% and we want the sector to grow at a rate of 100% next year.

“We need to enhance exports, FDI and maintain remittances to increase the inflow of dollars,” Tarin said.
“We want to make surplus food and would like to grow the housing sector.”

Read more: Pakistan succeeded in reviving economy despite Covid pandemic: Forbes

Areas to be tapped

The government wants to manage the power sector. “It is a black hole for us,” the minister stated.
The agriculture and manufacturing sectors have immense potential.

Tarin revealed that Prime Minister Imran Khan refused to enhance power tariffs for IMF.

Highlighting the circular debt crisis Rs450 billion was supposed to be the circular debt for the outgoing year, unfortunately, they stood at Rs200 billion.

China Pakistan Economic Corridor (CPEC) helped in establishing, however, we could not bring investors in these SEZs.

“We should take benefit of SEZs. China is going to outsource85 million jobs,” he stressed.

The minister said Pakistan needs to attract investors to earn dollars which will help pay off loans.
State-owned entities are draining money. Moreover, DISCOs, PIA and Railways are under immense losses.

We are making a board of prominent professionals under Privatisation Commission and will give 15 entities under them,” Tarin disclosed.

Read more: Federal budget to be tabled in NA on June 11

These 15 entities would then be removed from under ministries.

Financial sector

Bank footprint is only 33% of GDP compared to 50% in Bangladesh and 100% in Korea
“We need to fix this,” he emphasised, adding, “Our bank footprint is among lowest in the world.”

Sector-wise growth

Speaking on the occasion, Adviser to Prime Minister on Commerce and Industries Razak Dawood said that the exports increased and reached $22.5 billion by May end.

“Our exports should focus on value-addition and diversification.”

Exports are expected to reach $25 billion by June end. Exports of textile garments, menswear, womenswear knitwear all grew substantially.

Cotton yarn exports, however, declined but it is good news because most of the cotton yarn remains in Pakistan and value can be added to it, he added.

The pharmaceutical industry has seen drastic growth in exports, he said.

“Next year, we will focus on engineering, chemicals and other sectors,” he added.

The PM aide highlighted many reasons behind industrial growth which include decline in customs duty and affordable raw material prices.

Ehsaas Programme

Special Assistant to the Prime Minister on Poverty Alleviation and Social Safety Sania Nishtar said two years ago Ehsaas was drafted.

About 24 million people are daily wagers in Pakistan and their work stopped in lockdown
Still, every target of Ehsaas programme is on track, Nishtar added.

“Pakistan’s first digital census was put on track under this programme,” Nishtar said adding that Educational scholarship was granted along with interest-free loans.

Ehsas Kafalat, 10 million family programme, is also on track, she added.

Tariff

The finance minister maintained that the losses of Discos were curbed but not substantially.

“Discos should be turned efficient and privatized,” he added. “Increasing tariff is not the solution as it hits the industrial sector and causes inflation. The tariff increase will make industry uncompetitive.”

Tarin, however, assured that circular debt and correction of the power sector will take five-six years
“IMF is asking for sustainable growth, which is Pakistan’s goal as well.”

The global agency asked Pakistan to increase income tax and tarrif, however, we cannot increase both,” he clarified. Discussions with IMF are still underway.

The minister stated that the Pakistan Bureau of Statistics (PBS) should be made autonomous. It should be under no ministry.

Growth Strategy

The finance minister said that the country needs two million jobs per year and the number of tax payers should be broadened through the use of technology.

(This is a developing story and will be updated accordingly)

Source: https://tribune.com.pk/story/2304506/pakistan-beats-key-growth-targets-in-fy21

 

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