Shaukat Tarin presents the Pakistan Economic Survey 2020-21

Finance Minister Shaukat Tarin presented the Pakistan Economic Survey 2020-21 at a press conference in Islamabad on Thursday. However, the document did not have the latest figures on poverty and unemployment.

Tarin revealed that the industrial and services sectors had helped the country post-Gross Domestic Product growth of 3.94 per cent in the first nine months of the fiscal year [FY](July to March), significantly higher than the target of 2.1 per cent.

“The agriculture and manufacturing sectors helped the economy grow to 4.4%, laying stress on the need for sustainable growth in Pakistan in the years to come,” added Tarin.

Coronavirus Pandemic

The minister opened his press briefing by speaking highly of Prime Minister Imran Khan’s policies in combating the coronavirus pandemic.

“The government itself had set [GDP] growth will be 2.1pc and the IMF predicted even lower. But the decisions by this government such as incentivising manufacturing and textiles, construction, and interventions in agriculture have helped the economy recover,” said Tarin.

He said many people lost their jobs when the pandemic hit Pakistan, however, due to PM’s visionary policy of not imposing a complete lockdown across the country, millions of people who were unemployed were hired again. 

“The economy is recovering,” he said. 

Remittances

Tarin said Pakistan’s remittances had broken records, adding that they had crossed $26bn. He said that lately imports, especially food in the form of wheat and sugar, were increasing as Pakistan’s economy was growing at the same time. 

“We were net exporter of food but now, we have become a net importer,” he said. “Our exports registered a growth but our remittances increased manifold,” he added. 

Ehsaas Programme

Tarin spoke highly of the Ehsaas programme, adding that the World Bank had described it as “one of the best and the largest” poverty alleviation initiatives across the globe. 

“Full credit goes to Sania Nishtar,” he said, adding that handing out cash to 15 million people was not a small achievement.

Growth rate

Tarin said he had told the prime minister it was time to focus on sustainable growth “until we go to 5-8pc 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. And this can only happen when growth is sustainable and continuous for 20-30 years,” he said.

“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.”

Current Account

According to the survey, during FY 2021, while the world was reeling from the economic impact of the pandemic, Pakistan’s “external sector appeared as a key buffer for resilience.”

 “The main driver of improvement in current account balance was the robust growth in remittances,” it stated.

Trade Deficit

“During July-March FY 2021, export of goods grew by 2.3 percent to $18.7 bn as compared to US$ 18.3 bn the same period last year. Import of goods grew by 9.4pc to $37.4 bn as compared to US$ 34.2 bn last year. Consequently, the trade deficit increased by 17.7per cent to $18.7bn as compared to $15.9bn last year,” the survey said.

Inflation

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,” Tarin said.

Federal Board of Revenue (FBR)

Speaking about the FBR, Tarin said he would end the practice of people being harassed by the bureau. “FBR will not audit [businesses or persons] but a third-party audit will be conducted,” he said. 

International Monetary Fund (IMF)

Tarin said Pakistan’s negotiations with the IMF were ongoing, adding that the international money lender had asked the government to hike tariffs and increase taxes. 

The finance minister said Pakistan and the IMF want the same thing; sustainable growth, adding that the country cannot afford to increase taxes or hike tariffs so that the poor and the salaried class do not feel additional burden of inflation. 

“This is a red line for the prime minister,” he said. “We will not further burden the poor,” he added. 

Energy Sector

Tarin said Pakistan’s economy was burdened due to the overcapacity in the power sector, saying that “it was a very big challenge and a black hole” for Pakistan. 

Privitisation

 Tarin said it was fair to ask how he can privatise state-owned enterprises when all others, before him, promised to do the same but failed to. 

“Nawaz Sharif used to shout the same slogan during the first time [when he was prime minister] and then for a second time [when he again became the prime minister] and then a third, but nothing happened,” he said.