The International Monetary Fund and the government's statistical forecasts of key macroeconomic indicators are at variance, a comparison between the data released on the IMF website with respect to Article IV Consultations presented to the Executive Board on February 3, 2012 and the Pakistani authorities' projections reveals.
The IMF has projected 3.4 per cent GDP growth, 6.7 per cent fiscal deficit and current account deficit of 2 percent of the GDP - $4.771 billion - for the current fiscal year. Finance Secretary Dr Abdul Wajid Rana while responding recently to queries during the Senate Standing Committee on Finance stated that the government does not agree with the IMF projections on macroeconomic indictors.
He clarified that the IMF projections are based on assumptions that foreign inflows budgeted on account of 3-G auction and Coalition Support Fund (CSF) are unlikely to materialise and therefore the fiscal deficit is projected to escalate to 6.7 per cent for the current fiscal year. The finance ministry remains optimistic that budgeted foreign inflows will materialise before June 30, 2012 and the budget deficit would be contained below 5 per cent and current account deficit would not escalate to what is projected by the Fund.
However officials of the finance ministry on condition of anonymity during background interactions with media have termed the IMF projections especially about fiscal and current account deficit more realistic. Analysis of the budget projections of Pakistani authorities and IMF staff estimates and projections reveal that statistics of the government and Fund differ not only in terms of revenue collections and expenditures for the current fiscal year but also in terms of the quantum of subsidies on account of inter-Disco tariff differential for the current fiscal year.
According to the IMF projection subsidies for inter-Disco tariff differential may go up to Rs 206 billion for the current fiscal year whereas Pakistani authorities projection submitted to the Fund staff was that subsidies for the power sector on this account would be around Rs 125 billion for the current fiscal year against the budgetary projection of Rs 50 billion.
The IMF staff estimated that the Federal Board of Revenue's revenue collection for the current fiscal year would be around Rs 1923 billion while the Pakistani authorities maintain they will achieve the target of Rs 1952 billion for the current fiscal year.
The IMF projections are that the tax authorities would remain Rs 10 billion short of the estimated projection of Rs 744 billion on account of direct taxes for the current fiscal year and Rs 17 billion below the projected collection of Rs 166 billion on account of Federal Excise Duty (FED).
The IMF believes that the Pakistan authorities are unlikely to achieve Rs 206 billion target on account of sales tax collection and may end up short by Rs 6 billion in the current fiscal year. However, the IMF projects that the tax authorities would be able to collect Rs 211 billion - Rs 5 billion higher than the projected Rs 206 billion on account of custom duty for the current fiscal year.
The IMF projected that the Pakistani authorities may not be able to realise non-tax revenue of Rs 610 billion for the current fiscal year and there would be a shortfall of Rs 111 billion with a projected total non-tax revenue collection of Rs 499 billion.
The IMF also projected slippages on expenditure side for the current fiscal year and estimated that total expenditure would remain between Rs 3.834 trillion to Rs 4.070 trillion against Rs 3.753 trillion estimated by the Pakistan authorities.
The current expenditure according to the Fund projection would remain between Rs 3.176 trillion to Rs 3.412 trillion in the current fiscal year against Rs 3.095 trillion projected by the authorities. The State Bank of Pakistan fiscal deficit projection is closer to the IMF estimate with the SBP projecting a fiscal deficit for the current fiscal year of 5.5 to 6.5 per cent of the GDP, with a bias on the upper side.
Comments
Comments are closed.