Pakistan revenue to be up Rs0.5tr by 2023-24: IMF
SBP releases on State of Economy FY 19 Q3 report
WASHINGTON/ KARACHI:The International Monetary Fund (IMF) has projected that revenues of the Federal Board of Revenue (FBR) would increase to Rs 0.5 trillion by the year 2023-24. In a recently released staff report on Pakistan, the IMF projected that the FBR is likely to collect around Rs5.5 trillion during the current fiscal year which would increase to Rs7.001 trillion in next year while in 2021-2022 the revenues would reach to Rs8.3 trillion and Rs9.48 billion in the subsequent year.
The overall revenues of the country will surge to Rs7.165 trillion in 2019-20 followed by Rs8.9 trillion in 2020-21, Rs10.6 trillion in 2021-22, Rs12.12 trillion in 2022-23, and Rs13.37 billion in 2023-24. The report said that the rapid growth of tax revenues in coming years would be ensured by the policy measures committed by the Pakistan authorities.
Meanwhile Pakistan’s economy moved along the stabilization phase led by demand management policies, vulnerabilities in the external and fiscal sectors persisted during Jul-Mar FY19, according to the State Bank of Pakistan’s Third Quarterly Report on the State of Pakistan’s Economy released on Monday. This implies that the current stabilization agenda needs to be reinforced with deep rooted structural reforms.
The pace of economic growth slowed down considerably during FY19, mainly in response to policy measures taken to curb the twin deficits. These measures affected the performance of the industrial sector and dampened manufacturing activities in the country. Meanwhile, water- and weather-related concerns, in tandem with the higher cost of major inputs, took a toll on crop production. The weak showing by the commodity-producing sectors also constrained the output of the services sector.
Moreover, the fiscal deficit deteriorated further, as a steep fall in non-tax revenues and a slowdown in tax revenue led the overall revenue collection to stagnate at last year’s level. On the other hand, expenditure increased sharply during Jul-Mar FY19, specifically the current expenditure that more than offset the decline in the development expenditure.
According to the report, inflation stubbornly kept an upward trajectory. Despite several rounds of policy rate hike since January 2018, the average CPI inflation during Jul-Mar FY19 exceeded the full year target. Although demand-pull pressures lessened in intensity towards the end of FY19, the Non-Food Non-Energy component continued to climb due to second round impact of exchange rate deprecation and increase in energy prices.
Moreover, the State Bank of Pakistan (SBP) today (Tuesday) under the new governor, Dr Reza Baqir, will announce its monetary policy for the next two months, which will be the first A press release issued on Friday said SBP Governor Dr Reza Baqir will unveil the decision of the Monetary Policy Committee at a press conference.
The interest rate is still high, the financial sector does not expect any downward change in the policy rate, which has been on the rise for more than a year and currently stands at 12.25 percent. Since May 2018, the interest rate has been increased by 5.75 percent, whereas the inflation has been recorded to be 8.9 percent in the month of June, 2019.
Experts believe that the interest rate may be increased by 0.5 to 1 percent amid the significant devaluation of rupee against the US dollar, inflation and the current economic situation of the country altogether.
The SBP believes the high interest rate is a must to get control over the rising inflationary pressure in the economy. According to SBP press statement, the Monetary Policy Committee of SBP is scheduled to meet on Tuesday, July 16, 2019 at SBP Head Office Karachi to decide about Monetary Policy.