▪ Pakistan’s economy was struggling to stabilize in FY2023 in the wake of
various global & domestic shocks and geopolitical situation. However,
through a combination of policy, structural, and administrative measures,
the economy has achieved macroeconomic stabilization in FY2024. This
has led to improve macroeconomic indicators and foreign currency
liquidity, thereby restoring the confidence of economic agents.
▪ At the beginning of FY2024, the economy of Pakistan was confronted
with:
– Contraction in GDP growth in FY2023: -0.2% resulted in a decline in
the size of the economy by $ 37 bn from $ 376 bn to $ 339 bn
– Highest level of Inflation at 29.2% & Food Inflation (Urban: 37.6%,
Rural: 41.1%)
– PKR depreciated by 28.7% during FY2023 (from Rs 204/$ to Rs
286/$)
– FOREX reserves depleted by $ 6.2 bn and reached $ 9.2 bn with SBP:
$ 4.4 bn, Banks: $ 4.7 bn
– Higher Fiscal Deficit: 7.8% of GDP, and rapidly growing Public
Debt: Rs 62,881 bn (74.8% of GDP).
II. Immediate Measures for Economic Revival
▪ IMF’s SBA program was implemented with a focus on fiscal
consolidation, gradual withdrawal of import restrictions, marketdetermined exchange rates, energy, SOEs, and governance reforms.
▪ Through fiscal consolidation efforts government ensured optimal
resource mobilization and prudent expenditure management.
▪ To improve agriculture sector productivity, the government facilitated the
provision of inputs such as agriculture credit (33.8%↑), fertilizer offtake
(18.7%↑), agriculture machinery (domestic 66%↑, imports 100%↑),
certified seeds, and on-farm management techniquesTo facilitate exports, various measures have been taken such as supply of
RLNG on competitive tariffs, compliance of phytosanitary certification,
and duty-free imports of textile machinery and raw material.
▪ Administrative measures and SBP’s actions against illegal transactions
reduced the gap between the interbank and open market exchange rate.
▪ Incentivized remittances through various measures under the Pakistan
Remittance Initiative (PRI).
▪ Focusing of SIFC on investment inflows in energy, agriculture, mining
and minerals, IT, and defence to have a multiplier impact for higher &
inclusive growth. SIFC improving Pakistan’s business environment by
adopting a cooperative approach, attracting investments across crucial
sectors.
▪ Pakistan has entered into a commitment with KSA and UAE for an
investment package worth $ 5 billion and $ 10 billion, respectively.
▪ Prime Minister’s China trip geared more investment; Pakistan and China
signed 23 MOUs aimed at strengthening bilateral ties across multiple
sectors including transportation, infrastructure, industry, energy,
agriculture, media, health and other potential areas.
III. Major Achievements in FY2024
▪ Smooth Political Transition from Caretaker to the Elected
Government is boosting the confidence of economic agents thus
fostering economic revival.
▪ Successful completion of the SBA program with all targets met.
▪ IMF has acknowledged that Pakistan’s economic and financial position
has improved on the back of prudent policy management.
▪ Real GDP grew by 2.4% in FY2024 led by Agriculture, surpassing the
projections of IMF’s 2.0%, ADB’s 1.9%, and WB’s 1.8%.
▪ The size of the economy in FY2024 increased by 11% to $ 375 bn ($
338 bn last year▪ The agriculture sector recorded a growth of 6.3% – the highest in the
last 19 years (FY2005 at 6.8%), ensuring food security and price
stability.
▪ Industrial activity started to recover in Q2-FY2024 with 0.09% growth
and further improved to 3.84% in Q3 – mainly due to better crop
production and an increase in global demand.
▪ The improved agricultural productivity in FY2024 will have a spillover
impact on the industrial and services sector in FY2025.
▪ Per capita income increased by $ 129 to $ 1,680, on account of
improved economic activity and appreciation of the PKR.
1
▪ Inflation is on a downward trajectory from 38.0% in May 2023 to
11.8%, at a 30-month low in May 2024 – due to exchange rate stability,
monetary tightening, fiscal consolidation, smooth food supply, and
favourable global commodity prices.
▪ Food inflation (Urban) declined significantly from 48.1% in May 2023
to 2.2% in May 2024.
▪ External accounts considerably improved, with increased exports and
contained imports, resulting in a reduced trade deficit, supported by
remittances.
