Amid growing economic challeges, Pakistan planners set 5% GDP growth target for next year

Islamabad, Jun 9 (PTI) Pakistan's top economic body has set the next year’s economic growth rate target at five per cent ahead of the unveiling of the budget for the next fiscal year, according to a media report on Thursday.

The National Economic Council (NEC) — the country’s highest economic decision-making body — met on Wednesday with Prime Minister Shehbaz Sharif in the chair. Chief ministers of three provinces other than Khyber Pakhtunkhwa and other members of the council attended.

The NEC approved the Macroeconomic Framework for Annual Plan 2022-23, which envisaged a 5 per cent growth rate on the back of agriculture (3.9 per cent), manufacturing (7.1 per cent) and services (5.1 per cent) sectors, the Dawn newspaper reported.

Officials told the paper that the consolidated size of the national development budget was set at Rs. 2.184 trillion, which included the federal allocation of Rs. 800 billion against the current year’s allocation of Rs 900 billion, it said.

The provinces would separately formulate their annual development plans worth Rs. 1.384 trillion in aggregate against Rs. 1.235 trillion for the current year, showing an increase of over 12 per cent.

The council also unanimously decided that 60 per cent of the federal public sector development programme (PSDP) would be spent on ongoing development projects and the remaining 40 per cent on new projects.

An official statement quoted the prime minister as telling the NEC members that the top priority for next year’s development agenda would be to improve the lives of the people by utilising the full capacity of the federal and provincial administrations.

The government would focus on developing infrastructure, improving governance and ensuring uninterrupted and affordable energy, quality education and basic health facilities for all without discrimination, the report said.

The NEC estimate for growth comes as the coalition government is set to present its first budget on June 10 after coming to power by toppling the government of Imran Khan in April. Tough measures are on the card as the government is under pressure to increase taxes.

Pakistan has faced growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.

The cash-strapped country is facing an uncertain economic situation due to a delay in the revival of a stalled multibillion-dollar International Monetary Fund (IMF) programme.

Saudi Arabia has agreed to provide Pakistan with a "sizeable package" of around USD 8 billion to help the country revive its ailing economy. Saudi Arabia provided USD 3 billion deposits to the State Bank of Pakistan in December 2021 while the Saudi oil facility was operationalised from March 2022, providing Islamabad with USD 100 million to procure oil.

Chinese banks have agreed to refinance Pakistan with USD 2.3 billion worth of funds in a massive relief for the country to help it bolster its depleting foreign exchange reserves.