Islamabad:
The Minister of Finance Muhammad Aurangzeb Monday set his goal on the “economic turnaround” while he was preparing to present the federal budget for 2025-2026 Tuesday (today).
He released confidence in the start of the coming exercise on a stronger basis, based on the economic recovery that started last year and has grown this year with the support of the IMF – despite the failed targets in the main real sectors, including agriculture.
Launch of the economic survey in Pakistan 2024-25, the Minister of Finance also proposed a major revision to the formula for sharing the resources of the National Finance Committee (NFC). He called to reduce the dominant weight of the population – currently 82% – in favor of other indicators such as the area, poverty and revenue generation, which together have a weight of 18%, arguing that the existing formula encourages population growth to the detriment of equity.
The survey has shown that the government has succeeded in consolidating economic recovery by avoiding a “rush to sugar” and stabilizing the outside sector, once again, it could not achieve the most critical objectives necessary to give the credibility of economic figures and help increase investments.
The economic growth rate remains at 2.7%, which is a good way to go through sustainable growth in order to avoid boom-bust cycles, said the Minister of Finance, while referring to historical models of higher growth rates followed by the collapse of the following year.
However, the growth rate requested is lower than the target of 3.6% and is also disputed by independent economists.
The Minister of Finance also declared that inflation was “a fantastic story”, which slowed down 4.6% this year and is in the right direction.
The recovery that started last year was consolidated this year and next year will be the year of economic recovery, said the minister.
However, he found it difficult to defend the 2.7% claimed economic growth figure for the outgoing financial year and proposed to create an expert committee to examine the opposite point of view.
“The data was provided by the government and we will stick,” said the Minister of Finance while answering questions about the deviations in the data used to determine the number of economic growth of 2.7%.
The minister said he was open to examine the figures highlighted to highlight the differences. The integrity of the data is absolutely critical and there is always a place for improvement, said the Minister of Finance and adding that the government could constitute a steering committee with private sector members to examine the data.
Independent statisticians and economists have challenged the government’s assertion that the economy increased by 2.7% during the outgoing financial year. To reach the figure, the economy must increase by 5.3% during the period from April to June, with large -scale manufacturing should increase by more than 8%.
Throughout the financial year, the government had declared that the production of electricity was down, but the economic survey showed an increase of 39.3% of additional gross value in the electricity sector.
Likewise, the construction sector, which is also affected by government tax policies and low demand, has been demonstrated as increasing by 6.6%.
In addition, all major crops have dropped to their production. Wheat production decreased by 9%, rice (1.4%) and cotton harvest experienced a decrease of 31%.
Regarding requests for weak growth associated with high and unemployed poverty, the Minister of Finance said that the government would not be on a sugar rush and would absolutely not remain on the program of economic reforms.
To another question, the Minister said that it was necessary to control population growth, because the current rate of 2.6% was not sustainable. One of the measures to control the population is “the maze of the population of the National Finance Commission,” the Minister of Finance said in a policy statement that will set the tone for the talks in the August NFC.
While commenting on the fate of the agricultural sector, the minister said that if growth in the agricultural sector had remained at last year, the overall economic growth rate could have been close to 3.6%.
The government has missed its target of GDP of 14.2%. It remained at 13.8% and that also assuming that the entire public sector development program of 1.1 Billion of RS had been fully used.
The investment objective of the private sector was missed by a wide margin and it was glued to 9.1% of GDP, despite efforts to arouse investments abroad within the framework of the special umbrella of the investment facilitation council.
SIFC will play an essential role in investment in the energy sectors, information technologies and mines, which will change the situation for the economy, said the Minister of Finance.
The government has reached the inflation target of 12% and it remained less than 5% during this exercise, marking its important realization.
On the income side; However, the government has missed the tax objective by a huge margin of more than 1 billion of rupees.
The Minister of Finance said that the FBR transformation plan would take two to three years to be fully implemented.
The minister said that there had been an enlargement of the tax base, individual return declarations and the figures for registered retailers increasing compared to last year.
He said the Ministry of Energy had done a good job when he had managed to show improved recovery, but rushed to add that the overall losses of public enterprises oscillated about 1 billion of rupees that could be avoided.
To a question concerning measures to reduce spending, the secretary of Imdad Ullah Bosal finance said that Pakistan had obtained budgetary consolidation within the framework of the IMF program and added that there is no more space available to reduce expenses more. For the next fiscal year, also, the maximum possible expense reduction has been proposed, said Bosal.
Our dilemma remains the twin deficit, but this year, the current account will remain in surplus and the exchange reserves have increased to $ 11.5 billion, said the Minister of Finance.
He said that the Pakistan funding initiative and Roshan’s digital accounts should be appreciated to increase foreign exchange.
He said funding should reach $ 38 billion during the outgoing financial year while cumulative entries in digital accounts have increased to $ 10 billion.
Revenue per capita has now increased to $ 1,824 and the size of the economy (in dollars) is $ 411 billion, according to the survey. Based on the latest figures for national accounts, the aggregates for the year 2024-25, the overall size of the economy is at Rs114.7 Billions.
Agricultural sector
The survey has shown that the production of significant crops has decreased by 13.5% due to a decrease in wheat production from 31.8 million tonnes to 29 million tonnes.
The claim of 29 million tonnes of wheat was much higher than the projections of the Ministry of Finance of around 26 million tonnes expected this year.
Corn production decreased by 15.4% to 8.24 million tonnes, rice production fell by 1.4% to 9.7 million tonnes and sugar cane production decreased by 4% to 84.24 million tonnes. Cotton crops have undergone major success with a 31% drop in production. Cotton balls went from 10.22 to 7.1 million bullets.
Despite the reduction in the production of grams by 17%, other crops posted provisional growth of 4.8% due to two -digit growth in potatoes, onion, mango and sesame.
While cotton, ginning components and various decreased by 19%, livestock, forestry and fishing displayed provisional growth rates of 4.72%, 3.03%and 1.42%, respectively.
Industrial growth
The government said that “industry has shown growth of 4.77%”. Despite an increase in coal production (2.84%), the mine and career industry contracted by 3.4%due to a decrease in natural gas production by 7.05%, crude oil production decreased by 14.7%.
Large -scale manufacturing has also experienced negative growth of 1.53%. “The electricity, gas and water supply industry has shown positive growth of 28.9% mainly due to the low basic effect of the 201023-24 financial year, that is to say -19.86% as well as the production of Wapda & Companies”.
The construction industry increased by 6.61% due to the increase in expenses related to construction by the private sector and the general government, he added.
The growth of the construction sector is based on the assertion that the government will spend 1.1 billion of rupees for development during this exercise, which is false.
Likewise, the electricity growth claim is based on the hypothesis that 1.2 Billion of electricity subsidies will be used during this exercise.
Service sector
The service sector also shown growth of 2.91% in 2024-25 with positive contributions from all constituents. Bost and retail trade experienced a modest growth of 0.14% due to slower production growth in the agriculture and manufacturing sectors.
The transport and storage industry increased by 2.2% due to the increase in the production of water, air and road transport. Information and communication increased by 6.5% due to an increase in the release of computer programming and advice activities 24%. A slower inflation rate and a low basic effect has caused positive growth rates in the finance and insurance and public security and social security industries to 3.22% and 9.92% respectively, he added, added, he added, he added, he added, he added, he added
In addition, the human education and human health and social health industries have posted positive growth of 4.43% and 3.71%, respectively.
