The State Bank of Pakistan in a statement has said that GDP growth for FY2021 would increase to 3.94 percent as the post-COVID recovery intensified since last summer.

The central bank also mentioned that the nine-month current account remain in surplus for the first time in 17 years and that foreign exchange reserves are at their highest level in four years. The SBP statement reads:

This recovery was supported by well-thought-out policies

SBP said that due to high public debt, financial support was targeted at the most vulnerable segment of the society, in particular cash distribution through Ehsaad program. The statement further appreciated government steps:

At the same time, government debt and deficits were under control, which strengthened market sentiment, investment expectations and economic recovery.

SBP further mentioned that it provided a focused economic stimulus of PKR 2 trillion to support recovery through lower interest rates, deferred funding, loan restructuring, payroll financing system to prevent layoffs, and concessional financing for industry and healthcare investments.

SBP said that the FY2021 estimated Economic growth of 3.94 percent released by the government is backed by a strong economic recovery since the start of this fiscal year, as highlighted in recent monetary policy statements and quarterly data.

SBP said it raised GDP forecast in March-2021 on the back of increased economic activity reflected in various high-frequency data.

This was done in a conservative way enough to draw attention to the risks to growth. SBP further stated that data since march-2021 has reinstated that Economic Growth has materialized.

According to the SBP, some sections of the media have raised unnecessary concerns about National Accounts Committee and State Bank’s views regarding economic growth.

In a separate press release, Finance Minister Shaukat Tareen has also said that the 3.94 percent figure should not be controversial as the work was done very transparently by the planning department and the finance department had nothing to do with it. Shaukat Tareen has further expressed his view that GDP growth for FY2021 will settle around 5%, much higher than current estimate of 3.94%.

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