Punjab govt frustrated over impossibility of 8% economic growth rate target

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According to high level officials of Punjab’s economic team there is an absolute disorder and lack of clarity among Punjab’s economic policy makers with reference to the Economic Growth Targets, Pakistan Today has learnt reliably.

The officials while talking to Pakistan Today said there are multiple power centres in Punjab’s economic team, and one of the groups is trying to revise the growth targets in the upcoming Pakistan Economic Report (PER).

At this point of time, the government wants to adjust economic growth targets in order to capitalise these economic gains in next year’s elections.

The target of 8 per cent growth, announced in Growth Strategy in 2014 by Punjab Government, is far from being achieved, added the above mentioned sources.

The sources further said that some of the government’s economists want to manage the PER before the upcoming budget, in a way that it will recommend the government to revise their growth target and set it at 6 per cent that is quite achievable as this would help the government to claim the achievement of desired growth in their election campaign.

The sources claimed that the government is determined to adjust the figures in this very year. Moreover, if it is going to be done in the next year (election year) then it would be extremely damaging for the government. So this led the government, according to the sources, to prepare the ground for political motives through managing the economic figures.

Sources in the team informed that it was an over-passionate target from the beginning and many government officials, even at the time, when it was getting set, were opposing the move saying that 8 per cent growth target is set in Vision 2025 and it is insanity to set it for 2018; however, the government took the decision for its projection, which in accordance with the PND and finance department sources, was mainly formulated and backed by the International Growth Centre Pakistan (IGC), to gain political support.

Additionally, government officials without mentioning their names, blame the IGC for the lack of success in government’s growth strategy. According to them, IGC, consisting of some of the professors of the Lahore University Management Sciences, has made Punjab government, especially the chief minister, its hostage.

Nevertheless, they put the blame on IGC, which is being funded by international donor agencies, for pressing the government for setting a highly impractical growth target of 8 per cent.

The Planning and Development Department of Punjab (PND) has recently announced to publish Punjab Economic Report (PER) this year with the support of its Think Tank Punjab Economic Research Institute (PERI). The PND is funding the report and has outsourced it to the LUMS under the supervision of the PERI to assess and evaluate the performance of the government, with respect to their economic policy.

In response to the growth target, the PND department replied that government “has no plans for revising the growth target”. In addition to growth target, it explained that main purpose of the PER is just to assess the performance of government and the “report will be comparing the performance of PRE and post-growth policy of Punjab government”.

However, Dr Ijaz Nabi, the country director of IGC and advisor to the CM, said that “there is no harm in the revision of growth target, but if government is setting a new growth target that is achievable, it should be seen as a positive step”.

Dr Nabi explained that 8 per cent target should be seen as a benchmark to achieve. He stated that “it’s a good thing that we are moving towards our target, but we haven’t yet achieved it”. “8 per cent growth target is desirable and only this growth target can lead us to the creation of 1.2million jobs–the actual goal”, added Dr Ijaz.

“The Growth Strategy was last announced in 2014, while it must be done every year.” In response to the monopoly of the IGC on Economic Policy, he replied that our profiles are open for everybody. “Economists of IGC have vast experience of research and policy, and we do not ask the government to consult us, it is totally their own choice”.

Furthermore, Dr Mumtaz Anwar Chaudhary, the head of PERI, responded that “it was a good step to set a high growth target and now if the government is revising it on the basis of their recent assessments then it should be seen as a positive move”.

Dr Ashfaq Hasan Khan, a former advisor to Ministry of Finance, said that “it is just useless to get into the growth targets of Punjab”. Referring to the latest Pakistan Labor Force Survey, Dr Ashfaq stated that “overall unemployment of youth (15-19 years) and prime age (20-24 years) are at 12.4 per cent and at 11 per cent, respectively”.

But more worrisome is the fact that the unemployment rate in the urban Punjab is horrible. “Unemployment for youth (15-19 years) in urban Punjab is 20.8 per cent and for prime age (20-24 years), it is 14.6 percent,” he added.

“This is the ground reality and therefore the growth strategy is useless for the people of Punjab in general and urban Punjab, in particular”, said Dr Ashfaq.

According to Mohammad Ali Kemal, an independent economist, “desirable growth target in general is an ambitious scenario and usually, it is done for point scoring”.

With respect to the role being played by the IGC, he said that “the international organisations, in general, has done a good consultant exercise for the government; however, if we read the details they have somewhere written the assumptions of those estimates which are essential in measuring these growth targets.”

It is noteworthy that 8 per cent growth by 2018 in the Punjab Growth Strategy is based on “improvements in productivity of resources and better functioning urban clusters”. This implies that neither productivity of resources has improved nor urban clusters are functioning better.

Another driver of growth strategy, according to Kemal, was the private-sector-led economic growth that will require a revival of investment by the private sector, but due to several constraints, private sector investment is not picking up.

Ali Kemal further added that “another important situation which needs attention is that Punjab Growth Strategy, 2018, shows several drivers of growth with various outcomes. A downward revision of growth target may have led to downward revision of other targets such as unemployment, exports and overall investments.

More importantly, Ali Kemal emphasised on the “quarterly estimates of GDP in all the provinces, as well as at the national level. It is important, especially after the 18th amendment, because the social sector is very important for sustainable growth and development”.