All key economic indicators have been performing well, affirming the success of the government in laying a foundation for robust growth, according to a three-year performance report released here Thursday. According to the report, the government prepared a comprehensive roadmap for stability, growth and productive employment. It said the government had taken immediate policy measures to correct macro-economic imbalances and to avert the crisis which it inherited from the past government. The measures included, bilateral arrangements, multilateral program, IMF program, deferred oil payments, current account deficit managed through exchange rate correction, export industry incentives and duties imposed to curtail luxury import items. In addition it executed prudent expenditure management through austerity measures and did not allow supplementary grants and had zero borrowing from State Bank of Pakistan (SBP). “Consequently, measures paid off in terms of improved external and fiscal accounts, stability in exchange market and growing investor confidence,” the report said. The report added as the economy was transitioning from stability to higher sustainable growth trajectory, the COVID-19 brought multifaceted challenges for Pakistan. Like contraction in other economies of the world, the economy of Pakistan contracted by 0.47 percent in FY2020 whereas Pakistan was not the only country in the world that experienced negative economic growth, the whole world faced severe unanticipated recession.
Pre-Covid, the global economy was projected to grow by 3.4 percent in 2020 but due to COVID 19, the global growth contracted by 3.3 percent. The government devised a comprehensive strategy to prevent the spread of the pandemic on one hand and on the other, it announced the largest ever fiscal stimulus package of Rs 1,240 billion to mitigate the adverse effects of the pandemic on the economy and to protect the vulnerable segments of the society. This package was also complemented by liquidity support from SBP for businesses especially SMEs.
In addition, a construction package for low-cost housing & jobs creation was also announced and consequently, the economy has largely escaped the devastation and was bounce back compared to its peers in the region. Meanwhile, in order to meet the financing requirement, the government has been utilizing optimum combination of borrowing sources with prudent degree of risk while ensuring long-term sustainability of debt portfolio. The government had taken several measures for curtailing the losses of State Owned Entities (SOEs) and make them financially and operationally efficient so that they serve the public better and positively influence the fiscal exchequer. Efficient SOEs will further unleash the potential of other sectors of the economy including energy, transport and would lead to increased employment, better public service delivery and more inclusive growth.
The prime objective is to attain the sustainable and inclusive growth through structural reforms rather than taking the usual route of pricing and fiscal adjustments.
