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ISLAMABAD, Sep 28 (APP):The Finance Ministry on Thursday said that since the beginning of FY2024, Pakistan’s economy stepped up on the recovery path and Pakistan’s economy performed well on the external and internal sectors.
In August FY2024, month-on-month exports increased by 14.2 percent while imports grew by 2.1 percent for the same period, according to the monthly economic update and outlooks report issued by the Ministry of Finance.
On the external front, the current account deficit and aligned indicators are showing some developments in August, the report said.
Similarly, fiscal performance remains satisfactory at the start of FY2024. It is expected that the economic revival plan and prudent actions – policies including SIFC and IT policy- will attract new investments to create a multiplier effect in the economy for higher and inclusive economic growth in FY2024 and further in the medium term.
According to the report, recent administrative measures aimed at improving the availability of essential food commodities and expected ease in supply constraints has improved the inflation outlook.
Moreover, administrative and regulative action for curbing illegal activities in the foreign exchange market have started to yield desired dividends and narrowing the gap between interbank and open market exchange rates.
Similarly, fiscal performance remains satisfactory at the start of FY2024. It is expected that the economic revival plan and prudent actions – policies including SIFC and IT policy- will attract new investments to create a multiplier effect in the economy for higher and inclusive economic growth in FY2024 and further in the medium term.
According to the report, Foreign Exchange Reserves Pakistan’s total liquid foreign exchange reserves increased to $ 13.2 billion on September 26, 2023, as the SBP’s reserves stood at $ 7.7 billion and Commercial banks’ reserves remained at $ 5.5 billion.
The Monthly Economic Indicator (MEI) is developed as a tool to distribute the past annual GDP numbers, reported by the PBS, on a monthly/quarterly basis, and to nowcast GDP growth for the FY in which the National Accounts are not yet available on the same frequency.
The figure presents the MEI on a monthly basis since January 2019. It should be noted that some of the data underlying the August 2023 MEI are still provisional and may be revised next month, the report said.
The MEI estimated for the month of August 2023 stood positive on the back of improved exports and imports on MoM basis and rising cement dispatches. As the government is striving hard to revive the economy, MEI is expected to be positive throughout the outgoing fiscal year.
According to the report, In August-FY2024 BoP data shows some developments – as exports of goods and services increased by 13.8 percent on MoM basis, and imports of goods and services increased marginally by 1.4 percent.
As a result, strong growth in exports has been transmitted in the trade deficit of goods and services which decreased by 12.6 percent on MoM basis in the month of August.
Similarly, workers’ remittances increased by 3.2 percent in August 2023. All these positive factors impacted the current account and its deficit decreased by around 79 percent on both MoM and YoY basis. For the outlook, recent administrative measures against speculative activity in the foreign exchange market in the month of September will impact positively remittances inflows, trade, and current account balance.
Moreover, Pakistan’s main export markets particularly US, UK, Euro Area and China’s monthly CLI positions indicate an upward trend, indicating positive prospects for export growth in the coming months.
However, imports will gradually increase to stimulate economic activities in the economy. Therefore, it is expected that the current account will remain within a sustainable limit.
At the fiscal side, in July FY2024, fiscal performance remained satisfactory while exhibiting a surplus in the primary balance accompanied by a fiscal deficit at the same level as last year.
On the revenue side, new tax measures are contributing to direct tax collection. Other components of tax collection like FED have also posted significant growth mainly due to an uptick in collections at the import stage.
With the removal of import restrictions, the collection from import-related taxes is likely to increase further. Similarly, the increase in sales tax is primarily attributed to 25.6 percent from domestic collection. Overall performance signifies the revival of economic activities and sales.
According to the report, these developments collectively bode well for achieving the tax collection target in the first quarter of FY2024.
The government is actively engaged in implementing a strategy to ensure fiscal sustainability through revenue-enhancing initiatives and prudent expenditure management.
The government is particularly focusing on restricting non-markup expenses through the implementation of austerity measures and targeted subsidies. The main objectives are to limit the fiscal deficit to 6.5 percent of GDP and to keep the primary balance in surplus of 0.4 percent of GDP during FY2024, the report said.
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