ISLAMABAD, Jul 2 (APP): Asserting that there was a strong linkage between a country’s national security and economic security, Federal Minister for Finance and Revenue, Shaukat Tarin Friday expressed government’s strong commitment to manage national economy in most efficient and effective manner to achieve higher sustainable and inclusive growth.
The minister was addressing virtually on “Pakistan’s Economy- Fragility & Smart Action Strategy” National Workshop Balochistan-7.
He said that for achieving sustainable and inclusive growth, the government had devised a comprehensive set of economic reforms across all sectors of the economy.
“We have achieved macroeconomic stability and now we are moving towards the higher growth trajectory,” he added.
He said that the country needed upto 7percent growth and for realizing this goal, there was dire need of economic stability, adding that the government was committed to ensure that the growth momentum remains intact.
He said, the country’s development plan was for enabling the country to stand on its feet.
“It would put the economy on a higher growth trajectory; with growth being generated not by stoking consumption through borrowing, but through higher investment, efficiency and enhanced productivity,” he added.
He said, measures are being focused on establishing and strengthening an economy which was not only self-reliant but also capable of competing with its competitors globally, he concluded.
He said that although the incumbent government inherited an economy in crisis with significantly higher macroeconomic imbalances, however with prudent policies the country has been moved from stabilization to higher growth.
After considerable efforts, the government has succeeded in stabilizing the economy and putting it on optimal growth path, he said adding that the COVID-19 brought multifaceted challenges for Pakistan.
He said Pre COVID, the global economy was projected to grow by 3.4 % in 2020 but due to COVID-19, global growth contracted by 3.3%. World’s top most economies witnessed negative growth as United State witnessed negative 3.5 %, Euro Area -6.6 %, UK -9.9 %, Japan -4.8 % while many others suffered badly.
The economic growth contracted by 0.47 % in FY2020 he said adding that Pakistan contained adverse effects of the pandemic on the economy and vulnerable segments of the society through appropriate measures.
The government announced the largest ever Fiscal Stimulus package of Rs 1,240 billion. This package was also complemented by liquidity support for industry especially SMEs from SBP.
In addition, a Construction package for low-cost housing & jobs creation was also announced due to its high employment capacity. As a result, Pakistan has largely escaped the devastation and bounce back compared to its peers in the region.
The minister said, the economy rebounded strongly in FY2021 and posted growth of 3.94 % on the basis of 2.77, 3.57 and 4.43 % growth in agriculture, industrial and services sectors, respectively.
In addition, the minister said, inflation rate was contained at 8.8 % during July-May FY2021 against 10.9 % last year due to vigilant monitoring by NPMC and district administration while tax collections has shown remarkable growth of 18 % which has crossed the psychological barrier of Rs. 4,000 billion which is not based on holding back of refunds.
The comfortable external balance position of Pakistan has been supported by surplus current account balance on the back of robust flow of remittances and a sustained recovery in exports.
Current account deficit of $ 4.3 billion (-1.8 % of GDP) in July-May, FY2020 turned into surplus of $ 0.2 billion (0.1 % of GDP) during July-May, FY2021.
Likewise, exports increased by 10.3 percent to $ 23.1 billion in Jul-May FY2021 against $ 21.0 billion in the same period of last year. Pakistan has been placed among the top ten recipient countries that received most remittances in 2020 and its share as a percent of GDP increased to 9.9 % During July-May FY2021, remittances soared to $26.7 billion posting a growth of 29.4 %.
The improvement in the current account led to increased foreign exchange liquidity in the interbank market thus reflected in a build-up in the country’s foreign exchange reserves.
During the year, all three major credit rating agencies, Moody’s, Fitch and Standard & Poor’s, reaffirmed their sovereign credit Ratings for Pakistan.
This reaffirmation is reflective of the sound policies of the Government and of the confidence reposed by these leading international institutions in the country’s economic outlook. Pakistan has met 26 out of 27 FATF conditions due to strict compliance and prudent reforms.
He said, it was heartening to say that the commitment and hard work by government had supported us to successfully complete the stabilization phase.
Now the Budget 2021-22, the minister added, was growth-oriented based on a strategy to stimulate economic growth, with a clear roadmap of strategic priorities, revenue and expenditure plans.
The growth target for FY2022 is set at 4.8 % and to attain this higher inclusive and sustainable economic growth, the government has set its priorities in the current budget across different sectors:
He said agriculture would be the mainstay of our development due to its linkages with employment, trade and food security whereas in order to provide a boost and further strengthen the industrial economy the government was are giving concessions to this sector.
For promotion of exports, the government has also taken various initiatives including the taxes imposed on exporters have been rationalized and incentives are given in value added products in addition to introducing new products.
Likewise, the PM?s housing and construction package had spurred a flurry of economic activities in this sector and its allied industries.
On energy side, the government formulated a circular debt management plan which includes curtailing line losses and improving recoveries.
The government had also set tax collection target of Rs 5,800 billion, which would be achieved through automation and use of technology
The minister said the government had enhanced the development budget from Rs 630 billion to Rs 900 billion with the aim to boost economic growth, reduce unemployment and poverty thus leading to inclusive growth.
On fiscal side, the government would bring down the budget deficit to 6.3 % of GDP in FY2022 from 7.1 %. The primary deficit would be brought down to 0.6 % of GDP.
He said, the government intends to change the course of history by using bottom up approach instead of leaving vulnerable segments to the mercy of trickle-down effect.
In this regard, the new development package announced in the budget 2021-22 is going to be a game changer for common man – providing loans to farmers, job opportunities to the youth, houses to the low-income group and Sehat Health Card; thus upgrading the lifestyle of our masses.