Pakistan's economic growth rate has slowed down from 5.5 percent to 3.3 percent in FY 2019, lowest in nine years and missing targets set for all major sectors of the economy, said Engineer Ahmad Hassan former Vice President Faisalabad Chamber of Commerce & Industry and Chairman of the FCCI standing Committee on R & D.
Chairing a meeting of the R&D, he said that as per provisional official results, the GDP growth rate for fiscal year 2018-19 was almost half of the annual target of 6.2 percent because of low growth in the agriculture and industrial sectors. "The slow pace of economic growth coupled with currency devaluation has trimmed the size of the economy, in dollar terms which slipped to around $280 billion from $311 billion at the end of the last government's term", he told.
Hassan said that Pakistan's GDP growth rate has fallen well below that of other countries in the region including India and Bangladesh, which are expected to grow at a rate of 7 percent. "The Agriculture sector grew by only 0.85 percent this year and the Industrial sector grew by only 1.4 percent while large scale manufacturing contracted by 0.3 percent", he added.
Explaining the severity of the problems being faced by the current government on the economic front, he said that Pakistan's GDP growth is expected to remain lower in the next couple of years and total government debt is projected to increase even further.
He said that low tax revenues have been one of the primary reasons for Pakistan's financial issues. He further told that total revenue collected by FBR reached a level of Rs4,000 billion in FY 2018 which was only around 12 percent of GDP while for FY 2019, the government has set an overall target of Rs4,888 billion for tax collection, whereas, IMF has suggested to further increase the tax collection target for coming years.
Continuing, he said that total revenue collection in the last fiscal year stood at Rs5,310 billion out of which Rs2,384 billion was paid out to provinces leaving net revenue of only Rs2,926 billion for the Federal Government against a total expenditure of Rs4,752 billion. "Low tax collection is therefore, one of the primary reasons for the persistent large budget deficits faced by the Federal Government", he added
Quoting data from the FBR, he told that the total number of tax filers crossed the mark of 1.800 million for the tax year 2018, which is just around 0.87 percent of the country's total population. "This figure shows that there is an urgent need to expand the tax base in order to increase tax collection and ease the government's financial woes", he remarked.
Engineer Hassan said that Pakistan has been facing a persistently high trade deficit for the past many years, which has grown considerably in recent years. "This rapidly growing trade deficit has placed a high pressure on the national current account", he said and added that although the trade deficit has decreased in the current fiscal year, yet it continued to remain at an unsustainably high level.
Presenting latest data, he said that imports decreased by 7.8 percent to $45.47 billion in July-April 2019 while exports remained relatively unchanged at $19.17 billion. "The trade deficit for the first 10 months of the current fiscal year therefore stood at $26.3 billion", he told and added that the Current Account Deficit has decreased significantly by 29.5 percent to $9.6 billion in the first 9 months (July-March) of FY 19 was helped partly by an increase in remittances of 9 percent to $16.1 billion. "However, Foreign Direct Investment (FDI) decreased by a significant 51.5 percent to $1.3 billion in July-March 2019 compared to $2.6 billion in the same period last year", he added
He further told that the external debt of the country has increased significantly in the past 4-5 years, increasing from around Rs5.7 trillion in 2013 to Rs8.9 trillion in September 2018 as per data from the State Bank of Pakistan. "Total debt on the other hand has increased to over Rs27 trillion which is well above the 60 percent debt to GDP limit set by the FRDL Act 2005", he concluded.
Copyright Business Recorder, 2019