Pakistan sets ambitious growth target

ISLAMABAD: Pakistan on Friday announced its annual budget for financial year 2020-21, setting ambitious targets of 2.1 percent GDP growth, a 7 percent fiscal deficit and an increase in tax revenues, even as it reels from a surge in novel coronavirus cases.

The GDP target is much higher than a recent World Bank projection that Pakistan will have another year of negative growth at -0.2 percent, while the fiscal deficit is much lower than the 9.4 percent it is expected to hit in the current year.

Headline inflation that hit a decadehigh of 14.56 percent in January is estimated at an average rate 6.5 percent in the next year. Economic analysts termed the targets unrealistic, forecasting that the government will need to introduce a mid-year supplementary budget given the economic disruptions caused by the pandemic.

“It looks unlikely that they will meet the fiscal deficit target,” said Saad Hashemy, Executive Director at BMA Capital.

Total expenditure for the next fiscal

year will be 7.136 trillion Pakistani rupees ($43.45 billion), said Minister for Industries and Production Hammad Azhar as he introduced the budget in a rowdy session of parliament.

Only 25 percent of members were in attendance in an attempt to ensure social distancing. “Corona is a flu!” shouted one opposition member, taking a jibe at Prime Minister Imran Khan, who in his initial response to COVID-19 had played down the respiratory disease.

Pakistan has struggled to contain the virus and the World Health Organization has warned that the acceleration of infections could overwhelm the under-funded healthcare system.

Official statistics showed a record 6,397 new cases and 107 deaths on Thursday, taking the tally to 125,933 cases and 2,463 fatalities. Azhar said in his speech that the outbreak has caused Pakistan’s nearly $300 billion economy a loss of 3.3 trillion Pakistani rupees ($20.09 billion).

“The long lockdown, a countrywide shutdown of business, travel restrictions and social distancing have diminished economic activities, which have had a negative impact on growth rate and investment,” Azhar added. On the expenditure side, debt servicing will take up 2.946 trillion Pakistani rupees ($17.94 billion) - 41 percent of the country’s spending. — Reuters