The government’s exercise of rebas5ng the national accounts shows across-the-board economic growth. The FY21 growth rate has risen from the earlier estimated 3.94 percent to 5.4 percent while GDP has gone up to $346.76 billion from the provisional estimate of $296 billion. The size of the economy and per capita income have also registered increases while circular debt has come down. The government claims that besides rebasing, the upward revision in figures was due to growth in industrial, agricultural and services sectors.
Energy Minister Hammad Azhar and Minister for Planning Asad Umar have tried to make political capital out of the revaluation. The former told a news conference that despite various challenges, including the pandemic, all economic indicators have remained positive. Making a dig at the previous administration, Azhar claimed his government had achieved impressive growth at a lesser cost than the PML(N) government. Umar called it the second highest growth in the last 14 years.
The timing of the report is significant. The National Accounts Committee (NAC) meetings are usually held in May every year. This time it was held four months earlier at a time when the government’s economic policies are under attack and the opposition has announced two marches to Islamabad, rising prices being one of the major grievances.
While the government wants to use the growth figures for political grandstanding, it is mainly a changed methodology to measure growth that has jacked up the growth rate to 5.6 percent with industrial, agricultural and service sectors playing only a secondary role. Interestingly, the rebasing exercise has reduced the public debt-to-GDP ratio from 83.5 percent to 71.8 percent for fiscal year 2020-21 while there is no reduction in the public debt per se, which remains at Rs39.9 trillion by June 2021. At $346.76 billion, Pakistan’s ranking among world economies has however improved to 35th, just a notch below Denmark. The growth figures provide room to the government to issue new sovereign guarantees that are also pegged with the size of the economy.
For the man in the street the growth figures have little relevance as these bring no improvement in his livelihood like an increase in real wages, a significant reduction in unemployment or increase in purchasing power. The figures will not bring down foreign debt, reduce the current account deficit or bring down prices.
