The government has suffered a major blow in terms of attracting investment to achieve a high growth rate as investment to GDP fell to 14 percent during the current fiscal year from 14.6 percent a year ago with a massive decline in Large-Scale Manufacturing (LSM), according to Economic Survey 2013-14.
An official who was involved in the process of compiling the Survey told this correspondent on condition of anonymity that in the current year investment in large-scale manufacturing sector declined negatively by 23.4 percent from 31.1 percent a year ago, which has been a major setback to the government as it indicates a reluctance to make investment in real/productive sectors as opposed to in government papers. According to Economic Survey 2013-14, total investment in the country has contracted to 13.99 percent in the current fiscal year from 14.57 percent a year ago, which was relatively worse in terms of law and order situation and political uncertainty owing to an election year.
Finance Minister Ishaq Dar, who launched the Economic Survey, admitted that most of the economic targets have been missed and wanted media to assess the government's performance by looking at the glass "as being 70 percent full instead of 30 percent empty." The government had set a target to take the investment to GDP to 15.1 percent in the current fiscal year from 14.6 percent with provisional estimates suggesting that it would remain at 14 percent. The Finance Minister maintained that the Pakistan Bureau of Statistics (PBS) is independent and claimed that economic advisors of his Ministry are fully autonomous to perform their duties.
"We want broadening of PBS by involving people from media and economic experts with the objective to make our economic data more credible," the minister stated. He dismissed an argument that the tax exemption allowed by the government has doubled in the current fiscal year; however, he acknowledged that exemption in import duty was given on two recently imported BMWs. Dar said that BMWs were imported for foreign dignitaries who would not extend the "$1.5 billion gift" if we do not give them due respect which he defined as tax concessions.
The Finance Minister said that Federal Board of Revenue officials who have not yet filed their returns have been given the deadline of June 10 to file them under a penalty and their failure to meet the deadline would lead to a suspension of their special allowance. Dar said that GDP to grow by 4.1 percent in the current fiscal year against 4.4 percent target fixed in the budget and 3.7 percent for the last fiscal year. Industrial sector is estimated to grow at 5.84 percent for the current fiscal year against 1.37 percent growth a year ago due to better supply of gas and electricity to the industry.
A growth of 11.31 percent is recorded in construction sector against a negative growth of 1.68 percent in the last fiscal year. Services sector has witnessed a growth of 4.3 percent against 4.85 percent of last fiscal year, he said adding that negative growth in cotton and pulses as well as oil seeds led to a decline in agriculture sector's growth. Dar further stated that inflation would remain in a single digit due to the appreciation of exchange rate impact on prices of commodities. The country's exports would be at $21 billion dollars in the current fiscal year after showing a growth of 4.4 percent over $20.1 billion of the last fiscal year. Dar added that textile exports have registered a 7 percent growth and raw cotton 42 percent subsequent to the grant of GSP plus status. The Minister stated the import of plants and construction machinery led to an increase in imports of 1.2 percent in the current fiscal year over previous year's. The Finance Minister maintained that foreign investment in the current fiscal year was recorded at $2.79 billion including $2 billion Eurobond as compared to $1.77 billion for the last fiscal year and the country's foreign exchange reserves touched $13.63 billion mark on May 21, 2014, including $8.8 billion with State Bank of Pakistan, against $11.4 billion of the same period of last year. The foreign exchange rate of 98.77/$ would remain stable at this range, he said adding that contrary to the prediction of economic pundits that it would touch Rs 114-Rs 127 per US $ it would remain stable at the current level. Dar maintained that there is an improvement in investment both in fixed and private investment. Tax revenue witnessed an increase of 7 percent in the current fiscal year, non-tax revenue 2.7 percent; while expenditure declined to 12.9 percent from 14.9 percent. On the monetary side, he said that net borrowing of the government was Rs 992 billion during July-May 10 last year and decreased to Rs 199.6 billion for the same period in the current fiscal year and SBP borrowing was Rs 416.8 billion during July-May 10 last fiscal year and this year it is Rs 10.5 billion. According to him, the loans retired by the government led to give birth to some space for the private sector. The Minister added that M-2 last year was Rs 788.8 billion and this year it is Rs 648 billion.
Comments
Comments are closed.