ISLAMABAD: The Ministry of Finance, under the leadership of Ishaq Dar, has admitted that several high-frequency indicators including remittances, export, import, current account deficit, foreign direct investment and total foreign investment point to lower growth since the start of the current fiscal year.
The finance ministry in the monthly economic update and outlook November 2022 stated that several high-frequency indicators including remittances, export, import, current account deficit, foreign direct investment and total foreign investment point to lower growth since the start of the current fiscal year.
But the economic situation is faced with severe headwinds following the devastating floods and the higher energy prices. The government has supported the incomes of the most needed as well as key sectors of the economy. As a result, it is highly expected that contraction or recession will be avoided.
The report states that the targets fixed for current Rabi-2022-23 crops seems to be challenging due to delayed sowing in the flood affected areas. However, timely rains may positively impact the production in the agriculture sector.
The worsening global and challenging domestic environment coupled with contractionary monetary policy have pushed down the performance of LSM at -0.4 percent in the first quarter of FY23.
On YoY basis, LSM remained subdued at 0.01 percent in September 2022, while on MoM basis it grew by 0.1 percent. The Consumer Price Index (CPI) increased to 26.6 percent on a YoY basis in October 2022 as compared to an increase of 23.2 percent in the previous month and 9.2 percent in October 2021.
During Q1 FY23, total revenue increased by 12 percent to Rs.2017 billion against Rs.1809 billion in the same period last year. Within revenues, total tax collection grew by 16 percent while receipts from non-tax fell by 15 percent.
Similarly, total expenditures grew by 26 percent to reach Rs. 2826 billion in Q1 FY23 against Rs.2247 billion in the same period of last year.
Consequently, the fiscal deficit increased to 1.0 percent of GDP in Q1 FY2023 against 0.7 percent recorded in the same period of last year. The primary balance posted a surplus of Rs.145.3 billion in Q1 FY2023 against a surplus of Rs.184.2 billion in the comparable period of last year.
While the revenue deficit deteriorated and increased to 0.7 percent of GDP in Q1 FY2023 against the deficit of 0.2 percent last year, indicating a substantial increase in current expenditures compared to revenue growth.
The Current Account posted a deficit of $2.8 billion for Jul-Oct FY2023 as against a deficit of $ 5.3 billion last year, mainly due to increase in exports and contraction in imports. However, the current account deficit stood at $ 567 million in October 2022 as against $ 363 million in September 2022.
Exports on fob grew by 2.6 percent during Jul-Oct FY2023 and reached $ 9.8 billion ($9.6 billion last year). Imports on fob declined by 11.6 percent during Jul-Oct FY2023 and reached $ 20.6 billion ($ 23.3 billion last year). Resultantly, the trade deficit (Jul-Oct FY2023) reached to $ 10.8 billion as against $ 13.7 billion last year.
FDI reached $ 348.3 million during Jul-Oct FY2023 ($726.5 million last year). FDI received from China $ 87.6 million (17 percent of total FDI), U.A.E $73.2 million(14.2 percent), Netherlands $ 61.5 million (12.0 percent) and Switzerland $ 48.2 million (9.4 percent).
Foreign Private Portfolio Investment has registered a net outflow of $ 15.6 million during Jul-Oct FY2023. Foreign Public Portfolio Investment recorded a net outflow of $ 18.2 million.