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Economic Survey 2022-23: Growth rate plunges as political firefighting mars economy

ISLAMABAD, JUN 8: Finance Minister Ishaq Dar Thursday took the wraps off Pakistan Economic Survey for the outgoing fiscal year 2022-23, a document that sums up the government’s performance, to the utter dismay of the country as nearly all the targets were undershot by a shocking margin with the GDP growth rate crashing to 0.3%, which can be chalked up to natural and political disasters.

Finance minister presented the pre-budget document during a press conference in Islamabad.

Dar’s first budget for this government’s complete fiscal year would be eagle-eyed by the analysts for any hints about populist dole-outs and they would also try to ascertain if the government was willing to pursue economic discipline required to enter another International Monetary Fund (IMF) programme.

At the start of the presser, Dar reminded the journalists of 2013 when Pakistan Muslim League-Nawaz (PML-N) government took charge. He explained that at the time the economy was in tatters, there was loadshedding of 18 hours, and terrorism was on the rise.

“We followed our ‘three-e’s’ concept and Pakistan saw macroeconomic growth,” recalled Dar.

“Now, we are focusing on five-es — exports, equity, empowerment, environment, and energy. These are our five driving areas. This is our roadmap for the next year,” said the finance minister. He noted that the current year was “challenging” one and the “government did its best to handle the economic situation”.

While talking about the outgoing fiscal year 2022-203, the finance minister said that this year the government has added information and technology to the economic survey as “stand-alone”.

“This sector has the potential for growth in the coming days,” said the minister. He added that the government’s aim is to achieve macroeconomic stability along with inclusivity and resilience.

“We want it to be inclusive to avoid the maldistribution of resources,” said the finance minister. He emphasised that if this is done that the investors’ confidence can be restored.

“In 2013, we merged all the stock exchanges, helping the stock exchange grow substantially. The market capitalisation was around $100 billion during 2013-2017. This was huge. It is our duty to take Pakistan back to the track of growth,” said Dar.

Coming back to the outgoing year, the minister said that when the PML-N-led coalition government took charge in 2022, it “faced extreme challenges as fiscal space had shrunk, inflation was on the rise, the current account deficit was skyrocketing, and financing needs were increasing”.

“It’s obvious that when the policy rate increase, the financing needs also increase. I believe that if this government hadn’t taken charge, then God knows what might have happened,” said the finance minister.

Defending his claims, Dar said that in the “last third quarter”, before Shehbaz Sharif’s government took charge, there was a $6,400 million reduction in the foreign exchange reserves.

“We have survived five quarters. Had we been going at that pace, then I don’t know what could have happened,” said the finance minister. He assured that the spiraling of the economy was stopped and it was moving towards stability.

“When this government came in, then the GDP rate was 6%. But, remember, that the GDP rate before that was -1%. The base was very low. So, all of you understand, when the base falls, the next year and in the successive years, you have a new base line,” he explained.

Comparing 2018 and 2022, the finance minister said that in 2018, the fiscal deficit stood at 5.8%, and when this government came in, it reached 7.9%.

“Please, I would like to remind you that our 5.8% deficit stood when we were running operations against terrorists. The trade deficit stood at $39.1 billion in 2022 from $30.9 billion in 2018. The current account deficit has reached 4.7% of the GDP at $17.5 billion. The foreign direct investment has slumped to $1.9 billion and the public policy rate has 13.75%,” he said. He added that the public debt increased 10%.

The finance minister noted that even though tax collection had increased, a “major bulk of it is spent on debt servicing”.

“But even with the increase, our mismanagement (increase in debt and policy rate) we have taken it to new highs and it is unsustainable. I think the final nail in the coffin was Pakistan’s credibility and rate was shaken,” said the finance minister. He added that if Pakistan makes a
“sovereign commitment” then it should be treated as a “personal promise”.

“When you felt that your government was going to be ousted, you backtracked on your commitments,” said the minister.

The finance czar of the country emphasised that since there is “economic turmoil across the globe” it has affected Pakistan as well — from trade to finances.

“Pakistan cannot remain isolated, it will have an impact. We also faced unprecedented floods. Our physical and economic losses crossed $30 billion. You must remember that several multilaterals calculated the amount,” said the minister. He added that the pledges Pakistan “received from the donors conference were more than expected”.

“Alhamdulillah, things are on their way. The planning minister and his ministry are doing their job,” he added.

Coming to the IMF programme, the finance czar said that it should have been completed in 2022.

“We completed the only IMF programme between 2013-2016. All chiefs of multilaterals had come to this city and congratulated Pakistan on its achievement. We are trying to achieve that stability,” said Dar.

Defending the government’s economic performance, Dar said that they “left no stone unturned for economic stability and paid a huge price for it”.

He added that when a government, is sworn-in for five years, it can pay that political cost, but when it comes in for 14 months, then it is a “huge challenge”.

“But I believe it was worth it as Pakistan’s credibility eroded. We took several steps to correct this path. I am hoping that when the IMF programme completes, we have two payments in the line — $450 million from World Bank and $250 million from AAIB,” said the minister. He added that Pakistan paid all its debts on time.

The minister said that the government during the outgoing year prioritised the import of food items and medicines.

However, rupee depreciation creates all the problems as it increases inflation and exports do not increase, he said. He added that the real value of the dollar was less than 200 against the rupee.

“40 to 45 rupees reduction in dollar price is possible even today,” said the finance minister.

As per the economic survey, the growth rate in accommodation and food sector was 4.11%, while in IT and telecom it stood at 6.93%. While the economy grew by 27.1% this year.

The data also showed that the size of the economy was Rs8.4 trillion.

The per capita income stood at $1,568 this year compared to last year’s $1,765.

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