ISLAMABAD: Pakistani economists on Saturday expressed skepticism over the government’s claim it would be able to accelerate economic growth to 3.6 percent in the next fiscal year from 2.4 percent in the outgoing financial year, warning that employment and poverty rates could increase further in the coming months.
Prime Minister Shehbaz Sharif’s administration is expected to present the annual budget on June 10, at a time when the country is facing an economic crisis with double-digit inflation and struggling to secure funding from the International Monetary Fund (IMF).
The government on Friday approved a 3.6 percent growth target for the 2024-25 budget, boosting the development allocation to Rs1.2 trillion ($4.3 billion) from Rs950 billion ($3.4 billion) in the outgoing fiscal year, which has now been slashed to Rs717 billion ($2.6 billion) due to fiscal constraints.
“Looking at the economic indicators including agricultural and large-scale manufacturing growth, it seems the government may hardly be able to achieve around three percent growth rate,” Sajid Amin, economist and deputy executive director at the Sustainable
Development Policy Institute (SDPI) in Islamabad, told Arab News.
“The governments usually budget a high growth target and then revise it down,” he said, referring to the outgoing fiscal year’s growth rate as the government had targeted 3.5 percent but achieved only 2.4 percent.
Amin said that around nine million youth were entering the labor market annually and Pakistan would require at least a five percent growth rate to create job opportunities for them.
“Even if the government achieves the growth target, the unemployment and poverty rate would unfortunately increase,” he said.
According to a recent Planning Commission report, the government expects inflation to moderate to 12 percent in the next fiscal year while admitting that growth prospects “hinge upon political stability, exchange rate, macroeconomic stabilization under IMF’s program and expected fall in global oil and commodity prices.”
Ali Khizar, an economist, said the country was faced with gross financing gaps and development would remain in check with real interest rates to stay positive.
“Pakistan’s current account is expected to stay close to zero until the foreign exchange reserves build,” he told Arab News, adding that commercial financing revenues would remain low and with all this Pakistan would not be able to achieve the targeted growth rate.
“Even 3.6 percent growth rate is not a good number to create job opportunities and bring people out of poverty,” he continued, adding that Pakistan would have to ensure tight fiscal and monetary policies with high interest rates to secure the IMF loan program.
These, he pointed out, would slow down the economy.
