The latest figures released by Pakistan’s National Accounts Committee contradict the government’s earlier narrative that the country’s economy has stabilised, according to a new report.
The National Accounts Committee recorded a growth of 2.0 per cent in the final
quarter in the last financial year, revised the annual figure down to 3.65 per cent,
and added as much as $14.8 billion to recorded imports across five financial years.
The hike in the figure for imports shows that the external accounts underwriting
the stabilisation story were wrong throughout the period Islamabad claimed to be
fixing them. The revised figures show that the improvement in the economy that
was earlier shown on paper was based on fudged figures, according to an article in
the Greek news website Directus.
The International Monetary Fund’s (IMF) regional assessment this month refused
to endorse Pakistan’s official account on almost every count. The IMF projects
Pakistan’s current account deficit near 1 per cent of output, roughly $4.5 billion,
versus Islamabad’s estimate of about $2.5 billion, and warns the external position
will weaken further as imports rise and remittances moderate.
The IMF has highlighted that exports have not grown despite years of incentives.
Gross financing needs are put at 22 to 25 per cent of output, far above regional
peers and a risk in themselves, and its growth forecast of 3.5 per cent sits below
the official 4 per cent.
Sector-wise details of the fourth quarter show that Pakistan’s industry contracted
by 4.7 per cent while electricity, gas and water supply shrank as much as 33.2 per
cent.
A finance ministry committee identified discrepancies of roughly $18.13 billion
between import data compiled through PRAL and the Pakistan Single Window,
with the annual gap widening from $1.4 billion in FY2021 to $6.22 billion in
FY2025.
The cause was that the Federal Board of Revenue and the Bureau of Statistics had
not updated their data since 2017, so they never captured goods entering under
newer declaration categories, particularly facilitation schemes. The review was
triggered only because Pakistan’s recorded imports from China diverged from the
latter country’s recorded exports. The gap was revealed by Beijing’s data and not
Pakistan’s institutions.
Current data confirms that the external account is deteriorating now rather than
stabilising. The trade deficit for the first quarter of this fiscal year widened more
than 15 per cent to $10.79 billion, imports rising over 13 per cent against export
growth of 11 per cent.
The goods deficit on the payments measure widened 21.1 per cent, the current
account deficit reached $874 million from $755 million a year earlier, and the
overall balance swung to a quarterly deficit of $3.12 billion from a $274 million
surplus.
