Finance Minister Shaukat Tarin presented the Economic Survey of Pakistan 2021 on Thursday, saying that 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.
The minister opened his press briefing by speaking highly of Prime Minister Imran Khan’s policies in combating the coronavirus pandemic.
KEY POINTS
- COVID rendered 20mn people jobless, says Tarin
- Working population back to 53mn people out of the 55mn who were unemployed, he says.
- Economy grew more than the government, IMF and World Bank’s expectations.
- Agriculture growth measured at 2.77% despite widescale loss in cotton crop.
- Exports increased but remittances grew by a larger sum.
- FBR collected 4.2 trillion in last 11 months.
- Pakistan’s stock market is the best in Asia, fourth in the world, he says.
- The poor will be number one for us, says Tarin about government’s economic priorities.
- IT industry growing by 40-50%, we want them to grow by 100%, he says.
- Power is a “black hole” sector; we overbuilt and are now making capacity payments, says finance minister.
- FBR harassment will end; audits will be conducted by third parties, says Tarin.
He said many people lost their jobs when the pandemic hit Pakistan, however, due to the prime minister’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.
He said the government had, itself, expected the economy to grow by a meager 2.1% this year and the IMF, World Bank, had released ever lower estimate.
However, he said the economy had grown by 4.4% due to impressive decisions by the government, which included incentivising manufacturing, subsidising electricity and providing assistance to the agriculture sector.
“Large scale manufacturing grew nearly by 9%,” he said.
Tarin praises growth in remittances, says Pakistan will become a food exporting nation once again
Tarin said Pakistan’s remittances had broken records, adding that they had crossed the $26bn mark. 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.
“This shows the confidence that overseas Pakistanis have in Prime Minister Imran Khan,” said the finance minister.
“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.
The finance minister addressed criticism that the government was increasing debt. He said it was inevitable that the debt had to rise considering there was a fiscal deficit in the country.
“The total debt has only increased by 1.7 trillion from 2020-21,” he said, adding that it was a huge decline compared to the previous years.
“I’m not saying it’s a commendable thing that our debt is growing,” he said. “I am not saying that. But you can see stability [in the economy] return slowly,” he added.
He said both mobile phones and broadband subscribers have immensely increased in Pakistan, adding that it showed market penetration of these services have increased.
Tarin speaks on Ehsaas programme, stresses on ‘sustainable economic growth’
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 15mn people was not a small achievement.
The finance minister said he had spoken to the prime minister about moving Pakistan towards growth. “Till when will you stabilise the country? Unless we move towards a growth target of 5%, 6%, 7% and 8%, the large population of our youth will not get jobs,” he added.
Tarin said Turkey, China and India were nations who underwent sustainable economic growth over the past 20-30 years. “When did we grow? We have obtained loans and credits for the past few decades,” he said, adding that the government will move towards policies that will target growth.
He said the common man was struggling in Pakistan since commercial banks did not cater to their economic needs and provide loans to them.
“In this growth, the poor will be ‘number one’ for us, and this growth will trickle down to them,” he said.
Finance minister wants IT industry to grow by 100%, says power sector a ‘black hole’
Tarin spoke about the IT industry, saying that they had registered a growth of 40% but by the next budget, he intended for it to grow by 100%.
“India, in 2010, earned $1bn through IT exports. Today, they are earning $100bn through them. If they can grow 100 times, can’t we grow our IT industry by 40 or 50 times?” he asked.
Speaking about the energy challenges, 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.
“We have to continue to make capacity payments as a result,” he said, adding that even if Pakistan continued to grow at 4,5 or 6% in the next couple of years, the extent to which Pakistan had overbuilt, it is not possible for the country to utilise that capacity.
Tarin said the government will not resort to increasing tariff time and again, saying that it will have a cascading effect on inflation. “Indirectly, even the poor will be burdened with inflation over it,” he said, adding that the government will take 7-8 years to eliminate circular debt.
He said Pakistan was trying to improve the performance of these DISCOs and sell them at a profit to private enterprises.
The finance minister said China was outsourcing 85mn jobs and Pakistan wanted to avail this opportunity. Tarin said Pakistan had sought feedback from Chinese manufacturers, asking them what facilities they needed to invest in Pakistan’s Special Economic Zones (SEZs).
“We also want to earn dollars as well,” he said, adding that for that to happen, Pakistan will have to increase its non-traditional exports and at the same time, invite direct investment.
Tarin on state-owned enterprises, IMF negotiations
Tarin rejected criticism on the government’s initiative to privatise state-owned enterprises (SOEs), adding that when these institutions were handed over to politicians, they liked to wield influence over them and as a result, destroy these institutions in the process.
In response to a question, 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.
Answering another question on taxation, Tarin said developed countries such as China, Turkey and others had increased indirect taxation over the next couple of years.
FBR harassment to end, promises finance minister
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.
He said once the third-party conducts its audit and finds a party guilty, that individual will be thrown into jails.
Answering another question, 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.
Tarin said he will be able to pull it off as he had played a key role in privatising large commercial banks across Pakistan, successfully, hence he believed it was possible to pull it off.
What does the economic survey of Pakistan show?
The Economic Survey for 2020-21 will throw light on the salient features of economic performance in the outgoing fiscal year. It is going to claim that total debt and liabilities (TDL) stood at Rs45 trillion by the end of March 2021 compared to Rs44.6 trillion at the end of June 2020.
This implies a 2% growth in nine months, which is the lowest ever growth of TDL in a single year in 15 years. Total debt of the government grew by 1.5% in this period.
Within external sources, multilateral and bilateral sources were the main contributors. Total debt and liabilities stood at 95.3% of the GDP at the end of third quarter of 2020-21 as against 103% of GDP in the comparable period last year. So total debt and liabilities decreased by almost 8% in one year.
Earlier, the finance minister had called on PM Imran Khan where he spoke to him about the survey. Special Assistant to the Prime Minister on Revenue Waqar Masood was also present in the meeting.
