F.P. Report
KARACHI: Pakistan Business Forum (PBF) has utterly rejected the 40 rupees per litre jump in petroleum prices in the month of September which will further squeeze the industry, agriculture sector and common man of this country.
It said though institutions were trying their best to curb the artificial price of dollar but at this point, increase of 24 rupee per litre was not at all justified move by the finance division. In the last few days dollar was on decline in the open market and we appreciated the commendable efforts of the institutions.
In a statement on Saturday, Pakistan Business Forum Chief Organizer Chaudhry Ahmad Jawad said that at present Rs. 60 per liter was being charged from the public on per lire already in the name of surcharge. On the other hand, high electricity bills have left the public and the business community in debt. The business community and the people were currently on the streets challenging the government’s helplessness.
Jawad stressed the need for implementing structural reforms for good governance, curbing unproductive expenditures, expanding the tax base, fostering public-private partnerships, and reallocating resources to critical sectors to stimulate sustainable growth, as the country was facing with daunting economic challenges, posing a serious threat to the viability of the industry, in this regard the role of SIFC was appreciated to shape up the country’s economy at the right direction.
PBF official Jawad further observed that it is imperative to understand that fiscal discipline cannot be achieved and sustained without initiating structural reforms.
In the 2023 budget, the government extended substantial subsidies and grants to loss-making entities, which, in turn, are not only failing to make positive contribution but are also incurring significant losses.
“We must maintain fiscal discipline and establish controls to create fiscal space to extend relief to the masses, Saleha said.
Quoting the reports, she said that the budget deficit continues to grow, entangling Pakistan in an unrelenting cycle of debt”.
Even if we exclude the impact of debt servicing, our revenues fall short of covering other expenses, implying that all these are met from borrowed funds. At the close of the fiscal year (FY) 2022-23, Pakistan recorded a budget deficit of Rs6.52 trillion, equivalent to 7.7 percent of the GDP, a slight decrease from the previous year’s 7.9 percent of GDP. However, in absolute figures, the budget deficit surged by a substantial 24 percent, or Rs1.26 trillion, within just one year.
Due to this bleak scenario, the primary balance registered a negative Rs690 billion in FY2023. Encouragingly, Pakistan achieved a noteworthy reduction of Rs1.3 trillion or 67 percent year-on-year in its debt portfolio at the primary balance level during FY2023.
According to the Fiscal Operation report, the primary deficit, which stood at 3.1 percent of GDP in FY2022, was reduced to a more manageable level of 0.8 percent of GDP in FY2023.
This improvement has created some fiscal room, and with continued efforts we can attain a primary surplus, representing the fundamental level of financial discipline.
It is encouraging to note that at the consolidated level, the government successfully attained an overall primary surplus of Rs503 billion.
However, by end of the third quarter of FY2023, overall budget’s balance showed a negative figure of Rs3.07 trillion. Yet, in the last quarter of FY2023, primary surplus turned into primary deficit, with latter recording a primary deficit of Rs1.1 trillion.
The budget deficit in last quarter of FY2023 surged to nearly 112 percent of the cumulative figures from July 2022 to March 2023. Pakistan’s budget deficit for the initial nine months amounted to approximately Rs3 trillion, but in Q4 FY23 alone, it registered a substantial increase of Rs3.4 trillion. It’s worth noting that in the latest budget documents released in June 2023, revised estimate for primary deficit in FY23 was Rs421 billion.
However, according to the Ministry of Finance’s recent update, there was a primary balance overrun of Rs690 billion, marking an increase of Rs269 billion, which is 64 percent higher than the revised estimates for FY2023 shared earlier in June of the same year. Contrastingly, according to the budget document from the previous year, a surplus of Rs153 billion was projected.
This highlights the inadequacies in financial planning at ministerial level. PBF President Multan further told many countries are implementing privatisation policies for SOEs, Pakistan remains in debate over the issue without officially announcing any plans for disinvesting in such entities; he added. (INP)
