An impressive broad-based growth rate of 8.4 percent will be achieved by the end of June 2005, spokesman of the ministry of finance Dr Ashfaq Hassan Khan told Business Recorder here on Thursday. Commenting on the third quarterly report of State Bank of Pakistan for FY 2005, he said that all the three major sectors of the economy have registered appreciable growth; agriculture 7.5percent, large scale manufacturing 15.4 percent and services sector 7.9 percent. "If we minus 1.9 percent population growth, it gives the nation 6.5 percent real per capita GDP growth which is a remarkable performance by all standards, Dr Ashfaq added.
He said that the government highly values quarterly reports of the State Bank of Pakistan about the performance of economy and the results of the government policies as corrective measures are also suggested by independent economic and monetary experts.
INFLATION: Commenting on the inflationary pressures, highlighted in the quarterly report/analysis, the finance ministry spokesman argued that these were the natural outcome of a fast expanding economy and high growth rates of consecutive three years.
Dr Ashfaq said that per capita income of Pakistanis has increased from $500 to $700, which has changed social, cultural and societal behaviours and dietary habits of the people creating a demand and supply problem for the government.
Further, he pointed out that oil prices have gone up almost by $20 per barrel in the international market increasing Pakistan's oil import bill by $700 to 800 million in a year, which consequently increased prices of food items and made the services costly.
Dr Ashfaq said, "We are trying to handle the excess demand phenomenon by tightening monetary policies and easing off demand pressure by allowing import of certain food items which has stabilised prices of essential commodities in a month.
The finance ministry spokesman maintained that it was endeavour of the government to bring the inflation down at a rate of 5 percent, and hoped that inflation would further lower during the next FY.
TRADE IMBALANCE AND BUDGET DEFICIT: About the trade imbalance, Dr Ashfaq said that our economy was expanding beyond the expectations of the policymakers and planners, which necessitated import of more raw materials for industry, machinery, equipment, capital goods, fertilisers and other industrial inputs.
"This faster pace of imports and increased economic activities are good omen for the country as these have increased our production base and generated job opportunities" he added.
Dr Ashfaq said that one of the biggest achievements of the present government was to curtail the budget deficit and debt servicing which was leaving meagre amounts for development programmes and social sectors.
The budget deficit has been brought down to 2.4 percent of the GDP as against 7 percent in the 1990's, he said, adding the domestic borrowing which was more than Rs 100 billion in the 1990's is now only Rs 10 to 12 billion, which has enabled us to concentrate more on poverty alleviation programmes and making long-term projects.
The finance ministry spokesman said that bumper crops of cotton, rice and now wheat have not only provided additional revenues of about Rs 57 billion to the national exchequer but much-needed food security and prosperity of the small farmers.