Economic indicators point to improvement: federal minister
When the current government came to power, Pakistan was facing daunting challenges such as a high current account deficit, which has now been curbed significantly due to sound fiscal policies, said Federal Minister for Information Fawad Chaudhry.
Briefing the media on Wednesday, he said that at present, economic indicators were pointing towards improvement in the national economy despite the Covid-19 pandemic.
“All high-frequency data shows improvement in the economy and growth rate is being predicted at about 3.94 percent,” he said.
He added that the Pakistan Tehreek-e-Insaf (PTI) government had inherited elevated levels of debt servicing of over $10 billion per year. Higher external borrowing ($49.76 billion), especially short-term and expensive commercial loans ($17 billion), by the previous government was the prime reason behind the surge in debt servicing, he said.
Govt proposes Rs383b revenue measures
The federal government on Friday slapped at least Rs383 billion worth of additional taxes– and nearly 70 percent are regressive in nature and highly inflationary aimed at achieving the Rs5.829-trillion tax target.
The single largest tax measure is Rs1 tax on every call lasting more than three minutes, 10 paisa tax on every SMS and Rs5 tax on use of each 1 gigabyte (GB) of internet to generate Rs100 billion additional taxes.
Similarly, the government has also imposed 17 percent sales tax on import of crude oil to generate another Rs38 billion in taxes. However, the crude oil import tax estimates appeared on the lower end.
The government has imposed new taxes on almost every important consumable and daily use item, including sugar that will now be taxed at a retail stage and its price will go up by about Rs7 per kilogram. However, the industrialists and stock market players have been given relief in their tax burden.
Interest payments to eat up PKR 3.06tr
Pakistan’s interest payments on foreign and domestic debt will further increase by 4.48 percent during next financial year 2021-22. The federal government has projected that it will spend Rs3.059 trillion on mark-up payments on domestic and foreign debt in the upcoming fiscal year. In the ongoing fiscal year 2020-21, it will spend Rs2.9 trillion on mark-up payments on domestic and foreign debt.
Of the Rs3.059 trillion earmarked for interest payments on domestic and foreign loans, Rs2.75 trillion will be mark-up on domestic debt and Rs302.5 billion on foreign debt during the next financial year.
For the outgoing year, Rs2.94 trillion had been earmarked to pay mark-up on foreign and domestic loans, but the target was later revised downward to Rs2.85 trillion.
Subsidy allocation increased to PKR 682 bn
The government has increased the amount of subsidies by 58 percent to Rs682 billion in the federal budget for next fiscal year 2021-22, beginning July, of which a major chunk will go to the power sector.
With the FY22 subsidy allocation, the government expects to provide some cushion for consumers of electricity, metro bus, wheat operation and stocks, fertiliser plants, the Naya Pakistan Housing Authority and the Ramazan package.
However, it cannot be said with certainty whether the government will be able to keep itself within the subsidy ceiling or overshoot the target, as has happened in the outgoing year.
According to the Budget Book released by the government on Friday, the payment of subsidy has been estimated at Rs682 billion for the next fiscal year, which is 226 percent higher than the budgeted figure for the ongoing year.
SBP reserves rise $281mn to $16.4bn
The foreign exchange reserves held by the central bank rose 1.74 percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
On June 4, after accounting for external debt repayments, the foreign currency reserves held by the SBP were recorded at $16,414.9 million, up $281 million compared with $16,133.6 million recorded on May 28.
According to the central bank, the rise came on the back of receipt of Water and Power Development Authority’s (Wapda) Green Eurobond proceeds amounting to $499 million.
Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $23,577.9 million. Net reserves held by banks amounted to $7,163 million.
Govt pins high believes on IT sector
Pakistan’s information technology sector has the potential to increase its exports as the industry grew significantly by around 40 percent during fiscal year 2020-21.
While unveiling the Economic Survey for FY21, Finance Minister Shaukat Tarin pinned high hopes on the growth in IT sector exports, which he believed could reach 100 percent or more in the coming years.
Highlighting India’s IT export growth, which surged to $100 billion in 2010, from $1 billion in 2000, the minister questioned as to why Pakistan could not increase its IT exports to $40 billion, if not $100 billion.
There has been a robust growth in IT and IT-enabled services (ITeS) remittances over the past five years, with compound annual growth rate (CAGR) of 18.85 percent– the highest growth rate as compared to all other industries and the highest in the region, according to the Economic Survey.
Agriculture sector attains growth target
The agriculture sector– the backbone of national economy and a major source of employment – recorded a significant growth of 2.77 percent during the outgoing fiscal year, which was in line with the target of 2.8 percent set by the government during the pandemic.
At the announcement of Economic Survey 2020-21, Finance Minister Shaukat Tarin revealed plans to empower small farmers by taking relevant measures.
The agriculture sector’s performance during 2020-21 remained encouraging as it grew by 2.77 percent against the target of 2.8 percent. Growth of important crops – wheat, rice, sugarcane, maize and cotton – during the year came in at 4.65 percent, according to the survey report.
94PC of Pakistanis unaware of GDP
A public opinion poll reveals that nine out of 10 Pakistanis are unaware of economic indicators like current account deficit and gross domestic product – the two yardsticks that have been drummed as a reflection of economic turnaround in the outgoing fiscal year.
The findings of the latest series of the Ipsos survey showed that for majority of the respondents increasing rates of inflation and unemployment remained the topmost concerns.
The surveyor asked the respondents whether they were aware of six most commonly used economic terminologies by the government and the media. These are gross domestic product, current account, fiscal deficit, per capita income, stock exchange and foreign exchange reserves of Pakistan.
However, 91 percent to 98 percent of the respondents were found to be unaware about these terminologies. As much as 94 percent respondents said that they did not know about the GDP growth rate. For the outgoing fiscal year, the government has estimated the GDP growth rate at 3.94 percent.
Total public debt stands at PKR 38tr
Total public debt was recorded at Rs38 trillion at end March 2021, registering an increase of Rs1.607 trillion during the first nine months of current fiscal year 2020-21.
However, the government said that it was much less when compared with the increase of Rs2.499 trillion witnessed during the same period of last year. It accounted for 79.7 percent of GDP. Total debt of the government stood at 70.7 percent of GDP. Domestic and external debt stood at 53.6 percent and 26.1 percent of GDP, respectively.
The government said in the Economic Survey 2020-21 released on Thursday that the debt-to-GDP ratio of Pakistan is expected to reduce and will remain below 84 percent at the end of the current fiscal year.
The finance minister, during the unveiling of the economic survey, said that Pakistan’s total debt had increased nominally in the last nine months.