ISLAMABAD: Pakistan was on the brink of technical default on its financial commitments with forex reserves at a historic low covering only two weeks’ worth of imports when PML-N government took over in 2013, said Federal Finance Minister Senator Ishaq Dar in his budget speech on Friday outlaying budget 2017-18 with a total out lay of rupees 4.1 trillion .
This was for the first time that fifth budget was presented by same Finance Minister under same Prime Minister. This is reflection of strengthening of democracy for which the entire nation can feel pride dar said.
Elaborating further he said huge repayments were due and the multi-lateral development partners were shying away from undertaking any new business with Pakistan. The FBR revenues had grown only by 3.38% for that year, expenditure was high and the result was a fiscal deficit of over 8% of GDP, he recalled. Energy outages were pandemic, the load-shedding hours in a day were longer than those in which electricity was available. Load shedding in cities was for 12 to 14 hours while in villages was 16 to 18 hours. The writing on the wall was obvious. From macroeconomic perspective, Pakistan’s economy was declared as unstable internationally Finance Minister said.
Claiming huge efforts round the clock under guidance of Premier Nawaz Sharif, he said today Pakistan is on the cusp of a high growth trajectory. Our GDP has grown this year by 5.3% which is a 10-year high.
Enumerating the achievement of his ministry he said foreign exchange reserves are at a comfortable level, sufficient to cover about 4 months of imports; tax revenues have increased by 81% over the last four years translating into an average annual increase of 20%; since 2013 credit to private sector has increased by over five times; fiscal deficit will be around 4.2 percent; there has been over 40% increase in imports of capital goods this year; gas availability has improved, and load-shedding for industry has been eliminated and substantially reduced for commercial and domestic sectors – Inshallah next year will be the year of complete elimination of load shedding. The writing on the wall is obvious even today – only the message has changed. It is a success story with an economic turn around, Dar said Today globally credible institutions like Price Waterhouse Coopers have said that “Pakistan economy is set to be among the 20 largest economies (G20) of the World by 2030”.
This turnaround has been made possible by prudent fiscal management, continued focus on enhancing revenues and reducing non-development expenditure. This is not an ordinary achievement.
Defending record borrowing, he said “Borrowing for development is acceptable for any country or an organisation as the socio-economic returns outweigh the cost of borrowing”. Investing in the people of Pakistan and its infrastructure will lead to even higher, sustainable and inclusive growth.
The government has put the country on the path of self-sustenance which is being internationally recognised and is reflected in the improved ratings by all major rating agencies including Moody’s, S&P and Fitch.
Real GDP Growth at 5.28% this year is the highest in the past decade. Four years’ ago, the economic growth was 3.68% and for the first time the size of the economy has surpassed $300 billion;
our agriculture sector has turned around and has registered a robust 3.46% growth. All major crops including Wheat, Cotton, Sugarcane and Maize have registered healthy growth. This turnaround in agriculture from stagnant growth is a result of the Prime Minister’s Kisaan package announced in September 2015 and the extraordinary measures approved by this house as part of budget 2016-17, said Finance Minister.
Industrial production grew by 5.02% and businesses are now hiring additional workers while vServices sector which includes banks, retail, transportation, housing, etc – grew by 5.98%. On average, income of each Pakistani has increased by 22% since fiscal year 2012-13. Per capita income today stands at $1,629 as compared to $1,334 four years ago, he said adding that Inflation was around 12% between 2008-13 but after four years of Nawaz Sharif government is around 4.3%.
In fiscal year 2012-13 FBR collection was Rs.1,946 billion. For the current year the target is Rs.3,521 billion. This represents a historic increase of 81% in the last 4 years with average annual growth of 20%. Tax to GDP ratio which was 10.1% in fiscal year 2012-13 is likely to increase to 13.2% this year, he said Referring to criticism over increasing imports he said imports have been recorded at $37.8 billion during July-April showing an upward trajectory. This vibrancy in imports is attributable to over 40% increase in capital machinery, industrial raw material and petroleum products and the increased investment under the CPEC projects focused on energy and infrastructure sectors. All of this augurs well for Pakistan’s economy in the near future.
The exports during the first ten months of this year have shown an over all minor decrease of 1.28% compared to 7.8% decline during the same period last year. This reversal has been the result of timely support by the government to exporters in shape of a comprehensive package of Rs.180 billion in January 2017 and efforts of our exporters, he said.