ISLAMABAD-The ministry of finance has claimed that the economic recovery process continues at a steady pace, bolstering business confidence and market sentiment as the economic indicators have started performing well.
“The real sector is experiencing mixed performance across the economic sectors,” said the ministry in its report.
In the agriculture sector, the prospects for achieving production targets are positive. During the Rabi season of 2023-24, wheat cultivation nearly met its planned area. Notably, Punjab exceeded its wheat sowing target by 2 percent. Farm inputs have also observed an upward trend. Farm tractor production and sales exhibited growth of 60.7 percent and 98.2 percent, respectively, during Jul-Nov FY2024, compared to the corresponding period last year. Similarly, during Oct-Nov 2023, there was a 5.6 percent increase in Urea and a 42 percent increase in DAP offtake compared to the same period last year, indicating positive growth in Rabi crops.
However, the LSM sector demonstrated a minor negative growth of 0.4 percent during Jul-Oct FY2024, compared to the contraction of 1.7 percent in the previous year. A mixed trend was observed at the sub-sector level: 12 out of 22 sectors witnessed positive growth which include, food, beverages, coke & petroleum products, wearing apparel, leather, chemicals, pharmaceuticals, non-metallic mineral products, rubber products, fabricated metals, machinery and equipment, and others (football) while tobacco, textile, wood products, paper & board, iron & steel products, computer, electronics & optical products, automobiles, electrical equipment, furniture, and other transport equipment witnessed negative growth.
A substantial increase in revenues compared to expenditures brought down the fiscal deficit to 0.8 percent of GDP (Rs.861.7 billion) in Jul-Oct FY2024 from 1.5 percent of GDP (Rs.1265.8 billion) last year. The primary surplus continued to improve owing to contained growth in nonmarkup spending and recorded Rs.1429.7 billion (1.4 percent of GDP) during Jul-Oct FY2024 from Rs.136.2 billion (0.2 percent of GDP) last year. Net federal revenue receipts increased to Rs.2806.6 billion in July-Oct FY2024 from Rs.1316.8 billion last year. The sharp rise in revenues has been largely attributed to considerable improvement in non-tax revenues that grew by more than 300 percent during the period under review. In absolute terms, it increased to Rs. 1586.5 billion against Rs. 346.4 billion last year. This growth in non-tax collection has been observed across all major heads, indicating a broad-based increase. Similarly, receipts from FBR tax collections grew by 29 percent to Rs.2748.4 billion against Rs.2138.7 billion last year. The net provisional FBR tax collection maintained its momentum with 29.6 percent growth to reach Rs.3484.7 billion during Jul-Nov FY2024 from Rs.2688.4 billion last year. Within total, domestic tax revenues grew by 32 percent driven primarily by a 62.8 percent surge in FED and a 42.2 percent rise in direct taxes. Total expenditures grew by 35 percent to Rs.3706.7 billion during Jul-Oct FY2024 against Rs.2737.2 billion last year. Within total, current spending grew by 44 percent mainly due to a significant rise in markup payments that increased by 63 percent during the first four months of the current fiscal year, while non-markup spending witnessed a restricted growth of 19 percent on account of the government’s cautious expenditure management strategy.
The current account posted a deficit of $ 1.16 billion for Jul-Nov FY2024 against a deficit of $ 3.3 billion last year, largely reflecting an improvement in trade balance. Exports (fob) increased by 5.0 percent and reached $ 12.5 billion ($ 11.9 billion last year). Imports (fob) declined by 16.0 percent reaching $ 21.3 billion ($ 25.3 billion last year). Resultantly, the trade deficit recorded at $ 8.8 billion as against $ 13.4 billion last year
Total foreign investment during Jul-Nov FY2024 recorded an inflow of $ 694.8 million as against $ 575.5 million last year. FDI stood at $ 656.1 million ($ 606.9 million last year) increasing by 8.1 percent. Foreign Private Portfolio Investment has registered a net inflow of $ 38.4 million during the period under review. Foreign Public Portfolio Investment recorded a net inflow of $ 0.2 million. The total FPI recorded an inflow of $ 38.7 million as against an outflow of $ 31.4 million last year.
In Jul-Nov FY2024, workers’ remittances were recorded at $ 11.0 billion ($ 12.3 billion last year), decreased by 10.3 percent. MoM remittances declined by 8.6 percent in November 2023 ($ 2.3 billion) as compared to October 2023 ($ 2.5 billion). However, YoY remittances increased by 3.6 percent in November 2023 ($ 2.3 billion) as compared to November 2022 ($ 2.2 billion) because of structural reforms related to exchange companies and consequent convergence of exchange rate in interbank and open market. Pakistan’s total liquid foreign exchange reserves increased to $ 12.9 billion on December 22, 2023, with SBP’s reserves stood at $7.8 billion and Commercial banks’ reserves remained at $5.1 billion.