A section of media on Wednesday carried
a report contending that the country would be forced to re-enter into IMF
program. The report has portrayed a negative picture of the economy and
completely ignored positive developments.
The spokesman of the Finance
Division offers following comments in response to the report:
The fact that Pakistan’s
economic indicators are positive has been acknowledged internationally.
Recently, ADB has stated that Pakistan enjoys growth despite trade contraction.
The external sector which was under strain in last two years due to falling
exports and declining remittances has now started showing positive and
impressive growth both in exports and remittances. In
August 2017 exports have witnessed a growth of 12.89 percent over the same
period of 2016, while over previous month the exports are higher by 14.41
percent and imports are only 2.42 percent and during July-August, FY2018
exports have registered a growth of 11.80 percent. Similarly, workers' remittances
have shown a growth of 13.18% during July-August, FY2018 and on month on month
basis higher by 26.8 percent in August 2017. These all bode well that pressure
on current account will ease, going forward. The growth in FDI is also on
upward trajectory. During July 2017, FDI posted a stellar growth of 162.8
percent.
With regard to taxation, it is to be noted that the share of direct taxes in
total taxes has increased over the years. In 1990-91 the direct taxes were just
around 20% of total taxes, rose to 31.1 percent in 2004-05, 38.2 percent in
2012-13 and 39.1 percent in 2015-16. In FY 2016-17 the share of direct
taxes reached 40% and it has become the single largest tax collected by FBR.
The government is focused on further increasing the share of direct taxes
through various policy and administrative reforms including broadening of tax
base.
Substantial progress has been made to bring potential taxpayers in the tax net
during the last four years. As a result of these efforts the number of income
tax return filers which was around 766,000 for the tax year 2012 has risen to
1.26 million in the tax year 2016 and would further increase in coming years. The
reforms program has started paying dividends in shape of higher tax revenues,
an efficient, modern, transparent and taxpayers’ friendly revenue organization.
The revenue collection has witnessed a substantial increase during last four
years. The net collection increased from Rs.1,946 billion in 2012-13 to
Rs.3,362 billion in FY 2016-17, registering an overall growth of around 73%. In
absolute terms revenue collection has been increased by Rs.1.4 trillion. The
tax-GDP ratio of the country has reached 12.5 percent in FY 2016-17.
With regard to debt, that PML(N) government borrowed record Rs.10.8 trillion is
incorrect and based on incorrect projections. The actual increase in present
Government’s 4 year tenure is around Rs.6.1 trillion. Even if the year 2018 is
added as projected, the total debt increase in 5 years is
expected to remain around Rs.7.5 trillion until 2018.The statement is only
intended to mislead the general public by propagating increase in total debt by
Rs. 10.8 trillion by the current government which is based on mere projections
and may include PSE debt and other external debt and liabilities as well, which
are not part of total government debt.
Moreover, the contention of large borrowing from external
sources is incorrect. Out of total debt, external debt proportion fell from
21.4 percent of GDP in 2013 to 20.6 percent of GDP in 2017. Against the total
external debt, the largest component is multilateral and bilateral concessional
debt, which constitutes around 85 percent.
External debt sustainability has increased manifold during the tenure of
present government as recent debt sustainability analysis shows that external
debt would remain on a downward trend over the medium term and staying well
below the risk assessment benchmarks. The increased sustainability of external
public debt is also evident from the fact that the 'Share of external loans
maturing within one year' has been reduced from
68.5 percent of official reserves at the end of June 2013 to 31.9 percent at
the end of December 2016 showing improvement in foreign exchange stability and
repayment capacity. The fear expressed in the report that Pakistan would go
back to the IMF for another bailout package is based on a false premise and
incorrectly projected data. There seems to be no need for any international
program including IMF for any bailout considering the debt dynamics have shown
sustainability.
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