ISLAMABAD: Blaming the PML-N government for broad-based failures to deliver on five-year macroeconomic targets, Minister for Planning and Development Makhdum Khusro Bakhtyar on Wednesday said the next five-year plan (2018-2023) would take the country to 7 per cent growth rate to achieve the core objective of generating 10 million jobs.
Speaking to journalists, the minister, however, conceded that the Ministry of Finance was setting a growth target of 6pc by the terminal year (2023), necessitating downward adjustments in the planning ministry’s sectoral goals and outcome. He also agreed that in case of an International Monetary Fund programme, some more adjustments may be required.
He said the two ministries (finance and planning) would meet on Thursday to discuss each other projections and targets before finalising a homegrown macroeconomic stabilisation with a human face under 12th five-year plan (2018-2023).
The minister said the government would engage renowned economists for analysis of last five year data that he believed had serious gaps so that next five year performance be based on credible data and real picture is comes forward. However, he declined to comment on the process for selection of economists, saying it was at an early stage.
“The previous government missed all targets set in 11th five-year plan (2013-2018),” he said, adding the ‘performance remained off-track’ and growth was artificially achieved through consumption growth.
The current government, he said, would create 10m jobs in 5 years and enhance sustainability of the economic growth by building fundamentals and structural reforms. “Ours is a reformist government,” he said.
The average real GDP growth of the last five years was just 4.8pc against a terminal year target of 7pc and masked many inequalities such as the crop sector, employing 38pc labour force, grew marginally by 0.6pc in those five years. He said terminal year (2017-18) growth was claimed at 5.8pc that was based upon 6 months data and would require on the basis of full year data.
One example, he said, was large-scale manufacturing (LSM) where growth was taken at 6.1pc (7 months). This will be revised downward to actual full year growth of 5.2pc, he said, adding that about 0.2pc reduction in growth is due only on this count.
He said the previous government artificially boosted consumption to uplift economic growth through fiscal expansion and easy monetary policy. The quantum of consumption in Pakistan at 93pc of GDP was one of the highest among emerging economies whereas investment and savings were one of the lowest. This ratio in India is 70pc and in Bangladesh is 74pc whereas investment in these countries was above 30pc compared to Pakistan’s just 16pc while the saving rate in Pakistan was less than half of these countries.
The minister said the total investment could not reach close to the target of 22.8pc of GDP and stood at 16.4pc on the conclusion of 2017-18. Worryingly, the private investment rate continuously fell during the last four years in a row from 10.4pc GDP in 2014-15 to just 9.8pc 2017-18 when interest rates were at historical low level. Public investment was increased by 1.2 percentage points in this period to keep investment level almost stable that took away banking sector’s liquidity for government borrowing.
The minister said national savings could not reach even at half the targeted level of 21.3pc and fell to 10.4pc instead. As a result, fiscal consolidation could not be achieved as the fiscal deficit missed by 300 basis points from the target set at 3.5pc of GDP (Rs1,203 billion) reaching to 6.6pc (Rs2,260bn) in the terminal year of last plan period 2017-18.
Published in Dawn, January 17th, 2019