The government has projected a GDP growth rate of 5.5 percent for 2015-16 backed by projected growth of 3.9% in agriculture, 6.4% industry (with 6 percent in large scale manufacturing sector, 8.3 percent in small and household, 8.5 percent in construction industry and 6% in electricity generation and gas distribution), and 5.7 percent in services sector, according to an official document. The government is projecting a growth of 15.2% in indirect taxes in 2015-16 budget - a projection less than half of 34.2 % which it claims was achieved between 2013-14 and 2014-15.
The slower growth in the FBR tax collection in the current year, the report notes, may be attributed to a substantial decrease in prices of petroleum, products, record dip in inflation and lower growth in the manufacturing sector and acknowledges that "tax collection is lagging behind the target despite a number of administrative and policy reforms initiated by FBR."
The document notes a growth of 12.8 % in FBR taxes while federal non tax revenue declined by 10.5% mainly due to reduction in markup of PSEs and others, a reduction in discount retained on crude oil price, passport fee and a windfall levy against crude oil and other non tax heads. External resources'' inflows are projected to rise by 78% in 2015-16 relative to 2014-15 while the cited figure was a negative 48.6% in 2013-14 over 2014-15.
In this document exclusively available with Business Recorder, the provisional estimates for the current year are 3.2% growth in GDP, 2.9% in agriculture, 3.2% manufacturing (with 3.2% in large scale manufacturing, 8.2% small and household, 7 percent construction and 1.9% electricity generation and gas distribution and provisional estimates for services sector for the current year is 5%.
The provisional estimate of GDP for the current year is Rs 25,822 billion while for 2015-16 the projected target is set at Rs 28,873 billion. The growth target is subject to risks, the document states, like deterioration in energy availability, extreme weather fluctuation, non implementation of envisaged reform program and fiscal profligacy. Borrowing for budgetary support for the current year (8 May 2015) was 601 billion rupees with negative 532.41 billion rupees from the State Bank of Pakistan in line with the International Monetary Fund''s condition with heavier reliance to the tune of Rs 1.133 trillion on borrowing from scheduled banks. Net government borrowing increased by Rs 579.7 billion in July-May 2014-15 which was substantially higher than the increase of Rs 175.1 billion in July-May 2013-014.
Total investment is projected to rise by 31.4 % while consumption is expected to rise by 9 percent. The comparable growth for the current year is 10.2 and 8.8 % respectively. National savings are projected to rise to 16.8 percent next year with 14.5% in the current year thereby indicating that investment growth would be funded by external sources. The report adds that "recently the private sector has shown some appetite for working capital but long spells of power outages, a deteriorating law and order situation and other regulatory bottlenecks kept the away from investment."
Inflation is projected to rise to 6 percent in 2015-16 compared to a provisional estimate of 3.6 percent in the current year. However, the document accepts that "due to falling international prices the rate of inflation came down sharply to 2.1% by April 2015". The document acknowledges that Pakistan was able to float successfully in the international capital market $1 billion worth of Ijara Sukuk Bonds albeit at somewhat high cost. The trade deficit deteriorated in the first ten months of the current year by $476 million as imports outpaced exports; however, the increasing trend in remittances was sustained with a 16.1% growth.
The report advises better fiscal discipline, sustainable balance of payments, stable exchange rate, rising availability of credit to the private sector, revival of investor and consumer confidence, improved energy availability, better governance and meaningful monitoring of economic activity.
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