Dr. Abdul Hafeez Shaikh adviser to Prime Minister on Finance and Revenue said Thursday that country’s economy was stabilizing before the outbreak of corona-virus pandemic, which inflicted huge losses and derailed it towards negative growth of 0.38%.
Addressing the launching ceremony of Pakistan Economic Survey for the outgoing fiscal year 2019-20, the advisor said that the fiscal year 2020, before coronavirus spread, showed dedicated efforts of the government for addressing structural issues that had caused macroeconomic imbalances back in FY 2018. He said that the economic reforms programme and the implementation was also acknowledged by the international financial institutions while International Monetary Fund (IMF) had declared that Pakistan’s programme was on track and bearing fruits for the economy.
He said that the pre-coronavirus economic recovery was also supported by macroeconomic indicators as on the external side, the decline in current account deficit, buildup of foreign reserves and stable exchange rate. On the fiscal side, there were significant improvements in all major indicators and the trend continued till March 2020, implying that the fiscal consolidation was on track. The primary balance witnessed a remarkable turnaround as it posted a surplus of Rs193.5 billion during July-March FY2020 against a deficit of Rs463.3 billion of the last year.
During FY2020, GDP growth remained negative 0.4% on the basis of 2.7% growth in Agriculture, negative 2.6% in industry, negative 0.6% in services. GDP growth impacted due to COVID-19 followed by lock down in the 4th quarter of FY2020.. #launchofeconomicsurvey2020
— Ministry of Finance (@FinMinistryPak) June 11, 2020
He said that the government repaid around Rs 5,000 billion loans and was successful in reducing its expenditures, while no ministry or division was provided supplementary grant. During this period, he added, the government even did not borrow a single penny during this period from State Bank of Pakistan. In addition, the revenues had also witnessed significant growth of 17% whereas there was also significant growth in non-tax revenues.
The advisor said that the non-tax revenues increased from Rs1,100 billion to Rs1,600 billion, which was a big jump. However, he added, due to Covid-19 outbreak, the economy has suffered a lot as it has been now estimated to grow negative 0.38% against the predictions of around 3%. “But Pakistan is not alone to face this hostile condition, the advisor adding that the world economy had suffered a lot due the spread of coronavirus,” he said.
He said that the International Monetary Fund (IMF) has predicted 3.4% downfall in world GDP, however the developing economies are likely to suffer more as their exports would decline and remittances suffer owing to decreasing demand in international market. He said that the coronavirus had inflicted loss of around Rs 3,000 billion to national economy.
He said that the agriculture growth also declined to 2.67% whereas there has been negative growth of 2.64 percent in industrial sector and negative 0.59 percent growth in services sector. Likewise, the pandemic affected exports of the country and is likely to affect remittances, which so far have been on track.
The advisor said that the revenues collection was also badly damaged by the coronavirus as against the expected target of Rs4,700 billion, the collections may hardly reach to Rs3,900 billion during the current fiscal year. Dr Hafeez Shaikh said during the outgoing fiscal year, the fiscal deficit was 4% of the GDP during July-March 2019-20 as compared to 5.1 percent in the corresponding period of the last financial year.