Islamabad:
The Minister of Finance, Muhammad Aurengzeb, established on Monday the “economic change” while preparing to present the federal budget by 2025-26 on Tuesday (today).
He exuded confidence in starting the next fiscal year on a stronger base, based on the economic recovery that began last year and won impulse this year with the support of the IMF, despite the objectives lost in real real sectors, including agriculture.
By launching the Pakistan 2024-25 economic survey, the Minister of Finance also proposed an important review of the Resource Exchange Formula of the National Finance Commission (NFC). He asked to reduce the dominant weight of the population, currently 82%, in favor of other indicators such as the area, poverty and income generation, which together entail a weight of 18%, arguing that the existing formula encourages population growth at the expense of equity.
The survey showed that the Government has managed to consolidate economic recovery avoiding a “sugar fever” and stabilize the external sector, once again, could not meet the most critical objectives necessary to credibility to economic growth figures and help increase investment.
The economic growth rate is maintained at 2.7%, which is a correct way to make sustainable growth to avoid booming cycles, said finance minister, while referring to historical patterns of achieving higher growth rates followed by collapse next year.
However, the claimed growth rate is below the 3.6% objective and is also dispute by independent economists.
The finance minister also said that inflation has been “a fantastic history”, which decreased 4.6% this year and is in the right direction.
The recovery that began last year has established itself this year and next year will be the year of economic change, said the minister.
However, he fought to defend the economic growth figure of 2.7% for the outgoing fiscal year and offered to establish an expert committee to review the opposite point of view.
“The data has been provided by the Government and we will adhere to them,” said the Minister of Finance while answering questions about discrepancies in the data used to solve the economic growth number of 2.7%.
The minister said he was open to review the numbers that stand out to point out discrepancies. The integrity of the data is absolutely critical and there is always a margin of improvement, said the Minister of Finance and add that the Government could constitute a Steering Committee that has members of the private sector to review the data.
Independent statistics and economists have challenged the government’s claim that the economy grew 2.7% in the outgoing fiscal year. To achieve the figure, the economy has to grow 5.3% in the April-June period, with large-scale manufacturing, more than 8% should grow.
Throughout the fiscal year, the government had been declaring that the generation of electricity was in decline, however, the economic survey showed a 39.3% increase in the gross value in the electricity sector.
Similarly, the construction sector, which is also affected by government tax policies and low demand, showed that it grew by 6.6%.
In addition, all the main crops saw a fall in their departure. Wheat production decreased by 9%, rice (1.4%) and cotton cultivation witnessed a 31%decrease.
Regarding consultations about low growth along with high poverty and unemployment, the Minister of Finance said that the Government did not rush a sugar and would remain absolutely in the course of the economic reform agenda.
For another question, the minister said it was necessary to control population growth, since the current 2.6% rate was unsustainable. One of the measures to control the population is to “delegate the population of the National Finance Commission,” said finance minister in a policy statement that will establish the tone for August NFC conversations.
While commenting on the difficult situation of the agricultural sector, the minister said that if the growth of the agricultural sector remained at last year, the general economic growth rate could have been close to 3.6%.
The Government lost its investment objective to PCD of 14.2%. Remained at 13.8% and that also, assuming that the entire RS1.1 development program of sector had been completely used.
The investment objective of the private sector was lost by a wide margin and stuck to 9.1% of GDP, despite the efforts to bring investments abroad under the special umbrella of the Investment Facilitation Council.
The SFC will play a fundamental role in investment in energy, information technology and mining sectors, which will change the game for the economy, said finance minister.
The Government fulfilled the objective of inflation of 12% and remained below 5% in this fiscal year, marking its important achievement.
On the income side; However, the government lost the fiscal objective by a great margin of more than RS1 billion.
The finance minister said that the FBR transformation plan will take two to three years to be completely implemented.
The minister said the tax base has expanded, with individual return filing archivators and the numbers of registered retailers compared to the last year.
He said that the Ministry of Energy has done a good job, since it managed to show improved recoveries, but hastened to add that the general losses of state companies were around RS1 billion that could be avoided.
To a question about the measures to reduce expenses, the Secretary of Finance, Imdad Ullah Bosal, said that Pakistan has achieved fiscal consolidation under the IMF program and added that there is no more space available to further reduce expenses. For next fiscal year, also, the maximum possible reduction in expenses has been proposed, said Bosal.
Our dilemma remains the twin deficit, but this year, the current account will remain in surplus and currency reserves have increased to $ 11.5 billion, said finance minister.
He said that Pakistan’s remittance initiative and Roshan’s digital accounts should be appreciated for increasing currency inputs.
He said that remittances are expected to reach $ 38 billion in the outgoing fiscal year, while cumulative tickets under digital accounts have increased to $ 10 billion.
It is now claimed that per capita income has increased to $ 1,824 and the size of the economy (in dollar terms) is $ 411 billion, according to the survey. On the basis of the latest figures of national accounts for fiscal year 2014-25, the general size of the economy is RS114.7 billion.
Agricultural sector
The survey showed that the production of important crops has decreased by 13.5% due to a decrease in wheat production of 31.8 million metric tons to 29 million tons.
The claim of 29 million tons of wheat production was much greater than the projections of the Ministry of Finance of around 26 million tons of production expected this year.
Corn production decreased 15.4% to 8.24 million tons, rice production fell 1.4% to 9.7 million tons and sugar cane production decreased 4% to 84.24 million tons. Cotton crops held great success with a 31% drop in production. The cotton bullets decreased from 10.22 to 7.1 million bullets.
Despite the reduction in Grams production by 17%, other crops have published a provisional growth of 4.8% due to the growth of two digits in the production of potatoes, onion, mango and sesame.
While cotton, gining and diverse components have decreased by 19%, livestock, forestry and fishing have recorded provisional growth rates of 4.72%, 3.03%and 1.42%, respectively.
Industrial growth
The Government has affirmed that “the industry has shown a growth of 4.77%.” Despite an increase in coal production (2.84%), the mining and quarry industry contracted 3.4%due to a decrease in natural gas production by 7.05%, the production of crude oil decreased by 14.7%.
Large -scale manufacturing has also witnessed a negative growth of 1.53%. “The electricity, gas and water supply industry has shown a positive growth of 28.9% mainly due to the low effect of FY2023-24, that is, -19.86%, as well as an increase in the production of WAPDA and companies.”
The construction industry increased by 6.61% due to the increase in expenses related to construction by the private sector and the general government, he added.
The growth in the construction sector is based on the statement that the Government will spend RS1.1 billions in this fiscal year, which is false.
Similarly, the electricity growth claim is based on the assumption that the power subsidies of RS1.2 billion will be used in this fiscal year.
Services sector
The services sector has also shown a 2.91% growth in 2024-25 with positive contributions from all components. The wholesale and retail trade witnessed a modest growth of 0.14% due to a slower growth in production in the sectors of agriculture and manufacturing.
The transport and storage industry increased by 2.2% due to the increase in water, air and road transport production. Information and communication have grown by 6.5% due to an increase in the production of 24% computer programming and consulting activities. The slowest inflation rate and the low base effect has resulted in positive growth rates in the finance and insurance and public administration and social administration industries to 3.22% and 9.92% respectively, he added, he added, he added, he added, he added, he added, he added, he added.
In addition, both education and human health industries and social work have published a positive growth of 4.43% and 3.71%, respectively.
