Pakistan’s economic recovery narrative based on fudged figures: Report

New Delhi: The latest figures released by Pakistan’s National Accounts Committee contradict the government’s earlier narrative that the country’s economy has stabilised, according to a new report.

The National Accounts Committee recorded a growth of 2.0 per cent in the final quarter in the last financial year, revised the annual figure down to 3.65 per cent, and added as much as $14.8 billion to recorded imports across five financial years.

The hike in the figure for imports shows that the external accounts underwriting the stabilisation story were wrong throughout the period Islamabad claimed to be fixing them. The revised figures show that the improvement in the economy that was earlier shown on paper was based on fudged figures, according to an article in the Greek news website Directus.

The International Monetary Fund’s (IMF) regional assessment this month refused to endorse Pakistan’s official account on almost every count. The IMF projects Pakistan’s current account deficit near 1 per cent of output, roughly $4.5 billion, versus Islamabad’s estimate of about $2.5 billion, and warns the external position will weaken further as imports rise and remittances moderate.

The IMF has highlighted that exports have not grown despite years of incentives. Gross financing needs are put at 22 to 25 per cent of output, far above regional peers and a risk in themselves, and its growth forecast of 3.5 per cent sits below the official 4 per cent.

Sector-wise details of the fourth quarter show that Pakistan’s industry contracted by 4.7 per cent while electricity, gas and water supply shrank as much as 33.2 per cent.

A finance ministry committee identified discrepancies of roughly $18.13 billion between import data compiled through PRAL and the Pakistan Single Window, with the annual gap widening from $1.4 billion in FY2021 to $6.22 billion in FY2025.

The cause was that the Federal Board of Revenue and the Bureau of Statistics had not updated their data since 2017, so they never captured goods entering under newer declaration categories, particularly facilitation schemes. The review was triggered only because Pakistan’s recorded imports from China diverged from the latter country’s recorded exports. The gap was revealed by Beijing’s data and not Pakistan’s institutions.

Current data confirms that the external account is deteriorating now rather than stabilising. The trade deficit for the first quarter of this fiscal year widened more than 15 per cent to $10.79 billion, imports rising over 13 per cent against export growth of 11 per cent.

The goods deficit on the payments measure widened 21.1 per cent, the current account deficit reached $874 million from $755 million a year earlier, and the overall balance swung to a quarterly deficit of $3.12 billion from a $274 million surplus.

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