ISLAMABAD: Pakistan’s economy is likely to have expanded by 2.4 per cent in the fiscal year that ends this month, missing a target of 3.5 per cent, the government’s economic survey showed on Tuesday (Jun 11), a day before the country’s federal budget is unveiled.
It was, however, an improvement on last year’s contraction of 0.17 per cent and in line with the full-year projection of the State Bank of Pakistan, which cut its key interest rate by 150 basis points on Monday as it strives to boost the economy.
Pakistan’s current account deficit narrowed sharply by 95 per cent to US$200 million in the July to April period of FY24 versus US$3.9 billion in the same period a year ago, the survey showed.
The current account registered three straight months of surpluses until April, and May could be another month of surplus, Finance Minister Muhammad Aurangzeb said at the launching ceremony of the report.
The government in its monthly economic review at the end of May said it was targeting economic expansion of 3.6 per cent for the new fiscal year starting in July, amid an uptick in economic activity.
Pakistan is in talks with the International Monetary Fund for a loan estimated to be anything between US$6 billion to US$8 billion to avert a default for an economy that is growing at the slowest pace in the region.
Aurangzeb said talks with the IMF had been “productive and constructive” and that Pakistan was committed to economic reforms being discussed with the lender.
Prime Minister Shehbaz Sharif has publicly expressed his commitment to tough reforms since coming to power in a February election. These would be critical to securing the IMF loan, but high prices, unemployment and a lack of new job opportunities have piled political pressure on his coalition government.
One of the most difficult expected demands of the IMF programme is the increasing of revenues to trim the fiscal deficit. The government’s total revenue for three quarters of the current year stood at 9.78 trillion rupees (US$35 billion), the survey showed, against a target of 12.4 trillion rupees.
Aurangzeb said the current year’s revenue collection marked a 30 per cent increase over the year before, which he termed “unprecedented”. However, the central bank says that with structural reforms remaining elusive, any increase in revenues would likely be from tax and levy hikes.
Other key performance indicators mentioned in the economic survey include a fiscal deficit at 4.5 per cent of GDP up until April, against a target of 6.5 per cent for the full year.
From: channelnewsasia
Business News
