Govt foresees 2pc growth economic growth in FY21

ISLAMABAD: As the economic growth has come down to a negative 0.4 per cent after the outbreak of the Covid-19 pandemic, the government envisions improvement in growth by 2 per cent for the next fiscal year.

The Annual Plan Coordination Committee (APCC) on Thursday recommended the outlay of the PSDP 2020-21 of Rs630 billion to the National Economic Council (NEC) for the next budget 2020-21. It also approved a macroeconomic framework with a GDP growth target of 2 per cent and inflation to be reduced to a single digit.

APCC is the first step for the country’s development and economic policymakers to set the agenda for next year’s economic and development agenda. The consultative meeting of APCC was held in the Planning Commission with Deputy Chairman Planning Commission Jahanzeb Khan in the chair.

According to officials, APCC was told that the economy was heading towards revival till March 2020; however, with the emergence of the Covid-19 pandemic economic landscape has changed.

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Before Covid-19 exchange rate stability, barring tax revenues, the overall fiscal performance was satisfactory, reserves were build-up, current account deficit was reduced massively, inflation after peaking in January started decreasing, remittances were improving and QIM was going up with a reduction in the extent of contraction and IMF targets for 3 quarters were fully met.

Economic growth was set to rise over 3 per cent but because of Covid-19, it came down to negative 0.4pc. Pressure on government spending mounted, exports contracted in April 2020 but imports fell much more quickly.

Next year will be challenging too, but the economy will learn to live with the Covid-19 phenomenon and growth will improve to over 2pc, with agriculture despite locust attack impact will post positive growth and some revival is expected in the services sector.

Inflation will be in the lower single-digit next year, and external accounts will be comfortably placed with lower current account deficit. However, exports and remittances are likely to face a challenging global environment.

The major strategy for PSDP 2020-21 is focused on the completion of ongoing projects; the Covid-19 responsive development program; more funds have been proposed for the social sector compared to infrastructure than the past years and funding of only approved projects as per provision of Public Finance Management Act 2019.

In the Water Sector, large multipurpose dams, particularly Diamer Bhasha, Mohmand, Dasu Dams and drainage projects, have been proposed adequate funds. Small scale provincial nature dams and drainage projects for less-developed districts have been proposed allocations.

Major ongoing projects of Railways including ML-1, Maritime Affairs Karachi Shipyard, and Inter-provincial/ regional connectivity have been proposed financing.

Similarly, a major portion of the western route has also been proposed funds. In the Energy Sector, the focus remained on projects of power evacuation, expansion, improving transmission and distribution system to minimize line losses and circular debt. Projects for the supply of power and gas to SEZs have also been proposed for financing.

The Health Sector is a priority in the wake of Covid-19 to provide improved health services, preventions and control of communicable diseases, production of medical devices, and capacity enhancement of health institutions. The primary focus would be on strengthening promotive, preventing care, and the public health and hygiene system with supporting community resilience in the country.

In the PSDP 2020-21, Out of the total, 59% proposed allocation has been provided to Infrastructure, 35% to Social Sector, and the remaining 6% to other sectors.

For next year preference has been given in allocation of funds to the social sector by proposing an allocation of 35pc (Rs185 billion) of PSDP compared to the financial year 2019-20 where this allocation was in the range of 16%.

The government has taken this step to improve the life of the common man by providing good health, education, clean environment, clean drinking water and improving the overall life standards of the masses.

The government has proposed Rs159bn to the Transport & Communications, Rs70bn for energy sector, Rs64bn for water, Rs18bn for health and population, Rs43bn for education, Rs19bn for physical planning & housing, Rs 41bn for SDGs, Rs40bn for special areas (AJK, GB), and Rs40bn for merged districts.

Under the special program for improving the quality of life of common people Rs. 100 billion have been proposed. The total proposed outlay of the PSDP 2020-21 is Rs 630 billion.

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Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]


  1. Excellent description on above title subject. Pakistan”s economy is fall down.on covid_19 crisis. It is time to be united. According to material economics”
    Livlihood is a fundamental problem of man and economics developments are ultimately results end of human life.
    I have share another example ” according to islamic economics” ” livelihood is necessary and indispensable, but cannot be true purpose of human life.


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