Tag: Economic Survey 2020/2021

ISLAMABAD: Due to COVID-19, the scheduled flight operations to most of the parts of the country and the globe remained suspended. Pakistan International Airline Company (PIAC) revenues, approximately Rs82.6 billion, stood short of the target.

It, however, operated special flights to facilitate stranded Pakistanis abroad, said Economic Survey of Pakistan released on Thursday.

PIAC has taken following measures to revamp its operations during the current FY 2021:

— Due to COVID-19, the scheduled flight operations to most of the parts of the country and the globe remained suspended. PIAC revenues, approximately PKR 82.6 billion, stood short of the target. It, however, operated special flights to facilitate stranded Pakistanis abroad.

— Enhancement of ancillary revenues through bulkhead seats, pre-allocation of seats, advance excess baggage etc.

— Network optimization e.g. code share alliances to expand network

­– Focus on enhancement of cargo and charter operations

— Focus on capacity rationalization for better utilization

— Improvement in customer services via punctuality and regularity of flights, aircraft cleanliness and food quality

— Better governance and focus on discipline:

— Action against employees with disciplinary issues

— Plugging in loop holes by better internal controls

— Improvement in air-crew flight rosters

— Enhancing brand perception

— Reconciling and rescheduling loans

— Strict discipline and accountability regime including a Time Management System

— Centralized medical center for all PIAC employees leading to cost savings

— Increasing Maximum Take Off weight limitation on A-320 aircraft, thereby increasing payload carrying capacity

— Restructuring through Voluntary Separation Scheme (VSS)

— Reducing salaries for 6 months with a resultant saving of Rs 770 million.

ISLAMABAD: Following the adverse impact of coronavirus pandemic, the reforms introduced by the Securities and Exchange Commission of Pakistan (SECP) and the government’s pro-growth policies are helping the capital market to withstand the pressure, said the Economic Survey of Pakistan released on Thursday.

It said that during FY2021, Global equity markets, which plummeted in March 2020, rebounded when governments around the globe injected big stimulus money into their economies.

Pakistan Stock Exchange (PSX) also successfully powered through the initial COVID-19 induced economic downturn and earned the title of being the ‘best Asian stock market and fourth best-performing market across the world in 2020.’

During July-May FY2021, the benchmark KSE-100 index improved from 34,889 points to 47,896 points, gaining 13,006 points in the said period. As of May 31, 2021, the total market capitalization of the Pakistan Stock Exchange was Rs 8,267 billion.

An increase of 26.6 percent was witnessed in market capitalization, compared with the June 30, 2020 market capitalization of Rs 6,529 billion.

Though the third wave of COVID-19 dragged the KSE-100 index down in March and April of FY2021, reforms introduced by the SECP and the government’s pro-growth policies are helping the capital market to withstand the pressure.

The distinguishing feature of this year is the significant number of IPOs that took place. Despite the COVID-19 outbreak, Pakistan Stock Exchange witnessed five IPOs between July 2020 and March 2021. These five are: The Organic Meat Company, TPL Trakker, Agha Steel Industries, Engro Polymer & Chemicals Limited and Panther Tyres Limited.

During July-March FY2021, corporations raised Rs 96.9 billion by issuing seventeen debt securities. While 93 previous corporate debt securities worth Rs 782.875 billion remain outstanding.

ISLAMABAD: After the COVID-19 outbreak, the State Bank of Pakistan (SBP) proactively reduced the policy rate by a cumulative 625 basis points (bps) from 13.25 percent to 7.0 percent, within almost 3 months between March and June 2020, said Economic Survey of Pakistan released on Thursday.

The target of monetary policy was shifted towards supporting growth and employment during the pandemic.

During FY2021, SBP has continued with an accommodative monetary policy stance with 7.0 percent policy rate which has supported the economic recovery while keeping inflation expectations under control and safeguarding financial stability.

“Besides sharply lowering the borrowing cost, SBP introduced a host of measures aimed at supporting the businesses and households during the challenging time. These measures, along with a fiscal stimulus package especially for revival of construction, led to a quick turnaround in economic activity in the country during 2020/2021.”

During the period 1st July-30th April, FY2021 Broad money witnessed an expansion of Rs 1,664.8 billion (growth of 8.0 percent) against Rs 1,698.1 billion (growth of 9.5 percent) during the same period last year. Growth in money supply mainly contributed by Net Foreign Assets (NFA) of the banking system, which increased by Rs 950.2 billion against an expansion of Rs 931.1 billion last year, reflecting an improved balance of payment position. Whereas, Net Domestic Assets (NDA) of the banking system observed an expansion of Rs 714.6 billion during the period under review compared to an expansion of Rs 767.0 billion during same period last year.

