The government is left with no option but to heavily rely on the domestic borrowings in order to meet the fiscal deficit target set for the ongoing financial year 2011-2012 that would certainly lead to further increase in inflation rate that is already in double digits.
Discussion with different economists revealed that the government has fixed unrealistic revenue collection target of Rs1,952 billion for the current fiscal year, which was based on Rs1,588 billion of the previous year. However, as Federal Board of Revenue (FBR) has failed to achieve previous fiscal year’s revenue collection target of Rs1,588 billion, therefore, the target for financial year 2011-12 looks a challenging task for the tax department.
The economists believe that international financial institutions are already reluctant to give loans without International Monetary Fund (IMF)’s letter of comfort. Therefore, the government has no other option but to rely on borrowings from the banking sector in order to meet the fiscal deficit target during the current financial year.
“Yes, the government will have to borrow from domestic sector including banks to run its expenditures during the present fiscal year”, said renowned economist Dr Ashfaque Hasan Khan while talking to The Nation on Wednesday. He further said that domestic borrowings are much expensive than the foreign ones. Due to heavy domestic borrowings, he said, fiscal space would further reduce as interest payments would increase, he added.
Due to printing of new currency notes, Dr Khan said that inflation will definitely go further up. Talking about the revenue collection figures fudging, he said that it has affected the government’s credibility and added that now IFIs would always doubt our figures.
He dispelled the expectations about reviving the suspended IMF’s standby loan programme for Pakistan wherein the international donor has to release the remaining two tracnhes worth $3.4 billion, as Dr Khan believed that the government not only failed to achieve the revenue collection target but it also failed to take other reforms.
The economist said that Pakistan has to go for fresh IMF programme but with the new economic team. Dr Khan suggested that government should change its economic team, as the current team has lost its credibility due to the figures’ fudging episode of the FBR and IMF might not trust the existing team.
Similarly, other economists also observed that the government would have to depend on the domestic borrowings during the current financial year which would increase the inflation rate that is already in double digits.
Discussion with different economists revealed that the government has fixed unrealistic revenue collection target of Rs1,952 billion for the current fiscal year, which was based on Rs1,588 billion of the previous year. However, as Federal Board of Revenue (FBR) has failed to achieve previous fiscal year’s revenue collection target of Rs1,588 billion, therefore, the target for financial year 2011-12 looks a challenging task for the tax department.
The economists believe that international financial institutions are already reluctant to give loans without International Monetary Fund (IMF)’s letter of comfort. Therefore, the government has no other option but to rely on borrowings from the banking sector in order to meet the fiscal deficit target during the current financial year.
“Yes, the government will have to borrow from domestic sector including banks to run its expenditures during the present fiscal year”, said renowned economist Dr Ashfaque Hasan Khan while talking to The Nation on Wednesday. He further said that domestic borrowings are much expensive than the foreign ones. Due to heavy domestic borrowings, he said, fiscal space would further reduce as interest payments would increase, he added.
Due to printing of new currency notes, Dr Khan said that inflation will definitely go further up. Talking about the revenue collection figures fudging, he said that it has affected the government’s credibility and added that now IFIs would always doubt our figures.
He dispelled the expectations about reviving the suspended IMF’s standby loan programme for Pakistan wherein the international donor has to release the remaining two tracnhes worth $3.4 billion, as Dr Khan believed that the government not only failed to achieve the revenue collection target but it also failed to take other reforms.
The economist said that Pakistan has to go for fresh IMF programme but with the new economic team. Dr Khan suggested that government should change its economic team, as the current team has lost its credibility due to the figures’ fudging episode of the FBR and IMF might not trust the existing team.
Similarly, other economists also observed that the government would have to depend on the domestic borrowings during the current financial year which would increase the inflation rate that is already in double digits.
