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ISLAMABAD: The fiscal deficit during the first five months of the current fiscal year stood at 1.8 percent of GDP, 0.2 percent higher over 1.6 percent last year, however, primary balance remained in surplus of Rs216 billion (0.5 percent of GDP) as opposed to 0.3 percent of GDP or Rs117 billion for the same period a year before, according to monthly economic update and outlook for Jan 2021 uploaded by Finance Ministry on its website. The Federal Board of Revenue (FBR)’s provisional net tax collection grew by five percent to Rs2,206 billion (Rs2,101 billion last year).

For December 2020 alone, revenue collection achieved 97.7 percent of the target (Rs520 billion).

The net collection increased by 7.9 percent to Rs508 billion during the first half of FY2021 (Rs471 billion last year).

Net federal revenues have witnessed a noticeable increase of 22.2 percent (1,391 billion) for July-November fiscal year 2021 (Rs1,138 billion last year).

Within revenues, non-tax posted a healthy growth of 17.7 percent.

Total federal expenditures grew by 14.5 percent to Rs2,383 billion during the period under review (Rs2,081 billion last year).

Within total, current expenditures grew by 15.7 percent mainly due to higher mark-up payments and Covid-related spending.

Expenditures other than mark-up payments and Covid have decreased, reflecting government adherence of maintaining fiscal discipline.

On the development side, the rupee component of the PSDP increased by 11.3 percent to Rs128 billion (Rs115 billion last year) in utilisation during the period.

In July-December fiscal year 2021, the FDI reached $952.6 million ($1,357.4 million last year), while on year-on-year, the FDI was recorded at $193.6 million in December 2020 ($493 million last year).

Foreign Private Portfolio Investment recorded a net outflow of $244.4 million during July December 2021.

Foreign public portfolio investment witnessed a net outflow of $193.8 million.

The total foreign portfolio investment recorded an outflow of $438.2 million during Jul-Dec FY2021 (inflow of $471.0 million last year).

Countries with major inflows are the UAE ($101.7 million) and Singapore ($21.5 million). Remittances increased to $14.2 billion ($11.4 billion last year) during the first half of the current fiscal year, with a growth of 24.9 percent, while on year-on-year basis, remittances recorded $2.4 billion showing an increase of 16.2 percent in December 2020 ($2.1 billion in December 2019).

Workers’ remittances remained above $2.0 billion for the seventh consecutive month in December 2020.

The major destinations of remittance are Saudi Arabia, the UAE, USA, and UK.

Current outlook ensures economic revival on the basis of continued recovery seen in recent months but there is possibility of slower economic activities especially in the services sector depending on the intensity and duration of the pandemic.

Recent developments show that both year-on-year and month-on-month inflation are on downward trend and it is expected that the declining trend in year-on-year inflation will continue in January within a range of 7.2 to 8.2 percent.

The credit to private sector increased from Rs130.2 billion from July 01 to January 10 2019-20 to Rs230.5 billion in July 1 to January 8, 2020-21, however, credit to agriculture sector witnessed a decline of 2.4 percent during the first five months of the current fiscal year as opposed to the same period of the last year.

Copyright Business Recorder, 2021

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