Economic indicators showing robust growth: report
ISLAMABAD: All the key economic indicators have been performing well, affirming the success of the government in laying a foundation for robust growth, according to the “Three Years Performance Report” released on Thursday.
According to the report, the government had prepared a comprehensive roadmap for stability, growth and productive employment. It said, the government had taken immediate policy measures to correct macroeconomic imbalances and to avert the crisis, which it inherited from the previous government.
The measures included bilateral arrangements, multilateral programme, International Monetary Fund (IMF) programme, deferred oil payments, current account deficit managed through exchange rate correction, export industry incentives and duties imposed to curtail luxury items import.
In addition, it executed prudent expenditure management through austerity measures and did not allow supplementary grants and had zero borrowing from the State Bank of Pakistan.
“Consequently, [the] measures paid off in terms of improved external and fiscal accounts, stability in the exchange market and growing investors’ confidence,” the report noted.
It also said as the economy was transitioning from stability to a higher sustainable growth trajectory, the Covid-19 brought multifaceted challenges for Pakistan.
Like contraction in other economies of the world, the economy of Pakistan contracted 0.47 per cent in FY2020, whereas Pakistan was not the only country in the world that experienced negative economic growth, the whole world faced severe unanticipated recession.
Before the Covid, the global economy was projected to grow 3.4 per cent in 2020 but due to the pandemic, the global growth contracted 3.3 per cent.
The government devised a comprehensive strategy to prevent the spread of the pandemic, on the one hand, and on the other, it announced the largest-ever fiscal stimulus package of Rs1.24 trillion to mitigate the adverse effects of the pandemic on the economy and to protect the vulnerable segments of the society.
This package was also complemented by liquidity support from the central bank for businesses, especially the Small and Medium Enterprises.
In addition, a construction package for the low-cost housing and jobs creation was also announced and consequently, the economy has largely escaped the devastation and bounced back, compared with its peers in the region.
Meanwhile, to meet the financing requirements, the government has been utilising an optimum combination of borrowing sources with a prudent degree of risk, while ensuring long-term sustainability of the debt portfolio.
The government had taken several measures for curtailing the losses of the state-owned entities (SOEs) and making them financially and operationally efficient so that they serve the public better and positively influence the fiscal exchequer.
Efficient SOEs will further unleash the potential of other sectors of the economy, including energy, transport and would lead to increased employment, better public service delivery and more inclusive growth.
The prime objective is to attain sustainable and inclusive growth through structural reforms rather than taking the usual route of pricing and fiscal adjustments, the report noted.
It also said the ultimate goal is to improve the socioeconomic conditions of the vulnerable and underprivileged segments of the society.
During the period, the Finance Division has taken several initiatives in accordance with the prime minister’s vision, which included no borrowing from the State Bank of Pakistan since July 2019; setting up of Pakistan’s first Global Medium Term Note Programme; introduction of various new domestic debt securities; regular issuance of Shariah-compliant instruments and development of debt capital markets for the government securities.
In addition, it also took measures for discontinuation of the bearer prize bonds; PSE borrowing through competitive methods.
The Finance Division has taken two major steps, legislative and policy/stock-taking, in actualisation of the government’s vision, it added.
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