• Main crops down 13.5pc amid water disaster, limiting agriculture and total GDP progress
• Business, providers underperform; large-scale manufacturing struggles for third straight 12 months
• Inflation drops to 4.6pc, a 60-year low, amid declining rates of interest
• Finance czar calls it ‘a gradual restoration’, guarantees ‘turnaround’ subsequent 12 months
• GDP progress reaches 2.68pc, lacking 3.56pc goal
ISLAMABAD: “Subsequent 12 months shall be a turnaround story,” Finance Minister Muhammad Aurangzeb promised on Monday as he unveiled the Pakistan Financial Survey 2024-25 (PES) doc, which highlighted widespread slippages throughout main sectors of the financial system within the outgoing fiscal 12 months.
Reviewing the financial system report card, the finance minister instructed that Pakistan’s efficiency ought to be evaluated in a world context relatively than a historic one.
He acknowledged that whereas world financial progress has been on a declining development, increasing 3.5pc in 2023, 3.3pc in 2024, and a couple of.8pc in 2025, Pakistan had progressed from a contraction of 0.2pc in 2023 to 2.5pc progress in 2024, with an additional rise to nearly 2.7pc this 12 months.
“That is gradual restoration, and the correct manner to make sure sustainable progress,” he insisted, including that nobody needed a return to the boom-and-bust cycles of the previous.
The present 12 months’s GDP progress will clock in at 2.68pc; effectively wanting the three.56pc goal, though barely improved from final 12 months’s 2.5pc. It’s under the five-year common of round 3.3pc, and effectively under Pakistan’s long-term common of over 4.5pc.
Mr Aurangzeb famous that world inflation stood at 2.6pc in 2023, rose to 2.7pc in 2024, and is projected to achieve 3.1pc in 2025. In distinction, inflation in Pakistan had fallen from 29pc in 2023 to 23pc in 2024, and now to a six-decade low of 4.6pc.
“So, this too has moved in the correct path,” Mr Aurangzeb remarked, noting that the benchmark rate of interest had been decreased by a cumulative 1,100 foundation factors through the present 12 months to 11pc, down from a peak of 22pc. Resultantly, the general public debt-to-GDP ratio declined from 68pc final 12 months to 65pc, aided by the federal government’s buyback of roughly Rs1 trillion in debt, which created further fiscal area, the minister stated.
Missed targets
The Financial Survey information reveals that the majority main parts of the financial system missed targets. The finance minister singled out a 13.5pc contraction in main crops, which was estimated to have restricted the general GDP progress charge by 0.6pc. The general agriculture sector, which accounts for practically 24pc of GDP, posted modest progress of 0.6pc this 12 months, falling effectively wanting the 2pc goal and considerably under final 12 months’s introduced progress of 6.4pc. Main crops corresponding to wheat, cotton, and maize contracted by 13.5pc, a sharper decline than an estimated 4.5pc.
This was primarily as a result of preliminary estimates of a 35pc water scarcity, which have been later revised all the way down to 11-12pc. Because of this, cotton ginning noticed a 19pc decline, in comparison with final 12 months’s progress of 0.1pc, and effectively under a focused contraction restrict of two.3pc.
In the meantime, the commercial sector was introduced to have proven 4.8pc progress, surpassing the 4.4pc goal. This triggered some pointed questions, nonetheless. A journalist commented that it appeared probably the business’s efficiency would later be revised downward, provided that an nearly 1pc contraction had been reported for the primary 9 months of the present 12 months.
Inside industries, mining and quarrying contracted by 3.4pc towards a progress goal of 5pc, shrinking for the third consecutive 12 months. Likewise, Massive-Scale Manufacturing (LSM), which contributes practically 8pc to GDP, contracted by 1.5pc, falling far wanting the expansion goal of three.5pc.
This additionally marked the third consecutive 12 months of struggles for LSM, which noticed a 10pc contraction in fiscal ’23, adopted by lower than 1pc progress in fiscal ’24 (that too, owing to a low base impact), and adopted by an extra 1.5pc contraction this 12 months.
The providers sector, which makes up practically 59pc of GDP, was stated to have posted progress of two.9pc, effectively wanting the 4.1pc goal. Inside the providers sector, wholesale and retail commerce, transport and storage, monetary and insurance coverage providers, and personal providers all missed targets, whereas authorities providers, schooling and related sectors that outperformed expectations.
Individually, the investment-to-GDP ratio improved to 13.8pc in fiscal ’25, up from 13.1pc in fiscal ’24, though falling wanting the 14.2pc goal. Personal funding grew by 9.1pc, barely under the 9.7pc goal. Nationwide financial savings additionally noticed an enchancment, rising to 14.1pc of GDP, surpassing the 13.3pc goal.
Indian meddling
Mr Aurangzeb stated structural reforms aimed toward reworking the foundations of Pakistan’s financial system would have remained elusive with out the continuing 37-month Prolonged Fund Facility (EFF) programme. The programme, he famous, had supported taxation reforms that raised the tax-to-GDP ratio to a five-year excessive and contributed to a discount in energy sector losses.
The minister described the current launch of a $1bn tranche by the IMF as a significant success, achieved “towards all odds.” For the primary time publicly, it was revealed that India had actively opposed the transfer.
“Simply as our armed forces fought for a victory, the same battle was being fought on the financial entrance,” he stated, claiming that the Indian govt director on the IMF had made each effort to maintain Pakistan’s case off the board’s agenda, or, if it was included, to dam each the second instalment of the EFF in addition to a brand new $1.4bn Resilience and Sustainability Facility, which is essential for Pakistan’s local weather adaptation financing wants.
However Pakistan’s bilateral allies and multilateral companions stood by the nation and supplied their help, Mr Aurangzeb stated, whereas additionally acknowledging that this consequence wouldn’t have been attainable with out the power of Pakistan’s financial efficiency.
Reform-centric finances
Mr Aurangzeb additionally acknowledged that reforms in public finance, together with pension reforms, rightsizing of presidency, and privatisation of public sector entities, could be pushed by means of, and this could be evident within the finances to be offered on Tuesday (right this moment).
The minister averted a number of questions relating to the standard of information, and the usage of Could-June projections to calculate progress numbers as an alternative of counting on precise information. Nonetheless, he affirmed his help for the printed information, stating that, as finance minister, he stood behind it.
He additionally expressed his help for the inclusion of members from the personal sector on the board of the Pakistan Bureau of Statistics, which is chargeable for the Financial Survey report.
Printed in Daybreak, June tenth, 2025
