In its latest monthly economic update, the Ministry of Finance has provided insights into the current financial landscape, indicating positive economic developments in the first quarter of the fiscal year.
As per the report, inflation for the ongoing month is projected to fluctuate between 27% and 29%. This relatively low inflation is primarily attributed to reduced petrol and diesel prices as well as the strengthening of the national currency, the rupee.
The report highlights a significant uptick in revenue collection by the Federal Board of Revenue, which registered a notable 25% increase, totaling Rs 2,042 billion.
On the other hand, a critical concern revolves around the mounting interest payments on loans, posing a considerable challenge to financial stability.
Non-tax revenue showed remarkable growth, surging by 114.7% and accumulating Rs 453 billion over the last three months. However, the fiscal deficit expanded by 17.6%, reaching Rs 963 billion.
In terms of balance of payments, the report underscores a substantial 58% reduction in the current account deficit, which amounted to $900 million from July to September. Additionally, foreign direct investment witnessed an upswing in the first quarter of the financial year, with a noteworthy inflow of $402.3 million.
The agriculture sector experienced a significant boost, with a 126% increase in cotton production and a marginal 0.5% growth in large-scale manufacturing. Furthermore, agricultural loans saw a 30% uptick, resulting in disbursement of Rs 499 billion.
However, the report notes a decrease of 19.8% in remittances, amounting to $6.3 billion, and a 5% drop in exports, which totaled $7 billion. Imports, on the other hand, decreased by 23.8%, amounting to $12.5 billion from July to September.
Despite these challenges, the report anticipates better economic growth for the ongoing financial year, driven by accelerated economic activities. It emphasizes the importance of addressing macroeconomic imbalances for sustainable growth.
Moreover, the report mentions a decline in global food prices, encompassing dairy products, edible oil, and meat, while highlighting an increase in certain commodity prices, including sugar and cereals.
The exchange rate of the US Dollar also saw fluctuations, with an increase of Rs 77, rising from Rs 220 to Rs 279. The policy rate experienced an upward trend, reaching a high of 22% within a year, up from 15%.
This comprehensive report paints a dynamic picture of the current economic landscape, underlining both opportunities and challenges that will shape the financial year ahead.
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