Budget measures lack clear strategy: IPR

Vulnerable external sector could make Pakistan knock on doors of International Monetary Fund

LAHORE: The Institute of Policy Reforms (IPR), an independent think tank, has said that despite tall claims that the budget would be a strategic breakthrough in economic policy, measures lack coherent strategy.

"This is a budget with some realistic, some fanciful numbers, and more than a dash of electioneering," IPR said in its review of the budget 2018-19 on Saturday.

"The government takes credit for revival of GDP growth rates. However, several developments, such as recovery of world economies from the 2008 financial crisis, low energy prices and large-scale investment in infrastructure from China helped Pakistan's economic growth," stated the report.

"Yet, despite these favourable developments, the government has not placed the economy on a sustained growth path.

"The economy's fundamentals are weak, especially its external sector with a runaway current account deficit. The government so far has no response on how it will manage the external account. Its estimate that imports will grow by just 4.8% is unrealistic."

For FY19, the government forecasts a growth rate of 6.2%. Fiscal deficit is targeted at 4.9% of GDP. The government has clearly made a policy transition from stability to growth. This would change if the vulnerable external sector makes Pakistan knock on the doors of the International Monetary Fund again.

Published in The Express Tribune, April 29^th, 2018.

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