Pakistan Economic Survey 2020-21 launched: PTI govt claims ‘V-shaped’ economic recovery in FY21

ISLAMABAD: Pakistan’s economy recorded 3.94 per cent growth during the fiscal year 2020-21 defying low growth projections by the IMF and the World Bank, said Minister for Finance and Revenue Shaukat Tarin on Thursday, giving credit of the “V-shaped” recovery to the government’s prompt interventions and incentives to mitigate the fallouts of the pandemic.

Speaking at the launch of Pakistan Economic Survey 2020-21, the minister said there were 2.1 per cent growth projections for the current fiscal year, while the international financial institutions, including the World Bank and the International Monetary Fund (IMF) had forecast even lower growth. However, he added, due to the timely interventions and prudent policies, GDP witnessed a remarkable growth of 3.94 per cent.

Tarin said the government had provided incentives to manufacturing sector and facilitated businesses by providing incentives in gas and electricity, besides making interventions in agriculture sector, which helped in growth.

The minister said Large Scale Manufacturing (LSM) recorded growth of 9 per cent, while agriculture sector grew by 2.77 per cent, whereas overseas Pakistani workers’ remittances had crossed $26 billion and were expected to go up to $30 billion.

Tarin said the government had tackled the Covid-19 pandemic in a wise manner, due to which, Pakistan had been witnessing growth at a time when the world economies were facing difficulties. He said Pakistan became net importer of wheat and sugar which had put burden on current account balance. However, he added, the country’s exports were witnessing growth. Over price hike, he said although inflation had gone up, it was comparatively low as compared to other world countries. He assured people the government was making all out efforts to bring inflation down and provide relief to the common people.

Tarin said Covid-19 had badly hit the working population as the number of working people came down from 57.74 million to 35 million, depriving over 20 million from their jobs and livelihood. However, he said policies introduced by the Prime Minister to reduce after effects of the pandemic, the number of working population started to increase and reached again up to 50 million by October 2020, hence helped in regaining the economic activity in the country.

In order to sustain local economy, he said government had taken timely decisions and announced special incentives for different sectors of national economy including manufacturing, construction and agriculture sector.

Due to incentives of the government, major crops like wheat, rice, sugarcane and maize production touched higher numbers and bumper crops were produced during the season.

Meanwhile, the unprecedented growth in worker remittances was showing the confidence of overseas Pakistani on the leadership of Prime Minister Imran Khan, he remarked. The minister said the increasing trend in foreign remittances had also helped overcoming the negative impacts of current account deficit, which was swelled mainly due to increase in the imports of food commodities including wheat, sugar, edible oil and others.

Tarin said foreign exchange reserves with the State Bank of Pakistan increased, while $1 billion was deposited through Roshan Digital Accounts. He said the government had strived to fulfil the requirement of the Financial Action Task Force.

He expressed optimism on increasing revenue collection of the Federal Board of Revenue, saying it touched Rs4.2 trillion during last 11 months, which was higher than 18 per cent as compared to the collection of corresponding period of last year. FBR collection witnessed about 18 per cent growth on year on year basis, he said, adding revenue collection witnessed about 50 to 60 per cent growth on month-on-month basis in last four months, adding due to that trend next year collection was fixed at Rs5.8 trillion.

For the first time in the last five years, the primary balance was in surplus, he said, adding food inflation was high which was affecting the common man, but it was correlated with some international fluctuation in the food commodity market.

He said Pakistan was importing wheat, sugar, pulses and edible oil and prices of these commodities in international market went up manifold, adding the government was bearing the shocks and was not passing the impact on masses directly.

In order to bring stability in daily use commodities as well as controlling rising inflation, he said the government in its current budget was paying special attention on agriculture sector to enhance output of agriculture produces in the country.

To discourage artificial effects of increasing prices of food commodities, he said measures would be taken to improve local prices mechanism and marketing facilities, besides setting up the storage facilities to break the nexuses of hoarders and profiteers.

About the debt, Tarin said debt payment increased from Rs1,500 to Rs3,000 as total debt stood at Rs31 trillion out of which Rs25 trillion was local debt and Rs12.5 trillion was foreign debt, adding in 2020-21 Rs1.7 trillion increased. He said debt growth during the current financial year was half compared to the last year.

According to Pakistan Economic Survey 2020-21, the economy despite myriad challenges had been moving progressively on higher inclusive and sustainable growth path on the back of multiple measures and achievements during the current fiscal year, witnessing a rate of 3.94 per cent growth.

“The economy of Pakistan rebounded strongly in FY2021 and posted growth of 3.94 percent, which is not only substantially higher than the previous two years (-0.47 and 2.08 per cent in FY2020 and FY2019 respectively) but also surpassed the target (2.1 per cent for FY2021),” the survey said.

Despite strict fiscal constraints, timely and appropriate policy measures taken by the government resulted in a V-shaped economic recovery, it added. The “economy has witnessed a V-shaped recovery while the current economic recovery has been achieved without compromising internal and external stability,” the survey said. The current account posted a surplus of $0.8 billion, during July-April, FY2021 for the first time in 17 years. Inflows of foreign exchange through Roshan Digital Account (RDA) crossed $1 billion mark.

During July-April FY2021, workers’ remittances posted historically high growth of 29 per cent and reached $24.2 billion while the State Bank of Pakistan’s foreign exchange reserves rose to $16 billion, a four-year high. Keeping in view the significant performance pertaining to the Financial Action Task Force (FATF) conditions, potential of exports and e-commerce, Pakistan had been added into the Amazon’s sellers list. According to the survey, the installed capacity of electricity increased to 37,261 megawatts during July-April FY2021 as compared to the same period last year, showing an addition of 1,289 MW.

Under the Ehsaas Emergency Cash Programme, Rs179.3 billion had been disbursed, with around 14.8 million families benefited from the programme. Under the Kamyab Jawan Youth Entrepreneurship Scheme, Rs 8,566 million had been disbursed till April, 2021 to the youth for various businesses. The 10 Billion Tree Tsunami programme achieved plantation of approximately 350 million plants during July-March FY2021, with about 100,000 daily wagers employed. Cumulatively, over 800 million plants had been regenerated /planted in last two years.

It said prior to Covid-19, the working population was 55.74 million, and the number declined to 35.04 million, which indicated that the people either lost their jobs or were not able to work. Due to prudent decisions by the government, working population reached 52.56 million till October, 2020.