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ISLAMABAD: The Finance Ministry has said the challenges of inflation persist in the forms of supply chain disruptions, increased utility prices and significant pressure on expenditure due to higher markup payment.

The Economic Adviser’s Wing of the Finance Ministry in its monthly economic update and outlook for January 2024 stated that in the first half of the ongoing fiscal year, macroeconomic conditions have gradually improved, leading to a revival in overall economic activity compared to the challenging fiscal year 2023.

However, on the fiscal side, there is significant pressure on expenditures attributed to higher markup payments despite an increase in revenue and inflation is anticipated to remain around 27.5 to 28.5 percent in January 2024 and further ease out to 26.5-27.5 percent in February 2024.

Pakistan’s inflation projected to ease to 20-22% for FY24: SBP report

The elevated prices of perishables and vegetables and increased utility costs (electricity and gas) have contributed to the inflationary pressure. In January 2024, there is a slight moderation in the inflation outlook, yet, challenges persist in the form of supply chain disruptions and increased utility prices, the decline in fuel cost offers a promising counterbalance, potentially mitigating the overall impact on consumers and production sectors.

The wheat crop has surpassed the cultivation area to achieve the production target of 32.12 million tonnes and large scale manufacturing (LSM) declined by 0.8 percent during Jul-Nov fiscal year 2024 against the contraction of 2.3 percent same, whereas, year-on-year basis it increased by 1.6 and on a month-on-month basis, it increased by 3.6 percent in November against the decrease of 2.2 per cent in October.

There has been a decline of 6.8 per cent in remittances during July-December 2023-24 to $13.4 billion from $14.4 billion for the same period a year before.

The exports have increased by 7.5 per cent to $15.3 billion during the first six months of the current fiscal year from $13.2 billion for the same period of last fiscal year and imports decreased by 14.7 per cent to $25.2 billion during the period under review from $29.6 billion a year before. As a result, current account decreased to $0.8 billion, 77.1 per cent less over $3.6 billion during July-December 2022-23.

The foreign direct investment witnessed an increase of 34.8 per cent and was recorded $862.6 million during July-December 2023-24 from $640 million for the same a year before, and portfolio investment increased $71 million in the first six months of the ongoing fiscal year from negative -$1033.4 million for the same period of last fiscal year.

The total foreign investment stood at $933.7 million in the current fiscal year (July-December 2023-24) from negative -$393.3 million in Jul-December 2022-23.

The Federal Board of Revenue (FBR) tax collection Rs4,469 billion during July-December 2023-24, which was higher by 30.3 per cent over Rs3,429 billion for the same period of last fiscal year and non-tax revenue witnessed an increase of 116.4 per cent to Rs1,979.1 billion during first six months of the current fiscal year as opposed to Rs814.1 billion for the same period a year before.

The federal PSDP release or utilisation were Rs152.1 billion during July-December 2023-24, five per cent less compared to Rs161.7 billion for the same period of last fiscal year.

The fiscal deficit of Rs2,407.8 billion during July-December 2023-24 was higher by 43 per cent over Rs1,683.5 billion for the same period of last fiscal year while the primary balance was recorded at Rs1,812.2 billion, which is 103.7 per cent higher over Rs889.6 billion for the same period of last fiscal year.

Disbursement of agriculture credit was recorded at Rs1,104.8 billion during July-December 2023-24, which was 31.3 per cent more as compared to Rs842.4 billion for the same period of last fiscal year. However, credit to the private sector was decreased by 35.5 per cent to Rs373.5 billion in the first six months of the ongoing fiscal year from Rs581.2 billion for the same period a year before.

Copyright Business Recorder, 2024

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