Islamabad:
Finance Minister Muhammad Aurangzeb put his views on “financial reversal” on Monday as he was preparing to present the federal budget for 2025-26 on Tuesday (today).
He radiated confidence to begin the coming fiscal year on a stronger foot, built on the economic recovery that began last year and gained momentum this year with the IMF support – despite unanswered goals in the most important sectors, including agriculture.
The launch of the Economic Survey of Pakistan 2024-25 also proposed the Minister of Finance also a major revision of the National Finance Commission (NFC) resource division formula. He urged to reduce the dominant weight of the population – currently 82% – in favor of other indicators such as area, poverty and revenue generation, which together bear a weight of 18% and argue that the existing formal formal incenters population growth at the expense of equity.
The study showed that the government has managed to consolidate economic recovery by avoiding an “sugar rush” and stabilizing the external sector, once again it could not meet the most critical goals needed to provide economic growth numbers and help increase investment.
The economic growth rate remains at 2.7%, which is a real way to go to sustainable growth to avoid boom-bust cycles, the finance minister said, referring to historical patterns to achieve higher growth rates followed by collapse the next year.
However, the alleged growth rate below the target is 3.6% and is also disputed by independent economists.
The finance minister also said that inflation has been “a fantastic story” that slowed down to 4.6% this year and is in the right direction.
The improvement that began last year has been consolidated this year, and the next year will be the year of financial reversal, the minister said.
However, he struggled to defend the alleged 2.7% economic growth figure for the outgoing financial year and offered to set up an expert committee to review the opposite point of view.
“The data is provided by the government and we will stick to them,” the finance minister said, answering questions about discrepancies in the data used to prepare the economic growth number of 2.7%.
The minister said he was open to review the numbers that were highlighted to point out discrepancies. Data integrity is absolutely critical and there is always a space for improvement, the finance minister said, adding that the government could constitute a management committee that has members from the private sector to review the data.
Independent statisticians and economists have challenged the government’s claim that the economy grew by 2.7% in the outgoing financial year. To achieve the figure, the economy must grow by 5.3% in the April-Juni period, with a large-scale production should grow over 8%.
Throughout the financial year, the government had stated that electricity production was on decline, yet the economic study showed a 39.3% increase in gross allowance in the electricity sector.
Likewise, the construction sector, also affected by the government’s taxation policy and low demand, was shown as growing by 6.6%.
All major crops also saw a dip in their output. The end of wheat fell by 9%, rice (1.4%), and the cotton crop witnessed a decrease of 31%.
As for queries about low growth combined with high poverty and unemployment, the Finance Minister said the government would not enter a sugar rush and absolutely remain during the economic reform agenda.
To another question, the minister said there was a need to control population growth as the current rate of 2.6% was unsustainable. One of the measures to control the population is “to define the population of the National Finance Commission,” the Finance Minister said in a political statement that will set the tone for the August NFC interviews.
While commenting on the situation of the agricultural sector, the minister said that if the agricultural sector was back at the last year’s level, the total financial growth rate could have been close to 3.6%.
The government missed its investment-to-BDP target of 14.2%. It remained at 13.8%, and also by assuming that the entire RS1.1 trillion public development program was fully used.
The private sector’s investment target was missed by a wide margin and it was glued to 9.1% of GDP despite the efforts to bring investments from abroad under the umbrella’s umbrella.
SIFC will play a critical role in bringing investments in energy, information technology and mining sectors, which will be a game election for the economy, the finance minister said.
The government met the inflation target of 12% and it remained less than 5% in this financial year and marked its important performance.
On the revenue side; However, the government missed the tax target with a huge margin of over RS1 trillion.
The Minister of Finance said the FBR transformation plan will take two to three years to be fully implemented.
The minister said the tax base has been expanded, where both individual return filers and registered dealer numbers rose compared to the last year.
He said the Ministry of Energy has done a good job when it managed to show improved recovery, but rushed to add that the total loss of state -owned companies was hovering around RS1 trillion that could be avoided.
To a question about measures to reduce expenses, Financial Secretary Imdad Ullah Bosal said that Pakistan has achieved fiscal consolidation under the IMF program and added that there is no more space available to reduce expenses further. Also for the next financial year, the maximum possible reduction in expenses has been proposed, Bosal said.
Our dilemma remains the twin deficit, but this year the ongoing account remains in profits and the currency reserves have risen to $ 11.5 billion, the finance minister said.
He said the Pakistan transfer initiative and Roshan Digital accounts had to be appreciated to increase the influx of foreign currency.
He said transfers are expected to hit $ 38 billion in the outgoing financial year, while cumulative influxes under the digital accounts have risen to $ 10 billion.
Income per The inhabitant is now claimed to have risen to $ 1,824 and the size of the economy (in dollar) is $ 411 billion, according to the survey. On the basis of the latest figures for the national accounts for FY2024-25, the total size of the economy is on the RS114.7 trillion.
Agricultural sector
The study showed that output from important crops has decreased by 13.5% due to a decrease in the production of wheat from 31.8 million tons to 29 million tons.
The claim of 29 million tonnes of wheat production was far higher than the Ministry of Finance’s own projections of about 26 million tonnes of expected production this year.
The production of maize fell 15.4% to 8.24 million tonnes, rice production dropped 1.4% to 9.7 million tonnes and sugar cane output fell 4% to 84.24 million tons. Cotton crops got a big hit with 31% dip in production. The cotton balls fell from 10.22 to 7.1 million balls.
Despite reduction in gram production by 17%, other crops have sent a temporary growth of 4.8% due to double -digit growth in the production of potato, onion, mango and sesame.
While cotton, ginning and various components have fallen by 19%, livestock, forestry and fishing have published a temporary growth rates of 4.72%, 3.03%and 1.42%respectively.
Industrial growth
The government has claimed that “industry has shown a growth of 4.77%”. Despite an increase in coal production (2.84%), the mining and quarry industry contracted by 3.4%due to a decrease in natural gas production by 7.05%, the crude oil exit fell by 14.7%.
The large scale recovery has also witnessed a negative growth of 1.53%. “The electricity, gas and water supply industry has shown a positive growth of 28.9% primarily due to low base effect of FY2023-24, ie -19.86% and increase in output from WAPDA & COMPANIES”.
The building industry increased by 6.61% due to an increase in building -related expenses from the private sector and the general government, it added.
The growth of the construction sector is based on the claim that the government will spend RS1.1 trillion on development in this financial year, which is untrue.
Likewise, the requirement for electricity growth is based on the assumption that RS1.2 trillion power supplements will be used in this financial year.
Service sector
The service sector has also shown a growth of 2.91% in 2024-25 with positive contributions from all voters. Wholesale and retail witnessed a modest growth of 0.14% due to slower growth in 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 have grown by 6.5% due to an increase in output of computer programming and consulting activities 24%. Slower inflation and low base effect have resulted in positive growth rates in economy and insurance and public administration and social security industries of 3.22% and 9.92% respectively, it added,
Furthermore, both education and human health and social work have introduced a positive growth of 4.43% and 3.71% respectively.
