The twin monsters of coronavirus and locust invasion have pushed Pakistan into negative territory, causing a contraction of 0.38 per cent in growth – something that the country has not witnessed in almost seven decades.
Even wars and natural disasters could not slow down Pakistan’s economic growth into the past 68 years.
The dismal scenario follows a massive current account deficit that stunted development expenditures and drained precious resources into paying off the debt.
Prime Minister Imran Khan’s government, facing criticism over its handling of the coronavirus crisis, has decided not to levy any new taxes.
The GDP Growth Rate in Pakistan averaged 4.92 per cent from 1953 until 2018, reaching an all-time high of 10.22 per cent in 1954 and a record low of -1.80 per cent in 1952.
“The present government inherited the economic crisis of the current account deficit which amounted to $20 billion from the previous government, where Pakistan’s external account was moving towards default, whereas our expenditure was more than our income, ” advisor to Prime Minister on Finance, Dr Hafeez Shaikh said.
Unveiling the annual Economic Survey 2019-20 in the capital, Islamabad on Thursday, Sheikh said that the government was inducing growth by taking loans from external sources, in such a situation the government decided to mobilize resources by seeking loans from partner countries and the International Monetary Fund (IMF).
The provisional GDP growth rate for the fiscal year 2020 is estimated at negative 0.38 per cent on the basis of 2.67, -2.64, and -0.59pc growth in agricultural, industrial and services sectors, respectively.
“Although, the provisional GDP growth rate for FY2020 is estimated at negative 0.38 per cent, however, macroeconomic stabilization measures undertaken by the government over the past year resulted in a significant reduction in Saving-Investment Gap which was mainly driven by a reduction in the trade deficit and increase in workers’ remittances. It is also mentionable that fiscal deficit remained contained in first three-quarters of FY2020,” he said.
The government also decided to improve the country’s tax regime and improve the country’s exports by providing incentives to businesses. “The current account deficit amounting to $20bn was brought down to $3bn, this is a big achievement of the government,” he said.
Nevertheless, according to the survey, total public debt was recorded at Rs 35,207 billion at end-March 2020 compared with Rs 32,708 billion at end June 2019, registering an increase of Rs 2,499 billion during first nine months of the current fiscal year while Federal Government borrowing for the financing of its deficit was Rs 2,080 billion.
During July-March FY2020, current account deficit (CAD) reduced by 73.1 per cent to US$ 2.8 billion (1.1 per cent of GDP) against US$ 10.3 billion last year (3.7 per cent of GDP), read the survey.
Sheikh said that the government aimed to provide further relief to the masses by not imposing new taxes. “Despite a small budget, we doubled the budget for the Ehsaas Programme so that the money could reach the people,” he said.
On combating the coronavirus pandemic, Sheikh said that the government policy has been to maintain a balance between saving people’s lives and protecting the economy as well.
The advisor said that the country’s economy suffered losses worth Rs3000bn. In order to mitigate the impact, the government announced an Rs1240bn package, he said.
The IMF has forecasted the global economy would decline by 3-4pc, and the loss in global demand also affected our exports. “It is difficult to ascertain anything related to coronavirus,” he said.
“The outbreak of Coronavirus (COVID-19) has negatively affected the near-term outlook. It has brought significant challenges for the economy by squeezing the economic gains achieved during the ongoing fiscal year. In particular, fiscal accounts are expected to come under tremendous pressure,” read the survey.
The Federal Board of Revenue (FBR) tax collection target was expected to reach Rs4.8 trillion, but has now been reduced to Rs3.9 trillion, meaning FBR sustained losses of up to Rs700-800 billion in its tax collection, informed Sheikh.
“We do not want to add the burden of more taxes on our citizens, in order to stimulate economic growth amid coronavirus pandemic,” he said.
Sheikh, a former banker, also pointed to a silver lining in the gloomy scenario.
“The FBR tax collection has witnessed a remarkable turnaround during the current fiscal year after posting negative growth of 0.4 per cent in FY2019. The overall FBR tax collection grew by 10.8 per cent to Rs 3,300.6 billion during July-April, FY2020 against Rs 2,980.0 billion in the comparable period last year. Within the total, the domestic component of tax revenue collected by the FBR grew by 14.7 per cent to stand at Rs 2,777.7 billion in first ten months of the current fiscal year against Rs 2,421.1 billion in the comparable period last year,” the Survey says.
“As the economy slowly reopens, it is expected that the adverse impact of COVID-19 will be bottoming out. However, the framework for recovery will depend on various factors like the extent of adverse impact on various sectors, duration as well as the severity of lockdowns and the associated risks.
