Pakistan manages to restrict budget deficit

Second quarter of current fiscal

ISLAMABAD: With improved tax collection and curtailed expenditures in the second quarter (Oct-Dec) of the current fiscal, Pakistan has managed to restrict the budget deficit within envisaged limit of the International Monetary Fund (IMF).

However, the IMF was expected to raise questions on meeting deadline for moving ahead with strategic sale of the Pakistan International Airlines (PIA), Pakistan Steel Mills and privatisation of other power sector entities during the upcoming parleys to complete 10th review. Pakistan is eyeing to restrict the budget deficit at 4.3 percent of the GDP for the current fiscal year and the government had managed the deficit around two percent of the GDP for first half (July-Dec) period. However, the accounts’ details are still pouring in and the government will finalise details of fiscal operation till January 20, 2016.

Pakistan and the IMF are scheduled to hold review talks most probably at Dubai from January 26, 2016, under Extended Fund Facility (EFF) for reviewing progress for end December 2015 for approving eleventh tranche for Islamabad’s economy. The venue of upcoming talks has not yet been finalised as Islamabad wished the IMF team to visit Pakistan but the security concerns might block the way again this time.

“Yes, we have managed the budget deficit within the desired limit,” one top economic wizard told ‘The News’ here on Monday. The FBR made a net collection of around Rs785 billion, as against target of Rs750 billion fixed for the second quarter of the current fiscal year.

The net collection for the current six months stood at Rs1,385 billion showing an increase of 19% from the corresponding period of the previous year. The target for the current quarter has, therefore, been surpassed by around Rs35 billion. The revenue collection trend during the quarter Oct-Dec, 2015, augurs well for the efforts of the FBR towards achievement of the annual assigned revenue targets.

From July to September, 2015, the FBR made a net collection of Rs600 billion as against target of more than Rs640 billion thus falling short by Rs40 billion. During the current quarter, not only the assigned target of Rs750 billion was achieved, Rs35 billion was also recouped in respect of the shortfall of the previous quarter.

According to press statement issued by Finance Ministry here on Monday, Finance Minister Ishaq Dar chaired a meeting to review preparations for the 10th IMF Review due to begin on January 26.

Finance Secretary Dr Waqar Masood briefed the minister on the progress of various reform measures in the context of the Fund Programme. The status of actions relating to performance criteria and indicative targets, agreed under the programme, were also discussed. The minister expressed satisfaction with the second quarter results as well as the overall progress made since the 9th Review and directed that the positive momentum should be maintained for the remainder of the fiscal year.

He stated that the reforms agreed under the programme had been helpful in achieving the objective of macroeconomic stability and stressed that the process should be accelerated so that the gains made during the last two and a half years are further consolidated.

In a separate meeting, Nasir Mahmood Khosa, Executive Director World Bank, called on Ishaq Dar.

Khosa briefed the minister regarding the upcoming visit of the World Bank president to Pakistan. He stated that the visit was very important in the backdrop of the positive turnaround of the economy achieved in the last two and a half years. He said that the successful implementation of difficult but much-needed reforms had enhanced the image of the country at the international fora. He stated that the forthcoming visit will provide an opportunity to further increase the positive contribution of the World Bank in the infrastructure and social sector development.

The finance minister said the government appreciates the assistance and cooperation of the international institutions which had been helpful in achieving the objective of macroeconomic stability. He hoped the partnership with the World Bank will continue in future as well.