ith less imports and a better fiscal policy in place, the economic indicators of the first quarter of the financial year 2019-20 show a visible shrink in foreign trade and fiscal deficits. Presenting a review of the economic performance, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh said the trade deficit has been narrowed by 35 per cent and fiscal deficit by 36 per cent in the first quarter. As per the Pakistan Bureau of Statistics, the trade deficit touched $5.727 billion from July to September, which was $8.79 billion during the corresponding period in 2018.
The credit for the decline goes to shrinking imports, which is a good sign for the economy. An equally worrying sing, however, is no growth in export figures, as despite the government’s all-out efforts exports in the first three months of the ongoing fiscal year have been $5.522 billion, which is just 2.75 per cent more from the last year export data. The top figure in the government, Dr Sheikh, however, seems happy with the marginal recovery in exports and a giant leap in deficit control. The widening deficit remained a challenge for the government in its initial months. The first year ended with a record 8.9 per cent fiscal deficit, the highest one in the history of the country, thanks to low inflow of revenue and high expenditure.
The thing not to be forgotten is that the improved economy’s trickle-down effects have yet to reach the public. Another big boost, which the minister shared, is a 16 per cent increase in revenue collection. In non-tax revenue, the government has collected Rs406 billion, which is 140 per cent more from the previous year. If the trend continues, as per the minister’s expectations, the Rs1,200 billion target can be extended to Rs1,600 billion. Moreover, on the tax collection front, the Federal Board of Revenue is shown strong resolve to enhance the number of documented taxpayers and has refused to budge before anti-documentation traders, mostly backed by different political parties. The FBR has done well to bring the services sector under the tax net.
When the economy is showing signs of recovery, the season of political uncertainty is sure to strike a blow to the overall progress. Arrangements for the Jamiat Ulema-i-Islam-F-led march are in the works. It is the opposition’s right to protest against the government’s policies but a prolonged sit-in may send negative signals to foreign investors. The march poses a challenge to the government’s political wing just when the economic wing has started delivering results. The ruling circles must reach the opposition to start negotiations.