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Economic Survey 2018-19

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The Advisor to the Prime Minister on Finance, Dr Hafeez Sheikh launched the Economic Survey 2018-19.The government did not meet any of its economic targets; Prime Minister Imran Khan issued a special message to fellow citizens regarding declaration of assets, including an amnesty period to bring benami accounts into the government’s knowledge. The economic turmoil began ten years ago with two other governments in power. The current economy was simply inherited by the incumbent PTI. Prime Minister Imran Khan’s reiteration of Pakistan being one of the most charitable nations is quite absurd. Unfortunately it is not being able to contribute abundant tax money to the government treasury. It is well known that the present government continues to first target wealthy billionaires who have withheld taxes owed to the country, before affecting lower and middle socioeconomic classes. With the disclosure of a dismal economic picture, Prime Minister Imran Khan has called for austerity. At this critical economic and social situation Prime Minister Imran Khan has called for austerity. He also appealed to the public address avail the alternative provided by the amnesty scheme. The amnesty scheme is also a revenue-generating exercise planned to help the government meet its massive revenue target of Rs5.5 trillion which is approximately 35 percent higher than the current year’s collection. The Economic Survey, has given a dismal picture of the economy, with most of the sectors showing adverse growth and next year’s target for total GDP growth being only 4 percent. Most estimates and anticipation are that even this humble target will prove difficult for the government to accomplish. In this critical position the government must prepare itself for an extremely difficult year ahead. The government will have to accede to an IMF programme and missing targets will hardly be acceptable. Traders and businessmen will possibly express their fury if the government forcibly gets them to register themselves with the tax authorities which in the past have always not been successful.
The advisor’s claim that the economic policies would guarantee that the poverty stricken remain untouched, due to a 216 billion rupee subsidy to those using up to 300 units of electricity. The advisor stated, due to the incumbent government inheriting a current account deficit of 20 billion dollars; a budget deficit of 2.3 trillion rupees and exports showing zero growth for the past 10 years. He did not stress on remittances which recorded a growth of 3.6 percent in 2017-18, a growth that continued this year showing a laudable 8.76 percent rise. There is a possibility for a more increase in remittances as the World Bank evaluated the growth of remittances in 2018 calendar year to low and middle income countries at 9.6 percent with the largest recipients being India with 79 billion dollars, followed by China at 67 billion dollars. Economic Survey recognized the current account deficit expanded by 50.5 percent and reached 12.03 billion dollars that is 3.89 percent of GDP during July-March Financial Year 2018. This was primarily owing to 20.7 percent expanding in the trade deficit. Government inherited a historical high current account deficit which forced it to incur loans repayable within one year from friendly countries 3 billion dollars each from Saudi Arabia and United Arab Emirates with another 3.2 billion dollars deferred oil facility for one year extendable to three years from Saudi Arabia, 2.5 billion dollars from China and 1.1 billion dollars from the Islamic Development Bank. The poor performance of major macroeconomic indicators, including public investment July-March 2018-19 registered unfavourable 7.9 percent compared to revised estimates of 2017-18 recording in addition 16.8 percent; private investment grew by 6.5 percent July-March 2018-19 compared 11.1 percent in 2017-18; investment as a percentage of GDP was 15.4 percent in the first nine months of the current year as against 16.7 percent the year before while national savings declined to 10.7 percent of GDP hinting heavier than ever reliance on borrowing to fund investment; and most alarming of all for the government was the decline in the per capita income to 1497.3 this year from 1652 as per revised evaluation of 2017-18.Tax revenue declined to 9.3 percent of GDP from 15.1 percent as per the revised projection of the year before, and tax revenue recorded 8.2 percent of GDP against 12.9 percent the year before. The survey demonstrated a bitter declining economy, where the growth rate for the current fiscal year has been at 3.3 percent compared the target of 6.2 percent, merely past the halfway point. The survey displayed that all the real sectors like agriculture, industry and services had not only missed the targets for the current fiscal year but also declined over the last fiscal year. A total of 15 out of 20 sub-sectors missed the targets and six of them actually showed unfavourable growth. The situation was precarious that about Rs3 trillion was required just for interest payments next year. Foreign debts had accelerated over the years to $97 billion, while exports showed zero growth. This is a menace to the economy. The survey document depicted that total debt and liabilities have increased by Rs5.216 trillion, or 18 percent, considering end June 2018.Warning of tough times ahead, the adviser stated that it will provide a foundation for sustainable progress even if it is at the heavy cost of difficulties over six to eight months. The hard times, according to the survey document, include higher inflation all through next year.