Rs2trln Stimulus Boosts Pakistan Economy Targeting 6% Growth Target
Dubai: The Pakistani economy is on a solid growth path and has the potential to grow at a much higher rate over the next five years despite a tough environment around the world, experts said, according to Khaleej Tiimes, based to Dubai.
Senior government officials, analysts and business leaders trust economic growth and have said higher GDP growth of around five to six percent per year is going to be a ‘new normal’ ‘in the next five years, given the strong economic indicators.
“Yes, we have the potential to grow at a much higher rate in the years to come. The State Bank of Pakistan [SBP] forecasts GDP growth of 3% in fiscal year 2020-2021 and 4% in 2021-2022, ”SBP Governor Dr Reza Baqir told the Khaleej Times in a recent event.
New Finance Minister Shaukat Tarin has said Pakistan will opt for an ambitious 6% economic growth target over the next two years as the International Monetary Fund (IMF) shows willingness to renegotiate tough conditions for a loan of $ 6 billion as a result of the hike. Case of covid19.
“Federal government will allocate up to Rs 900 billion [$6 billion] for development expenses for the year at the beginning of July. This is the bare minimum we need for a country of this size, ”he said.
The IMF has forecast GDP growth of 4% for Pakistan in fiscal year 2021-2022, which begins in July. Islamabad is expected to post an expansion of 1.5 percent in the current fiscal year ending June 30 after a rare contraction of -0.4 percent last year.
“We have strong economic indicators this year despite the challenges of the Covid-19 pandemic and it bodes well for the economy. The government is providing over Rs2 trillion in stimulus to lift the economy out of the Covid crisis by supporting businesses with much-needed cash and cash flow at the grassroots level, ”said Dr Baqir.
Elaborating, the central bank governor said the SBP was offering the private sector 450 billion in liquidity under its temporary economic refinancing facility to absorb the Covid shock, while an additional 240 billion rupees was provided as funds from turnover to avoid layoffs and job losses.
“The central bank has also offered a 900 billion rupee cushion to banks to provide relief to troubled companies in the event of postponement and restructuring of principal payment and mark-up charges. These are some of the measures that have helped the economy rebound quickly to meet global demand after the lockdown period, ”Dr Baqir said.
Referring to increasing foreign exchange reserves, orderly rupee-dollar parity, improving current account balance and other economic indicators such as large-scale manufacturing, cement, automobiles and fast-moving consumer goods, the SBP governor said the economy was moving in the right direction. direction and will perform better in the years to come.
“Pakistan is one of the few countries to have reduced its budget deficit despite the Covid challenge and the global economic slowdown by redefining spending priorities. The country’s public debt-to-GDP ratio remained broadly stable last year as it increased for most emerging markets thanks to Covid; it has improved the country’s creditworthiness, ”he said.
The governor said the market-based exchange rate system determines the rupee-dollar parity, which is around 153 rupees today after hitting an all-time high of 168 last year.
“And nearly $ 16 billion in foreign exchange reserves raised through an improvement in the current account, initiatives such as the Pakistan Remittance Initiative and the Roshan Digital Account, which in fact provide a solid foundation for a ‘sustainable economic recovery’. country, ”he said. On the challenges ahead, Dr Baqir said tackling poverty reduction and high food inflation was essential to bring about real change in the economy.
“The government is giving top priority to solving these serious problems through administrative measures aimed at improving the goods supply chain system,” he said.
Irfan Mustafa, who co-hosted the event with Imran Choudhry, praised the eloquent and compelling presentation by the central bank governor which further increased community confidence and optimism that the reforms undertaken by the government are taking root. and show clear signs of a turnaround in the Pakistani economy.
Mustafa, a global entrepreneur and senior executive, further felt that “we have the resources and the potential to grow our economy” at high numbers in the years to come to lift millions out of poverty and become a power. regional economy.
“As overseas Pakistanis, we are contributing wholeheartedly to this goal,” he said.
Dubai-based leading Pakistani businessman Chaudhry also gave confidence to the economy’s bright future and said he was on track to improve performance in the years to come.
“Pakistan has the potential to achieve higher growth over the next five years,” he said.
Samiullah Tariq, head of research at Pakistan Kuwait Investment, said the country’s economy would need to grow at much higher rates to realize the country’s true economic potential.
“Pakistan is a nation of over 220 million people and every year new workers are entering the mainstream. Renewable energy provides sustainable and cheap energy for everyone, making life easier and cheaper production, ”Tariq told the Khaleej Times.
“The IT, e-commerce, internet and cell phone sectors have enormous potential to move the economy into the fast lane and achieve much higher GDP growth over the next five years. . Single digit growth will be a new normal in the years to come, ”he said.