Current fiscal: export target trimmed by $2 billion

The government has revised the export target down by $2 billion for the current fiscal year - from $26.7 billion to $24.7 billion, sources said on Thursday. They said that the country''s exports had been adversely affected in the current fiscal year in terms of value and volume because of energy crisis and inflation.
The decline in exports is adding pressure on the current account deficit and compelling the country''s economic managers to revise original current account estimates upward for the outgoing fiscal year - from $1.9 billion to $3 billion which, analysts say, could go higher.
The country''s textile exports have already declined by 9.4 percent during the first eight months of the current fiscal year over the same period of last year; and 21.71 percent and 0.48 percent in March 2012 over March 2011 and February 2012, respectively. The continuation of this trend would negatively affect the country''s external account and exacerbate balance of payment problems. Sources said that fiscal and current account deficit were continuing to pose challenges for macroeconomic stability and it was admitted by the economic team during the last Cabinet meeting.
The high-ups of the finance ministry were quoted as saying that significant challenges to macroeconomic stability persist, adding that these affected fiscal and current account deficits. Other challenges are (i) tax policy and tax administration reforms for mobilising domestic resources to enhance tax-to-GDP ratio, (ii) power sector and public sector enterprises currently costing about two percent in growth and around two percent in fiscal deficit, (iii) cost of security situation and (iv) failure to improve provincial revenue mobilisation and management.
The rising oil prices and Euro-zone crisis were having serious consequences on trade balance and consequently the balance of payment. The Cabinet meeting was also informed that the Euro-zone crisis was likely to hurt Pakistan''s exports. The economic team also admitted before the Cabinet meeting about serious risks to the budget for the current fiscal year from rising oil prices (peaking at $120 per barrel in March this year) which has already increased the country''s import bill by more than $2 billion.