▪ Current Account Deficit (Jul-Apr FY2024) narrowed down by 95% to
$0.2 bn ($3.9 bn last year).
– CA registered a back-to-back surplus in February ($98 million),
March ($434 million) and April ($491 million) of 2024.
o Exports increased by 10.6% due to Food export growth (52%).
o Pakistan’s IT exports increased by 21% to $2.6 billion ($ 2.1 billion
last year) – with the highest-ever exports of $ 310 million (62%
growth) in April 2024 Imports declined by 5.3% due to a decline in Food, Petroleum
Products, and Cotton.
o Workers’ remittances increased by 7.7% (Jul-May FY2024) due
to stability in exchange rate and facilitation under PRI. Pakistan is
among the top 5 recipients of remittances.
▪ External sector stability helped to increase foreign exchange reserves by
$5.0 bn to $14.2 bn (31st May 2024) with SBP: $9.1bn & Banks $5.1bn,
resulting stabilized exchange rate.
▪ Under Roshan Digital Account (RDA), an inflow of $7.8 billion with
689,650 accounts has been recorded from September 2020 till April 2024.
▪ With economic recovery and stability in the exchange rate, the
confidence of overseas Pakistanis in the economy has been restored.
This is evident from the increased inflows under RDA during Q2 and Q3
of FY2024, which rose to $439 million and $465 million, respectively,
compared to $427 million and $390 million last year.
▪ Thus, cumulative inflows during the last two quarters rose by 11% to
$904 million from $817 million last year. Encouragingly, outflows have
been reduced significantly by 77% to $79 million during the same
period from $340 million last year.
▪ Stable exchange rate due to:
– better inflows (IMF, IFIs, others)
– concerted efforts by LEAs to address smuggling and hoarding
– institutional efforts by SBP to regulate the currency exchange
market
▪ As a result, PKR/USD parity improved by 2.8% during July-May
FY2024, against the depreciation of 28.7% in FY2023.
▪ FDI improved by 8% in Jul-Apr FY2024 to $ 1.5 billion against a
decline of 16% in FY2023 – Mainly from China (30%), Hong Kong
(20%), and UK (15%) – Major sectors include Power (43%), Oil & Gas
exploration (13%), and Financial Businesses (11%▪ The country’s investment and financing flows strengthened, resulting in a
build-up of FOREX reserves, which improved import buffers, from 1
month in June 2023, to currently over 2 months.
▪ All of the above developments translated into significantly improved
investor confidence as the KSE-100 index increased by 83% from
41,453 points to 75,878 points.
▪ FBR’s tax collection performance showed an upward trend,
demonstrating the effectiveness of tax policy and administrative
measures.
▪ FBR Tax collection grew by 31% during Jul-May FY2024 to Rs
8,125.7 billion against Rs 6,210.1 billion last year.
▪ The FBR is undergoing reforms and modernization to become a more
efficient organization and achieve optimal outcomes. Efforts are
underway to digitize FBR and tax documentation.
▪ The fiscal deficit has been reduced to 4.5% of GDP during Jul-Apr
FY2024 (4.7% of GDP last year), and the primary surplus improved
significantly to 1.5% of GDP due to fiscal consolidation efforts.
▪ Rs 4,644 billion added in Public debt during July-March FY2024 against
an addition of Rs 10,005 billion during the same period in FY2023.
▪ The growth in debt stock has declined significantly from 20.3% (end
March 2023) to 7.4% (end March 2024).
▪ SBP has continued its tight monetary policy stance and maintained the
policy rate at 22% during July-May FY2024 – with the objective to
control inflationary pressures, as a tool of demand management and
economic stabilization policy.
▪ The asset base of the banking sector grew by 29.5% YoY basis to reach
Rs 46.4 trillion by the end of December 2023. While it grew by 19.8% on
a YoY basis to Rs 46.5 trillion by the end of March 2024 (26.4% last
year).
▪ The deposit base of the banking sector posted significant YoY growth of
24.2% to Rs 29.1 trillion by the end of December 2023. It posted a
significant YoY growth of 19.2% to Rs 29.6 trillion by the end of March
2024 (16.9% last year▪ Bank solvency has been improved as Capital Adequacy Ratio (CAR) –
increased to 19.7% by the end of December 2023 from 17.0 % (end of
December 2022). It increased to 19.6% by March 2024 from 16.3% (end
March 2023). The prevailing CAR is well above the domestic and
international minimum benchmarks of 11.5% and 10.5%, respectively.
