ISLAMABAD - As like previous fiscal year, the PML-N government would once again miss the main macroeconomic targets during ongoing financial year 2014-15 including country’s GDP, budget deficit and rate of investment targets due to one or other reasons.
“The country’s economic growth rate is a source of concern. For a number of years, economic growth has not touched 4pc. In the first quarter too, there seems to be no improvement. It was expected that, upon assuming responsibilities, the Government would address short-term measures to put the economy on firm footing and then launch a comprehensive plan for sustained economic growth. But the government did neither”, said Humayun Akhtar Khan former minister and Chairman Institute for Policy Reforms.
Institute for Policy Reforms (IPR) held an event in Islamabad to review the country’s economic performance for the first quarter (July-September) fiscal 2014-15 as well as government’s economic performance scorecard vis a vis objectives set in the 2013 elections manifesto. Speaking on the occasion, former Finance Minister and Managing Director IPR Dr Hafeez Pasha informed that government would not able to achieve the macroeconomic targets during ongoing financial year. The country’s GDP growth rate would remain around 3.5-4 percent as against the government’s estimates of 5.1 percent. Rate of investment would be 14-14.5 percent of the GDP as compares to the target of 15.7 percent. Fiscal deficit would go up to 5.5-6 percent of the GDP against the target of 4.9 percent of the GDP. Current account deficit would soar to 1.4 percent of the GDP against the government’s estimates of 1.1 percent of the GDP.
He told the participants of the event that government could not achieve the agriculture sector growth target due to floods in Punjab, as the growth of this sector would be around two percent against the target of 3.3 percent. However, Dr Pasha informed that government would achieve the inflation target, as it would remain 6-6.5 percent during current fiscal year against the estimated target of eight percent. He was of the view that inflation rate could further decline if government had not increased the power tariff by imposing an equalisation surcharge and enhancing wheat support price by Rs 100 per 40 kg.
Talking about the power tariff, Dr Hafeez Pasha said that government should have been reduced the tariff due to reduction in furnace oil, rather, it enhance the tariff by imposing an equalisation surcharge.
The former finance minister criticised the government for not releasing funds for public sector development programme to restrict the budget deficit target within level. The budget deficit remained at 1.2 percent during first quarter (July-September) of the year 2014-15 despite a significant shortfall in FBR revenues. The target of restricting budget deficit was achieved due to big cut in releases of PSDP funds and receipt of two tranches of coalition support fund (CSF) and higher revenues from petroleum levy, he added.
Presenting alarming situation on poverty and unemployment, Dr Pasha said around three million people annually are going living below poverty line.
Meanwhile middle class of the society is shrinking due to the higher inflation rate, as numbers of middle class families were 45 percent in Musharraf era, which now shrunk to less than 35 percent. The rate of unemployment is around 10 percent. Around 2 million people in Punjab neither seek jobs nor going for study, which might turn them into criminal, he added. Former finance minister said that it was not part of the PML-N party manifesto to sale the shares of the profitable entities like OGDCL, PPL, ABL, UBL and HBL.
Former Finance Minister and Managing Director IPR Dr Hafeez Pasha also highlighted the ‘Economic Scorecard of PML-N government in 2013-14’, as he said government achieved only one target of Budget Deficit Reduction in last year out of 14 targets . Four indicators, tax revenues, losses of public sector entities, level of public debt and health spending improved but their targets were not achieved. There were no changes in growth of Large Scale Manufacturing, transmission and distribution losses in power sector, education spending and non-pension social protection spending. However situation was deteriorated in following sector GDP growth rate, inflation rate, rate of investment, PEPCO billing recovery dates.
He said the government overstated GDP growth rate and the actual growth rate is between 3.3 and 3.5 percent. The government claimed that economic growth was 4.1 percent during last financial year. Talking about the manufacturing sector growth, Dr Pasha said growth of Large-Scale Manufacturing was only 4 percent against the required a growth rate of 4.6 percent in 2013-14.
 The implied target for the rate of investment in 2013-14 was 15.7 percent of the GDP. The actual rate achieved is 14 percent. Therefore, there has been a significant shortfall in relation to the target. In fact, the investment rate has actually fallen in 2013-14. Large-scale manufacturing and electricity supply have seen slow growth (under three percent) while exports declined by over 5pc in the first quarter. Investment too has been tardy. Private credit grew by just Rs5 billion in the first quarter as opposed to 32 billion in the same period last year. Tax collection remains a concern. First quarter receipts alone showed a shortfall of Rs.49 billion.