During an interaction with media persons, Khusro Bakhtiar Wednesday pointed out that last Five Year Plan targeted 7% GDP growth which was missed by a margin of 1.2 % as GDP growth stood at 5.8 percent against the target. "We are finalising 12th Five Year Plan in consultation with all the stakeholders with an objective to provide a firm base to the fundamentals of economy and create 10 million jobs in the country."
He said that last Five Year Plan targeted 4% growth in agriculture which was missed by a margin of 0.2% as growth stood at 3.8% against the target. He said that the previous government in the 11th Five-Year Plan set a target of 8% growth of manufacturing sector which was missed by 1.8 % as growth stood at 6.2 % against the target.
The minister said targeted 22.8% growth target was set for investment which was missed by 6.4 % growth in this sector stood at 16.4% against the target. He added that fixed investment target was set at 21.2% growth which was missed by 6.4% as growth stood at 14.8 % against the target. He said that last Five-Year Plan targeted 16.7% growth of private investment which was missed by 6.9% as growth stood at 9.8% against the target. He said that the previous government set a 21.3% growth target for National Savings which was missed by 10.9 % as growth stood at 10.4 % against the target.
Bakhtiar said that target of total revenue was set at 15.3% growth which was missed by a margin of 0.1% as revenue growth stood at 15.2% against the target.
He said that the target of export was set at 14% growth which was missed by 5.5% as growth stood at 8.5% against the target while the imports increased by 3.4 %. He said that the previous government had set -6.3 % growth of trade balance but it stood at -10.9%. He said that similarly last Five-Year Plan targeted -1.2% growth of current account deficit which was missed by massive -4.9 % as growth stood at -6.1% against the target.
The minister said that he had reviewed the performance indicators of 11th Five-Year Plan (2013-18) with his economic team and found that all the targets were missed whereas the credibility of the GDP growth performance under the plan was also questioned. He said that the average real growth of 5.8 percent during the plan marked many inequalities like crop sector grew marginally by 0.6 percent in these five years which employs 38 percent of labour force.
He said that the 5.8% growth in 2017-18 was based upon 6 months data and will be revised on the basis of full year data. He said that one example is large-scale manufacturing where growth was taken at 6.1% (7 months) that will be revised downward to actual full year growth of 5.2%.
The minister said that total investment could not reach close to the target of 22.8 percent of GDP and stood at 16.4%. He said that the private investment rate continuously fell during the last four years in a row from 10.4% of GDP in 2014-15 to just 9.8% in 2017-18 when interest rates were at their historical low level. Public investment increased by 1.2 percentage points in this period to keep investment almost stable, he said.
He said that National Savings could not reach even at half the targeted level of 21.3% and fell to 10.4%. He said that the fiscal consolidation could not be achieved as the fiscal deficit missed by 300 basis points from the target set at 3.5% (Rs 1,203 billion) reaching to 6.6% (Rs 2,260 billion) in the terminal year of last plan period, 2017-18. He said that the outgoing government sowed the seeds of fiscal indiscipline by parking deficits in the commodity, PSEs and power sector, which will continue to haunt the fiscal consolidation efforts.
"The reckless borrowing increased the debt stock from Rs 16 trillion to around Rs 30 trillion and exerted enormous pressure on future generations. Expansion in current account deficit from 1.3% of GDP ($ 3.13 billion) in 2013-14 to 6.1% ($ 18.9 billion) of the terminal year was witnessed during the plan period," the minister said. He said that 44 % of total revenue is consumed by debt services.
He said consumption was artificially boosted to uplift economic growth through fiscal expansion and easy monetary policy. He said the quantum of consumption in Pakistan at 93 % of GDP is one of the highest among emerging economies whereas investment and savings are one of the lowest. He said this ratio in India is 70% and in Bangladesh it is 74% whereas investment in these countries is above 30% while in Pakistan this ratio is just 16%. He said that savings rate in Pakistan is less than half of these countries.
About the targets being set for 12th Five-Year Plan, as it is currently being prepared by the Ministry of Planning, the minister said that he also reviewed the targets for the 12th Five-Year Plan and advised the relevant sections to deliberate with sectoral experts to firm up these targets. He said that the core objective of the plan is to create 10 million jobs in 5 years and enhance sustainability of economic growth through building fundamentals. He said that the macro-framework will be finalised in consultation with the Ministry of Finance and the SBP. He said that provincial growth strategies are already incorporated in the national growth framework. He said he has also directed to put in place an implementation plan and a periodic monitoring mechanism for an effective traction.
The minister said that he has chaired a series of meetings to finalise various chapters of the 12th Five-Year Plan where an in-house stocktaking exercise to look into the existing resources, challenges and window of opportunities is conducted regarding sectoral policies and its alignment with overall strategy of the government. He said, "We are cognisant of the fact that the 12th Five-Year Plan is presented in the backdrop of serious macroeconomic imbalances and a huge structural deficit."
The minister spoke about challenges to the economy such as regaining macroeconomic stability, fiscal consolidation, long-term sustainability of the external sector, creating employment and skill development, and poverty alleviation. He claimed that growth of the 11th Five-Year Plan period strengthened the notion of economic growth without economic development.
He said that the meetings concluded that macroeconomic imbalances of this magnitude could not be sustained for an indefinite period and a home-grown macroeconomic stabilisation with human face is needed at this moment. He said that stabilisation must not suffocate economic growth. He stated that the growth strategy of the government is focusing upon building strength of economic fundamentals such as quality and inclusiveness of economic growth or human capital, up-scaling technological capability, sustainable agriculture, social protection, strategic trade policy framework, national SME policy, financial inclusion, productivity and efficiency, and above all an investment strategy for efficient resource allocation.
