Difficult decisions needed to end economic crisis: finance adviser

ISLAMABAD: Prime Minister’s Adviser on Finance and Economic Affairs Dr Abdul Hafeez Shaikh on Monday reiterated that difficult decisions will have to be made in order to bring deteriorated economic situation under control, ARY News reported.

The finance adviser, while presenting Economic Survey Report in a press conference, suggested to control imports first in order to make improvements in the national economy.

“Duty on imports is being increased,” Shaikh announced.

While detailing on financial aid, the adviser said that financial assistance of $9.2 billion was received by the present government. He added that a bailout package worth more than $6 billion is being taken from International Monetary Fund (IMF).

He, however, clarified that the country cannot be made a prosper state through foreign assistance.

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Shaikh blamed previous governments for destroying national institutions. “We are bound to pay Rs2900 billion in term of interest against the loans taken by the past governments,” he added.

“Previous governments had acquired Rs31,000 billion  and no hike was made in export rate during last five years. The loans worth $100 billion from other sources had been taken during previous tenures.”

The adviser said that the national currency is facing pressure due to loans.

He presented further statistics before the media, saying that the reserves of State Bank of Pakistan (SBP) shrink to $9 billion from $18 billion.

He added that the trade deficit had reached to $32 billion during the previous government and the Pakistan Muslim League Nawaz (PML-N) government had spent Rs2300 billion in its last year.

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“We should think for the reasons behind the current economic situation of the country,” Shaikh added.

He said that the past governments had completely neglected measures to increase exports nor any attention was given on national resources.

The adviser added, “The country is facing dual deficit this time and it is inevitable to come out of it.”

The economic survey, presented by the finance adviser, came before the announcement of budget for the fiscal year 2019-20 on June 11 (tomorrow).

Earlier in the day, Prime Minister Imran Khan in a meeting of his economic team approved the budget proposals for the fiscal year 2019-20.

The prime minister directed his team to ensure minimum burden on the poor class of the society. He also urged the officials to prepare a people-friendly budget, which also ensure economic stability of the country.

Important points from Pakistan Economic Survey

Growth and Investment: The provisional GDP growth rate for FY2019 is estimated at 3.29 percent on the basis of 0.85, 1.40 and 4.71 percent growth in agricultural, industrial and services sectors respectively.

Inflation: The CPI has witnessed a rising trend during the current financial year. It increased to 5.8 percent in July 2018 and after remaining sticky at 5 percent during following two months increased to 6.8 percent in October 2018. The spike witnessed in October 2018 was due to increase in gas prices. The Oil and Gas Regulatory Authority revised the retail prices of natural gas for various consumers after keeping them unchanged for about two years. The substantial increase of 9.4 percent was witnessed in March 2019 while in April 2019 it was recorded at 8.8 percent.

Education: According to Labour Force Survey 2017-18, literacy rate was estimated at 62.3 percent in 2017-18 as compared to 60.7 percent estimated in 2014-15. For males it increased from 71.6 percent to 72.5 percent and for females it increased from 49.6 percent to 51.8 percent. Area wise analysis suggests that literacy rate increased in both rural areas (51.9 percent to 53.3 percent) and urban areas (76.0 percent to 76.6 percent). Literacy rate increased in three provinces; Khyber Pakhtunkhwa from 54.1 percent to 55.3 percent, Punjab from 61.9 percent to 64.7 percent and Balochistan from 54.3 percent to 55.5 percent while Sindh it decreased marginally from 63.0 percent to 62.2 percent.

Health: As percentage of GDP, health expenditure has improved from 0.91 percent in 2016-17 to 0.97 percent in 2017-18. During FY2018-19 (July-March) it has increased by 0.53 percent compared to 0.49 percent increase recorded during the corresponding period of last year.

Energy: As of end March 2019, total installed capacity of electricity reached 34,282 MW which was at 33,433 MW at end of March 2018, thus, posting a growth of 2.5 percent. Although electricity generation varies due to availability of inputs and other constraints, the generation increased from 82,011 GWh to 84,680 GWh, posting a growth of 2.1 percent during the period under discussion. The government has also shown its commitment for electricity generation through renewable energy sources. During July 2018 – March 2019, there was an increase of 1 percent in share of renewables in electricity generation, and it is expected that the share will further increase in coming years.