External account: PM takes stock of Situation

Finance Division on Monday briefed the caretaker Prime Minister former Justice Nasirul Mulk on broad economic outlook as well as challenges to the balance of payments following a slide in foreign exchange reserves. Sources said that secretary finance briefed the caretaker Prime Minister on broader economic outlook, chairman Federal Board of Revenue briefed him on revenue collection and Economic Affairs Division (EAD) explained about expected finance from development partners and donors.
The meeting said to have held a detailed discussion on debt situation, current account deficit and fiscal deficit as well as inflation and most of the time was consumed on discussion over the country's exports. An official said that chairman FBR informed the caretaker Prime Minister about the measures being taken for broadening of tax base.
An official said major area of concern for the economic managers is upcoming repayments of $2.5 billion loans due in next months and Financial Actions Task Force (FATF) meeting in the ongoing month in Bangkok. An official said that foreign exchange reserves are not sufficient to meet more than a month's imports.
During a briefing on economic indicators, the Prime Minister was told that GDP growth will be around 5.8 percent for the current year, however, external account remained a major problem following high trade deficit. The government has projected 6.2 percent growth for the next fiscal year. Finance Division reportedly acknowledged challenges on external account and of growth in exports but maintained that the situation is now turning around with exports showing growth.
The workers' remittances are expected to reach $20 billion for the current fiscal year and they will provide some buffer to the foreign exchange reserves. Finance Division also briefed the meeting on rapidly increasing country's external debt to around $91 billion and increase in domestic debt to meet the fiscal deficit targets.
The caretaker Prime Minister said that fiscal deficit projected at 5.5 percent for the current fiscal year may be difficult to achieve and consequently reliance on borrowing will increase to meet the deficit. Additionally, some payments may be required to control rising circular debt.