Ambitious Economic Agenda.
The Pakistan Tehreek-e-Insaf-led government is setting the seal on the 12th Five Year Plan, reckoning an average gross domestic product (GDP) growth rate of 5.8 percent in the period, starting from 2018-19 to 2022-23.
They are resolved to bring about a major shift in policies employed by their predecessors, the Pakistan Muslim League-Nawaz (PML-N), under whose regime the average growth rate remained about 4.8 percent from 2013-14 to 2017-18.
Nevertheless, the GDP growth rate during PML-N's last year, 2017-18, reached 5.8 percent, the highest ever in 13 years.
It is relevant to mention that the country had achieved an average growth rate of 2.8 percent under Pakistan People's Party (PPP) government from 2008 to 2013. So the economy was moving towards higher trajectory on the growth front, so to speak.
Pakistan's growth history could be termed as a boom-bust cycle so it was again set to repeat the history of experiencing bust after achieving boom. So the growth would again nosedive this fiscal after the implementation of stabilisation strategy, primarily owing to record high twin deficits.
However, it can be good wish of the PTI-led regime, but it requires long and sustained efforts to fuel higher growth trajectory through promoting investment and savings in the percentage of the GDP over the next five years consistently. Making paradigm shift will simply be impossible through mere shallow slogans as the government will have to synchronize all policies for moving towards higher growth trajectory.
There are challenges lying ahead for the incumbent regime as it is eyeing higher growth at a time when the country is planning to seek fresh a bailout package from the International Monetary Fund (IMF). Although, the government is claiming exploring other options, insiders know that it will have to enter an IMF program within few months after the next budget because the country had never implemented any reforms without the IMF program. Under the dispensation of political regime, the IMF program is considered imperative for ensuring financial discipline and pursuing the path of reforms.
But the stringent conditions attached to the fund program are the most hated things for any ruling party; however, the bureaucrats and technocrats running ministry of finance love to see the country caught in the tight noose of IMF scrutiny. It is because this mechanism makes their lives easier by handed them the stick, which they can easily use to scare the demands of subsidy out of any sector, saying budget deficit cannot be hiked under the IMF program.
The challenge for the PTI government will be syncing the process of striking stabilisation and then taking the economy towards higher growth trajectory. The IMF approach is considered one-size-fits-all as the lender of the last resort will advise curbing demand through higher exchange and discount rates and additional taxation, slowing down the economy in first two years at least.
So first of all ministry of finance and planning commission will have to evolve a consensus on macroeconomic framework's envisaged targets in such a way that kills two birds with one stone.
For instance, the ministry of finance is also working on a five year plan expected to be unveiled along with the mini-budget before the parliament on January 23, 2019.
Thus far, the macroeconomic targets figured under 12th Five Year Plan proposed by ministry of planning and ministry of finance's macroeconomic framework is not on the same page, although, meetings were already in progress to devise unanimity on major economic targets.
The macroeconomic framework is the domain and the responsibility of planning commission under the rules of business but the fiscal framework is the legal duty of ministry of finance. So both the sides along with other stakeholders including ministry of commerce, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), and others will have to sit together to evolve unanimity on economic targets and ensuring ownership for delivery on all fronts.
According to macroeconomic framework under 12th Five Year Plan, the government wants to achieve an average growth rate of agriculture sector to the tune of 1.6 percent in the aforementioned period with 2.4 percent in 2018-19, 3.7 percent in 2019-20, 3.9 percent in 2020-21, and 4.1 percent growth in 2022-2023.
For the important crops they have envisaged an average growth rate of 2.6 percent from 2018-19 to 2022-23, with expected negative growth of 0.8 percent in 2018-19, 3.2 percent in 2019-20, 3.5 percent in 2020-21, 3.5 percent in 2021-22, and 3.5 percent in 2022-23.
In case of livestock the plan envisages average growth rate of 3.8 percent up to 2022-23, with 3.4 percent in 2018-19, 3.8 percent in 2019-20, 3.8 percent in 2020-21, and 4 percent growth in 2022-23.
The industrial growth on average is projected to achieve a growth rate of 6.8 percent in the period, with 3.7 percent in 2018-19, 5.8 percent in 2019-20, 7.1 percent in 2020-21, 8.4 percent in 2021-22, and 9.2 percent growth in 2022-23.
In the industrial sector, the manufacturing sector has been envisaged achieving an average growth rate of 6.9 percent in five years, with 3 percent in 2018-19, 5.8 percent in 2019-20, 7.4 percent in 2020-21, 9.1 percent in 2021-22 and 9.4 percent in 2022-23.
The large scale manufacturing is envisioned to have an average growth rate of 7 percent in the period starting from 2.1 percent in 2018-19, 5.5 percent in 2019-20, 7.5 percent in 2020-21, 9.7 percent in 2020-21 and 10 percent in 2022-23.
The commodity producing sector will attain an average growth rate of 5.4 percent under 12th Five Year Plan with 3.1 percent in 2018-19, 4.8 percent in 2019-20, 5.6 percent in 2020-21, 6.4 percent in 2021-22 and 6.9 percent in 2022-23.
The services sector is targeted to witness an average growth rate of 6.1 percent in the period with 4.9 percent in 2018-19, 5.8 percent in 2019-20, 6.2 percent in 2020-21, 6.5 percent in 2021-22, and 7.1 percent in 2022-23.
The average GDP growth rate in five years is targeted at 5.8 percent with 4.2 percent in 2018-19, 5.4 percent in 2019-20, 6 percent in 2020-21, 6.5 percent in 2021-22, and 7 percent in 2022-23.
All these macroeconomic targets are ambitious but achievable, provided there is consistency and continuity in economic policies as well as stability on the political front.