ISLAMABAD: Initially, some three million jobs are expected to be lost and Federal Board of Revenue's (FBR's) tax revenue may drop from Rs 4,800 billion to Rs 3,905 billion with a revenue loss of Rs 700 billion to Rs 900 billion expected from April to June 2020 as a result of the impact of coronavirus on Pakistan's economy, Finance Ministry told the Senate on Friday.
With a shortfall in revenues and an increase in public spending due to fiscal stimulus package, fiscal deficit is expected to exceed the target of 7.5 per cent of GDP (Gross Domestic Product) and may go up to 9.4 per cent of GDP, reads the written reply of Finance Ministry to a question posed by Senator Mushtaq Ahmed from Jamaat-e-Islami (JI) regarding the estimated loss incurred by Pakistan's economy due to pandemic of coronavirus.
Prior to coronavirus outbreak, GDP growth was projected at 3.24 per cent for fiscal year 2020 with Agriculture (2.85 per cent), Industry (1.95 per cent) and Services (4.04 per cent). The FY2020 posted a negative growth of 0.4 per cent (Provisional), of which Agriculture (2.67 per cent), Industry (-2.64 per cent) and Services (-0.59 per cent," the Finance Ministry said.
Low economic activity in the European Union, the United States, the United Kingdom, Middle East and resultant fall in commodity prices, exports of Pakistan will remain around $ 21-22 billion (pre-Covid: $ 25.5 billion). Workers' remittances are expected to remain around $ 20-21 billion (pre-Covid-19: $ 23 billion), the Ministry's reply said.
Due to Covid-19, the Pakistani rupee depreciated by 7.5 percent on month-on-month basis in March over February FY2020, it added.
Later, speaking on the floor of the House during Senate session, Federal Minister for Industries and Production Hammad Azhar said that the number of tax filers has increased from 1.6 million to 2.6 million in a period of one year as a result of steps taken by the present government.
He said, Pakistan's tax collection also witnessed a 27 per cent growth before the coronavirus outbreak. The post-pandemic has seen 30 per cent decline in tax collection but expressed the confidence that the situation will improve as the business activities are being resumed, he said.
On Pakistan Steel Mills (PSM), he said, the previous governments neither restored PSM nor privatized it, saying the present federal government is taking the ownership of PSM. He once again confirmed the retrenchment of over 9000 employees of PSM, saying each retrenched employee would be offered Rs 2.3 million on average.
"Today the debt of Pakistan Steel Mills stands at 230 billion rupees. He said the government has now decided to lease out the core steel mills operations to revive Pakistan Steel Mills," he said.
The government gave a stimulus package of Rs 1200 billion to support different segments of society including the poor and the businesses during the Covid-19 pandemic, the minister said. "Our initiatives have helped reduce the inflation rate from twelve percent to eight percent. We have also reduced the petroleum prices which are currently the lowest in the South Asian region," he said.
Adviser to Prime Minister on Commerce Abdul Razak Dawood said Pakistan has got orders for the export of personal protective equipment against Coronavirus. He said that surgical masks, N-95 and Tyvek gowns will not be exported.
The country's fruits, vegetables, meat and poultry exports to the Middle Eastern countries witnessed a growth of 36 percent over the last 12 months, he said.
Pakistan enjoys close and cordial relations with Turkey and is negotiating a Free Trade Agreement with it to promote bilateral trade relations, Dawood said.
The Senate would meet again on Monday at 4 pm.
INP adds: Around three million jobs are expected to be lost in the "initial round" of the novel coronavirus outbreak, the finance ministry told the Senate in a written response submitted on Friday.
Out of the three million jobs, the industrial sector is likely to lose one million and the remaining two million will be lost in the services sector. The Pakistan Institute of Development Economics, the finance ministry said, estimated a loss of 18m jobs in agricultural, services and industrial sectors collectively.
The finance ministry also said the proportion of those living in poverty will increase from 24.3 per cent to 33.5pc.
The ministry also informed the Senate about the currency value, which depreciated by 7.5pc in March over February. The value of rupee against the dollar in February was Rs154.23 but in March, it decreased to Rs166.70. In April, the value of rupee had increased to Rs160.17 as the "volatility observed in domestic financial and foreign exchange markets [...] somewhat subsided", the finance ministry said.
Rupee value in May fell slightly to Rs163.10 in May, the report addded.
Before the pandemic, GDP growth for fiscal year 2020 was estimated as 3.24pc out of which:
agricultural sector was expected to record a 2.85pc growth
industrial sector was expected to record a 1.95pc growth
services sector was expected to record a 4.04pc growth
However, the year posted a negative growth of 0.4pc out of which industrial sector recorded -2.64pc, agricultural sector 2.67pc and services sector -0.59pc.
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