Finance Ministry’s Monthly Outlook Report (November 2020) Shows Progress, Economic Recovery EXPLAINED

The government of Pakistan intends to keep the pandemic spread in check by imposing several restrictions.


  • The latest Monthly Economic Update & Outlook report showed that Pakistan’s economy is on the way to recovery.
  • The government of Pakistan intends to keep the pandemic spread in check by imposing several restrictions.
  • The report revealed positive insights about the pandemic, taxation, energy, automobile and more.

The latest Monthly Economic Update & Outlook report showed that Pakistan’s economy is underway of recovery.

On Friday, the Ministry of Finance issued its Monthly Economic Update & Outlook (November 2020) report, which outlined factors showing that Pakistan’s economy is on its way to recovery. The report stated:

A major risk to the scenario of economic recovery on a path of external and internal balance is the upsurge of COVID-19 infections all over the world and also, to a lesser degree, in Pakistan.

Here are all the insights revealed in the report:

Basic Insights of the Report

  • The MEI [Multivariate ENSO Index] shows strong growth in the first four months of the current fiscal year. 
  • No significant deterioration in the balance of trade in goods and services is expected.
  • The inflow of workers’ remittances also remains strong, which implies the prospect for a stable exchange rate in the near term.

The government of Pakistan intends to keep the pandemic spread in check by imposing several restrictions.

Pandemic-related Insights

The government of Pakistan intends to keep the pandemic spread in check by imposing several restrictions in some sectors and areas of the economy. The intensity and duration of these restrictions may define the future economic outlook. 

The recent worldwide communications regarding the production of some successful new vaccines may give rise to the possibility of back-to-normal economic activity soon, which may boost business and consumer confidence and further enhance economic growth.

Taxation-related Insights

During the first four months of the current fiscal year:

  • Provisional tax collection by the Federal Board of Revenue (FBR) has increased by 4.5 percent.
  • Domestic tax collection grew by 5.7 percent.
  • Customs duty declined by 1.6 percent.

For the month of October 2020, the net collection witnessed an increase of 4 percent to reach Rs. 336.1 billion against Rs. 323.0 billion in the comparable period of FY2020.

For the month of October 2020, the net tax collection witnessed an increase of 4 percent.

Automobile-related Insights

During July-October fiscal year 2021, the total car sales increased by 8.1 percent while production plunged to 14.4 percent.

For the month of October:

  • The production and sale of cars increased by 21.5 and 25.4 percent, respectively.
  • The total trucks and bus sales increased by 20.8 percent, and production decreased by 22.1 percent.

Energy-related Insights

The government announced a Relief Package for small and medium enterprises (SMEs), under which electricity tariff has been reduced to Rs. 8 per unit (down from Rs. 16 per unit) from the 1st of November 2020 to 30th of June 2021, with no peak hours.

For the next three years, Rs. 12 per unit of electricity tariff would be charged from all industries, which means a 25 percent tariff discount.

Under the Economic Stimulus Package, the Federal Board of Revenue (FBR) has given relief to export-oriented industries by providing Rs. 40 billion (out of Rs. 70 billion) tax refunds up till September 30, 2020.

Ministry of Finance issues latest Monthly Economic Report.

Inflation-related Insights

  • Both YoY and average inflation followed the downward path compared to the upward trend in last year. 
  • The national Consumer Price Index (CPI) of October 2020 was recorded at 8.9 percent compared to 11 percent in October 2019. 
  • The average CPI between July and October eased to 8.9 percent from last year’s 10.3 percent. 
  • The Sensitive Price Indicator for the week ended on the 19th of November 2020. It increased by 0.24 percent every week after two consecutive declines during November 2020.
  • The financial sector continued to perform better in the wake of unprecedented challenges due to the COVID-19 pandemic. During the first quarter, the recorded performance for this sector slightly increased to 1.1 percent of GDP against 0.7 percent recorded last year. However, it remained below the target set for the first quarter.
  • The primary balance remained in surplus of Rs. 257.7 billion (0.6 percent of GDP) in Q1, FY2021. 
  • During the quarter, tax revenues (federal & provincial) stood at Rs. 1068.9 billion. Development expenditures increased by 15.4 percent for the first quarter this fiscal year against Rs 142.5 billion in the first quarter of last year.
  • In October 2020, the Current Account remained in surplus ($382 million) for the fourth consecutive month. Thus, the Current Account posted an excess of $1.2 billion (1.3 percent of GDP) during July-Oct FY2021 against a deficit of $1.4 billion last year.
Ministry of Finance’s November 2020 report shows economic positivity.

Foreign Investment-related Insights

  • The foreign direct investment (FDI) increased by 67.9 percent to $317.4 million on a month over month basis in October 2020 against $189 million in September 2020. 
  • On a YoY basis, the FDI increased by 150.9 percent during October 2020 and stood at $317.4 million compared to $126.5 million in October 2019.
  • During July-October FY2021, the FDI increased by 9.1 percent to $733.1 million compared to $672.0 million last year.
  • Foreign Private Portfolio Investment recorded a net outflow of $145.6 million during July-October FY2021. 
  • Foreign Public Portfolio Investment recorded a net outflow of $162.0 million. 
  • The total foreign portfolio investment recorded an outflow of $307.5 million during July-October FY2021 against an inflow of $452.3 million last year.
  • Countries that majorly contributed to the inflows were UAE ($69.2 million) and Singapore ($19.2 million). 
  • Countries that majorly contributed to the outflows were UK ($106.6 million), the US ($88.1 million), and Luxembourg ($29.0 million).
  • Worker’s Remittances during July-October FY2021 rose to $9.4 billion against $7.5 billion last year, showing a growth of 26.5 percent. 
  • Share of remittances from Saudi Arabia was 28.8 percent ($2715.3 million), UAE 20.4 percent ($1924.9 million), USA 8.7 percent ($815.9 million), UK 13.4 percent ($1264 million), other GCC countries 11.2 percent ($1057.2 million), Malaysia 0.8 percent ($73.4 million), EU 8.5 percent ($804.7 million) and other countries 9 percent.
Ministry of Finance’s latest report reveals Pakistan is underway economic progress.

SBP Reserves-related Insights

  • The total liquid foreign exchange reserves increased to $19.3 billion by the end of October 2020, up by $3.9 billion over end-October 2019.
  • The breakup of reserves accumulation in October 2020 shows that the SBP’s reserves stood at $12.2 billion ($8.2 billion last year) and $7.2 billion ($7.2 billion last year) in commercial banks’ reserves. 
  • The present reserves level provides the import cover of around 3 months.

Stock Exchange-related Insights

  • The KSE-100 index hovered around 40,000 points in October 2020 and closed at 39,888 points on October 29, 2020, losing 788 points in the month. 
  • Market capitalization lost Rs. 249 billion and settled at Rs. 7,399 billion on October 29.
  • Major world indices showed an oscillating trend in October 2020.

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