ISLAMABAD: The government has been unable to achieve its first-year growth rate target with the economy growing only 4.1% in the outgoing fiscal year -- a rate that carries substantial risks of downward revision once actual public spending figures are compiled.
The 4.1% growth rate was mostly driven by industrial growth, while targets in the agriculture and services sectors, which contribute about three-fourths of national output, were missed.
The National Accounts Committee (NAC) on Thursday approved the provisional growth rate of 4.14% for fiscal year 2013-14. The official economic growth rate target was 4.4%.
Minister of Finance Ishaq Dar meanwhile expressed hope that Pakistan would move beyond the 4% GDP growth rate in the next year and reach 5% in the coming years, APP reported.
The growth rate is provisional and subject to changes on the basis of actual national accounts, Chief Statistician of Pakistan Asif Bajwa said while talking to The Express Tribune.
The NAC has taken into account the budgeted figures of public sector development spending, while actual spending is expected to remain less than half of the total allocation, according to officials privy to the NAC meeting discussions.
The NAC has worked out growth in the construction sector on the basis of Rs1.155 trillion spending by the provincial and federal governments. The actual spending will remain less than Rs600 billion, according to the officials.
Against an allocation of Rs615 billion, the four provinces have spent only Rs199 billion in the first nine months of the fiscal year. The provinces are earning profits by keeping their cash with the federal government instead of spending on provision of social services. Against an allocation of Rs540 billion, the federal government spent Rs196 billion in the first nine months of the fiscal year.
The officials revealed that once the actual spending figures are available, the lower spending will erode by 0.2%, bringing down the provisional figure to 3.9%. On the basis of the budgeted amount of Rs1.155 trillion, the NAC has showed 11.3% growth in construction sector in the outgoing fiscal year, according to NAC documents.
Out of 23 key growth indicators, the NAC documents showed that the government achieved only eight targets, while performance against 15 indicators, primarily in agriculture and services sector, remained below the expectations.
Inflation and foreign reserves
Minister of Finance Ishaq Dar said that the inflation rate has remained in single digits with 8.6%, adding that the international community is convinced that inflation had come down while the growth rate is appreciating.
Dar also highlighted that the foreign exchange reserves are now touching the $13 billion figure, reported APP, adding that trade deficit had decreased to $13.93 billion in the first ten months the fiscal year from $14.74 billion during the first ten months of last year.
"Today international financial organisations and investors are reposing confidence in Pakistan and we are moving ahead as per our budgetary targets," the minister said while giving a policy statement in the National Assembly.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