Positive developments reported over Pakistan economic growth
ISLAMABAD: Pakistan economy is on solid growth path and has potential to grow at much higher rate in next five years despite a challenging environment across the globe, Khaleej Times reported while quoting experts.
Top government officials, analysts and corporate leaders repose trust in growing economy and said higher GDP growth in 5-6 per cent per annum was going to be a ‘new normal’ in next five years amid considering strong economic indicators of the country, it said.
“Yes, we have a potential to grow at much higher rate in coming years. The State Bank of Pakistan projects three per cent GDP growth in financial year 2020-21 and four per cent in 2021-22,” Dr Reza Baqir, Governor, State Bank of Pakistan (SBP), told the paper during an event in Dubai last week.
The paper quoted newly-appointed Finance Minister, Shaukat Tarin having said that Pakistan would go for an ambitious six per cent economic growth target in the next two years as the International Monetary Fund (IMF) shows its willingness to renegotiate tough conditions for a $6 billion loan in the wake of rising Covid-19 cases. “The federal government will earmark as much as Rs900 billion ($6 billion) for development expenditure in the year beginning July. That’s the bare minimum we need for a country this size,” Tarin said.
According to the report, the IMF had projected four per cent GDP growth for Pakistan during fiscal year 2021-22, starting in July. Islamabad is expected to post 1.5 per cent expansion during the current fiscal year ending on June 30 after a rare contraction (-0.4 per cent) last year.
“We have strong economic indicators this year despite the Covid-19 pandemic challenges and this is a good omen for the economy. The government ensures more than Rs2 trillion stimulus to steer the economy out of Covid crisis by supporting the businesses through much-needed liquidity and funds distribution at grass root level,” Dr Baqir said. Elaborating, the central bank governor said SBP offered Rs450 billion liquidity under Temporary Economic Refinance Facility to private sector to absorb Covid shock while another Rs240 billion provided as working capital to avoid lay-off and job losses.
“The central bank also offered Rs900 billion cushion to banks to ensure relief to distress businesses in deferment and restructuring of principal payment and mark-up charges. These are some of the measures which helped the economy to bounce back quickly to meet global demand after the lockdown period,” Dr Baqir said. According to the report, while referring to rising foreign exchange reserves, orderly rupee-dollar parity, improving current account balance and other economic indicators such as large-scale manufacturing, cement, automobiles and fast-moving consumer goods, the SBP governor said economy was moving in right direction and will perform better in coming years.
“Pakistan is one of the few countries that reduced fiscal deficit despite the Covid challenge and global economic slowdown by reprioritising spending. The country’s public debt to GDP ratio has remained broadly stable last year while it has risen for most emerging markets due to Covid; this has improved the country’s creditworthiness,” he said.