By Asad Cheema
ISLAMABAD: Pakistan is likely to witness the lowest growth of 2.8 percent in South Asia in the current fiscal year of 2019/20 as the government implements a program of macroeconomic and structural reform to stabilise the economy, Asian Development Bank (ADB) has said.
“Given the need for the authorities to address sizable fiscal and external imbalances, the economy is expected to slow further, with GDP growth projected at 2.8 percent in FY2020,” Manila-based lender said in its Asian Development Outlook Update 2019.
“Fiscal adjustments are expected to suppress domestic demand, and demand contraction will keep growth in manufacturing subdued. However, agriculture is expected to recover from weather-induced contraction this year, with major incentives in the government’s agriculture support package included in the budget for FY2020.”
ADB projected the second lowest GDP growth in South Asia for Afghanistan (3.4pc) for the current fiscal year, followed by Sri Lanka (3.5pc), Bhutan (6pc), Maldives and Nepal (6.3 percent each), India (7.2pc) and Bangladesh (8pc).
ADB Country Director for Pakistan Xiaohong Yang said the country needs to continue efforts to stabilise and protect the economy against external risks, rising global prices, current account deficit, rising debt servicing, and continued losses of public sector enterprise.
ADB said fiscal consolidation under the IMF program aims to reduce the large public debt while expanding social spending, establish a flexible exchange rate regime to restore competitiveness, and rebuild official reserves. “The budget assumes tax revenue increased to equal 14.3 percent of GDP,” it added. “With non-tax revenue projected at 2.3 percent of GDP in FY2020, total revenue is expected to increase to 16.6 percent of GDP.”
