Pakistan’s fiscal deficit decreases to 2.9% in 7MFY21

In February-April 2020 period, the international commodity prices were decreasing, and during that period, the CPI level decreased.

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Revamping Pakistan's economy in 2020The country’s fiscal deficit declined to 2.9% of the GDP in the first seven months of the FY21 as compared to 3.2% in the corresponding period last year.

This was mainly due to a large increase in net federal revenue receipts and the effective management of expenditures.

The information was revealed by a local media report that analyzed data published by the Ministry of Finance’s monthly economic update and outlook.

According to the report, the primary balance posted a surplus of ₨. 416 billion (0.9%) during July-January 2020-21 against the surplus of ₨. 153 billion (0.3% of GDP) in the same period of the FY20, showing an evident improvement.

On the other hand, in the last four months, oil prices and international food prices have been rising continuously.

In February-April 2020 period, the international commodity prices were decreasing, and during that period, the CPI level decreased.

This low base effect may briefly push year-on-year inflation higher in the next few months.

Nevertheless, the government measures to ensure smooth supply, primarily via the Ramzan Package, will reduce inflationary pressures.

Utility Stores Corporation (ULC) Ramadan Relief Package 2021

For next month it is forecast to remain between 7.9% and 9.5%.

On the external side, during July-February, FY21, exports of goods and services, as compiled in the Balance of Payments, reached $19.9 billion as compared to $20.3 billion in the same period of last year.

Moreover, imports of goods and services reached $37.3 billion this year against $35.7 billion last year, representing a surge of 4.5%.

However, in February 2021, a 3.2% growth was seen on a year-on-year basis.

The eight months performance indicates that it will remain on track, and the current fiscal year would end up meeting the set target.

What are your views on this? Share with us in the comments below.


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