During the period 1st July-30th April, FY2021, overall private sector credit witnessed an expansion of Rs 454.5 billion against Rs 318.5 billion last year.

On a positive note, fixed investment loans increased significantly by Rs 140.4 billion during July-April, FY2021 against the borrowing of Rs 0.4 billion same period last year, which augurs well for the industrial sector and overall economic growth in the coming years.

The government has borrowed Rs 675.9 billion for budgetary support during 1st July-30th April, FY2021 compared to Rs 1,171.3 billion in the same period last year. Within budgetary support, the government has borrowed Rs 1,840.6 billion from scheduled banks as compared to the borrowing of Rs 1,813.4 billion in a comparable period last year.

On the other hand, the government has retired Rs 1,164.7 billion to SBP as compared to the retirement of Rs 642.2 billion during the same period last year.

This shows a continuation of government adherence to zero borrowing from the central bank.

ISLAMABAD: The fiscal sector has witnessed significant challenges due to additional expenditures made to lessen the negative impact of COVID-19, according to Economic Survey of Pakistan released on Thursday.

It said that the government’s fiscal consolidation efforts provided significant support in maintaining fiscal discipline, increasing revenues and controlling expenditures, thus the fiscal sector continued to perform better.

The fiscal deficit was contained at 3.5 percent of GDP during July-March FY2021 against 4.1 percent of GDP in the same period of last year. The primary balance posted a surplus of Rs 451.8 billion during July-March, FY2021 against the surplus of Rs 193.5 billion in same period last year.

The FBR tax collection witnessed a significant rise in ten months. During July-April, FY2021 the total collection grew by 14.4 percent to stand at Rs 3,780.3 billion against Rs 3,303.4 billion in the same period of FY2020. Encouragingly, the tax collection surpassed the target by more than Rs 100 billion during the period under review.

The revenue performance is not only a reflection of growing economic activities without any disruption even in the wake of the third wave of COVID-19, but it also suggests that the efforts to improve the tax collection through various policy and administrative reforms are bearing the fruits.

The non-tax revenues stood at Rs 1,227.6 billion during July-March FY2021 against Rs 1,324.4 billion in the same period of last year, showing a decline of 7.3 percent. The decline is mainly attributed to the absence of a one-off renewal fee for GSM licenses from telecommunication companies.

The efficient expenditure management effectively curtailed the overall expenditures during the current fiscal year. Total expenditures grew by 4.2 percent during July-March FY2021 as compared with the growth of 15.8 percent observed in the same period of FY2020.

Presently, the fiscal policy measures are mainly focused on relief measures to support businesses and to protect vulnerable segments of society. Simultaneously, the government is focused on containing the fiscal deficit at a manageable level and keeping the primary balance at a sustainable level. The fiscal performance during the first three quarters of FY2021 is satisfactory.

However, challenges to fiscal performance still persist which largely depend on the domestic and international evolution of COVID-19 and its perils for the economy. Nevertheless, effective revenue mobilization and prudent expenditure management strategy would be supportive in coping with these challenges.

ISLAMABAD: The agriculture sector has almost achieve growth target of 2.8 percent for the fiscal year 2020/2021, according to Economic Survey of Pakistan released on Thursday.

The agriculture sector’s performance during 2020-21 broadly stands encouraging as it grows by 2.77 percent against the target of 2.8 percent. The growth of important crops (wheat, rice, sugarcane, maize and cotton) during the year is 4.65 percent. The production of major Kharif crops 2020, such as sugarcane, maize and rice indicated considerable improvement compared to last year and surpassed the production targets. The production of sugarcane increased by 22.0 percent to 81.009 million tonnes from 66.380 million tonnes, rice by 13.6 percent to 8.419 million tonnes from 7.414 million tonnes and maize by 7.4 percent to 8.465 million tonnes from 7.883 million tonnes. However, the cotton crop suffered mainly due to decline in area sown, heavy monsoon rains and pest attacks. The cotton production reduced by 22.8 percent to 7.064 million bales from 9.148 million bales last year.

Wheat is the most important crop of “Rabi”, which showed growth of 8.1 percent and reached record high production level of 27.293 million tonnes compared to 25.248 million tonnes last year. For the Rabi crops 2020-21, the government provided a comprehensive “Rabi Package” comprising of subsidies on fertilizer, fungicides and weedicides, together with an increase in the Minimum Support Price (MSP) of wheat to Rs 1,800 per 40 Kg.