▪ The government is diversifying energy mix. Total existing installed
capacity of electricity is 42,131 MW, hydel (25.4%), thermal (59.4%),
nuclear (8.4%), and renewables (6.8%).
IV. Global Economic Situation
The global economy is still struggling to achieve a pre-pandemic level of growth
in the wake of numerous challenges due to geopolitical tensions and tight
monetary conditions.
▪ Global economic growth has slowed down from 3.5% in 2022 to 3.2%
in 2023 and is projected to continue at the same pace in 2024 and 2025,
below the historical (2000–19) annual average of 3.8%.
▪ Global inflation is expected to fall from 6.8% in 2023 to 5.9% in 2024
and 4.5% in 2025. The anticipated decline in global inflation will further
ease domestic inflationary pressures.
▪ Growth outlook of Pakistan’s major trading partners is encouraging.
o Saudi Arabia: -0.8% (2023), 2.6% (2024) and 6.0% (2025)
o UK: 0.1% (2023), 0.5% (2024) and 1.5% (2025)
o Euro Area: 0.4% (2023), 0.8% (2024) and 1.5% (2025)
o USA: 2.5% (2023), 2.7% (2024) and 1.9% (2025)
o China: 5.2% (2023), 5.0% (2024) and 4.5% (2025)
▪ World merchandise trade volume is projected to grow by 2.6% in 2024
(-1.2% in 2023) before picking up to 3.3% in 2025 (WTO).
▪ The improved prospects in Pakistan’s major trading partners and
remittance source countries likely boost Pakistan’s export demand and
remittances. Pakistan Economic Survey 2023-24
Total Chapters/Sectors: 17
1) Growth and Investment 2) Agriculture 3) Manufacturing and Mining
4) Fiscal Development 5) Money and Credit 6) Capital Markets
7) Inflation 8) Trade and Payment 9) Public Debt
10) Education 11) Health and Nutrition 12) Population, Labour Force
and Employment
13) Transport & Communication 14) Energy 15) Information Technology
16) Social Safety Nets 17) Climate Change
Relevant chapters on these 17 sectors provide an overview of the progress in these
areas during the outgoing fiscal year.
New Special Section is added on ‘Quarterly National Accounts’
▪ As a historical step, for the first time – PBS in the outgoing fiscal year
started to release Quarterly National Accounts (QNAs).
▪ The main goal of QNA is to provide a timely and thorough overview of
current economic developments quarterly, which was previously,
provided by annual national accounts.
▪ QNA is released every three months following the reference quarter. It
offers a comprehensive and organized set of quarterly data on
macroeconomic aggregates at a higher frequency, serving as a crucial tool
for timely and effective economic policy-making.
VI. Key Policy Messages
Education, health, environment and population are the devolved subjects and
thus it is the prime responsibility of provinces to make development policies,
plan and manage these sectors.
Despite the 18th amendment, the Federal Government continued to maintain
spending on such areas that have been devolved to the provinces. Overlaps
between federal and provincial spending should be eliminated from the federal
budget to improve accountability, reduce duplication and waste of resources to
maintain fiscal discipline.
Provincial governments should take responsibility and build their capacity to
finance the delivery of devolved functions through expenditure and revenue
reforms Federal and provincial governments have taken various initiatives to
elevate education standards, aligning with their commitment to achieve
Goal 4 of SDGs i.e. Ensure inclusive and equitable quality education
and promote lifelong opportunities for all.
▪ The government measures have improved literacy rate from 58% in
FY2011 to 62.8% in FY2021 (Labor Force Survey 2020-21). Literacy
Rate is defined as a percentage of the population with age 10 years &
above who can read and write in any language with understanding.
▪ Out of School Children (OOSC) are 32% (Male: 27%, Female: 37%)–as
per PSLM 2019-20. Punjab has 24%, KP 32%, Sindh 44%, and
Balochistan 47%.
▪ The federal government has launched the OOSC project in Islamabad
Capital Territory with an aim to provide quality education to all
inhabitants, enhance girls’ education through various approaches, ensure
a suitable learning environment for different OOSC groups, and expand
community engagement through multifaceted interventions.
▪ Provincial governments have to focus on educational needs in their
jurisdiction and initiate suitable projects in line with the federal
government’s initiatives.
▪ During FY2024, the Government has allocated Rs 69.7 billion to HEC for
implementation of 169 development projects of Public Sector
Universities. During Jul-May FY2024, an amount of Rs 47.1 billion was
released.
