Prudent policies steer economy to grow at 3.94% in FY21: Shaukat Tarin

Prudent policies steer economy to grow at 3.94% in FY21: Shaukat Tarin

ISLAMABAD: Finance Minister Shaukat Tarin unveiled the Pakistan Economic Survey 2020-21 on Thursday, revealing that Pakistan achieved remarkable GDP growth of 3.94 percent in the first 9 months of the fiscal year (July to March), significantly higher than the target of 2.1pc.

According to the survey document, this came about largely due to growth in the industrial and services sectors, both of which surpassed the government’s expectations.  

Addressing the press conference, the minister said that there were 2.1 percent growth projections for the current fiscal year, while the world financial institutions including World Bank and International Monetary Fund (IMF) had forecasted even lower growth.

“However due to the timely interventions and prudent policies by the ruling Tehreek-e-Insaaf (PTI) government, the GDP witnessed a remarkable growth of 3.8 percent,” the minister added.

Shaukat Tarin underscored the impact of COVID-19 in causing the economy to contract last year. “However, the decisions by this government such as incentivising manufacturing and textiles, construction, and interventions in agriculture have helped the economy recover,” he pointed out.

According to the survey, Pakistan has recorded a provisional growth rate of 3.94pc in the fiscal year 2020-21. This came “on the basis of rebound in almost all sectors”.

He said that 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 positive development towards growth.

He said that Large Scale Manufacturing witnessed growth of 9 percent, while the agriculture sector also grew by 2.77 percent, whereas the overseas Pakistani workers’ remittances have crossed $26 billion and are expected to go up to $30 billion.

However, the minister said that Pakistan became net importer of wheat and sugar which has put burden on current account balance, however added that the country’s exports were witnessing growth.

He said that although inflation has gone up, as compared to other world countries it was comparatively low in Pakistan adding that the government was making all-out efforts to bring it down and provide relief to the common people.

‘Focus on sustainable growth’

The finance minister said he had told Prime Minister Imran Khan it was time to focus on sustainable growth “until we go to 5-8 percent GDP growth”. “We will do interventions and take care of the poor. The poor man has been crushed in this stabilisation phase because the dreams we have shown them have been of a trickledown economy,” he added.

However, the minister emphasised that this growth should not be based on borrowing. “Countries which had sustainable growth, they grew continuously for 20-30 years. What have we done? Every time we grow by borrowing money, which is credit-based growth.”

Inflation

The headline inflation was recorded at 8.6pc during July-April FY2021 against 11.2pc during the same period last year. The government had targeted inflation of 6.5pc for FY21.

According to the survey document, this was achieved “due to the government measures for maintaining price stability.” The finance minister said the government wanted to control inflation but prices are still high and affecting the common man. “So the way to solve this is by increasing production and that is why we have focused on agriculture in this budget,” he added.

Referring to the debt, Train said that debt payment increased from Rs1,500 to Rs3,000 as on total debt was stood at Rs 31 trillion out of which Rs 25 trillion was local debt and 12.5 trillion was foreign debt, adding that in 2020-21 Rs1.7 trillion increased. He said that debt growth during current financial was half compared to the last year.