Recently the World Bank said that the macroeconomic uncertainties in Pakistan are rising due to which balance of payments is disrupted. Now the Institute of Policy Reforms (IPR) has released its Annual Review of the Economy for the fiscal year 2016-17 in which it says that all the targets set by the government were missed out by the economy apart from inflation.
Pakistan missed out on the growth rate target of 5.7% for the fiscal year 2016-17 as it achieved 5.28% growth during the year. Current account deficit currently stands at $12.1 billion which raises concern over external vulnerability as external debt payments for the fiscal year 2017 totaled to $8.3 billion.
Revenues from the FBR increased by only 8% during the year as opposed to the government’s anticipation of 16% increase. This 16% increase was projected by the government on account of the 20% increase in revenue that was witnessed in FY 2015-16. However, in the first quarter of the current fiscal year, FBR revenues have increased by 21%, a sign of revival for the government.
The government has also failed to do any proper planning in order to forecast revenue generation. FBR revenue growth did not meet the government’s expectation and we failed to generate the revenue that was expected. Similarly, sales tax collection declined despite an increase in the GDP and fell short by Rs. 113 billion at year-end.
Another issue being faced by the economy is the difference between imports and exports that is increasing at an alarming level. Exports declined by 1.6% which is better than the double-digit decline that was witnessed in the last two years. However, the IPR review suggests that exports need to grow by 17.7% in order to reach the June 2014 level.
The government of Pakistan should focus on increasing and promoting the exports of the country in order to decrease the balance of payment and increase forex reserves which can cover the external sector financing to reduce potential risks.