ISLAMABAD: The Finance Ministry has presented the first quarterly report of the State Bank of Pakistan for the fiscal year 2015-16 on the state of economy in the Senate. The Finance Ministry is bound to present the SBP’s report before parliament under section 9 A (f) of the State Bank of Pakistan Act 1956.
Most often such reports are laid before the House either by the minister concerned, minister of state or parliamentary secretary for the relevant ministry. However, in the absence of Finance Minister Ishaq Dar, the Minister of State for Parliamentary Affairs Sheikh Aftab Ahmad presented the report before the House. Some five days ago, the SBP submitted the report to parliament.
The report projects recent tax measures FBR taxes have shown a significant YoY growth of 16.8% in Jul-Nov FY16. In order to keep the fiscal deficit within target without compromising on development spending, tax efforts have to be increased by manifold, particularly by widening tax base and effective enforcement.
A review of the quarterly report reveals that notable improvements in the key macroeconomic indicators during the first quarter of the year were observed; however, much needed to be done to ensure their sustainability.
In addition, marked improvement in security conditions, relatively better energy management, and persistently low global commodity prices, positioned the economy to further improve on its performance going forward.
Report also highlights some points of concern like budget deficit for 1Q-FY16 was lower than the same period last year and tax collection could not post the required growth.
Loss making PSEs remained a contingent liability on scarce fiscal resources. The privatization process of such PSEs is still at initial stages. This process must be expedited to improve quality of services, and stem losses to the exchequer;
Dwindling exports continued to eclipse overall healthy performance of the external sector. Specifically, exports recorded a year-on-year decline for the 3rd quarter in a row. This decline was attributed primarily to lower quantum.
Moreover, FDI also needs to contribute more towards external sector sustainability. While it is encouraging that FDI from China is likely to increase due to progress on various infrastructure projects under the CPEC.
Kharif crops cotton and rice suffered from heavy rainfall. However, the slow progress on privatisation process and persistent distribution and transmission losses in the power sector remain a challenge.
