Japan has queued up to help Pakistan to plug in widening budgetary gap by granting it $60 million soft loan in response to Islamabad's call to the friendly countries for financial support to keep current budget deficit at some reasonable level.
"We are working on the plan to sign an agreement with the government of Japan (GoJ) for $60 million soft loan which will be specifically used for budgetary support," a senior official of the Economic Affairs Division (EAD) said on Tuesday. According to the official, a formal agreement to this effect is likely to be signed here in next couple of weeks.
The financial support from Japan for lessening budgetary gap is the second positive response from friendly countries. Earlier the US had allowed Islamabad to use $250 million for budgetary support. The US was followed by China for financial support to Pakistan on bilateral basis. The Chinese Prime Minister had announced $500 million soft loan for easing financial pressure from Islamabad.
Pakistan is facing irrationally higher budgetary gap in current fiscal year for a number of reasons such as below expectations revenue from taxes and other indigenous resources. There is a huge difference in its expenditure and income in the first half of the current fiscal year, leading to higher budgetary gap. Although the economic managers are citing non-implementation of Reformed General Sales Tax (RGST) as a key reason of less revenue from taxes that led to widening of budgetary gap for the current fiscal year but they are ignoring slow pace of Pakistan's exports.
The government had set a comparatively low exports target for the current fiscal year, foreseeing negative impact of global economic situation on Pakistan's economy, in particular exports and local law and order situation a basic factor hampering the government efforts to achieve exports target this year but the result of the first half of the current fiscal year is even much below expectations.
In the given situation the government opted to get some financial support from friendly countries like Japan, US, China and some European countries where Pakistan has good share in exports. Working on the same line Islamabad is seeking financial support from Saudi Arabia and other Islamic countries and at the same time requesting for supply of major imports such as oil, fertilisers on credit to minimise pressure on budgetary side. In a relevant development Saudi Arabia has agreed to credit Pakistan $100 million in kind of urea fertiliser.
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