ISLAMABAD-Pakistan’s economic indicators have once again shown mixed performance in the first quarter (July to September) of the current fiscal year as compared to the same period of the previous year. Indicators like foreign investment, current account deficit, tax collection, reserves and others have recorded positive growth during the first quarter of the ongoing financial year, according to the data of the ministry of finance. However, the inflation rate has accelerated and foreign remittances have reduced in the period under review.
The current account posted a deficit of $947 million for Jul-Sep FY2024 as against a deficit of $ 2.3 billion last year, largely reflecting an improvement in trade balance. Exports declined by 5.0 percent and reached $7.0 billion ($7.4 billion last year). Imports declined by 23.8 percent reaching $12.5 billion ($16.3 billion last year). Resultantly, the trade deficit was recorded at $5.4 billion as against $8.9 billion last year. During the period under review, exports in services decreased by 0.6 percent to $1,707 million as against $ 1,717 million in the same period last year. The imports in services increased by 18.1 percent to $2,395 million as compared to $ 2,028 million in the same period last year. The trade deficit in services stood at $ 688 million as against $311 million last year.
Total foreign investment during Jul-Sep FY2024 recorded an inflow of $ 412.0 million as against $319.7 million last year. FDI stood at $402.3 million ($349.8 million last year), increasing by 15.0 percent.
According to the data, in Jul-Sep FY2024, workers’ remittances decreased by 19.8 percent to $6.3 billion ($7.9 billion last year). MoM, remittances increased by 5.3 percent in September 2023 ($2.2 billion) as compared to August 2023 ($2.1 billion) amid structural reforms related to exchange companies and consequently convergence between exchange rates in interbank and open market.
Pakistan’s total liquid foreign exchange reserves increased to $ 12.6 billion on October 27, 2023, with SBP’s reserves stood at $7.5 billion and commercial banks’ reserves remained at $5.1 billion. Foreign exchange reserves were at $14.78 billion in the same period of the last year. The net federal revenues witnessed a substantial increase of 54.7 percent, surging to Rs 816.6 billion during Jul-Aug FY2024 from Rs 527.8 billion last year. The revenue performance has been largely attributed to a sharp rise in non-tax collection which escalated from Rs 111.1 billion during July-Aug FY2023 to Rs 282.8 billion during July-Aug FY2024. Higher receipts from petroleum levy, markup (PSEs and others), passport fee, and royalties on oil & gas continued to be the main factors in raising non-tax revenues. Similarly, FBR tax collection grew by 27.5 percent to reach Rs 1207.5 billion during the first two months of the current fiscal year against Rs 947.3 billion last year. The first quarter of FY2024 concluded with a remarkable performance by FBR, as the total collection not only grew by 24.9 percent but also surpassed the target by Rs 64.0 billion. The provisional net collection amounted to Rs 2041.5 billion during Jul-Sep FY2024 against Rs 1633.9 billion last year. Similarly, in the month of September 2023, tax collection exceeded the target by Rs 40.0 billion to reach Rs 834.1 billion against Rs 684.8 billion in September last year. Total expenditures grew by 20.1 percent to Rs 1585.7 billion during Jul-Aug FY2024 against Rs 1320.2 billion last year. The growth in expenditures primarily stemmed from a 38.6 percent increase in current spending which stood at Rs 1450.0 billion in Jul-Aug FY2024 against Rs 1046.2 billion last year. Higher markup payments continued to be the major source of increase in current expenditures, as it grew by 63.5 percent during Jul-Aug FY2024. In contrast, the growth in non-markup spending has been restricted to 7.4 percent. Overall, the fiscal deficit stood at almost the same level of 0.8 percent of GDP in Jul-Aug FY2024 as observed last year. However, the primary balance remained in surplus of Rs 144.8 billion against the deficit of Rs 90.2 billion during the period under review.
During Q1 FY2024, CPI inflation stood at 29.0 percent against 25.1 percent in Q1 FY2023. On MoM basis, it increased by 2.0 percent in September 2023 compared to an increase of 1.7 percent in the previous month. According to Federal Committee on Agricultre (FCA), for Rabi 2023-24, cotton production is provisionally estimated at 11.5 million bales, showing a bumper increase of 126.6 percent in production over the last year. Rice production is estimated at 8.6 million tones, showing an increase of 18.0 percent compared to the last year. Sugarcane & maize production declined by 10.7 percent and 6.1 percent to 78.5 million tonnes and 10.3 million tonnes, respectively, compared to period under review. The FCA has fixed the production target of wheat for Rabi 2023-24 at 32.12 million tonnes on an area of 8.9 million hectares based on satisfactory input situation. The input situation is positive as farm tractors production and sales show a steep growth of 45.0 percent (11,586) and 64.1 percent (12,090), respectively during Jul-Sep FY2024 over the same period last year. During Jul-Sep FY2024, the agriculture credit disbursement stood at Rs 499.3 billion as compared to Rs 383.7 billion last year, an increase of 30.1 percent. During Kharif 2023, urea and DAP offtake stood at 3,322 thousand tonnes (5.9 percent more than Kharif 2022) and 756 thousand tonnes (54.0 percent higher than Kharif 2022), respectively.