Daily Times

The country’s economy experienced a notable stabilization during the first half of the current fiscal year (2023-24), owing to implementation of effective measures and prudent policies by the interim government that played a pivotal role in achieving this milestone.

“The first half of FY2024 has ended with economic stabilization. The government’s effective measures and prudent policies helped stabilize the macroeconomic situation, leading to a gradual improvement in economic activities,” says Monthly Economic Update and Outlook for January 2024 released by finance ministry here on Wednesday.

According to the report, this persistent uptick in economic indicators has resulted in improved GDP growth of 2.13% in the first quarter of FY2024, with expectations for continued growth in the second quarter.

It is apparent from better growth prospects in the real sector visible in month-on-month (MoM) increase in Large Scale Manufacturing (LSM) growth, an improvement in high-frequency indicators and better crop prospects.

Despite the challenges, external stability has been observed as evident from a surplus in the current account in December, it says adding on the fiscal side, the revenue performance is encouraging, however, there is significant pressure on expenditures attributed to higher markup payments.

“Despite this, the government is taking measures to manage non-markup spending, which is evidenced by continuous improvement in primary surplus,” it adds.

According to the report, Pakistan has recently received a tranche equivalent to US$ 705.6 million, following the successful completion of the first review by the Executive Board of International Monetary Fund (IMF) under Stand by Arrangements (SBA), which is providing market confidence and exchange rate stability.

The report predicted that economic activities would further strengthen during second half of FY2024 – contingent on the continuation of sound and prudent economic policies which will gear toward achieving the set growth target for the current fiscal year.

The report highlights the performance of agriculture sector saying, wheat crop for Rabi 2023-24 has been cultivated on an estimated area of 9.160 million hectares, surpassing the sowing target of 8.998 million hectares by 1.8 percent to achieve the production target of 32.12 million tonnes.

During Jul-Dec FY 2024, the agriculture credit disbursement reached to Rs 1105.8 billion as compared to Rs 842.4 billion last year, an increase of 31.3 percent.

According to the report, Large Scale Manufacturing (LSM) during November 2023, increased by 1.6 percent on YoY basis against the decline of 4.9 percent in the same month last year. While on a MoM basis, it increased by 3.6 percent in November against the decrease of 2.2 percent in October.

However, it decreased by 0.8 percent during Jul-Nov FY2024 against the contraction of 2.3 percent same period last year. The Consumer Price Index (CPI) based inflation was recorded at 29.7 percent on a YoY basis in December 2023 as compared to 24.5 percent in December 2022. During Jul-Dec FY 2024, CPI stood at 28.8 percent against 25.0 percent in the same period last year.

The consolidated fiscal deficit has been recorded at 2.3 percent of GDP (Rs.2407.8 billion) in Jul-Dec FY2024 against 2.0 percent of GDP (Rs.1683.5 billion) last year.

Total revenues during Jul-Dec FY2024 grew by 46 percent to reach Rs.6854.0 billion from Rs.4698.9 billion last year.

This notable performance is driven by a substantial increase in non-tax collections by 109 percent, reaching Rs.2019.7 billion, and a 30 percent growth in FBR tax collections, amounting to Rs.4469.2 billion during July-December FY2024.

The sharp rise in non-tax collection is largely attributed to higher receipts from mark up (PSEs & others), SBP profit, and petroleum levy.

Total foreign investment during Jul-Dec FY2024 recorded an inflow of $ 933.7 million against an outflow of $ 393.3 million last year. FDI stood at $ 862.6 million ($ 640.0 million last year) increasing by 34.8 percent.

In July-December FY2024, workers’ remittances recorded at $ 13.4 billion ($ 14.4 billion last year), decreased by 6.8 percent. YoY remittances increased by 13.4 percent in December 2023 ($ 2.4 billion) as compared to December 2022 ($ 2.1 billion).

Pakistan’s total liquid foreign exchange reserves increased to $ 13.2 billion on January 29, 2024, with SBP’s reserves stood at $ 8.2 billion and Commercial banks’ reserves remained at $ 5.0 billion.

The benchmark KSE-100 index closed at 62,451 points as of 29 December 2023 and gained 1,924 points over the month. Similarly, the market capitalization of PSX increased by Rs 334 billion (3.8 percent) and settled at Rs 9,063 billion by end December 2023.