▪ Pakistan is the 5th most populous country, with a population size of 241.5
million and a growth rate of 2.55%, whereas the unemployment rate is
6.3% (LFS 2020-21). The unemployment rate is defined as the percentage
of unemployed persons in the labour force. Every year more than 2
million youth are adding in working age population and to absorb this
workforce, growth of at least 6% is required.
▪ To control the population, a comprehensive strategy is required which
includes a strong commitment of provincial governments, creating
awareness through media campaigns, engaging Ulemas, and increasing
the female labour force participation rate Pakistan can learn lessons from Iran and Bangladesh as they have
successfully rejected the misconception that contraceptive use and
birth control are ‘Un-Islamic’. Their religious leaders fully support
family planning as a social responsibility. Bangladesh has
demonstrated the link between women’s education, empowerment, and
family planning usage.
▪ To improve social welfare and employment opportunities, the following
initiatives are being executed:
– Launched the “Prime Minister’s Youth Agriculture & Loan
Scheme”
– The “Prime Minister’s Youth Skill Development Programme”
– More than 680,545 (2.6%↑) Pakistanis have gone abroad through
official procedures in July-April FY2024.
– Ministry of Overseas Pakistani & HRD is making efforts to explore
good jobs for Pakistani labor force in global market.
– Allocation of Rs 466 billion to the BISP to execute the Social
Protection programmes for FY2024. During July-April FY2024
expenditures increased by 7% to Rs 319.1 billion against Rs 298.5
billion last year.
– BISP is disbursing payments to about 9.4 million beneficiaries
under the Benazir Kafaalat Programme.
– Targeted subsidies and innovative schemes like the Kissan Card
Scheme.
▪ To meet the energy demand and reduce greenhouse gas emissions, we are
actively pursuing renewable energy investments on a large scale as part
of our clean energy goals.
▪ By 2030, the share of electricity from hydel, wind, and solar sources is
projected to rise significantly, increasing green electricity share to
approximately 59 percent. This transition will be supported by
strengthening the regulatory framework and incentivizing private sector
investment in renewable energy.
▪ We reaffirm our commitment to a sustainable and secure energy future.
By leveraging renewable energy, we aim to build a resilient andcompetitive economy that meets the needs of our people and protects our
environment.
▪ Pakistan, despite being responsible for only 0.9% of global greenhouse
gas (GHG) emissions, stands out as one of the world’s most susceptible
nations to climate change.
▪ Pakistan’s updated Nationally Determined Contributions (NDCs) aim at a
50% reduction in projected greenhouse gas emissions by 2030, with a
15% reduction through domestic resources and an additional 35%
reduction contingent on international grant finance for energy transition.
▪ The government has taken various strategic planning and adaptation
measures to address the needs of current and future generations, focusing
on combating the negative effects of climate change.
▪ For a climate-resilient economy, a comprehensive 4RF strategy
(Resilient, Recovery, Rehabilitation, and Reconstruction Framework) is
being implemented.
▪ Provincial governments have also been proactive in climate mitigation
and environmental protection. Initiatives include the Punjab Environment
Endowment Fund, Sindh’s Climate Change Policy, air quality monitoring
& plastic pollution control in Balochistan, and conservation projects &
Urban Forestry Policy in Khyber Pakhtunkhwa.
▪ To ensure the success and sustainability of these programs, global support
and climate financing are crucial. Long-term comprehensive planning and
vigorous execution at all levels are essential for a better future.
▪ As we launch the Pakistan Economic Survey, we reiterate our
commitment to addressing climate change and protecting our
environment. Through joint efforts and climate justice, we can strengthen
resilience against climate shocks and ensure sustainable development and
a secure future for all.
▪ In the end, we reaffirm our commitment to achieve higher, inclusive and
sustainable growth to ensure that the benefits of economic progress are
broadly shared among all segments of society, reducing inequality and
promoting social stability ▪ To achieve this goal, our government recognizes the crucial role of fiscal
sustainability as it will help in maintaining expenditures in line with
revenues without excessive borrowing and compromising economic
stability.
▪ For this purpose, we will continue fiscal consolidation in FY2025 with a
focus on revenue-enhancing measures through policy and administrative
reforms and rationalizing expenditures through prudent measures. This
will help in achieving a general government primary surplus of 1.0 % of
GDP in FY2025
