ISLAMABAD: Finance Ministry said on Monday that Pakistan's domestic production and exports have declined mainly due to depressed global demand and commodity prices and the slowdown left adverse impact on tax and non tax revenues; whereas government spending is rising. Finance Ministry in its monthly economic update for July 2020 stated that besides COVID-19, the locust situation has worsened and might peak in between "15th July to 15th September," and consequently, crops may suffer.
On the fiscal side, the COVIID-19 has put significant pressures due to rising additional expenditures on health and cash transfers and slowdown in economic activity has posed significant challenges to the fiscal accounts.
However, for fiscal year 2021, the budget strategy is focused on striking a balance between Corona related expenditure and fiscal deficit and keeping primary balance at sustainable levels. At the same time, protection of social spending, successful continuation of IMF programme, keeping development expenditure at sufficient level to support the economic activity and revenue mobilization is at the forefront of government's economic agenda. It also focused on development expenditure at sufficient level to support the economic activity and revenue mobilization.
Despite challenges, Pakistan's economy witnessed improvement in some of its sectors last fiscal year and external account stabilized with a reduction in current account deficit by 78 percent, workers' remittances surged to a historic high level of $23.1 billion compared to $21.7 billion during fiscal year 2019, FDI increased by 88 percent and reached to $ 2.6 billion as compared to $ 1.4 billion in fiscal year 2019.
For agriculture sector, the government has allocated an amount of Rs 12 billion in its Public Sector Development Programme (PSDP) for fiscal year 2021. Under PSDP the government has allocated Rs 1.250 billion for 12 new schemes and Rs 10,750 million for completion of 24 on-going schemes.
LSM grew by 20.5% on month on month basis in May fiscal year 2020 (-32.5% April fiscal year 2020) while year on year LSM decreased by 24.8% in May 2020 (-1.01% May 2019). LSM during July-May fiscal year 2020 plunged to -10.3% (-2.7% last year).
Budget for fiscal year 2021 envisages new initiatives; (i) a reduction in Customs duty and exemption from additional customs duty on import of food related raw material;(ii) exemption from 2% additional custom duty on import of edible oils and oil seeds under Prime Minister's COVID 19 relief package has been extended;(iii) exemption of Customs duties on inputs of ready to use Supplementary Foods;(iv) exemption of duties & taxes on import of Dietetic Foods for Children.
The FBR has surpassed the revised target of Rs 3908 billion by Rs 73.4 billion during fiscal year 2020 to reach Rs 3981.4 billion against Rs 3828.5 billion in 2019 despite Covid-19 and for fiscal year 2021, FBR target is set at Rs 4963 billion.
Net government sector borrowing increased to Rs 2,226.2 billion against Rs 2,137.0 billion in last year. Borrowing for budgetary support stood at Rs 2,167.5 billion as compared Rs 2,203.5 billion during the same period of last year. Current account deficit is reduced by 77.9% to $ 2.9 billion (1.1 % of GDP) against $ 13.4 billion last year (4.8 % of GDP).
Exports declined by 7.2 % to $ 22.5 billion ($ 24.3 billion last year) during fiscal year 2020. Exports values were suppressed due to weak terms of trade, despite significantly higher quantum exports. Imports declined by 18.2 % to $ 42.4 billion ($ 51.9 billion last year).
FDI increased by 88% and reached $ 2.6 billion during fiscal year 2020 as compared to $ 1.4 billion last year. On year on year basis, FDI increased by 70.5%, reaching $ 174.8 million in June fiscal year 2020 as compared to $ 102 million in the same month of last year.
Foreign Private Portfolio Investment has been registering a net outflow since February, 2020. In June, the outflow was US$ 43.2 million and during Jul-June FY2020, remittances reached $ 23120.7 million ($ 21739.4 million last year), with a growth of 6.4%. On Y-o-Y basis, remittances increased by 50.7 % in June 2020, surging to $2466.3 million (against $ 1636.4 million last year).
The policies implemented by the government and State Bank of Pakistan, have lessened the detrimental impact of COVID while the government is taking proactive measures to control locusts and provide relief to the locust-affected areas.
The government is also mobilizing all of its available resources to provide maximum relief to the public and under Ehsaas Emergency Relief Programme Rs 160.5 billion was disbursed to 13.3 million beneficiaries till 27-07-2020.
Comments
Comments are closed.