ISLAMABAD: The government strengthened tax administration, reduced tax concessions /exemptions and implemented strategies to improve the business climate. Therefore, the domestic resource mobilization strategy helped in achieving higher revenue growth and tax to GDP ratio in recent years.
As a result, the tax to GDP ratio which was 9.8 percent of the GDP in 2012-13, has increased to 12.4 percent of the GDP during 2015-16,” a source at the Federal Board of Revenue (FBR) told Customs Today. Low inflation, low interest rate environment has enabled the government further reduce cost of the domestic debt portfolio thus resulting in significant savings to the economy.
Despite repayments of foreign loans amounting over $12 billion by the government in last three years, the source said that the foreign exchange reserves were presently recorded at over $24 billion up from $11 billion as at end June 2013. Improved international ratings have enabled the government to borrow internationally at historically low levels thus further reducing the cost of external borrowing.
The source said that enhanced tune of revenue collection also enabled the government to raise development budget gradually and adequately in order to meet the investment requirements of a growing economy. In this regard, the FBR has played key role and the government has well recognized FBR’s due role.
“Federal PSDP gradually increased from Rs. 348.3 billion during 2012-13 to Rs.800 billion for 2016-17, showing a cumulative increase of over 129% as well as credit to private sector, which was negative at Rs.19.2 billion in 2012-13, increased to Rs.460.6 billion in 2015-16,” the source added.
The source further observed that the expansion of credit to private sector helped in improving financial conditions of the corporate sector and a general uplift in business environment in the country. Owing to these efforts, fiscal space is expected to be enhanced further which will reduce government borrowing requirements and augment repayment capacity.
“In the enhancement of fiscal space, availability of funds generated by FBR are of vital importance because the revenue collection provided funds to the government in sufficient quantum,” the source added.
