ISLAMABAD: The Finance Ministry has reportedly noted with concern that the economy is under heavy pressure due to increase in expenditure and low revenue collection. This was stated by the Secretary Finance, Nasir Khosa and other senior officials during a briefing to the Prime Minister on state of the economy here on Monday. Governor State Bank of Pakistan (SBP) Dr Yaseen Anwar also briefed the Prime Minister about monetary situation.
Finance Ministry informed that the situation was further compounded by considerable increase in salary bill, which doubled during the last five years from Rs 180 billion to Rs 340 billion. Additionally, more than Rs 2 trillion subsides including those given to the power sector and inability to increase tax to GDP ratio more than 9.5% of the GDP are also serious concerns.
Advisor to Finance Ministry told journalists that a revenue shortfall of Rs 200 billion is expected in the current fiscal year which would have serious repercussions as far as the fiscal deficit is concerned. The government would have to borrow significantly higher than the budgetary estimates to finance the deficit.
However, he ruled out that revenue target would be further revised downward. Another official disagreed and stated that Federal Board of Revenue (FBR) is unlikely to achieve the revised revenue collection target of Rs 2191 billion for the current fiscal year. Senior officials of Finance Ministry further informed the caretaker Prime Minister that Pakistan was meeting its international obligations and foreign exchange reserves stand at 11.7 billion dollars. In his opening remarks the Prime Minister said that though the primary objective of the government was to hold free, fair and transparent elections, the government was cognisant that the economic stability of the country was equally important. He maintained that all steps would be taken by his government for improving the country's economy.
The Prime Minister also directed Finance Ministry to focus on exploring ways and means to ensure that the revenue targets set in the budget to be achieved. The Prime Minister was given a comparative analysis of the economy starting from 2008 till to date and was informed that foreign remittances were projected at $14.5 billion, which was $4.6 billion in 2005-2006. Similarly inflation which was hovering around 20 % has been brought down to 9% whereas in March 2013, the inflation rate was 6.6 %. The Karachi Stock Exchange, the Prime Minister was told, was booming stimulated by reports of new portfolio investment by foreign investors.
The Governor State Bank Yaseen Anwer in his briefing about monetary situation of the country said that because of stringent management control put in place by the State Bank the currency market had demonstrated stability. He gave a presentation on streamlining and improving the foreign remittances to facilitate Pakistanis working abroad to send money to their loved ones. Yaseen Anwar said that the SBP is striving to encourage the use of official channels by Pakistanis working abroad.
In response to a question of the Prime Minister regarding efforts of State Bank of Pakistan to eliminate Hundi system, he was informed that Pakistan Remittance Initiative (PRI) launched by the government envisages that both the remitter and beneficiary would be exempt from transfer charges, which in certain cases is prohibitive especially for those workers who sent smaller amounts.
Secretary Finance informed the Prime Minister that his ministry had released Rs 3 billion to pick up the transfer charges involved in the telegraphic transfer of money and would also release another 2 billion on this account which would provide comfort to the State Bank of Pakistan. The Governor State Bank said that a pilot module using information technology for ensuring real time transfer from anywhere to Pakistan is presently under trial.