The State Bank of Pakistan (SBP), in collaboration with the Pakistan Bureau of Statistics (PBS) and the Federal Board of Revenue (FBR), will harmonize the exports and imports data to address the widening gap between the trade data of SBP and PBS during 2020-21.
Senior officials of the Ministry of Finance told Propakistani that the decision was taken during the last meeting of the Coordination Committee for Macro-Economic Framework. There is a discrepancy in import and export data maintained by the SBP and PBS, which needs harmonization and reconciliation. The issue of the discrepancy in import and export data was discussed in detail during the last meeting.
The 6th meeting of the Coordination Committee for Macro-Economic Framework was held under the chairmanship of the Additional Finance Secretary (Budget).
The meeting was attended by Chief Economist State Bank of Pakistan (SBP), Member (National Accounts) Pakistan Bureau of Statistics (PBS), Chief (Macro) M/o Planning, Development & Special Initiatives (MA) PD&SI), Director (Trade Policy) M/o Commerce, Deputy Chief (Macro) MTh PD&SI and senior officers of the Finance Division.
The Economic Adviser inquired about the discrepancy in trade numbers between SBP and PBS data. He asked both organizations to arrange a meeting, along with FBR, to re-check the calculation methods for the reconciliation of the data. He further asked M/o PD&SI to collaborate with the Board of Investment and estimate the future trend of FDI.
Economic Adviser asked SBP about credit to private sector performance as it is not reflecting the uptake of credit in agriculture, the housing sector, and relief given in the context of COVID-19. He further inquired about Roshan Pakistan Digital Accounts and its treatment in data collection and classification. He directed SBP to provide the data on Finance & Insurance monthly.
Chief Economist SBP responded that SBP will arrange a separate session to address these queries.
Officials said that the Economic Adviser briefed about the progress on the previous decisions. In the previous meeting, the Ministry of Commerce was asked to analyze the price and quantum effect of exports and present it to the Committee. The Technical Sub-Committee of the Coordination Committee for Macro-Economic Framework was advised to discuss the data collection/gathering of high-frequency variables.
During the meeting, Deputy Economic Adviser (DEA) presented the outlook for FY2021. He informed that based on the information available, it is expected that the GDP growth for FY2021 will be in the range of 2.0 percent to 2.9 percent, agriculture may surpass its target of 2.8 percent due to better performance of sugar and rice production, LSM is showing strong signs of recovery and will grow in the range of 1.5 to 1.8 percent, services will grow in the range of 1.9 to 2.5 percent as it could suffer from the second wave of the pandemic. CPI inflation will be between 7.5 to 9.0 percent.
In the external sector, the Current Account Balance is expected to remain between negative $0.8 billion to positive $1.5 billion based on an expected increase in imports, especially the ‘food group.’ Imports are expected to remain between $42.0 billion to $42.9 billion, while exports between $22.5 billion – $23.2 billion. Remittances are expected to remain between $25.2 – $26.4 billion.
The estimated range of GDP growth is set wide as there is still a fear of a second wave gripping the country, but we are exercising cautious optimism that overall, things will turn out well for the economy.
Chief Economist SBP informed the meeting that the SBP predicts the growth to be between 1.5 to 2.5 percent. External account numbers of the SBP are more or less the same as presented by DEA. Remittances will lead the current account balance, and SBP, in collaboration with various ministries/organizations, is launching a survey to better understand the current account trends. He acknowledged that the second wave is a threat to the economy and will also depend on the downward revision of the previous year’s growth from a negative 0.4 percent.
Officials stated that the Member National Accounts PBS told the participants that no significant change in GDP growth in the last fiscal year is expected because a decline in one sector may be offset by rising in other sectors. LSM figures may be revised, which may have a slight impact on Services too, but on the whole, the revision will not be drastic.
Economic Adviser told the meeting that PSDP expenditure plays a major role in stimulating the economy. Despite the relaxation of many rules, PSDP spending, which should have increased substantially, has not lived up to expectations. Deputy Chief (Macro) M/o PD&SI informed that Deputy Chairman Planning Commission has taken the matter seriously, and M/o PD&SI is conducting monthly review meetings to address the bottlenecks.
The problem is at the concerned ministries’ end. M/o PD&SI may discuss the matter and apprise as in the next meeting.
Director (Trade Policy) M/o Commerce presented the price and quantum effect of the exports. He showed that in both fiscal years, Exports values were mainly driven by the Quantum effect but in few cases price effect dominated. There are also some products for which export value changed due to mixed effects of change in both price and quantum.
After a comprehensive discussion, the following decisions were made:
- Ministry of Commerce will provide an outlook of exports and imports for FY 2021 and the next three years in the next meeting of the Committee.
- The SBP, in collaboration with PBS and FBR, will harmonize the export and import data to address the widening gap between the trade data of SBP and PBS and submit a report on it in the next meeting.
- The M/o PD&SI will estimate the outlook of FDI for FY 2021 and the next three years in collaboration with the Board of Investment and other stakeholders.
- The M/o PD&SI will tell the reasons for the slow utilization of PSDP in the next meeting.
- The SBP will provide a briefing to the Technical Sub-Committee on credit to private sector performance, Roshan Pakistan Digital Accounts, and provision of data on Finance & Insurance on monthly basis.