Asad Umar took to Twitter to shine a bright light on Pakistan’s economy. He mentioned that Pakistan’s circular debt buildup for the current fiscal year July to April 2021, has gone down compared to last year.
He said, “Circular debt build-up Jul-Apr this fiscal year is 260 billion vs. 449 billion same periods last year, a reduction of 189 billion. The full-year circular debt buildup this year is expected to be more than 100 billion less than the circular debt buildup in PMLN’s last year of government!”
Circular debt build up jul-apr this fiscal year is 260 billion vs 449 billion same period last year, a reduction of 189 billion. The full year circular debt build up this year is expected to be more than 100 billion LESS than the circular debt build in pmln last year of govt!
— Asad Umar (@Asad_Umar) May 25, 2021
The former Finance Minister of Pakistan followed this up with a tweet that said, “This huge improvement in the circular debt build vs last year of PMLN government has been achieved despite the massive increase in capacity payments caused by decisions committed by PMLN govt. PM Imran Khan’s government improving performance and clearing mess inherited from PMLN in every sector.”
He lastly said, “This improvement in energy sector performance and a slowdown in buildup of circular debt has been the result of sustained hard work, analytical data-based decision making and willingness to break the nexus between decision-makers and powerful elite.”
According to the State Bank’s recent data released on 24th May 2021, Pakistan’s Central Government’s Debt is Rs36.8 trillion as of 31st March 2021.
According to the Data from the State Bank, Pakistan’s Public Debt has been on a constant rise since 2011, according to the 10-year data shown below.
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In a recent forecast by the government of Pakistan as well, the GDP growth is expected to be much higher than the expectations and the calculations by the IGOs like World Bank and IMF.
GDP growth
On the 22nd of May, the National Accounts Committee (NAC) released the estimate of 3.94 percent GDP growth projections for Fiscal Year 2021, higher than the previous estimates given by the World Bank, IMF, and ADB. Even Pakistan’s own SBP did not expect the GDP growth rate to be this high.
The NAC report was met by claims of biasedness by the opposition and some economists without any proof, but to stop the lamenting criticism, the State Bank of Pakistan (SBP) also on 24th May released its own data in support of the National Accounts Committee.
On 22nd May, the SBP released a statement saying, “The estimate released (by NAC) was approved unanimously and has the full backing of the SBP.”
Thus, on a Twitter thread on 24th May, the SBP said, “FY21 growth is expected to rise to 3.94pc, as post-Covid recovery underway since last summer has strengthened. The 9-mth current account is also in surplus for the 1st time in 17 years and FX reserves at a 4 yr high.”
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1/3 FY21 growth is expected to rise to 3.94%, as post-Covid recovery underway since last summer has strengthened. The 9-mth current account is also in surplus for the 1st time in 17 yrs and FX reserves at a 4 yr high. This rebound was fueled by a well-calibrated policy response.
— SBP (@StateBank_Pak) May 24, 2021
The Central Bank added, “This rebound was fueled by a well-calibrated policy response. Given high public debt, fiscal support was targeted to the most vulnerable, notably through the globally acclaimed Ehsaas program. At the same time, public debt and deficit were kept under check which has supported market sentiment, investment outlook, and economic recovery.”
The State Bank further said, “SBP provided a targeted economic stimulus of Rs2 trillion to support the recovery through an interest rate cut, principal deferment & loan restructuring, Rozgar payroll finance scheme to prevent layoffs, and concessional finance for investment in industry and health facilities.”
It must be kept in mind that the GDP for FY20 was a negative 0.47 percent, depicting a shrinkage in the Pakistani economy due to the pandemic.
In FY21, the most supporting force is unexpected higher growth in wholesale and retail trade (within the services sector) at 8.37pc.
Experts said the sector weight is 18.82pc in GDP and it contributes 40pc (or 1.58 percentage points) of FY21 growth.
The large-scale manufacturing (LSM) sector also witnessed an expected growth of 8.99pc during July-March FY21. The GDP growth rate was negative with 5.1pc in FY20 during the same period.
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It is worth mentioning that the SBP’s original estimate was 3 percent compared to IMF’s forecast of 1.5 percent and World Bank’s forecast of 1.3 percent GDP growth rate for FY21.