ISLAMABAD: Launching the Pakistan Economic Survey for 2013-14, Finance Minister Ishaq Dar played down the government’s missed targets, saying that it had “achieved 90 per cent” of the targets it set for itself.

Mr Dar said the Pakistan Muslim League-Nawaz government had spent its first year fire-fighting to show those who had predicted a default that they were wrong. Work to revive the nation’s economy would begin in earnest next year, the roadmap for which would be presented in the budget on Tuesday.

He said the national economy grew by 4.14 per cent of gross domestic product (GDP) against a target of 4.4 per cent and last year’s revised growth rate of 3.7 per cent. “For the first time in six years, the growth rate moved past the 4 per cent mark and if you are still not satisfied, we are ready to do more,” he told reporters on Monday.

But this is not entirely accurate, as the economic survey from 2009-10 put the economic growth rate at 4.1 per cent, which was revised below 4 per cent the year before that. A former government official pointed out that the growth rate in FY2013-14 was likely to face downward revision to about 3.8 per cent because the government had taken large-scale manufacturing (LSM) growth at 5.3 per cent for the July-March period instead of the 4.7 per cent that was reported in the first 10 months of FY2013-14.

Dar touts GDP growth rate and performance of industry and stock market as successes

When asked for details, the finance minister refused to go into the specifics, but said that he could arrange a special briefing with the Pakistan Bureau of Statistics to explain these issues in some detail.

Simultaneously, the minister tried to manage expectations for the coming year. “We may have to revise our strategy of setting difficult targets. Next year’s targets may not be as aggressive,” he said, articulating a decision already made by Prime Minister Nawaz Sharif to set next year’s economic growth target at 5.1 per cent of the GDP instead of the 5.5 per cent originally discussed with the International Monetary Fund.

He said the growth rate would be improved at the rate of 1 per cent every year, culminating in 6 per cent growth by 2015-16 and 7 per cent by 2016-17.

The minister said the industrial sector grew by 5.84 per cent of the GDP against a nominal growth of 1.37 per cent in the previous fiscal year. A major factor in this was the improved supply of electricity and gas following the resolution of the circular debt issue.

A 5.31 per cent increase in LSM, against last year’s 4.08 per cent, also contributed towards this growth.

The minister also played up improvements in the construction sector, which posted a growth of 11.3 per cent this year as against a 6.15 per cent decline last year.

The services sector, Mr Dar said, grew by 4.29 per cent as compared to last year’s figures of 4.85 per cent. He attributed the decline to a 30 per cent cut in general services by the government through expenditure control. He said the real impact of services sector reforms was expected next year as they required a longer gestation period.

On the agriculture front, the minister conceded the government had been lacking and promised to analyse its weaknesses and address them in the upcoming budget. He said the sector grew by 2.12 per cent against 2.88 per cent growth achieved last year. The agriculture growth target was set at 3.8 per cent for FY2013-14.

He attributed this weak performance to a drop in cotton production, which stood at 12.77 million bales this year as compared to 13.03 million bales produced last year. Some minor crops also showed decline, but a rise in wheat, rice and sugarcane production balanced things out.

The minister said inflation, as measured by the Consumer Price Index, rose by 8.69 per cent in the first 10 months of FY2013-14, against a 7.75 per cent rise last year. This year’s target at 8 per cent was missed. He said the core inflation grew by 8.24 per cent in 10 months against 9.91 per cent of last year.

Mr Dar, however, claimed victory on this front saying that international institutions were projecting inflation at 12 per cent following an increase in oil and electricity prices, but the inflation was contained to a single digit due to the appreciation of the Pakistani Rupee, reduced government borrowing and an improved monetary policy.

The current account deficit increased to $2.162 billion in the first 10 months of FY2013-14, against $1.574 billion last year. This was, however, supported by a robust 11.5 per cent growth in remittances from overseas Pakistanis.

He said foreign investment flows into Pakistan stood at $2.98 billion over the first 10 months of FY2013-14, including $2 billion in Eurobonds against last year’s foreign investment of $1.277 billion.

The minister said the per capita income in dollars recorded a growth of 3.5 per cent as compared to 1.44 per cent last year. The per capita income stood at $1,386 this year as opposed to $1,339 last year.

He said the stock market index, which stood at 19,916 basis points on election day, May 11, 2013, had now risen to 29,700. While total investment increased in absolute numbers, the government missed the target set for investment-to-GDP ratio, achieving 14 per cent against a target of 15.1 per cent.

National savings were expected to grow by 14 per cent of the GDP in FY2013-14 but ended up at 12.9 per cent of the GDP, lower even than last year’s 13.5 per cent national savings-to-GDP ratio.

He said the fiscal deficit had been contained at 3.2 percent of the GDP in the first nine months of FY2013-14, against 4.7 per cent in the same period the previous year.

Published in Dawn, June 3rd, 2014