Unsustainable public debt heart of economic woes, Finance Ministry

The Ministry of Finance in monthly economic report said that GDP growth accelerated to 2.1% in Q1 FY2024, after two consecutive quarters of negative growth.

Caretaker Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar in the report stated that the heart of the economic challenges facing Pakistan today is the unsustainable public debt position, with Pakistan in breach of the Fiscal Responsibility & Debt Limitation Act (FRDL) since 2013.

The monthly report said that restrictive stance of monetary policy and limited fiscal space are posing numerous challenges to stimulating the economy. Despite the domestic challenges, there is some optimism regarding Pakistan’s export markets, the finance ministry stated.

Key takeaways

• Consumer Price Index (CPI)-based inflation in Pakistan to hover around 24.5-25.5% in February 2024
• Fiscal deficit was recorded at 2.3 percent of GDP (Rs2407.8 billion) against 2.0 percent of GDP (Rs1683.5 billion) last year
• The Current Account posted a deficit of $ 1.1 billion for Jul-Jan FY2024 as against a deficit of $ 3.8 billion last year
• Total foreign investment during Jul-Jan FY2024 recorded an inflow of $ 785.9 million as against an outflow of $ 148.8 million last year
• Workers’ remittances Jul-Jan FY2024, recorded at $ 15.8 billion ($ 16.3 billion last year), decreased by 3.0 percent
• Pakistan’s total liquid foreign exchange reserves increased to $ 13.0 billion on February 27, 2024, with SBP’s reserves stood at $ 7.9 billion and Commercial banks’ reserves remained at $ 5.1 billion
• FBR Tax collection grew by 30% to Rs 5.15 trillion during Jul- Jan FY2024 against Rs 3966.4 billion last year
• PSX rallied 40% from Sep 2023 with the KSE 100 index rising to 63,300 points by 26 Feb 2024
• Agriculture credit disbursement reached to Rs 1105.8 billion (Jul-Dec FY2024)as compared to Rs 842.4 billion last year
• In auto-industry Car production and sale decreased by 47.6% and 48.7%, while Trucks & Buses production and sale decreased by 58.3% and
  49.4%, however Tractor’s production and sale increased by 76.7% and 82.5%
• Sales of total petroleum products in first seven months of FY24, dropped by 13% to 9.07 million tons compared to 10.48 million tons in the same period last
• Exports (fob) increased by 9.3% and reached $ 18.0 billion ($ 16.4 billion last year), Imports (fob) declined by 11.1% reaching $ 29.8 billion ($ 33.5 billion last year) in FY24