Hafeez Shaikh unveils Economic Survey 2018-19
He said reserves of the State bank of Pakistan (SBP) fell from US$18 billion to US$9 billion
ISLAMABAD (Dunya News) – Advisor to Prime Minister (PM) Imran Khan on Finance, Revenue and Economic Affairs Abdul Hafeez Shaikh has unveiled the pre-budget document, Economic Survey 2018-19 on Monday to share the key economic indicators and the performance of different sectors of the economy.
The pre-budget document was shared with media at a press conference in Islamabad during which an overview of the economic progress made in recent years in Pakistan is being provided.
Addressing a press conference along with Adviser to the Prime Minister for Commerce, Textile, Industry and Production Razak Dawood, Federal Minister for Power Division and Petroleum Umar Ayub, Chairman Federal board of Revenue (FBR) Syed Muhammad Shabbar Zaidi and top officials of Ministry of Finance, he said that the government has to pay Rs3 trillion interest on Rs31 trillion worth borrowings of the country, adding that the reserves of the State bank of Pakistan (SBP) fell from US$18 billion to US$9 billion.
"The country cannot flourish solely on the back of boosting dollar reserves," he said and added we need to strengthen our institutions.
The adviser expressed the government s resolve to address long drawn-out basic issues to put the national economy on sustainable growth path, adding that crucial decisions are being made to correct the course of economy and stabilize it.
He said Pakistan is endowed with natural resources including fertile land, long coast line, hardworking people, rich minerals and a number of other assets, adding that the government inherited a weak economy with a total debt touching 31000 billion rupees which were taken over the previous years. He said in the coming years, 3000 billion rupees will have to be paid in terms of interest only on these loans.
Shaikh said US$97 billion were taken as external loans while the wealth producing capacity of the country was increased by zero percent due to no raise in exports in all these years, adding this is an alarming situation for the country s economy and the rupee is facing a lot of pressure. Rs2300 billion were spent beyond income that resulted in printing more currency notes and leading towards inflation.
He said Prime Minister Imran Khan has shown the commitment to make difficult decisions in order to change things on permanent basis.Hafeez Shaikh said the PTI government took important decisions to correct the course of economy. For this purpose, duties were increased on imports to restrict the current account deficit. Incentives were given to export industries to increase their share.
The adviser said PM Imran through his personal efforts received 9.2 billion dollars from friendly countries. A deferred oil payment facility from Saudi Arabia, UAE and Islamic Development Banks was achieved. It was also decided to forge a partnership with IMF to provide a sound footing to the economy and also show the commitment that we are ready for financial discipline. A successful partnership of 6.2 billion dollars with IMF was achieved.
Shaikh said the public sector institutions will be strengthened, adding that in the past the public utility companies as well as transportation, insurance and other institutions were made hollow from inside due to corruption. The money which was to be used on health, education and other facilities to people was rather spent on these white elephants to the tune of 1300 billion rupees.
"Effort has been made to put minimum burden on poor segments of the society," the Adviser said and added Rs216 billion have been earmarked in the next budget to provide subsidy to consumers who are using low consumption of electricity. He said the amount for financial handouts to the poor is being doubled in the coming budget.
Enumerating the priorities of the government, Hafeez Sheikh said our priorities are to stabilize the economy addressing immediate threats, improve relations with foreign countries to reap benefits, strengthen domestic industry, give a pivotal focus to marginalized people, and convince the rich to pay their due share of taxes.He said the tax collection is very low and a large segment of the population does not want to give its share in the form of taxes.
Read Complete Economic Survey 2018-19
Earlier, Dunya News reported that the government has missed all the key economic targets for the current fiscal year where Gross Domestic Product (GDP) locked at 3.3 percent and was almost halved from the target set at 6.2 percent owing to sharp drop in agriculture production and negative growth heralded at industrial sector.
Manufacturing sector slid by 0.3% and government may set target of 2% for 2019-20 in this sector. LSM has shown negative growth of 2% vs targeted 8.1%. LSM target for new fiscal year may be set at 2.8%.
Services sector grew by 4.7% and the target set in this sector was 6.5%. Services sector is likely to show growth of 4.8% in FY2020.
Construction sector showed negative trend and dropped by 7.6% against 10% target. Construction growth target for new fiscal year is likely to set at 1.5% by the government.
Agriculture sector grew by 0.8% and agriculture sector growth target was set at 3.8% but for new fiscal year government may set agriculture sector target at 2.9%.
Main commodity recorded a slide of 6.5% and main commodities production for 2019-20 may be set at 3.5%. Other commodities output increased by 1.5%. Target in this sector in 2018-19 was 3.5% and for FY20 target is likely to set at 3.5%.
Cotton output has decreased by 12.7% against 8.9% growth target. Cotton may grow by 3.1% in FY20.
Livestock has grown by 4% against target of 3.8% .Target for Livestock for 2019-20 may be set at 2.5% by the government.
Remittances from the month of July to April in the fiscal year 2018-19 increased by 8.5 percent; however a drop of 52 percent in external investment was observed.
Furthermore, per capita income dropped from $1652 to $1516.
The target of the industrial growth rate was only 1.4 percent instead of 7.6 percent.
The production of drugs, automotive industry [car manufacturing], iron, and steel and food products was decreased by 4.7 percent.
Besides, during July-April, LNG import was recorded with an increase of 46 percent, whereas crude oil imports increased by 14 percent. However, imports of petroleum products decreased by 14 percent.
According to details, the total investment-to-GDP ratio stood at 15.8 percent as compared to 17.2 percent target. The ratio of investment in the private sector was 9.8 percent as compared to 10.8 percent target.
PM Imran Khan’s government came to power in August facing a yawning budget deficit expected at around 7% of gross domestic product as well as a balance of payments crisis, with foreign exchange reserves that cover less than three months of imports.
It promised reforms to stimulate exports, cut the deficit and overhaul the power sector, and has pushed ahead with an ambitious infrastructure development project with China. But Pakistani households have struggled, with inflation running at more than 9%.
