Economic targets: Govt blindsided by a bull’s eye


By Sohail Ramzan – Pakistan Today –

Former finance minster says govt reduced budget deficit, however missed all other important targets

Dr Pasha forecasts growth rate of 3.5pc for 2014-15, warns fiscal deficit will worsen if tax collection continued to slip and energy circular debt was settled

The government of Pakistan Muslim League-Nawaz (PML-N) has achieved only one objective out of 14 economic targets set in its manifesto for the first fiscal year (2013-14) of its government, according to an economic scorecard developed by former finance minister Dr Hafiz Pasha.

Presenting his findings of the review of government’s performance in its first fiscal year (2013-2014) and first quarter (July-September) of the second fiscal year (2014-15) during an event held under the auspices of Institute of Policy Reforms (IPR) in Islamabad, Dr Pasha highlighted the missed targets and poor performance of the PML-N’s economic team lead by Finance Minister Ishaq Dar.

“At best, government’s performance was mixed against targets that it set for itself. Of the 14 targets, government achieved just one, that of reduction of budget deficit, a key IMF condition, and four indicators showed some improvement but were well below target and another four did not change at all,” the former minister analysed.

Reviewing economic performance, Dr Pasha recognised significant stabilisation of the economy in 2013-14 and in first quarter, however he also noted that balance of payments position was improved due to the IMF. However, this government could not sustain the upward trend in foreign exchange reserves in the first quarter, he said.

Dr Pasha criticised the government for setting an ambitious growth rate of over 5 percent and foreign exchange reserves equal to three months import. However, according to him, the outcome in the first quarter of 2014-15 was somewhat disappointing as agriculture production has been affected by the floods and all other sectors of economy have shown sluggish progress.

He also questioned the government’s ability to deal with the uncertainties from both political developments and the “hiatus” in the IMF programme. However, he hoped that the Fund’s Executive Board would release the next tranche. He also bemoaned that international commodity prices have declined in recent months, but these were yet to transmit to domestic prices.

Moreover, Dr Pasha forecasted a growth rate of 3.5 to 4 percent for the fiscal year (2014-15) and warned that fiscal deficit target will worsen if tax collection continued to slip and the energy circular debt was settled. He feared that if the IMF postpones the next tranche, the rupee value would decline despite increase in home remittances while investment would also fall short of target at an estimated 14 percent to 14.5 percent of GDP.

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