ISLAMABAD: The government has officially acknowledged that coronavirus has inflicted a loss of Rs3 trillion on the economy so far with 3 percent to 3.5 percent hit to the GDP and the severity of the pandemic on export and remittance will be more in the months ahead.
This was disclosed by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, while launching the "Economic Survey 2019-2020" on Thursday.
The adviser, who was accompanied by Minister for Economic Affairs Division, Khusro Bukhtiar, Special Assistant to Prime Minister on Commerce Razak Dawood, and on Poverty Alleviation Dr Sania Nishtar, added that it was not easy to quantify the impact of the coronavirus accurately because there was uncertainty with regards to how rapidly cases would increase and what would be the duration of the pandemic as well as what form social distancing and lock down would take in the coming days and weeks.
In reply to a question that different projections were being made about the impact of coronavirus, the International Monetary Fund (IMF) projected 1.5 percent negative GDP growth, and the World Bank (WB) 2.6 percent negative as opposed to the government's estimates of 0.4 percent, he stated that it was not easy to make accurate projections because the situation was evolving on a daily basis.
He added that different institutions had been making different projections based on different assumptions that involved different magnitude, severity and duration.
"I am being careful that instead of relying on any number conclusively to see how the situation would evolve," he added.
The adviser said that the debt increased to 88 percent of the GDP and no government has been able to adhere legal requirement to maintain the debt below 60 percent of the GDP as stipulated in fiscal responsibility and debt limitation.
Khusro Bukhtiar said that external debt and liabilities stood at $76.5 billion, and claimed that the previous government borrowed short-term commercial loans of $15 billion.
Hafeez Shaikh said that the present government borrowed Rs3.5 trillion with Rs1.5 trillion for expenditure and the remaining borrowing was used for interest repayment of the loans taken by the previous government. This year Rs2.7 trillion was used for debt servicing.
The adviser said the government had no intention to go for aggressive taxation but this does not mean that those who are rich would not be made to pay their due taxes.
Hafeez Shaikh further stated the International Monetary Fund (IMF) is a bank that provides loans to the country; and it supported the government's incentives package for small traders and industrial package. He said that Pakistan wants to give a message to the international community that it is a responsible country and has been treading the fiscal discipline path in professional and serious way.
The adviser further maintained that the economy was moving in the right direction before the COVID-19 with considerable reduction in current account to $3 billion and for the first time, strict control in expenditure resulted in primary surplus, and expressed gratitude to the chief of army staff for putting a freeze in defense budget. More importantly, he added: neither a 'taka' was borrowed from the State Bank of Pakistan and nor a 'taka' supplementary grant was issued to the ministries and division".
We were confident before the corona outbreak that Rs4.7 trillion revised revenue collection target for the current fiscal year would have been achieved if the corona pandemic had not hit the country, he added.
He said the government gave a Rs1.2 trillion economic stimulus package to provide relief to the various sectors of the economy and people, and to manage the coronavirus in a better way, and the State Bank of Pakistan was provided a subsidy for implementation of different programmes to provide support and relief to small and medium enterprises.
The adviser continued that non-tax collection of Rs1.6 trillion has been historically high during the outgoing fiscal year against target of Rs 1.1 trillion.
Shaikh said that gross domestic products (GDP) has been estimated at negative 0.4 percent for the current fiscal year on the basis of 2.67 growth in agriculture sector, industrials sector negative 2.64 percent, services sector growth negative 3.4percent and transport and communication, due to lockdown, negative 7.1percent
The government had inherited an indebted economy, the country facing the threat of a potential default, he said, and added that the present government after coming into power approached friendly countries as well as the IMF to support the balance of payment position.
The special assistant to the prime minister on poverty said that Rs192 billion was being disbursed through Ehsaas Programme among 10 million people without any political, religious and regional consideration.
This was a big step, the adviser added.
Comments
Comments are closed.