The outlook, therefore, carries challenges due to uncertainties associated with it,” according to the document.
The twin monsters of coronavirus and locust invasion have pushed Pakistan into negative territory, causing a contraction of 0.38 per cent in growth – something that the country has not witnessed in almost seven decades.
Even wars and natural disasters could not slow down Pakistan’s economic growth into in the past 68 years.
The dismal scenario follows a massive current account deficit that stunted development expenditures and drained precious resources into paying off the debt.
The GDP Growth Rate in Pakistan averaged 4.92 per cent from 1953 until 2018, reaching an all-time high of 10.22 per cent in 1954 and a record low of -1.80 per cent in 1952.
“The present government inherited the economic crisis of the current account deficit which amounted to $20 billion from the previous government, where Pakistan’s external account was moving towards default, whereas our expenditure was more than our income, ” advisor to Prime Minister on Finance, Dr Hafeez Shaikh said.
Unveiling the annual Economic Survey 2019-20 in the capital, Islamabad on Thursday, Sheikh said that the government was inducing growth by taking loans from external sources, in such a situation the government decided to mobilize resources by seeking loans from partner countries and the International Monetary Fund (IMF).
The provisional GDP growth rate for the fiscal year 2020 is estimated at negative 0.38 per cent on the basis of 2.67, -2.64, and -0.59pc growth in agricultural, industrial and services sectors, respectively.
“Although, the provisional GDP growth rate for FY2020 is estimated at negative 0.38 per cent, however, macroeconomic stabilization measures undertaken by the government over the past year resulted in a significant reduction in Saving-Investment Gap which was mainly driven by a reduction in the trade deficit and increase in workers’ remittances. It is also mentionable that fiscal deficit remained contained in first three-quarters of FY2020,” he said.
The government also decided to improve the country’s tax regime and improve the country’s exports by providing incentives to businesses. “The current account deficit amounting to $20bn was brought down to $3bn, this is a big achievement of the government,” he said.
Nevertheless, according to the survey, total public debt was recorded at Rs 35,207 billion at end-March 2020 compared with Rs 32,708 billion at end June 2019, registering an increase of Rs 2,499 billion during first nine months of the current fiscal year while Federal Government borrowing for the financing of its deficit was Rs 2,080 billion.
During July-March FY2020, current account deficit (CAD) reduced by 73.1 per cent to US$ 2.8 billion (1.1 per cent of GDP) against US$ 10.3 billion last year (3.7 per cent of GDP), read the survey.
Sheikh said that the government aimed to provide further relief to the masses by not imposing new taxes. “Despite a small budget, we doubled the budget for the Ehsaas Programme so that the money could reach the people,” he said.
On combating the coronavirus pandemic, Sheikh said that the government policy has been to maintain a balance between saving people’s lives and protecting the economy as well.
The advisor said that the country’s economy suffered losses worth Rs3000bn. In order to mitigate the impact, the government announced an Rs1240bn package, he said.
The IMF has forecasted the global economy would decline by 3-4pc, and the loss in global demand also affected our exports. “It is difficult to ascertain anything related to coronavirus,” he said.
“The outbreak of Coronavirus (COVID-19) has negatively affected the near-term outlook. It has brought significant challenges for the economy by squeezing the economic gains achieved during the ongoing fiscal year. In particular, fiscal accounts are expected to come under tremendous pressure,” read the survey.
The Federal Board of Revenue (FBR) tax collection target was expected to reach Rs4.8 trillion but has now been reduced to Rs3.9 trillion, meaning FBR sustained losses of up to Rs700-800 billion in its tax collection, informed Sheikh.
“We do not want to add the burden of more taxes on our citizens, in order to stimulate economic growth amid coronavirus pandemic,” he said.
Sheikh, a former banker, also pointed to a silver lining in the gloomy scenario.
“The FBR tax collection has witnessed a remarkable turnaround during the current fiscal year after posting negative growth of 0.4 per cent in FY2019. The overall FBR tax collection grew by 10.8 per cent to Rs 3,300.6 billion during July-April, FY2020 against Rs 2,980.0 billion in the comparable period last year. Within the total, the domestic component of tax revenue collected by the FBR grew by 14.7 per cent to stand at Rs 2,777.7 billion in first ten months of the current fiscal year against Rs 2,421.1 billion in the comparable period last year,” the Survey says.
“As the economy slowly reopens, it is expected that the adverse impact of COVID-19 will be bottoming out. However, the framework for recovery will depend on various factors like the extent of adverse impact on various sectors, duration as well as the severity of lockdowns and the associated risks. The outlook, therefore, carries challenges due to uncertainties associated with it,” according to the document.
