Pakistan eyes 6% growth despite challenges

Pakistan economy in on track to achieve an ‘inclusive and sustainable economic growth’ despite commodity price shocks in the international market, its top official says.

Federal Minister for Finance and Revenue Shaukat Tarin said, the country’s gross domestic product (GDP) would grow by 4.5 per cent to five per cent during the current fiscal year and it would further improve to six per cent in financial year 2022-23.

“I am still hoping that it (growth rate) could be five per cent. It could be between 4.5 per cent to five per cent during the current fiscal year ending on June 30,” the Finance Minister said in an interview with Bloomberg.

Tarin, who assumed the charge of economy in April 2021, attributed the higher economic growth to rising exports, increasing remittances and improving tax collection that had gone up by 32 per cent to 35 per cent. However, he also said the economy had to face certain difficulties due to higher commodity prices in the international market. The utilisation of electricity had gone up by 13 per cent whereas the corporate profits were also at historic high, he said.

“We will be doing more than five per cent given the fact that last year’s growth comes now with the rebasing of the economy at around 5.57 per cent,” the minister said.

$1b IMF loan tranche

Meanwhile, the International Monetary Fund (IMF) on Wednesday approved a $1 billion loan tranche after completing a sixth review of the country’s reforms under its $6 billion extended fund facility (EFF) programme, which was initially approved in July 2019. The disbursement brings Pakistan’s total draw against the EFF plan for budget support to about $3 billion.

The much-needed tranche was initially to be released last year, but was held back because of a delay in Pakistan’s compliance with terms and conditions agreed with the fund.

The IMF said the EFF program had strengthened Pakistan’s fiscal buffers before the start of the Covid-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020.

“The Pakistani economy has continued to recover despite the challenges from the Covid-19 pandemic, but imbalances have widened and risks remain elevated. The authorities’ recent policy efforts to strengthen economic resilience are welcomed,” IMF deputy managing director Antoinette Sayeh said in a statement.

“Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth,” she added.

Tarin took to Twitter Wednesday night to announce the coming disbursement and welcome the news. He said the country obviously had done a lot of consolidation through the International Monetary Fund (IMF) programme.

“The current programme should be enough and if Pakistan started generating five per cent to six per cent balanced growth, there would be no need for another IMF programme,” Tarin said.

— muzaffarrizvi@khaleejtimes.com