ISLAMABAD: The Ministry of Finance on Saturday reiterated its position that Pakistan’s economic indicators were performing well and had been acknowledged internationally — resulting in an improvement in the country’s credit rating. The statement came in the wake of mounting criticism in the press about the state of the economy.
The pace of expansion in the economy accelerated for the fourth consecutive year in FY17 amid improving security situation and energy supply, the statement said, adding that real GDP growth in FY17 reached a decade-high of 5.3 per cent.
The Long Term Finance Facility (LTFF) has been reduced from 11.4pc to 6pc which is encouraging economic activities in large scale manufacturing (LSM) sector, the ministry claimed. The LSM recorded a growth of 5.6pc in FY17. This momentum continues in FY18 with growth of 12.98 pc in July of the current fiscal year, compared to 1.72pc in the corresponding period last year.
The statement also pointed towards credit disbursement to the private sector, which has seen expansion of Rs747.9bn in FY17 compared to a decline of Rs7.6bn in FY13.
“The robust lending is a reflection of favourable supply as well as demand conditions in the economy,” the statement added, pointing towards CPEC related investment as one of the reasons behind this growth.
Fiscal consolidation efforts remain on track since the government has successfully curtailed the fiscal deficit at 5.8pc of GDP in FY17 from 8.2pc of GDP in FY13, the ministry claimed.
The overall tax-GDP ratio has reached to 12.5pc in FY17 from 9.8pc in FY13. FBR tax collection increased from Rs1,946bn in FY13 to Rs3,361bn in FY17, registering an overall growth of around 73pc.
During July-August FY18, FBR tax collection further grew by 21.5pc, coming in at Rs443.89bn compared to Rs365.4bn during the same period of last year.
The current account deficit reached to $2.6bn (0.76pc of GDP) in July-August FY18, from $1.3bn (0.42pc of GDP) in FY17. On month-on-month (MoM) basis, the external sector position is showing an improvement and CA improved by 73pc during August 2017 over July 2017 on account of better exports, remittances and FDI growth.
Exports started showing positive results during FY18 due to several initiatives for the promotion and facilitation of exports, such as reduction in mark-up rates on Export Refinance Facility (ERF) from 8.4pc to 3pc. Prime Minister’s package of Rs180bn is also aiding the export sector, according to the ministry. During Jul-Aug FY18, exports posted a significant growth of 17.9pc and on MoM basis 14.3pc in August 2017.
During July-August FY18, overseas Pakistani workers remitted $3.496bn as compared with $3.089bn received during the same period in the preceding year, which is higher by 13.18 pc.
FDI amounted to $2.411bn during FY17 compared to $2.305bn during same period last year, posting a growth of 4.6pc. During July-August, FY18, FDI posted a significant growth of 154.9 pc which bodes well for the Balance of Payment.
Published in Dawn, September 24th, 2017