The fiscal deficit during the first five months (July-November) of the current fiscal year has been contained at the same level of 1.4 percent of GDP as it was recorded in the comparable period last year, the finance ministry said in a report.
According to the monthly Economic Update and Outlook for January 2023, the primary balance improved during July-November (FY2023) and posted a surplus of Rs 511 billion (0.6 percent of GDP) against the deficit of Rs 36 billion (-0.1 percent of GDP) last year.
“The first five months of Current Fiscal Year (CFY) have ended with some developments; containing fiscal deficit and surplus in primary balance due to effective fiscal management,” it says.
According to the report, the private sector credit observed developments in the month of December 2022 as it increased by Rs 458 billion compared to Rs 413.6 billion in December 2021, emanating more credit demand both from working capital and fixed investment.
During July 1 to December 30, FY2023 money supply (M2) showed growth of 2.0 percent (Rs 562.8 billion) compared to growth of 4.3 percent (Rs 1047.3 billion) last year. The current account deficit shrank to US$ 400 million in December 2022 as against US$ 1857 million in the same period last year, largely reflecting an improvement in the trade balance.
Current Account posted a deficit of US$ 3.7 billion for Jul-Dec FY2023 as against a deficit of US$ 9.1 billion last year, mainly due to a contraction in imports.
The report termed fiscal consolidation as the key to saving official reserves and exchange rate stability of the country. It says, the fiscal consolidation may temporarily be costly in terms of growth prospects in the short term. However, long-run prosperity and growth could only be achieved by augmenting the country’s long-term equilibrium growth path by expanding production capacities and productivity
The report says, Pakistan was currently confronted with the challenges like high inflation, low growth, and low levels of official foreign exchange reserves.
The integration of SECP with FBR and other provincial agencies led to the registration of 2,255 firms with FBR for the creation of NTN, 40 companies with EOBI, 41 companies with PESSI/SESSI, and 30 companies with the excise and revenue department.
Foreign investment has been reported in 62 new companies, with foreign investors from Afghanistan, Canada, Chile, China, Egypt, Germany, Iran, Iraq, Jordan, Kenya, Koea South, the Netherlands, Nigeria, Norway, Oman, Singapore, Switzerland, Tanzania, the UK, and the USA.
A major chunk of investment was received from China with 32 companies, Chile and Canada with 3 companies each, Egypt, Germany, Nigeria, Norway, Tanzania, the UK, and the USA with 2 companies each, and 10 companies with other countries.
Additionally, the SECP has launched a special WhatsApp service for taking inquiries. Around 895 WhatsApp inquiries from domestic and international investors about name availability and incorporation were answered during this month, with a 91 percent satisfaction score.
Source: IBP