ISLAMABAD: Pakistan has fetched $7.14 billion dollar inflows in the shape of foreign loans during the first ten months of the current fiscal year 2023-24.
Despite requests by Pakistan, Saudi Arabia has not yet resumed the oil facility on deferred payment. However, Pakistan has received $100 million oil facility from the Islamic Development Bank (IsDB) facility of ITFC in April 2024.
The foreign inflows of $7.14 billion do not include $3 billion received by Pakistan from the IMF under the Standby Arrangement (SBA) programme. The total disbursement then rises to $10.3 bn so far in the current fiscal year. Pakistan had received $13 billion during the same period of the last ten months of the previous financial year.
On the other hand, the Ministry of Finance has conceded that expenditure remains under significant pressure due to rising mark-up rate. “The expenditure on the other hand remained under significant pressure due to rising markup payments,” the Ministry of Finance stated in monthly report released on Wednesday night.
However, to cope with this challenge, the government has adopted a prudent expenditure management strategy, which helped in restricting the growth in non-mark-up current spending to 20.4 percent during July-March FY2024 relative to a 54 percent increase in mark-up expenditures.
Resultantly, a primary surplus of 1.5 percent of GDP has been achieved, indicating substantial progress towards meeting the full-year primary surplus target of 0.4 percent of GDP. The government is highly committed to strengthening the public finances through reforms and initiatives on both revenue and expenditure sides. The aim is to promote sustainable and equitable growth by ensuring fiscal sustainability and creating adequate budgetary resources for social and development projects.
The fiscal consolidation efforts helped in improving the revenues from both tax and non-tax collection. Moderate recovery in economic activities, a gradual increase in imports complemented by various policy and administrative reforms & measures, including anti-smuggling and broadening tax measures, collectively increased the tax collection by 30.6 percent during Jul-Apr FY2024. With an unwavering commitment to achieving the full-year target, the FBR is putting in maximum effort. Furthermore, it is focusing on technology advancement measures, which will enable the FBR to improve the tax collection, hence the tax to GDP ratio.
The ministry further stated that as the fiscal year is about to end, the economic indicators demonstrate strengthening of stability in the real, fiscal and external sectors. GDP growth is elevating while inflation rates are on a decline with a positive primary balance, reflecting the effectiveness of recent fiscal consolidation efforts.
The economic performance also reveals that agriculture has been a major contributor to this fiscal year’s economic upswing, attributed to government-led initiatives that enhanced input supply and credit disbursements. The LSM sector experienced a slight contraction but has shown improvement compared to the previous year. Fiscal measures have boosted both tax and non-tax revenues, helping maintain a stable fiscal deficit, while improvement in the current account balance highlight a healthier external sector driven by better trade balances and increased foreign direct investment. The economic outlook is promising as industrial activities are gradually improving, inflation is on a downward trajectory and the external sector is stable. Going forward, the economy will gain momentum in the coming months of this fiscal year. On front of external dollar inflows, the multilateral creditors have disbursed $2.8 billion during the first ten months of the current fiscal year out of which the World Bank disbursed the major chunk of foreign loans. The WB disbursed $1.353 billion under IDA loans and $171 million under IBRD loans. The ADB disbursed $708 million and AIIB $310 million.