ISLAMABAD: The Ministry of Finance has estimated a whopping loss of Rs190 billion per day in the wake of the country’s lockdown owing to protests by the opposition party.
These losses accumulated when the FBR suffered a severe blow owing to halted economic activities and witnessed a significant shortfall in achieving the revenue target envisaged for the previous month.
Although the FBR prepared internal estimates that its monthly shortfall for November would be standing at Rs 100 billion maximum in the aftermath of the halting of economic activities for five consecutive days owing to a protest call by the PTI the revenue shortfall further increased and now had gone up to Rs 149 billion.
The FBR collected Rs 4.3 trillion during the first five months of FY2024-25 and faced a shortfall of Rs 338 billion in achieving the desired tax collection. The FBR will have to collect revenues of Rs 1.71 trillion this month (December 2024) to achieve an indicative target of Rs 6.009 trillion by December 31, 2024, under the IMF program. It was a lone situation of the FBR’s tax collection that negatively impacted many factors, including the halting of economic activities because of the protest call.
This revenue shortfall might have far-reaching implications on the fiscal framework agreed upon with the IMF under the $7 billion EFF program. The IMF review mission is expected to visit Islamabad in the second week of February 2025 to hold review parleys based on which the Fund’s Executive Board will approve the next tranche for Pakistan.
The Ministry of Finance, in its report, assessed a whopping loss to the economy to the tune of Rs 190 billion, including Rs 144 billion in nominal Gross Domestic Product (GDP), Rs 16 billion loss in the wake of affected exports due to disruptions, Rs 26 billion in tax collection, and Rs 3 billion owing to declined foreign direct investment on a daily basis.
The Ministry of Finance stated that the country would face losses in achieving the envisaged GDP growth target of 3.5 per cent. It estimated losses to the agriculture sector standing at Rs26 billion, industry Rs20 billion, and the losses in the services sector estimated at Rs66 billion.
The export target of goods during FY 2025 is $32.4 billion, implying almost $89 million per day of export. Assuming 65 per cent of exports will be affected by agitation, $57.9 million, equivalent to Rs16 billion per day loss, will occur in exports.
The ministry stated that the target of the FBR for the current fiscal year is Rs12.97 trillion, approximately Rs36 billion per day. The FBR has to collect approximately 11 per cent of whatever GDP is created.
This agitation will increase federal expenditures, which, along with a shortage in FBR tax collection, will affect the fiscal deficit and hence increase the financing gap, it added. The Finance Ministry stated that in August 2024, the foreign direct investment inflows remained at $296.4 million. At the level of August 2024, the per-day loss is Rs2.6 billion.
