The International Monetary Fund’s (IMF) loan programme worth $6 billion would support Pakistan to achieve 5% economic growth and collect revenue of over Rs6 trillion in taxes in the current fiscal year 2022.
“I do not think IMF programme is going to impede our 5% growth rate,” Adviser to Prime Minister on Finance and Revenue Shaukat Tarin said while speaking at 18th Annual Excellence Awards organised by CFA Society Pakistan on Friday.
Pakistan may go for 5-5.5% GDP growth, “but I would not like to see 6% this year because it will be damaging for our economy.”
“If we remain within the range of 5%, 5.25% and 5.5%, we will be fine,” he said.
Pakistan has collected Rs230 billion more revenue in taxes than the target. “If we maintain the momentum, we would cross Rs6 trillion mark this year,” he said.
The growth in revenue collection “is not because of imports, sales tax and customs duty. Income tax has grown by 32%.”
“It is across the board growth,” he said.
“Our tax to GDP ratio was around 9.5% last year. This year, it will be around 11.5% and next year, 13.5%.
In three to five years, Pakistan should reach 20%, he said.
If the nation does not reach 20%, it will not be able to achieve sustainable GDP growth of 6-7% (in future),” he said.
There is a concern that current account deficit, which has resurfaced, might damage the economic recovery. “I can assure you the numbers are balanced as of now,” Tarin said.
He assured that the county’s current account deficit remains sustainable at present. The county just needs to assure that “imports do not explode,” he said.
Books are balanced which is why the net international reserves of the State Bank are growing.
Pakistan’s IT export are growing at a rapid pace as they widened 50% last year. They are estimated to grow by 75% this year.
“In five to six years, IT exports would reach around $50 billion and that is how we are going to bridge this gap (current account deficit),” he said.
He projected Pakistan exports to grow to $40 billion this year, including export of services worth $7.5 billion. “The exports would reach $55 billion next year (FY23),” he said.
Exports would be equivalent to 70-80% of imports over the next three to four years, he said.
Published in The Express Tribune, November 6th, 2021.
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