Document relevant for policymakers?

The Economic Survey 2014-15 contains, in common with last year, a clear and distinct bias in favour of the government's performance making the document largely irrelevant for policymakers. It has given birth to a question why all the positive indicators are attributed to government's policies while all negatives are attributed to external factors. In the Survey's words "during the fiscal year 2014-15 economic environment in the country remained confronted with a number of challenges such as war against extremism, energy shortages, settlement of IDPs, and strengthening state institutions. Moreover political conditions started deteriorating in August 2014 due to street sits ins/dharnas...concurrently floods hit various areas of the country..." There is however no explanation/clarification about what is meant by strengthening state institutions.
Positives, as per the Survey, include building foreign exchange reserves (though an overwhelming reliance on external borrowing as well as on sale of 2 billion dollar Eurobonds and one billion dollar sukuk at rates well above the international market rate inexplicably continues to be cited as an achievement); exchange rate stabilisation (though even the Planning Commission acknowledged in its working paper to the APCC that the rupee is over valued which is negatively impacting on exports which are declining); a sharp decline in inflation to 4.65 percent due solely to falling international oil prices (though ridiculously higher taxes ranging over time from 17 to 37 percent on some petroleum products to provide fiscal space due to inability to meet the twice revised downward revenue target) did little to significantly fuel domestic savings (which fell by 0.2 percent in the first year of the incumbent government but rose by 0.8 percent this year - from 13.7 to 14.5 percent); the rise in savings was strangely in spite of household consumption rising by 298.3 billion rupees and government consumption rising by 180.5 billion rupees in the first eleven months of the current year compared to the revised estimates of last year.
Private investment declined from 10 percent to 9.7 percent this year. This is a reflection that lower interest rates that the Finance Minister proudly claimed was one of the lowest in recent years did little to encourage private sector borrowing prompting the Planning Commission to maintain that "the SBP decision to ease monetary policy has not significantly impacted the investment climate suggesting that the problem lies with other determinants of investment." One major problem is heavier government borrowing from the scheduled banks - which rose from 175 billion rupees in July-May 2013-14 to 579.7 billion rupees in July May 2014-15. Growth in large scale manufacturing sector declined from 4 percent last year to 2.4 percent this year - a source of serious concern. The Survey highlighted government decisions targeted to deal with the decline in manufacturing: Board of Investment, under the Prime Minister's office, is projected to take policy measures to promote investor friendly environment, establishment of Land Port Authority to assist exporters, reducing mark-up on export refinance and developing an Action Plan to improve Pakistan's business environment. It is however unclear when implementation will commence and whether these decisions alone would yield the desired results.
Two sectors performed extremely well during the year and provided some reprieve to the government. First, was a steady rise in remittances - which reached 15 billion dollars between July-March this year against 12.9 billion dollars in the comparable period in 2013-14. And, second, the stock market - with its index rising by a whopping 64.22 percent between 11th May 2013 and 25 May 2015. Skeptics maintain that Pakistani stock markets are routinely supported by government-owned Development Finance Institutions (FDIs) to reflect investor confidence that is not evident in other indicators including direct foreign investment which has been steadily declining for the past two years, exports which have also declined in spite of the GSP Plus status extended by the European Union, and very slow growth in manufacturing. In return the stock market's pound of flesh is the rate of CGT. Last year's budget speech lends some credence to this critique with finance minister stating "a start performer of Pakistani economy during fiscal year 2-013-14 has been the stock market," and the reward was to delay the implementation of the agreement between the preceding government and the stock brokers to raise taxes from 10 to 17.5 percent with effect from 1st July 2014. Finance minister stated in his 2014 budget speech that to "ensure continued stability in the stock market it is proposed that with effect from 1 July 2014 CGT rates shall be 12.5 percent for securities held up to 12 months and 10 percent for securities held form a period between 12 to 24 months." Stock market pays less than 2 billion rupees in taxes per year and has the potential to generate around 100 billion rupees per annum if the same rates as those applicable in other regional markets are applied. It is however to be noted that the government intends to make some changes to the CGT in the budget to be presented to parliament today.
The negatives for which floods and Imran Khan/Tahirul Qadri sit ins are held responsible include a failure to meet the Gross Domestic Product target by 0.9 percent - budgeted at 5.1 percent with provisional estimate of 4.2 percent - agriculture growth was overstated by 0.4 percent - budgeted at 3.3 percent with 2.9 percent achieved (the growth rate was dependant on weather and on international commodity prices with little emphasis on combating structural problems). Electricity output for Wapda registered a growth of 7 percent, but with the annual rise in demand this rise did little to reduce the hours of load shedding, while KESC (renamed K Electric though the Survey does not appear to be aware of the name change) registered negative growth of 19.9 percent.
Tax revenue was supplemented with withholding taxes that are not collected by the Federal Board of Revenue (FBR) as well as transfer of three accounts from non tax to other taxes notably petroleum levy, gas infrastructure development cess and surcharge totalling 300 billion rupees. Thus the 11.5 percent tax to GDP ratio is based on innovative accounting.
The fiscal deficit is projected at 5 percent which appears unrealistic given that over ambitious, some say downright unrealistic expenditure cuts and revenue projections are made for the current and last month of the fiscal year. And relevantly the Survey acknowledged that the focus on reducing high fiscal deficits severely hampered "policy objectives such as sustained economic growth along with declining debt services, alleviating poverty and investing in physical and human infrastructure."
To conclude no revelations were expected in the Economic Survey 2014-15, and none were delivered, with respect to the economic performance of key macro economic indicators as data was either leaked or made public at different fora including the working paper prepared by the Planning Commission for Annual Plan Co-ordination Committee, the outcome of the APCC, approvals under the chairmanship of the Prime Minister in the National Economic Council and the presentation made by the Finance Minister to the cabinet.