All sectors performed poorly: Dar
Finance Minister Senator Ishaq Dar who launched the Economic Survey 2012-13 along with Minister for Planning and Division Ahsan Iqbal and other senior officials of Finance Ministry here on Tuesday stated that the economy is facing serious macroeconomic challenges and all the economic targets estimated in the current fiscal year budget were missed. The minister said the fiscal deficit is projected at 8.5 percent for the current fiscal year against 4.7 per cent projected target in the budget. The revenue collection target of Rs 2,381 billion for the current fiscal year is facing a shortfall of around Rs 350 billion.
The minister said the GDP growth target has been missed by 0.7 percent as current data indicates that growth would be 3.6 percent for the current fiscal year against 4.3 percent projected in the budget. The budgeted foreign inflows failed to materialise as the country received $800 million against $1.8 billion estimated in the budget. The projected investment to GDP target of 13.3 per cent has been revised downward to 12.6 per cent. He said the current account deficit which was projected at $2 billion for the current fiscal year is expected to widen by $2.9 billion at the close of current fiscal year. The minister said foreign exchange reserves with the State Bank of Pakistan (SBP) are around $6.2 billion.
Dar said positive growth has been witnessed in national saving which increased to 13.5 per cent against budgetary target of 12.8 per cent. Dar said average growth during last five year was around 3 per cent which was insufficient to cater for the requirements of country's annual population growth of 2.1 percent. The investment to GDP ratio has to be increased to 20 per cent to create needed employment opportunities and refused to own 6 per cent unemployment figures quoted in the Survey, saying that it was based on 2010-11 Labour Survey whereas the situation has worsened during the last couple of years and the unemployment may have been increased. The minister promised that he would conduct the survey in the next fiscal year to ascertain the accurate figure of unemployment in the country. The circular debt which is a serious problem creating load shedding in the country required Rs 500 billion immediately. He said the government would try to eliminate the circular debt in 60 days and would take a number of measures, reduce the line losses and improve recovery, to ensure that it does not resurrect to choke the electricity. The Cabinet Committee on Energy (CCoE) would be constituted to regularly monitor the situation and take necessary measures.
The Finance Minister said the country's public debt is simply unsustainable which has increased from Rs 3,000 billion in 1999 to Rs 14,000 billion in 2013. He said it was unfortunate that loan have been taken during the last decades to finance the fiscal deficit and violated 60 percent debt to GDP limit imposed in Fiscal Responsibility and Debt Limitation Act, 2005.
Highlighting future roadmap of his party, the minister stated that revival of the economy is topmost priority of the government by increasing growth rate to 4.4 per cent in the next fiscal year. This would be achieved through increased public sector spending of Rs 1,155 billion in the next fiscal year and eliminating circular debt and resolving load shedding problem which has been affecting 2 per cent GDP annually. The fiscal deficit would be reduced to 4.5 per cent in the next three fiscal years with around 2.5 per cent from the next fiscal year.
The minister said that the sale of 3G license would be completed in the next fiscal year in transparent manner. Expenditure would be rationalised and difficult decisions would be taken to broaden the tax base and national saving would be encouraged. The plan for revamping of SOEs has been prepared and competent people would be hired for this purpose. In reply to a question, he said the war on terror has caused $80 to $100 billion estimated loss to the country's economy. He said there was no need to change the base year at this time.