The twin monsters of coronavirus and locust invasion have pushed Pakistan into negative territory, causing a contraction of 0.38 per cent in growth – something that the country has not witnessed in almost seven decades.
Even wars and natural disasters could not slow down Pakistan’s economic growth into the past 68 years.
The dismal scenario follows a massive current account deficit that stunted development expenditures and drained precious resources into paying off the debt.
The GDP Growth Rate in Pakistan averaged 4.92 per cent from 1953 until 2018, reaching an all-time high of 10.22 per cent in 1954 and a record low of -1.80 per cent in 1952.
“The present government inherited the economic crisis of the current account deficit which amounted to $20 billion from the previous government, where Pakistan’s external account was moving towards default, whereas our expenditure was more than our income, ” advisor to Prime Minister on Finance, Dr Hafeez Shaikh said.
Unveiling the annual Economic Survey 2019-20 in the capital, Islamabad on Thursday, Sheikh said that the government was inducing growth by taking loans from external sources, in such a situation the government decided to mobilize resources by seeking loans from partner countries and the International Monetary Fund (IMF).
The provisional GDP growth rate for the fiscal year 2020 is estimated at negative 0.38 per cent on the basis of 2.67, -2.64, and -0.59pc growth in agricultural, industrial and services sectors, respectively.
“Although, the provisional GDP growth rate for FY2020 is estimated at negative 0.38 per cent, however, macroeconomic stabilization measures undertaken by the government over the past year resulted in a significant reduction in Saving-Investment Gap which was mainly driven by a reduction in the trade deficit and increase in workers’ remittances. It is also mentionable that fiscal deficit remained contained in first three-quarters of FY2020,” he said.
The government also decided to improve the country’s tax regime and improve the country’s exports by providing incentives to businesses. “The current account deficit amounting to $20bn was brought down to $3bn, this is a big achievement of the government,” he said.
Nevertheless, according to the survey, total public debt was recorded at Rs 35,207 billion at end-March 2020 compared with Rs 32,708 billion at end June 2019, registering an increase of Rs 2,499 billion during first nine months of the current fiscal year while Federal Government borrowing for the financing of its deficit was Rs 2,080 billion.
During July-March FY2020, current account deficit (CAD) reduced by 73.1 per cent to US$ 2.8 billion (1.1 per cent of GDP) against US$ 10.3 billion last year (3.7 per cent of GDP), read the survey.
Sheikh said that the government aimed to provide further relief to the masses by not imposing new taxes. “Despite a small budget, we doubled the budget for the Ehsaas Program so that the money could reach the people,” he said.
On combating the coronavirus pandemic, Sheikh said that the government policy has been to maintain a balance between saving people’s lives and protecting the economy as well.
The advisor said that the country’s economy suffered losses worth Rs3000bn. In order to mitigate the impact, the government announced an Rs1240bn package, he said.
The IMF has forecasted the global economy would decline by 3-4pc, and the loss in global demand also affected our exports. “It is difficult to ascertain anything related to coronavirus,” he said.
“The outbreak of Coronavirus (COVID-19) has negatively affected the near-term outlook. It has brought significant challenges for the economy by squeezing the economic gains achieved during the ongoing fiscal year. In particular, fiscal accounts are expected to come under tremendous pressure,” read the survey.
The Federal Board of Revenue (FBR) tax collection target was expected to reach Rs4.8 trillion but has now been reduced to Rs3.9 trillion, meaning FBR sustained losses of up to Rs700-800 billion in its tax collection, informed Sheikh.
“We do not want to add the burden of more taxes on our citizens, in order to stimulate economic growth amid coronavirus pandemic,” he said.
Sheikh, a former banker, also pointed to a silver lining in the gloomy scenario.
“The FBR tax collection has witnessed a remarkable turnaround during the current fiscal year after posting negative growth of 0.4 per cent in FY2019. The overall FBR tax collection grew by 10.8 per cent to Rs 3,300.6 billion during July-April, FY2020 against Rs 2,980.0 billion in the comparable period last year. Within the total, the domestic component of tax revenue collected by the FBR grew by 14.7 per cent to stand at Rs 2,777.7 billion in first ten months of the current fiscal year against Rs 2,421.1 billion in the comparable period last year,” the Survey says.
“As the economy slowly reopens, it is expected that the adverse impact of COVID-19 will be bottoming out. However, the framework for recovery will depend on various factors like the extent of adverse impact on various sectors, duration as well as the severity of lockdowns and the associated risks. The outlook, therefore, carries challenges due to uncertainties associated with it,” according to the document.
