ISLAMABAD: Despite Asian Development Bank’s (ABD) warning of increasing economic vulnerabilities last month, Finance Minister Ishaq Dar, announced, on Monday, a “strong fiscal performance” during the first quarter of the financial year 2017-18.
The ADB, in its Asian Development Outlook 2017 which was updated in September, had alerted that Pakistan’s economy was becoming increasingly vulnerable to external shocks and funding shortfalls despite the earlier growth projections of over five percent.
According to a Finance Ministry statement, the Minister expressed satisfaction at the growth in revenue collections by the FBR (Federal Board of Revenue) and appreciated the measures taken to achieve fiscal prudence in the first quarter.
Chairing a first quarter review meeting on Monday, the Finance Minister reiterated the government’s resolve to maintain fiscal discipline and directed officials to ensure the achievement of given targets.
“While commending inflation containment, low interest rates, positive and strong growth in large-scale manufacturing, recent increase in exports and remittances, the Finance Minister stressed on the need to maintain focus on acceleration of economic growth for continued reduction in unemployment and poverty,” the statement added.
Last month ADB said ,”Growth has improved, but the government needs to address fiscal and external sector vulnerabilities that have reappeared with the wider current account deficit, falling foreign exchange reserves, rising debt obligations, and consequently greater external financing needs. Political uncertainty, heightened following the Supreme Court’s decision in August to disqualify Nawaz Sharif from the prime minister office, can also possibly slow down growth prospects”.
According to the Manila based lender, possible loss of momentum in policy decision making may hamper growth prospects.
Monday’s meeting chaired by Finance Minister Dar noted that FBR tax collection, as per the provisional data, remained robust. Total collections of Rs 765 billion during July-September 2017 was up by 20 per cent as compared to the same period of the last financial year.
The Ministry has also claimed that it transferred increased sums to the provinces because of higher tax collections. However, according to the statement, even the increased amount of Rs 570 billion transferred so far also included arrears. Exercising strict fiscal discipline, the government also managed to contain expenditures at Rs 894 billion during the first quarter compared to Rs 914 billion spent during the corresponding period last year.
The overall budget deficit was recorded at Rs 324 billion in the first quarter this year as compared to Rs 438 billion in the same period last year. The fiscal deficit came down to 0.9 percent in the first quarter of current financial year as compared to last year’s figure of 1.3 percent.
Published in Daily Times, October 10th 2017.