Best-kept secret: NAC to unveil growth rate today amid suspicions

GDP growth may miss target for fifth consecutive year.

ISLAMABAD:

The National Accounts Committee is set today (Friday) to reveal this year’s projected rate of economic growth amid suspicions of intrigues and manipulation as all stakeholders have been kept in the dark by the Pakistan Bureau of Statistics.

In its 93rd meeting, the NAC will approve gross domestic product (GDP) growth for the current fiscal year, being worked out on the basis of nine-month data.

For the year, the previous coalition government had set a 4.7% growth target and initial reports suggest that the target will again be missed, for the fifth consecutive year. International financial institutions are projecting growth of 3.5% to 3.7% this year.

According to sources, the figure is likely to be between 3.8% and 4%, but it has not yet been finalised. Based on the final results, the NAC will also approve revised growth rates for the previous two financial years.

Sources said the Pakistan Bureau of Statistics was trying to figure out some of the accounts which were showing higher growth in the previous fiscal year, resulting in low growth this year due to the high base impact.

Revised estimates of the last fiscal year 2011-12 were showing over 4% growth due to increase in certain expenditures. For that year, 3.7% growth had been announced by the NAC in its 92nd meeting.

Efforts were being made to add at least 0.3% to the national output to take the growth to 4%, sources added.

Output of the services sector that previously remained the engine of growth is going down this year because of exclusion of government borrowings from the financial sector’s growth, sources said.

Top five banks have invested more than 50% of their balance sheet in government’s treasury papers. The exclusion of borrowings after adoption of the Financial Intermediaries Services Indirectly Measures (FISIM) methodology will have an impact on the overall growth rate.

However, the working paper of NAC meeting has not been shared with its members including provinces, the State Bank of Pakistan, the Planning Commission and other departments concerned. Even the agenda of the meeting is confusing as it states that the GDP will be worked out on the basis of 1999-00 base year, which the PBS governing council has already changed to 2005-06.

The Planning Commission, which was supposed to be at the centre of growth discussion, is completely in the dark about the national output. “I have neither been consulted on changing the base year of the economy nor the working paper of NAC has been shared with me,” said Dr Nadeemul Haque, the Deputy Chairman of Planning Commission.

PBS Chief Statistician Asif Bajwa stressed that the working paper could not be prepared as the decision of changing the base year was taken only three days ago.

He said preparing the working paper was a technical exercise, thus, it was not necessary to give the paper before the meeting. Bajwa said he was not under pressure to manipulate the growth figure.

Owing to the change in base year, the size of the economy grew 7.8% following inclusion of more services and goods in the economy. This also caused changes in shares of major sectors of the economy. The major shift was in the industrial sector whose share in the national output dropped from 26.9% to 20.9%, mainly because of declaring cotton ginning an agriculture activity instead of an industrial one.

The share of agriculture sector increased from 20.3% to 23% while the services sector’s contribution jumped to 56% from 52.8%.

Published in The Express Tribune, May 3^rd, 2013.

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