By Usman Ahmed
The latest reports issued by the International Monetary Fund (IMF) and World Bank have revealed that Pakistan would miss, for the fifth consecutive year, the growth targets set for the financial year 2012-13 and the sluggish pace of economy will continue for at least two more years with a rise in unemployment.
GDP forecast
According to the IMF, the economy will grow by mere 3.5 percent this year, as against official projections of 4.3 percent, whereas the Global Economic Prospects Report 2013, issued by the World Bank last week, says Pakistan’s economy is expected to grow at a rate of 3.8 percent, half percentage point below the target of 4.3 percent set for fiscal year 2012-13 ending on June 30.
Pakistan, the second largest economy in South Asia, is clubbed with Nepal that has the economic growth projection of 3.8 percent. Even Sri Lanka at 6.1 percent and Bangladesh at 5.8 percent are projected to hit growth rates far higher than that of Pakistan.
Various studies, both independent and official, suggest that Pakistan requires 7-8 percent annual growth to create job opportunities for its youth as the country has witnessed sluggish growth the last five years, leaving hundreds of thousands jobless every year.
Budget deficit forecast
According to the World Bank, against the government’s target of 4.7 percent, the budget deficit is expected to hover above 6 percent, a projection which is lower than the IMF forecast. According to the IMF assessment, this year’s budget deficit will remain around 7-7.5 percent of the GDP.
Tax collection
In December 2012, the Federal Board of Revenue (FBR) collected Rs211 billion revenue while Rs686 billion had been collected from July to November 2012. From July 1, 2012 to January 9, 2013, the provisional tax collection has come to around Rs915 billion, which is 22 percent higher than the revenue collection during the corresponding period of fiscal year 2011-12.
According to media reports, the Ministry of Finance expects to collect around Rs2.231 trillion against the annual tax collection projection of Rs2.381 trillion with likely shortfall of Rs150 billion during the current fiscal year.
During the current week, the exchange rate started with Rs97.71/Rs97.76 for buying/selling a US dollar. As foreign currency reserves held by the State Bank of Pakistan are gradually declining, the Pakistani rupee may touch or even cross the record rate of Rs100 a dollar amid falling reserves, IMF loan repayment and political instability.
The World Bank has also warned that currencies of several oil importing countries with low or eroded reserve buffers, such as Egypt, Pakistan and India, remain vulnerable.
Trade deficit
According to the Pakistan Bureau of Statistics (PBS) figures, although the trade deficit decreased by 14 percent during the first half of the current fiscal year as exports expanded by 7.58 percent and imports witnessed a decrease by 3.33 percent. In the other words, the overall exports of the country increased from $11.202 billion in July-December 2011-12 to $12.051 billion during July-December 2012-13. On the other hand, the imports decreased from $22.678 billion during the corresponding period of the last year to $21.922 billion during the same period of the current fiscal year. Thus, the trade deficit during the first six months of current fiscal year stood at $9.871 billion against the deficit of $11.476 billion during the corresponding period of the last fiscal year, showing a decline by 13.99 percent.
Though industrial activity has started picking up, however, the World Bank says the inadequate electricity and gas supplies to the industry continue to affect the performance of the industrial sector. It fears that the increase in exports in the first five months of the current fiscal year with an increase in garments and processed cotton products’ export may not continue during the remaining part of the year. Electricity shortages during the second half of December have already adversely affected textile production and may dampen export growth in subsequent months.
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