ISLAMABAD: The words and numbers tell a good story, but the big question now is whether the voters are buying it. The Economic Survey rolled out by the government struck all the right notes, even if there were big gaps in the data coverage.
Growth of GDP, the headline number that measures the health of the economy, came in at 5.8 per cent — a 13-year high but slightly behind the 6pc target for which the government blamed the ongoing political instability.
“We have paid a heavy economic cost because of political crises that created instability in the country,” said Ahsan Iqbal, Minister for Planning and Development, who wore a stern and defiant look throughout as he presented the larger narrative before the numbers were rolled out. “Otherwise we would have achieved 6.1pc growth rate and exceeded the target”.
Flanked by three other ministers, the panel he seemed to be leading was unusual for the absence of usual government officials such as the finance secretary and FBR chairman who usually accompany the finance minister during survey presentations in previous years. The only official present was the little-known economic advisor, cutting a diminutive presence on the edge of the desk.
Mr Iqbal said the PML-N could not claim to have transformed Pakistan like China but without any doubt turned around an economy described by many as a dead five years ago. “We have put Pakistan back to work,” he declared triumphantly in the middle of his narrative building presentation. Therefore, he described the economic survey as a ” scorecard” of PML-N’s five-year performance based on its promises. “We have fulfilled all the promises we made to the country,” continued Miftah Ismail, who was delegated the job to put the numbers behind the narrative presented by Mr Iqbal.
Mr Iqbal rolled out the series of challenges inherited from the previous PPP government and claimed credit for not only crisis management but also putting the country on a long term development path with heavy investments to add about 11,000MW of electricity in five years against 15,000MW of last 66 years.
Likewise, the challenge of extremism was also defeated with military operations in the tribal regions and Karachi, and all done with domestic resources, he claimed. He conceded many challenges still remained, including reviving exports on a longer term while fast growth rates created short term (3-4 years) problems like current account deficits.
The minister also believed the activation of $29 billion worth of projects under the $46 billion CPEC portfolio as another signature achievement of the current government that addressed Pakistan’s energy problems and created a connectivity platform and would propel the country towards what he referred to as “fourth generation economic development.”
Mr Ismail said the last year’s growth rate had now been revised up to 5.4pc and the current year GDP growth of 5.79pc was supported by the 13-year highest growth in agriculture sector (3.8pc), 10-year high of 5.8pc growth in manufacturing and 11-year high 6.25per cent growth large scale manufacturing (though the accompanying survey document puts the figure at 6.1pc, mentioning the 6.24 figure for the period July to Feb only) and 6.4 per growth in services sector.
One questioner acknowledged the growth in power generation capacity, but asked about the circular debt, saying it has crossed Rs1 trillion. Both Mr Ismael and Iqbal vigorously shook their heads as the question came forward, but evaded the answer in his response.
The circular debt reduction was carried out in one mammoth swoop by the government in its opening days back in 2013, to the tune of almost Rs500bn. That exercise caused the fiscal deficit figure for the last year of the PPP government to balloon to 8.2pc of GDP. Mr Ismail happily recounted that figure, saying this was the deficit “inherited” by his government, and went on to list where his government took this crucial figure in subsequent years, eventually preparing to bring it to 5.4 or 5.5pc by the close of their tenure (the target was 4.1pc).
The adviser and the minister both conceded the current account deficit had increased significantly over the past two years but attributed it the focus on strong growth rates necessary to generate enough jobs for two million people reaching the employment age every year.
Mr Ismail said exports were now showing growth in all the nine months so far, adding it was not advisable to cut imports to ultimately translate into exports. He agreed that former finance Minister Ishaq Dar strongly believed in strong currency while he had different opinions based on needs of the exporters and hence allowed two devaluations that led to better export performance. “All the exporters were saying this is necessary” he said. “They can’t all be mad.”
Mr Iqbal said violent extremism had been defeated, additional energy availability was now reviving industries and the combination of peace and uninterrupted power supply was now generating demand growth, which was a very positive sign which should now be sustained.
Mr Ismail tried to play down concerns over increasing public debt while Mr Iqbal said some analysts were unfair when they highlight only $35bn gross increase in external debt without simultaneously mentioning a $17-18bn of debt repayment.
Mr Ismail then turned to report that total public debt increased to 61.4pc of GDP at present compared to 60.2pc of GDP five years ago while external debt had dropped from 21.4pc of GDP five years ago to 20.5pc at present. More importantly, he said the size of the GDP increased by almost 50pc to Rs34.4 trillion from Rs22.4tr five years ago and most of the debt was utilized for capacity additions in energy sector and infrastructure development.
Mr Ahsan Iqbal said Pakistan was now on a take off stage but this would depend on policy continuity and political stability. He said the country had lost two opportunities in the past in the 1960s and 1990 to become developed economy and the fresh opportunity if grabbed would put Pakistan among the top 25 economies by 2025.
Published in Dawn, April 27th, 2018