Risks to the Pakistani Economy
Brought to you by PRMIA Lahore
Pakistan is a country with a population of over 220 million and has an estimated undocumented economy of over 36%. The economy is running entirely on debt and faces various financial & operational risks which are pushing it towards a possible default.
Economic recovery from the Covid-19 pandemic is expected to be weak despite a reopening of the economy, as return of employment and investments would be gradual given that the financial standing of firms has likely been undermined significantly by a nationwide lockdowns. Fitch forecasts real GDP to grow by 0.8% in FY2020/21 in Pakistan. Current account deficit is expected to widen slightly to 1.7% of GDP in FY2020/21 which will be driven by weaker exports and remittances growth. Budget deficit is expected to narrow to 8.2% of GDP in FY2020/21, from the government's estimate of 9.1% in FY2019/20. Fiscal deficit forecast is expected to be wider than the government's target of 7.0% of GDP as the government's projections for revenue collection are highly optimistic. Pakistan is projected to need US$ 27.8 billion to meet external debt service payments from now up-to June 2023 which includes US$19.4 billion to the IMF, WB, ADB and various CPEC related payments. External debt is estimated to be US$ 111 billion of which 48.4% is owed to bilateral official creditors and 38.1% to multilateral creditors. SBP is expected to maintain its benchmark policy rate at 7.00% for the remainder of FY2020/21. FBR has envisaged an annual tax collection target of Rs 4,963 billion for FY2020/21 against tax collection of Rs 3,997 billion for fiscal year 2019/2020. FBR requires around 20% growth in order to materialize its desired tax collection target by June 30, 2021. IMF doesn’t expect FBR to achieve its desired revenue collection targets and additional revenue measures in the shape of mini budgets through finance bill or Presidential ordinances are on cards.
The webinar will focus on risks for the economy and touch upon topics including low tax collection, SME’s resistance on tax initiatives, real estate sector lending initiatives, startup loans, external debt, IMF program, money laundering, Naya Pakistan Certificates, CPEC, etc.
Syed Shabbar Zaidi
is a Senior Partner A.F. Ferguson & Co. (a member firm of PwC), Former Chairman Federal Board of Revenue, Former Provincial Minister Sindh, Former Chairman South Asian Federation of Accountants, Former President Institute of Chartered Accountants of Pakistan and author of many books including Panama Leaks – a blessing in disguise - offshore assets of Pakistani citizens.
is the Member Global Council PRMIA, Director PPP Consultants, Former Chief Risk Officer commercial bank, Former Executive Manager Ernst & Young (EY) and Visiting Lecturer Bradford University. He is a regular writer in leading international publications and academic journals. He has MBA from Bradford University UK and BSc (Hons) from Middlesex University UK.