Growth claims are ‘fiction’: Provincial leader blasts Pakistan govt's budget strategy

A top economic official from Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province has sharply criticized the federal government’s economic strategy, accusing it of promoting “fictional” growth figures while ignoring deep-rooted structural problems.

Muzzammil Aslam, Finance Advisor to the KP government, warned on Monday that the country risks slipping into another financial crisis if the current fiscal approach continues unchecked. “This isn’t just flawed budgeting — it’s a recipe for renewed balance of payments stress,” he said at a press conference in Islamabad.

Citing his participation in the Annual Plan Coordination Committee meeting, Aslam said the federal planning minister appeared “helpless” and failed to address core concerns. He accused the center of overstating economic progress while simultaneously cutting development spending and underreporting agriculture output.

“If growth remained stagnant for nine months, how did it suddenly surge at the end?” he questioned, referencing remarks by the Chief Economist, who attributed the spike to increased electricity production via solar panels. Aslam dismissed the explanation as inadequate and unconvincing.

He also challenged the credibility of the government’s reported 2.68% GDP growth for the outgoing fiscal year and described the 4.2% target for FY2025 as “divorced from ground realities.”

In a pointed critique of agricultural policy, Aslam accused the federal government of understating wheat production by 3 million tons—a gap he claimed translates into a PKR 2,800 billion loss for farmers. “How can the government expect agricultural growth next year when there’s no development budget?” he asked, warning of growing rural distress if immediate corrections aren’t made.

He further argued that the agriculture sector is performing even worse than in 2023, directly contradicting the federal government's projection of a rural-led economic recovery.

Aslam also raised concerns about declining federal transfers to provinces, revealing that KP stands to receive PKR 300 billion less than previously anticipated. He urged the federal government to ensure equitable distribution of resources, especially for the underdeveloped merged tribal districts.

“We presented our case respectfully today and were heard, which I appreciate,” he noted, “but concrete outcomes are still missing.”

Aslam disclosed that development projects worth PKR 1,800 billion have been scrapped. “Without development spending, there will be no economic miracles,” he concluded, warning that Pakistan could be headed into another year of sluggish growth, fiscal pressure, and rising public frustration.