Finance Minister Miftah Ismail Thursday unveiled the Pakistan Economic Survey (PES) 2021-22, which revealed a record high growth rate of 5.97 per cent against a target of 4.8 per cent.

This overall growth came on the back of 4.40pc growth in Agriculture, 7.19pc growth in Industries, and 6.19pc growth in Services against targets of 3.5pc, 6.5pc and 4.7pc, respectively.

The Pakistan Economic Survey is an annual report on the performance of the economy, focusing in particular on major macroeconomic indicators. Interestingly, this time — perhaps a first — a new government (PML-N-led coalition) is presenting the economic performance of a previous government (PTI).

The survey was revealed by the finance minister alongside Planning Minister Ahsan Iqbal, State Minister for Finance Ayesha Ghous Pasha, and Power Minister Khurram Dastgir during a press conference in Islamabad.

Even though the country surpassed overall growth expectations as well as sector-wise growth targets, "underlying macroeconomic imbalances and associated domestic and international risks have dampened celebrations", according to the survey document.

The finance minister, while unveiling the survey, said "achieving growth was not an issue for Pakistan, the real issue is achieving sustainable growth".

The situation in Pakistan has remained the same — whenever the country records growth it, unfortunately, gets into the crisis of current deficit,” Miftah said in a televised press conference. The same has happened this time as well, the recent 5.97% growth recorded during the outgoing fiscal year 2021-22, according to the new estimates, has pushed Pakistan towards the balance of payments and current account deficit crisis,” the finance minister lamented.

Economic Survey 2021-22

He further highlighted those imports have also increased by 48% as compared to the last fiscal year, while the exports also move up. He noted that the trade deficit stood at $45 billion.

He shared that Chinese banks have agreed to refinance USD 2.3 billion worth of funds which will shore up Pakistan’s foreign exchange reserves.

Despite export receipts and workers’ remittances both reaching record-high levels during the nine-month period, import payments registered a "sizable, broad-based increase".

As a result, the current account deficit widened considerably over last year, the document revealed.

"These payment pressures manifested on the interbank PKR-USD exchange rate, which depreciated 14.1 percent during Jul-Mar FY2022. The SBP’s foreign exchange reserves also came under pressure from Q2 onwards, dropping $5.9 billion during the first nine months of the fiscal year to $11.4 billion by end March 2022.

Therefore, during this period, the current account posted a deficit of $13,169 million, or 3.6pc of GDP, against a deficit of $275 million last year. The major contributor to the higher current account deficit was the 55.5 percent increase in the merchandise trade deficit during Jul-Mar FY2022, the survey document revealed.

Ismail said that years before, the exports were around half of the imports. However, the export-to-import ratio stands at 40:60 now, he said, adding that Pakistan could only finance 40% of its imports through exports and for the rest, it had to rely on remittances or loans — which makes the country stuck in a balance of payments.

The government achieved the most important economic target — GDP growth — and hence, it was less surprising that other goals were achieved as well.

The minister said imports came in at $77 billion and will end up being the highest ever import bill n terms of GDP. "Imports have increased quite a lot but so have exports," Ismail said.

During Jul-Mar FY2022, goods exports grew by 26.6pc and amounted to $ 23.7 billion, whereas services exports grew by 17.1pc and amounted to $ 5.1billion, according to the survey.

"Despite the encouraging export performance, the country’s imports have also risen significantly. The broad-based surge in global commodity prices, Covid-19 vaccine imports, and demand-side pressures, all contributed to the rising imports, " the PES said.

Resultantly, trade deficit grew by 55.5 percent and amounted to $30.1 billion or 8.6pc of the GDP, which the document said is "historically high".

The finance minister added that since energy prices are too high in Pakistan, the local industry was "uncompetitive." 

He said the supply of gas supply to all industries has resumed after being shut for some time, noting that the supply to industries would not have been stopped had the PTI government entered long-term agreements.

The previous government did not make long-term plans, forcing Pakistan to buy energy and oil at costlier rates, which is leading to worsening the economy of the country.

"And this is not PML-N, JUI-F, PPP, or the coalition government's economy whose economic situation is worsening; it is the state of Pakistan that is seeing an economic turmoil," he said.

The finance minister, talking about the foreign direct investment (FDI), said it was around $2 billion in 2017-2018, but it stood at around $1.25 billion in the first nine months of the outgoing fiscal year.

Miftah said the trade and current account deficits have increased as compared to 2017-18 — the fiscal year when PML-N's government ended — as an "incompetent" ruler was imposed on Pakistan.

The Finance Minister said that our foreign exchange reserves reduced by 5.6 billion dollars in the month of March and these currently stand at around 9.7 billion dollars. He however expressed the confidence that the foreign exchange reserves will touch 12 billion dollars in the next few days with the provision of 2.4 billion dollars by China.

Miftah Ismail stressed the need for putting the country in the right direction.  He said we have to increase the prices of petroleum products the Brent price is hovering around 120 to 123 dollars per barrel.

The Minister pointed out that the country would not have been faced with the current price hike had the previous government signed long term agreements for gas import during the period of Covid-19.

He said the PTI left behind landmines not for the present government but the State of Pakistan.

As regards the Foreign Direct Investment, the Finance Minister said these were two billion dollars in 2017-18 and today this has come down to 1.25 billion dollars in the first nine months of the current fiscal year. He said Pakistan lags behind in every statistic because of the decision of the incompetent government of PTI.

Miftah Ismail said Pakistan will have to import three million tons of wheat this year to meet domestic requirements.

The year-on-year (YoY) inflation from July to April of the outgoing fiscal year was measured at 11pc, compared to the target of 8pc.

The PES cited abnormal increase in global commodity prices, especially crude oil and the edible oil, as the reasons for the rise in domestic prices.

"The group-wise breakdown indicates that major contributors to headline inflation are transport, followed by furnishing & household equipment maintenance and housing, water, electricity & gas."

Non-perishable food items are the main contributory factor in jacking up food inflation, it further noted.

Planning Minister Ahsan Iqbal attributed the growth witnessed in the outgoing financial year to rebasing of the economy by the PTI government last year. He added that the former government slashed the Public Sector Development Budget (PDSP) to Rs500 billion.

He said the private sector investment in Pakistan depended on the money invested by the government in the public sector development projects. Iqbal added that in 2021-22, Rs900 billion was set aside for development projects, later it was slashed to Rs700b and then to Rs550b.

Iqbal criticised the former government for damaging the CPEC projects. He added that the PML-N government had established nine Special Economic Zones but the PTI government failed to start work on five zones.

He added that the PML-N had expedited the work started by the PTI on dam projects. He added that industrial development, transport and communication were being focused in the upcoming year.

Power Minister Khurram Dastgir spoke about power production during the PML-N rule from 2013-18, and said the PTI failed to add anything to the national grid during its rule.

“Had the PTI government set up the required 8,000MW projects, there would be no power outages today,” he added.

According to Dastgir, K-Electric’s 1250MW project using coal produced in Thar was also delayed. The minister added that the government would install power plants that would use indigenous energy for production to ease the balance of payment crisis.