Govt projects 5.1pc economic growth in next three years

ISLAMABAD: The federal government has projected a 5.1 per cent economic growth rate during the next three years.

A three-year medium-term budget strategy prepared by the Ministry of Finance projected 3 per cent economic growth in 20-21, 4.5 per cent in 2021-2022 and 5.1 per cent in 2022-23. However, the report stated that the country’s economic growth would remain at 2.6 per cent during the ongoing fiscal year, which is 0.4 per cent short of last year’s growth.

The report also stated that inflation would be brought down from 11.7 per cent to 5.2 per cent by the end of FY2022-2023 and budget deficit would also be reduced to 3.1 per cent of the Gross Domestic Product (GDP) from the ongoing year’s projection of 7.1 per cent. Similarly, the report added, the public debt to GDP would also be decreased to 77 per cent from 83 per cent during the next three years. Moreover, the current account deficit would also be brought down to 4.1 per cent from 5.1 per cent during the next three years.

Giving a breakdown of the government’s expenditures, the report stated that Rs3,235 billion would be spent on interest payments, Rs1,402 billion on defence expenditures, Rs475 billion on pensions, Rs495 billion on federal government operations, Rs260 billion on subsidies, Rs820 billion on grants and Rs130 billion would be spent on the provision of contingencies for the next fiscal year.

The report that the government was taking various policy courses to target the supply side of the economy and the economy is moving progressively along the adjustment path and stablisation process. It added that the government is focused on bringing economic improvement through growth in agriculture, industrial and services sectors.

It also mentioned that the Planning Commission had been formulating the new development growth strategy to target higher equitable and sustainable economic growth, poverty reduction and job creation because this would pave the way for achieving SDGs and other socioeconomic targets of the government.

Regarding borrowing, the report stated that it remains a challenging task and the government has been focusing on raising funds through long-term government securities.  “The Debt Management Office of the Finance Division has been formulating policies to reduce the borrowing cost of the federal government, enabling the government to borrow in long tenors at lower rates during medium term, while also encouraging a long-term dispensation on debt,” it added.

The report further stated that special initiatives led by the prime minister, including Ehsaas Programme, Kamyab Jawan Programme and Sehat Insaf Card, are being implemented in letter and spirit.