ISLAMABAD: The ministry of finance has said that the rising cases of coronavirus may slowdown economic activities and adversely impact revenue collection in second quarter (October – December) of the current fiscal year.
The finance ministry on Friday issued monthly economic November 2020 update and said that fiscal performance for first quarter (July –September) FY 2021 was quite satisfactory, however, challenges still persist due to recent increase in number of corona virus cases.
The government continues to concentrate on expenditures related to COVID, both for economic revival and social relief, so it can build pressure on the expenditure side and increase public spending.
Further, on revenues side, FBR tax collection performed better in the wake of resumed economic activities during the first four months of current fiscal year.
“However, with the increase in COVID infection and related containment measures, slower economic activities in services sectors may slightly impact revenue collection in Q2 FY2021,” the ministry added.
The ministry said that the economy was underway of recovery. The Monthly Economic Indicator (MEI) shows strong growth in the first four months of the current fiscal year. Furthermore, based on current information, no significant deterioration in the balance of trade in goods and services is expected.
Also, the inflow of workers’ remittances remains strong. Therefore, the recovery may preserve external balance. External balance implies the prospect for a stable exchange rate in the near term, which may contribute, in addition to specific government measures, to reduce inflationary pressures.
The ministry said that a major risk to this scenario of economic recovery on a path of external and internal balance, in the upsurge of COVID-19 infections, all over the world and also, to a lesser degree, in Pakistan.
Like government in other parts of the world, Pakistan government is also intended to preserve the health of the people by imposing a number of restrictions in some sectors and areas of the economy.
“The effects on the economic outlook will depend on the intensity and duration of these restrictions. But specific well-designed government policies may soften the economic burden of these necessary restrictions.”
On the other hand, very recent world-wide communications regarding the production of several very successful new vaccines may open the scope for opening a back to normal path in the near future.
“These developments may boost business and consumer confidence and further enhance economic growth,” the ministry said.