Islamabad
\nPakistan\u2019s economy failed to meet most of its targets set in the previous budget due to challenging conditions, but the agriculture sector achieved unprecedented growth, Finance Minister Muhammad Aurangzeb announced on Tuesday while unveiling the Pakistan Economic Survey (PES) 2023-24.
\nThe strong 6.25pc expansion in the agriculture sector \u2014 said by the report to be the highest in 19 years \u2014 drove Pakistan\u2019s GDP growth by an expected 2.38 per cent in FY2024, recovering from a contraction of 0.21 per cent in the previous year.
\nThe report said fiscal discipline was maintained, with a fiscal deficit of 3.7pc of GDP and a primary surplus of 1.5pc of GDP. Total revenues, meanwhile, grew by 41pc, driven by non-tax revenues and improved tax collection.
\nThe State Bank of Pakistan, meanwhile, kept a tight monetary policy, with a 22pc policy rate, helping to ease inflation to 26pc from 28.2pc last year. The current account deficit narrowed to $0.5 billion, and gross foreign exchange reserves increased to $8.0 billion.
\nHowever, the PES noted a decline in the investment-to-GDP ratio, sluggish large-scale manufacturing, and high public debt.
\nAurangzeb began by speaking about inflation. \u201cIt is important to see the level of inflation in 2022-23. [In this] year, the Pakistani rupee suffered nearly 29pc depreciation and the foreign reserves went to just two weeks of import cover.\u201d
\nAurangzeb noted that the current fiscal year had begun under Prime Minister Shehbaz Sharif\u2019s leadership, before a brief caretaker administration, and was now back under PM Shehbaz\u2019s elected government for the next five years.
\nAurangzeb, who has been in his role for three to four months, said he had always believed that Pakistan would need to turn to the IMF programme.
\nHe praised the prime minister\u2019s \u201ccourageous step\u201d in signing a nine-month Stand-by Agreement with the IMF, saying it had brought the country to a better place.
\n\u201cWithout it, God forbid, we wouldn\u2019t be here discussing the targets. We would have been in a different situation, and we would have had the same discussion in a very different context.\u201d
\nAurangzeb acknowledged that the impact on large-scale manufacturing was inevitable, but highlighted agriculture as a \u201csaviour\u201d and a significant upside for future growth.
\nHe also noted that revenue collection had grown by nearly 30pc, an \u201cunprecedented\u201d increase.
\nThe finance minister credited the provinces for delivering on their surpluses, which had enabled the government to meet its commitment to the IMF.
\nHe also highlighted the significant reduction in the current account deficit, from an estimated $6bn to around $200m.
\nAurangzeb said in the three months of 2024, the country experienced a current account surplus. \u201cI don\u2019t have the final number, but if I look at the $3.2bn remittances for the month of May, I\u2019m pretty sure there will be another month where we will show a surplus.
\n\u201cSo my belief that by the time we come into government, the current account deficit would be less than a billion dollars had turned into a reality.\u201d
\nHe praised successive administrations for the relative economic stability seen over the past few months. \u201cFirstly, the caretaker administration took administrative measures, [launched a crackdown] against hundi hawala, and stopped smuggling, etc.
\n\u201cAfter that, the State Bank of Pakistan [worked on] the structural part. Capital requirements for exchange companies were increased and the exchange companies involved in speculation were phased out.
\n\u201cIn a bid to regulate foreign exchange activities, we instructed banks without exchange companies to set up their own,\u201d Aurangzeb said. \u201cTo me, that is a structural way of bringing the entire foreign exchange activity into a regulated environment.\u201d
\nAurangzeb expressed optimism that the move would prevent speculation on foreign exchange from returning to the country. \u201cGod willing, this will ensure that speculation does not come back to this country,\u201d he said.
\nThe minister recalled his experience in the private sector, where market predictions had suggested the dollar rate would soar to Rs300 or even Rs350.
\n\u201cBecause I was a part of the private sector at the time, we were following it and they were saying that it would be more than Rs300 and even Rs350,\u201d Aurangzeb said.
\nThe finance minister announced new initiatives to address leakages in the tax system, acknowledging that the previous track and trace system had failed. \u201cWe are now moving towards digitalisation to minimise human intervention,\u201d he said.
\nAurangzeb echoed his colleague\u2019s \u2014 who was seated beside him \u2014 sentiment that \u201cthere are no sacred cows\u201d and everyone must contribute to the economy.
\nHe emphasised that while philanthropy could support schools, universities, and hospitals, the country\u2019s functioning relied on taxes. \u201cThat\u2019s one certain[ty]. That\u2019s the basic principle,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Islamabad Pakistan\u2019s economy failed to meet most of its targets set in the previous budget due to challenging conditions, but the agriculture sector achieved unprecedented growth, Finance Minister Muhammad Aurangzeb announced on Tuesday while unveiling the Pakistan Economic Survey (PES) 2023-24. The strong 6.25pc expansion in the agriculture sector \u2014 said by the report to […]<\/p>\n","protected":false},"author":2,"featured_media":412351,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-412333","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-news"},"yoast_head":"\n