The first quarter of the current financial year
(July/Sept. 2002) ended with a positive note strongly indicating that
Pakistan's economy has started picking up. For the first time in decades
the revenue collection, a key indicator in this regard, has met the
quarterly targets while the import export gap has declined more than it
By end September, revenue collection exceeded the
target of 90 billion, The trade deficit-the import export gap —
touched the figure of 240 million dollars against estimate for the year
at $1.2 billion. If we take the yearly target of Rs.460 billion the
revenue collection for the first 3 months should have at Rs.120 billion.
However, the Central Board of Revenue (CBR), while distributing the
targeted amount into four quarter fixed a target of Rs.90 billion for
the first year.
The collection of Rs.9.2 billion during July-Sep.2002
is almost Rs.13 billion higher then Rs.77.5 billion during the same
period last year showing an increase of about 16 per cent.
Expressing this view, Finance Minister Shaukat Aziz
is reported to have said in Karachi that increase in imports reflected
growing demand and higher output of goods and services. A substantial
increase in sales tax showed greater commercial activity. He described
both of them as healthy signs for the country's economy. However, the
gains which the economy has recently made should be consolidated leading
to its full recovery. Its sustainability will need to be carefully
watched in the remaining three quarters of the ongoing financial year
and even beyond that timeframe.
While the external sector has shown noticeable
improvement and the finance minister expects the country's foreign
exchange reserves to reach $10 billion by end June, an all out effort to
meet full year's revenue target of Rs.460 billion will be imperative.
After taking into account the tax collection effort
and its results in July-September period, it is reasonable to believe
that this year's revenue target will be achieved. But, at the same time,
it will be necessary to ensure that this year's target of economic
growth of 4.5 per cent is also fully attained. The linkage between the
two is quite close. The increase in taxes by almost Rs.100 million over
the last couple of years has shown that by expanding the tax base,
reducing the number of SROs and streamlining procedures, the government
has been able to increase its revenue collection. An important element
in this effort will be to accelerate investment which is expected to
reach one billion dollars by the end of the current financial year.
While disclosing that export have increased by 17 per
cent during July/Sept.2002. The Federal Minister for Commerce and
Industry, Abdul Razzak Dawood, expressed the hope that other things
remaining normal, the current financial year's export target of $10.40
billion would be achieved a couple of months before the close of the
year. He was of the view that well-sustained stability in the exchange
rate of Pak rupee, preferably at the current level, in the coming
months, would be a favourable factor in maintaining a predictable growth
rate in exports. But another factor that could influence progress in
Pakistan's exports would be possible changes in the economic scenario in
the world economy and an onset of recession might cause a setback.
In a press interview the Finance Minister said the
country has achieved macro-economic stability and all the macro-economic
indicators showed that the economy was moving in the right direction.
"We have achieved this stability in three years.
Now the economy has a strong base and the first quarter figures for the
current year indicate an upward movement in all vital indicator, he
He said that foreign exchange reserves had always
been vulnerable, and this kept uncertainties prevailing in the economy.
"We always lived hand-to-mouth with rare intervals, but now we are
better placed to absorb exogenous shocks," he added.
He pointed out that the economic growth increased
from 2.6 per cent to 3.6 per cent last year and it was expected to be
4.6 per cent this year ending June 30, 2003, "And, the next
year" he said, "the growth is expected to be more than 5 per
cent. Once the growth crosses the 5 per cent mark, you would see a
decline in poverty".
It needs to be appreciated, the minister said, that
macro-economic stability was achieved despite the shocks the economy had
to suffer and the hurdles it had to face in the last three years,
namely, front loading of IMF programme, restoring credibility with the
donors, water shortage , and oil price hikes.
Advisor foreign exchange and debt management State
Bank of Pakistan, Mr. Zafar M. Sheikh disclosed while participating in a
discussion on TV that the State Bank has decided to liquidate all short
term high cost foreign debts. He said total reserves stood closed to
$8.5 billion which expected to touch the figure of 10 billion by end of
the current fiscal. The rupee dollar parity has narrowed down to Rs.59
per collar in Inter Bank market and almost the same prevailed in the
Zafar Shaikh stressed that the most crucial and key
policy decision was to maintain stability and strength of the exchange
rate under all circumstances. This, he said, would restore confidence in
rupee, and ultimately would lead to its further strength. He cited
instances of when the central bank pumped in dollars in the market to
keep the rupee stable against the dollar during the height of Indopak
tensions to avoid any speculative run on the exchange rate.