Pakistan Economic Survey: GDP Stood at 3.29% Only, Almost 0% Growth in Revenue, Expenditure Increased by 8.7%
Dr Abdul Hafeez Shaikh – adviser to the prime minister on finance – on Monday said raising prices would exact a heavy political cost, but termed it necessary if the government was to balance its accounts.
He, however, said, “Still, we have decided that the poorest will receive government support through whatever means possible, and low-end electricity users will not experience any price increases and the government will subsidise them. Despite budget constraints, we will try to help the vulnerable segments as much as possible.”
He said this while unveiling the Pakistan Economic Survey which revealed that the economy grew at an average rate of 3.29 per cent in fiscal year 2018-19 against a target of 6.2 per cent set in last year’s budget.
Shaikh said, “Pakistan’s rich do not want to pay taxes. This is a big issue: if we cannot collect taxes, we cannot meet our expenses or settle our debts.”
“We are faced with a fundamental question: how to broaden the tax net. We are taking two or three steps, and the results of the assets declaration scheme will be before us by June 30.”
Shaikh said it was not his intention to scare anyone, but to paint a realistic picture that could give the people an understanding of what the government was contending with.
Federal Board of Revenue (FBR) Chairman Shabbar Zaidi said the State Bank of Pakistan (SBP) had nothing to do with the amnesty scheme and that the central bank was only a conduit to receive the money.
The Pakistan Economic Survey says agriculture witnessed a growth of 0.85 per cent (against target of 3.8 per cent), industry 1.4 per cent (against target of 7.6 per cent) and services 4.7 per cent (against target of 6.5 per cent)
Total revenue at Rs3,583.7 billion (9.3 per cent of GDP) showed almost 0 per cent growth from July-March 2019, while growth in total expenditures was 8.7 per cent. The fiscal deficit was recorded at 5 per cent of the GDP compared to 4.3 per cent in the corresponding period last fiscal.
The FBR’s tax receipts from July-April 2019 remained at Rs2,976 billion against Rs2,922.5 billion in the corresponding period last year, registered growth of 1.8 per cent.
“Actual tax collection during [the] first 10 months of the CFY remained at 67.7 per cent of revised target of Rs 4,398 billion,” the document said.
Provincial revenue collection rose by 1.5 per cent from July-March 2019.
The government’s total expenditure increased by 8.7 per cent from July-March 2019 to Rs5,506.2 billion (14.3 per cent of GDP) against last year’s spending of Rs5,063.3 billion (14.6 per cent of GDP).
Current expenditure posted growth of 17.7 per cent to Rs4,798.4 billion (12.4 per cent of GDP).
The federal and provincial governments’ current expenditures grew by 19.9 per cent and 13.7 per cent respectively during the period under review.
Development expenditure decreased to Rs655.9 billion this fiscal compared to last year’s expenditure of Rs993.3 billion, exhibiting 34 per cent negative growth compared to 23.6 per cent positive growth recorded last year.
The Public Sector Development Programme (PSDP) share in total development expenditure stood at 88 per cent or Rs578.5 billion in the first nine months of the fiscal year. The same period last year saw Rs931.4 billion expenditure.
This year’s PSDP expenditure saw a 37.9 per cent decline, while last year witnessed 24.7 per cent growth in PSDP spending.
The federal and provincial PSDP decreased by 14.5 per cent and 52.2 per cent respectively during July-March 2019 compared to the same period last year.
The exports fell by 1.9 per cent despite exchange rate depreciation, while imports declined by 4.9 per cent.
“This helped in reducing the trade deficit by 7.3 per cent during July-April FY18-19, while it had shown an expansion of 24.3 per cent during the corresponding period last year,” the document stated.