Ministry of Finance has projected 2.4 percent growth for the current fiscal year in the budget documents based on fiscal consolidation agreed with the International Monetary Fund (IMF) under the bailout package. This was stated by former finance minister Dr Hafeez Pasha while talking to Business Recorder on Monday and confirmed by an official of the Ministry of Planning Commission on condition of anonymity.
Pasha said that obviously there is some misunderstanding between Ministry of Planning, Development and Reforms which has projected 4 percent and the Finance Ministry with 2.4 percent growth projection for the current fiscal year. He further said that Ministry of Planning, Development and Reforms has completely ignored IMF and made its own projection of (4pc) while Finance Ministry's projection of (2.4pc) was based on an understanding of fiscal consolidation under the bailout package.
"Finance Ministry has kept the macroeconomic framework agreed with the Fund confidential till July 3, 2019, when the IMF Executive Board will consider Pakistan's request for a bailout package," he added. Pasha said that growth projection (2.4pc) is credible as opposed to (4pc) projected by the Ministry of Planning and claimed by Minister for Planning Development and Reforms Khusro Bakhtiar in the post budget press briefing.
When asked about the possibility of achieving revenue collection of Rs 5.5 trillion with (2.4pc) growth estimate for 2019-20, Pasha responded "forget about the revenue collection target as it is totally unrealistic. The shortfall in tax collected in 2018-19 from the downward revised targets has increased by 150 billion rupees and hence the base line for achieving Rs 5.5 trillion has widening to Rs 1600 billion instead of Rs 1450 billion originally envisaged."
He said that total tax collection for the just closed fiscal year is reported at Rs 3820 billion against downward revised target of Rs 4150 and a growth of 44 percent in revenue would be required to achieve Rs 5555 billion target for this fiscal year. When the entire industry is moving towards strikes in protest against budgetary measures, the question arises from where this revenue would come.
Pasha also pointed out slippages on fiscal side and stated that fiscal deficit for 2018-19 would close at 8.4 percent against 7.2 percent projected in budget documents and announced by Minister for Revenue Hammad Azhar in his budget speech largely because of significant increase in debt servicing due to increase in interest rate.
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