The Economic Survey released on Friday indicated that Pakistan's economy performed poorly as the government missed targets for a number of key areas in 2006-07. Services sector, exports, large scale manufacturing (LSM) and inflation are among those areas, which fell short of targets.
Services sector grew only by 8 percent against its target of 10 percent, LSM fell short by 3.75 percent as it grew by 8.75 percent against 12.5 percent target. It remained even poor performer than the last year when it grew by 10.7 percent.
Exports could not take-off and in the first 10 months these could reach to $13.9 billion. In the next two months the government needs $4.7 billion to achieve 18.6 billion target, which is next to possible. The government at the highest level acknowledges poor performance on exports and concedes that the current years target was not achievable now.
Below target exports have widened trade deficit to an alarming level, forcing the government to go for some non-traditional means such as raising of money from bonds and GDRs to keep current account at an acceptable level.
Inflation is again an area where the government measures could not yield result. The economic survey indicated that CPI showed marginal decline in 10 months but much higher that target of 6.5 percent.
Another hard fact is that Pakistan's foreign debt rose to $38.86 billion in 2006-07, from $37.26 billion of last year. Although, in terms of GDP ratio foreign debt showed downward trend but in terms of statistics it increased by $1.6 billion in the current fiscal year.
Agriculture sector was the main driver in Pakistan's economy and took overall GDP growth up. Bumper wheat and sugarcane crops proved instrumental in keeping economic growth on track. Other areas, which were keeping the ball rolling, were remittances and foreign direct investment (FDI). Unprecedented inflows coming in from these two areas will help the government reduce the current account deficit.
Prime Minister's advisor, Dr Salman Shah, told journalists that the government would keep on following tightened monitory policy to do away with overheating in the economy. He also hinted at various budgetary measures to protect pro-poor section of the society. He said the government was doing enough to protect low-income group and it will follow the same policy for the future as well. He said the government was going to expand Utility Store Corporation (USC) network to provide items of daily use at concessional rates. He said the government has finalised a plan with the provincial and the city governments to set-up 'mandis' where farmers will sell their produce. He noted that 'mandi system' would eliminate middleman's role an increase income of the rural population.
Dr Salman Shah was upbeat about the future performance of the economy. He believed that rising investment trend and better availability of water for farms would help Pakistan current sustain economic growth and address poverty and unemployment issues.
He also showed optimism that the Karachi Electric Supply Corporation (KESC) will have additional generation to overcome power crisis in Karachi. He said that the government will increase salaries and pensions of the employees in 2007-08, budget. The advisor also foresaw bright future of housing and construction sector.
He disagreed with a questioner who wanted abolition of taxes to bring ghee/ cooking oil prices down and said it can only help the rich to mint more money and put the poor at disadvantage.