Economic Survey 2019-2020

As many analysts had expected, Special Assistant to the Prime Minister on Finance Hafeez Shaikh attempted to present as positive a picture as possible of Pakistan’s economy while presenting the 2019-20 Economic Survey on Thursday afternoon. Certainly, while Shaikh attempted to put a positive glow on what is essentially a bleak situation, with the negativity spread across the world as a result of the economic downfall caused by Covid-19, some figures told the truth. The provisional GDP growth rate for the fiscal year 2020 is estimated at -0.38 percent as a result of a decline in the agricultural, industrial and services sectors respectively. Shaikh pointed out that the current government had inherited an economy buried in debt and was looking at potential default by the end of the year. This puts it in precisely the same position where it stood at the end of the previous fiscal year. Shaikh attributed the decline in the economy in 2020 to the coronavirus pandemic which he said had wreaked havoc, crippling industry and other sectors. He also said the government had, unlike its predecessors, not taken loans from the State Bank of Pakistan through the entire year and maintained that its policies had been bringing stability and healthy growth, notably until the coronavirus crisis hit both Pakistan and the world.

The Economic Survey shows an inflation rate of over 11 percent, one of the factors that has worst hit the people of Pakistan. However, the PM's finance adviser has maintained that ordinary people have been the focus of the current government’s plans and that it is already pumping more money into schemes such as BISP, which now falls under the Ehsas Programme, and also beginning initiatives intended to create jobs for people. Shaikh has also said that PSDP allocation has been increased from Rs561.7 billion to over Rs700 billion to support these programmes. Given the impact of the Covid-19 crisis, the government has decided to not pursue a stringent tax collection policy since the impact on trade was recognized. This of course means the country will continue to struggle to collect sufficient revenue to support government initiatives and push back fiscal deficit. The survey has also pointed out that over 64 percent of Pakistan’s population is in the age group of 15 to 64 years, with a sizable number also falling below this age bracket. The demographic statistics mean the country has a potentially huge labour force and plenty of energy. The challenge of course is to find employment for these young people.

The survey says that the National Education Policy Framework aims to overcome challenges in the education sector which include decreasing children who are out of school, keeping them in school for longer periods and achieving uniformity in educational standards. This, as we all know, is easier said than done. While a minor increase in education expenditure shows a raise to Rs4.8 billion for 2019-2020, experts question if this will be enough to allow any meaningful change in a badly neglected sector. As under previous policies, the bulk of funds continue to go to higher education. Educational experts say this prevents putting in place the strong foundation on which education needs to be built from the bottom up. The Economic Survey also notes the extremely high rate of stunting and wasting among children in the country as documented in the National Nutrition Survey 2018. The government, during the financial year 2019, had increased cumulative health expenditures by federal and provincial governments to Rs421.8 billion compared to Rs416.5 billion during the previous year, but obviously this is a minuscule increase given the challenges presented by the presence of the highest infant and maternal mortality rate in South Asia, the continued fight against polio and other diseases, illnesses caused by unsafe water and of course now the Covid-19 pandemic.

It seems obvious that without radical change in economic policy, it would be impossible to genuinely improve the condition of the people, who also face threats from factors such as climate change. Some success was achieved by the government in areas such as improving revenue collection early on in the fiscal year. But the Covid-19 pandemic has hit hard, perhaps disguising the fact that the policies laid down were never going to be enough to put Pakistan on a better footing as far as its ability to serve its people is concerned.