Other crops having a share of 11.69 percent in agriculture value addition and 2.24 percent in GDP, showed growth of 1.41 percent because of increase in production of fodder, vegetables and fruits. Cotton ginning declined by 15.58 percent due to fall in the production of cotton crop. The overall crops sector, having a share of 35.81 percent in agriculture value addition and 6.87 percent in GDP, witnessed a growth of 2.47 percent.

Water availability during Kharif 2020 remained at 65.1 million acre feet (MAF) showing a slight decrease of 0.2 percent compared to 65.2 MAF of Kharif 2019. Rabi season 2020-21 received 31.2 MAF, showing an increase of 6.9 percent over Rabi 2019-20.

Domestic production of fertilizer during FY2021 (July-March) increased by 5.9 percent over the same period of the previous year mainly due to increase in supply of additional gas. There was an upsurge in total off-take of fertilizer nutrients by 15.2 percent largely due to upward revision in support price of wheat and decrease in the price of urea by 12 percent.

During FY2021 (July-March), total tractor production was 36,653 compared to 23,266 produced last year, an increase of 57.5 percent. The production increase was largely due to an improved liquidity position of farmers. The agriculture lending institutions have disbursed Rs 953.7 billion during July-March, FY2021 which is 63.6 percent of the overall annual target of Rs 1,500 billion and 4.6 percent higher than the disbursement of Rs 912.2 billion made during the same period last year.

Livestock having a share of 60.07 percent in agriculture and 11.53 percent in GDP, achieved a growth of 3.06 percent. The fishing sector, with a share of 2.01 percent in agriculture value addition and 0.39 percent in GDP, grew by 0.73 percent, while forestry sector having share of 2.10 percent in agriculture and 0.40 percent in GDP, grew by 1.42 percent.

ISLAMABAD: Pakistan has surpassed GDP growth target of 2.1 percent and achieved 3.94 percent for fiscal year 2020/2021 despite strict fiscal constraints in the wake of COVID-19.

The Economic Survey of Pakistan released on Thursday stated that the economy of Pakistan rebounded strongly in FY2021 and posted growth of 3.94 percent which is not only substantially higher than the previous two years (-0.47 and 2.08 percent in FY2020 and FY2019 respectively) but also surpassed the target (2.1 percent for FY2021). Despite strict fiscal constraints, timely and appropriate policy measures taken by the government resulted in a V-Shaped economic recovery.

The beginning of FY2021 was better in terms of containment of pandemic and economic recovery, however the second wave in late October 2020 and the third wave in March 2021 made government efforts more challenging for containing the pandemic and keeping the economic activities to continue. Regardless of fiscal constraints, relief provision to vulnerable segments and growth support was the government’s utmost priority.

According to the World Bank report on “Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures” published on May 14, 2021, Pakistan was ranked Fourth in terms of a number of people covered while Third in terms of the percentage of population covered.

Pakistan’s economy is now on course towards strong and sustained recovery. The pandemic resulted in lockdown and depressed demand. Adequate government policies were implemented to keep economy moving. Utilization of unused industrial capacities during the pandemic also helped in economic recovery. On the basis of a rebound in almost all sectors, for FY2021, the provisional GDP growth rate is estimated at 3.9 percent on account of 2.8 percent growth in Agriculture, 3.6 percent in the Industrial sector and 4.4 percent growth in the Services sector. Moreover, GDP at current market prices stood at Rs 47,709 billion, showing a growth of 14.8 percent during FY2021 over last year (Rs 41,556 billion). While in the dollar term, it remained $ 299 billion which is higher than its value recorded last year ($ 263 billion).

Private Consumption has a significantly large share in GDP. This large share implies that Pakistan’s economy is a consumption-driven economy. Better consumer confidence can influence domestic production by increasing demand for durable. Growth in private consumption remained 17 percent in FY2021 as compared to 4 percent last year. On the other hand, growth in Public Consumption remained 11.4 percent, lower than 19.3 percent recorded last year, mainly due to lower growth in interest payments and squeezing of unnecessary expenditures.

Gross Fixed Capital Formation (GFCF) posted a growth of 13.8 percent in FY2021 and remained 13.6 percent of GDP. Private and public including the General Government being two major components of GFCF posted a growth of 6.6 percent and 38.1 percent, respectively.

In aggregate demand, historically contribution of Net Exports usually remained negative. For FY2021, in National Accounts, Exports of Goods and Services posted a growth of 13.6 percent while Imports of Goods and Services posted growth of 20.1 percent. However, for current year, capital goods and raw materials were the main imports which in turn helped in the growth of exports as well as domestic economic recovery.

