ISLAMABAD, Pakistan: The International Monetary Fund (IMF) has forecast the gross domestic product (GDP) growth of Pakistan at 4.5 percent for the current fiscal year (2015-16), the highest in last eight years.
The growth is supported by large-scale manufacturing, investment related to the China-Pakistan Economic Corridor, buoyant construction activity, a swift recovery in private sector credit growth, and improvements in the supply of gas and electricity, according to the staff report released after the approval of the IMF’s Executive Board.
The report said that tax collection has also significantly strengthened in the second quarter.
Revenue growth accelerated from 11.6 percent in the first quarter of FY 2015-16 to 23.8 percent in the second quarter and made up most of the first quarter’s shortfall, it added.
Revenue collection has improved and is projected to exceed to 12 percent of GDP in FY 2015-16.
The report observed that Pakistan made significant progress in strengthening revenue mobilization and containing expenditures, bringing the fiscal deficit (excluding grants) down from 8.5 percent of GDP in FY 2012/13 to 5.4 percent in FY 2014/15.
It said, the government aims at reducing the fiscal deficit to 4.3 percent of GDP in FY 2015-16, with a further reduction to 3.5 percent in FY 2016-17, putting public debt on a firmly declining path.
According to the report, the headline inflation has continued to gradually rebound (to 4.0 percent on year-on-year basis in February 2016.
The banking system has remained profitable and well-capitalized. Non-performing loans (NPLs), while still elevated, decreased to 11.4 percent in December 2015. Private sector credit growth has recovered to 8.6 percent in December 2015.
The Fund said the low international oil prices provide a unique opportunity to continue strengthening foreign exchange reserves, but the decline in other commodity prices poses challenges, as these hurt already subdued commodity based exports.