Tag Archives: GDP

APBF Wants Strong Reforms for External Stability as Budget Deficit Reaches 2.3% of GDP

APBF Wants Strong Reforms for External Stability as Budget Deficit Reaches 2.3% of GDP

admin | January 12, 2018 | category: News

APBF wants strong reforms for external stability as budget deficit reaches 2.3% of GDP. APBF: As the country’s budget deficit has reached 2.3% of Gross Domestic Product during July-Nov of fiscal year 2017-18, the All Pakistan Business Forum has stated that the government is deviating from the path of fiscal discipline mainly due to heavy cost of domestic and foreign debt servicing.

APBF President Ibrahim Qureshi said the figures negate the federal government’s claim of reversing the trend of the last fiscal year when the budget deficit peaked to a record high of Rs. 1.86 trillion.

He said that the budget deficit and the current account deficit have become the biggest challenge for the economy, overshadowing the government’s economic performance in other areas. Because of these twin deficits, there are apprehensions that Pakistan might go back to the IMF for yet another bailout package, APBF leader warned.

He said that government should undertake strong reforms to maintain external stability, ensuring debt sustainability and supporting higher economic growth by containing the budget deficit.

He said the present trend shows that the annual budget deficit target of 4.1% of GDP approved by the parliament in June last year has now become unrealistic in just five months due to rising spending on debt servicing, forcing the country to go for more borrowing from the international market.

According to State bank of Pakistan (SBP), the country’s total external debt servicing stood at $2.09 billion during the first quarter of FY18. On principal side, external debt servicing under public debt stood at over $900 million, some $32 million on Public Sector Enterprises (PSEs) guaranteed debt, $53 million on PSEs non-guaranteed debt and around $ 50 million on private non-guaranteed debt. Around $670 million were paid on account of short-term debt servicing. Debt servicing on account of interest includes over $30 million to the IMF, $8 million to Paris Club and $90 million of multilaterals.

Ibrahim Qureshi said that country’s total external debt servicing exceeded $ 2 billion mark during the first quarter of current fiscal year. The decline in the SBP reserves also reflects lower inflows and higher foreign payments. The overall gap between expenditures and incomes has widened to Rs.826 billion during the July-Nov despite the fact that all provinces showed Rs. 150 billion as cash surplus during this period.

He said that the main reason behind this budget deficit is ballooning debt servicing repayments. The domestic and foreign debt servicing has increased to around Rs627 billion during July through November of the current fiscal year.

APBF chief said that the government’s growing reliance on short-term domestic and foreign borrowings has significantly increased the debt servicing cost. The 7% rupee devaluation during last one year would also increase the government’s cost of external debt servicing.

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Private sector role vital for 7% GDP growth

Private sector role vital for 7% GDP growth

Sumera Saeed | December 16, 2016 | category: News

The All Pakistan Business Forum president Ibrahim Qureshi has said the private sector can play role in investment and job creation to achieve the required 7% GDP growth rate in the country, as the private sector knows the art of making markets work, managing risks and fostering competitiveness and innovation.

The public-private partnerships is critical for inclusive and sustainable economic growth, he said and added the implementation of policies is a key challenge in the country.

Only the private sector can drive long-term value creation for their shareholders and stakeholders by developing business models, systems, processes and production chains that manage the economic, social and environmental dimensions in a balanced manner, Ibrahim Qureshi added.

He said there is a need to introduce reforms in the tax system and new sectors should be brought under tax net. He said smuggling, under invoicing and mis-declaration are big challenges for the local industry.

Terming the present tax system of the Federal Board of Revenue as a big challenge for existing and new businesses, he suggested that the taxpayers need to be honoured with a view to improve revenue collection.

APBF president suggested that the FBR must cautiously exercise enforcement powers against the taxpayers, who are regularly contributing revenue to the national kitty. FBR’s field formations should avoid exercising powers to issue notices, sealing of business premises and attachment of bank accounts on groundless basis.

He said that if enforcement powers are exercised without fulfilment of legal formalities, it would send a negative message to the existing investors as well as discourage the new businesses in all over the country.

What an investor needs is secure environment to achieve his goal and be able to contribute to the economy of the country, which could only be possible if the concerned departments extend their support and cooperation, he added.

Ibrahim Qureshi said the government has achieved some macroeconomic targets during last three years; however, declining exports and widening trade deficit still constitute a big challenge that should be focused by the policymakers.

He said that the rising oil prices in the international market and declining exports are negative signs for the country’s current account balance. However, he was optimistic about China Pakistan Economic Corridor saying the country’s economy is bound to grow faster with the completion of the projects of over $46 billion Chinese investment in Pakistan.

He suggested that the government should introduce reforms especially in the tax system and other sectors should be brought under tax net to achieve 7% growth rate of GDP that is essential of economic stability.