FY2019 was an era of stabilization, while FY2020 was not only humanitarian crisis but economy also suffered contraction. Economic growth remained 3.94 percent in FY2021 posting quicker significant economic recovery which can be attributed to three factors. (i) The government made better management in controlling the pandemic which kept businesses going on and confidence high in FY2021. (ii) Fiscal Stimulus of Rs 1.24 trillion along with monetary support given in the pandemic. (iii) Due to quicker vaccination which supported economic recovery earlier than expected.

ISLAMABAD: Pakistan has achieved GDP growth of 3.94 percent during outgoing fiscal year 2020/2021 owing to prudent policies adopted by the government amid hostile Covid-19 situation, which had hit hard the world economies, Finance Minister Shaukat Tarin said on Thursday while launching Economic Survey of Pakistan.

The minister said that there were 2.1 percent growth projections for the current fiscal year, while the world financial institutions including World Bank and International Monetary Fund (IMF) had forecasted even lower growth.

However, the minister added, due to the timely interventions and prudent policies by the government, the GDP witnessed remarkable growth of 3.8 percent.

He said that the government had provided incentives to manufacturing sector and facilitated businesses by providing incentives in gas and electricity besides making interventions in agriculture sector, which helped positive development towards growth.

He said that the Large Scale Manufacturing witnessed growth of 9 percent, while agriculture sector also grew by 2.77 percent, whereas the overseas Pakistani workers’ remittances have crossed $26 billion and are expected to go up to $30 billion.

He said that the government had tackled the Covid-19 pandemic in a wise manner , due to which, Pakistan had been witnessing growth at a time when the world economies were facing difficulties.

However, the minister said that Pakistan became net importer of wheat and sugar which has put burden on current account balance, however added that the country’s exports were witnessing growth.

He said that although inflation has gone up, but as compared to other world countries it was comparatively low in Pakistan adding that the government was making all out efforts to bring it down and provide relief to the common people.

Finance Minister, Shaukat Tarin informed that COVID-19 Pandemic had badly hit the working population as the number of working people came from 57.74 million to 35 million, depriving over 20 million from their jobs and livelihood.

However, he said that policies introduced by the Prime Minister to reduce the after-effects of the pandemic, the number of working population started to enhance and reached again up to 50 million by October 2020, hence helped in regaining the economic activity in the country.

In order to sustain the local economy, he said government had taken timely decisions and announced special incentives for different sectors of national economy including manufacturing, construction and agriculture sector. Due to incentives of the government, large scale manufacturing industry grew by 9 percent, agriculture sector witnessed 2.77 percent growth while the major crops like wheat, rice, sugarcane and maize production touched the higher numbers and bumper crops were produced during the season.

Meanwhile, worker remittances observed unprecedented growth and reached to $26 billion, which was showing the confidence of overseas Pakistani on the leadership of Prime Minister Imran Khan, he remarked.

Finance Minister said that the increasing trend in foreign remittances had also helped overcoming the negative impacts of current account deficit, which was swelled mainly due to increase in the imports of food commodities including wheat, sugar, edible oil and others.

Shaukat Tarin said that foreign exchange reserves with the State Bank of Pakistan increased, while $1 billion was deposited through Roshan Digita Account.
He said that the government had strived to fulfill the requirement of Financial Action Task Force.
He expressed optimism on increasing revenue collection of Federal Board of Revenue , saying that it touched Rs4.2 trillion during last 11 months, which was higher than 18 percent as compared the collection of corresponding period of last year.

FBR collection witnessed about 18 percent growth on year on year basis, he said adding that revenue collection witnessed about 50-60 percent growth on month-on-month basis in last four months, adding that due to that trend next year collection was fixed at Rs5.8 trillion.

First time in the last five years, the primary balance was in surplus, he said adding that food inflation was high which was affecting common man in the country but it was correlated with some international fluctuation in food commodity market.

He said that Pakistan was importing wheat, sugar, pulses and edible oil and prices of these commodities in international market went up manifold, adding that government was bearing the shocks and was not passing the impact on masses directly.

In order to bring stability in daily used commodities as well as controlling rising inflation, he said government in its current budget was paying special attention on agriculture sector to enhance output of agriculture produces in the country.

To discourage artificial effect of increasing pricing of food commodities, he said that measures would be taken to improve local prices mechanism and marketing facilities, besides setting up the storage facilities to break the nexuses of hoarders and profiteers.

About the debt, Train said that debt payment increased from Rs1,500 to Rs3,000 as on total debt was stood at Rs 31 trillion out of which Rs 25 trillion was local debt and 12.5 trillion was foreign debt, adding that in 2020-21 Rs1.7 trillion increased.

He said that debt growth during current financial was half compared to the last year.