Prudent policies led to positive economic growth in Q1
ISLAMABAD (City News) – Owing to the prudent policies introduced by the government, the country’s economy witnessed positive signs during first quarter of current Fiscal Year (2020-21) as indicated by several important economic indicators.
The remittances grew by 26.5% while foreign direct investment (FDI) increased by 9.1%, tax collection went up by 4.5% and the primary balance has been in surplus amounting to Rs.258 billion.
Official sources said that due to prudent and timely policies of the government, the large Scale Manufacturing (LSM) registered 4.8% growth while the cement sector grew by 20% with 100% capacity utilization and significant increase was also witnessed in sale of cars, motorbikes and tractors during July-October (2020).
The recent data complements the strengthening and expansion of the economy in “recovery” phase amid COVID-19 pandemic. Meanwhile, Moody’s upgraded Pakistan’s economic outlook to ‘stable’ in August 2020.
Pakistan has registered an upward trend in foreign remittances and FDI which is a clear reflection of confidence in Pakistan’s economy.
The government followed a liberal foreign investment regime and introduced measures to promote Ease of Doing Business (EoDB) in the country and as a result the country’s current ranking on EODB improved from 147 in 2018 to 136 in 2019 and to 108 in 2020.
The government had inherited a very precarious economic situation in 2018 and had to introduce a strict financial discipline to curtail excessive government expenditure, increase revenue collection, introduce market driven exchange rate, remove large tax exemptions and discourage imports.
As a consequence, Pakistan had witnessed remarkable improvement in fiscal and current account deficits. Similarly, Pakistan has a primary balance surplus which is unprecedented. All fundamental economic indicators reflected significant improvement before COVID-19 pandemic.
During COVID-19, the government introduced smart lockdown to contain the spread of the disease with the need to keep the economy functional. The smart lockdown allowed many businesses to re-open or continue operations on limited scale to lessen the adverse economic impact during testing times.
The government took several initiatives to facilitate agriculture and constructions sectors to accelerate economic recovery.
In sphere of agriculture, Prime Minister had approved Rs.24 billion package to reduce input cost for farmers. A relief package for SMEs shielded against insolvency and joblessness.
The government had also launched Ehsaas Emergency Cash Program with total allocation of Rs. 144 billion to provide immediate cash relief of Rs.12,000 to 15 million families of daily wage earners.
“The government firmly supports private sector as an engine of growth and believes in building institutional capacity for sustainable and inclusive economic growth,” as stated by the Adviser Finance, Dr. Abdul Hafeez Shaikh during his virtual address to the World Economic Forum on 25 November, 2020.