Speaking in a special edition of "Paisa Bolta Hai" with Anjum Ibrahim Dr Pasha stated that growth figures for the last three years were highly exaggerated and urged Pakistan Bureau of Statistics (PBS) to abandon the practice of "data engineering" and present an accurate picture of the economy.
According to detailed calculations made by Dr Pasha, growth rate for 2015-16 was 3.1 percent (against government claim of 4.5 percent), 4.4 percent in 2016-17 against government claims of 5.3 percent and 4.9 percent in the current year against the claim of 5.8 percent - an assessment he based on projecting the rate for the last four months.
The former Finance Minister clarified that for the current year industrial growth was calculated on data available for the first eight months (July-February) and PBS projected industrial growth for the remaining four months to arrive at the annual rate of 6.5 percent. This is unrealistic, he maintained, as the industrial sector witnessed negative 2 percent growth in March and there was a 2 percent decline in electricity consumption as per the Economic Survey 2017-18.
A growth of 6 to 7 percent was shown in banking and insurance sectors when the banking and insurance profits are decreasing on account of low interest rates; he added.
Dr Pasha stated that 3.8 percent growth in agriculture sector, the highest in 12 years or so claimed the government, was also highly inappropriate as there was no increase in major crop areas, consumption of fertilizer dropped by 4 percent and Rabi crops were badly hit due to the water shortage. About 2 to 2.5 percent growth rate is more realistic, he contended.
Dr Pasha warned that the budget deficit is likely to be over 7.75 to 8.2 percent of the GDP for the current year against the government's claim of 4.1 percent (the consolidated fiscal operation released by the Finance Division recently gave the figure of 4.3 percent for the first nine months of the year against the annual target of 4.1 percent).
Dr Pasha pointed out that in 2012-13 the budget deficit was 8.2 percent; however, this could not be attributable to the PPP-led coalition government as Finance Minister Ishaq Dar, by eliminating the Rs 480 billion circular debt through bank borrowing on the second last day of the fiscal year, raised the deficit by 1.6 percent.
Dr Pasha pointed out 'inappropriate things' in relation to deficit numbers with one showing that (i) provincial governments received non-tax revenue gift from somewhere of Rs 150 billion for development, and (ii) estimated provincial surplus was shown at Rs 200 billion in the third quarter of the current fiscal year when everyone is aware that this is an election year and provinces spending will increase and a surplus is unlikely.
He stated that total foreign exchange reserves with State Bank of Pakistan are $10.3 billion, which include forward borrowing of $6 billion from commercial banks. SBP's own foreign exchange reserves are $4.2 billion, which are dangerously low and their swift depletion will push the country's foreign exchange position to a critical level.
Hafeez Pasha said Pakistan's dependence on borrowing from China has increased dramatically during the last two years. Pakistan borrowed $ 8 billion during the two years with 40 percent dependence on one source country.
He further stated that the current account deficit is unlikely to increase in the next fiscal year due to rising oil prices and Pakistan's current account financing needs will increase to $17 billion for 2017-18 and may even increase to $19 billion if remedial measures are not taken. He urged the next government to take drastic actions and provide incentives to exporters to better manage the current account deficit.