The Federal Ministry of Finance has released its monthly economic report for December 2023, highlighting the achievements and challenges of the economy in the first half of the current financial year, reported 24NewsHd TVchannel.
The report claims that economic stability has been achieved and expects further improvement in exports, remittances, inflation, and wheat production in the second half of the fiscal year.
According to the report, the wheat cultivation has exceeded the target by 1.8 percent and the wheat production target of 32.1 million tonnes will be achieved. The report also states that the current account deficit in the first half of the financial year was $831 million, which is significantly lower than the $3.6 billion deficit recorded in the same period last year. The current account recorded a surplus of $379 million in December 2023, reflecting a positive trend in the external sector.
The report attributes the improvement in the current account to the reduction in the trade deficit, which is mainly due to the increase in exports and the decrease in imports. The report says that exports have increased by 21.3 percent on an annual basis, driven by the supply of raw materials to export sectors and the recovery of global demand. Imports fell by 3.6 percent on an annualized basis in December 2023, reflecting a rationalization of import demand and a substitution of domestic production.
The report also predicts a reduction in inflation in the country, which has been a major challenge for the government and the central bank. The report says that inflation is expected to be between 27.5 to 28.5 percent in January 2024, and further reduced to 26.5 to 27.5 percent in February 2024, according to the Finance Ministry's inflation forecast report. In December 2023, the inflation rate reached 29.66 percent, which was mainly driven by food prices.
The report acknowledges that remittances decreased by 6.8 percent in the first half of the current financial year, but expects a rebound in the second half due to seasonal factors and policy measures. The report also highlights the increase in revenue collection by the Federal Board of Revenue (FBR) and non-tax revenue sources. The report says that FBR revenue has increased by 30.3 percent in the current financial year, while non-tax revenue has increased by 116.5 percent.
The report admits that the budget deficit has increased by 43 percent from July to December of this financial year, reaching Rs2408 billion from Rs1683 billion in the same period last year.
The report attributes this increase to higher expenditures on interest payments, subsidies, pensions, and grants. The report says that the government is committed to fiscal consolidation and debt reduction, and will implement reforms to enhance revenue mobilization and expenditure rationalization.
Reporter: Waqas Azeem