Daily Times

ISLAMABAD: The government missed all major targets including the GDP growth rate that stood at 4.71% against a conceived target of 5.5% during the fiscal year 2015-16, according to the economic survey unveiled on Thursday.

Finance Minister Ishaq Dar told reporters at the launching ceremony that the government failed to achieve the 5.5% GDP growth rate during 2015-16 due to poor performance of the agriculture sector, especially the cotton. The agricultural sector witnessed growth at 0.19% against a projection of 3.9%.

Due to a 28% decline in cotton crop, GDP growth suffered a decline of 0.5%, Dar said. “If this was not the case, our GDP growth target would have been 5.21%,” he said. The government had also missed the GDP growth rate target last year, recording it at 4.2% against a set target of 5.1%.

The minister said development rate in finance and insurance sector was recorded at 7.1%. Gas and electricity production rate stood at 12.3% last year, while the same was recorded 11.81% this year, he said. Performance of railways sector improved in the last nine months, he added.

The minister said the inflation remained under control as government pursued a uniform monetary policy leading to lower spending/demand and higher savings. He said the fall in exports resulted in missed fiscal deficit target. Exports went down to $18.18 billion. The decrease in commodity and oil prices kept the return at low. The industries sector surpassed its estimated growth target of 6.4% and the services sector achieved its targeted growth. Out of Rs 700 billion PSDP allocations, only Rs 429 billion were disbursed for development projects compared to Rs 349 billion of the total Rs 535 billion allocated to the PSDP last year.

The government had planned to push Tax-to-GDP ratio to 12.5%, but it actually achieved 8.4% in the current fiscal year. The problem exacerbated because only 0.45% of the total population filed tax returns, which corresponds to just 15% of the potential tax base.

The minister said the war on terror cost $118 billion during this year. He said anti-terrorists operations were going on successfully across the country. He said $9.24 billion were spent on war on terror during the last year.

The industries sector surpassed its estimated growth target of 6.4% and the services sector achieved its targeted growth although this growth was largely supported by an increase in the salary of government employees.

The inflation remained 2.8% against the target of 6%. Inflation was under control primarily because the government pursued a tighter monetary policy.

The balance of payments situation showed a positive picture with the current account deficit coming in at 0.6% of the GDP compared to 0.8% last year. But despite that, the trade balance worsened with exports declining across all sectors and imports – other than food and energy –increased.

Remittances amounted to $16.03 billion this year. Therefore, the country was still facing a current account deficit of $1.6 billion despite record high remittances and savings through cheaper oil imports. The soaring remittances, which came in at around $15 million, also translated into unprecedented forex reserves of over $20 billion.

Regarding revenue collection by FBR, the finance minister hoped that by the end of current fiscal year, the set target of Rs 3104 billion would be achieved as during first 10 months of FY16 the revenue collection stood at Rs 2346.1 billion compared to the collection of Rs 1973 billion during same period of the preceding year.