New York City: On Thursday Jan 31st, a report was published by the Moody’s Investors Service which said that the mini-budget will be helpful to control the current deficiency of money in Pakistan.
The mini-budget was presented on Jan 23rd by Finance minister Asad Umar, which according to the rating agency places much weight on the improvements in tax administration.
If these measures will be successful, then it will assist the manufacturing sector of the country, help narrow the current account deficit and promote exports and import substitution.
The report predicted, “In fiscal year 2019, the current account deficit will narrow to 4.7% of GDP.”
The rating agency however, said that as the government is currently ignoring new spending cuts or revenue-raising measures, budget deficit will likely remain large. It noted that the large budget deficit will likely undermine government’s credibility which later help to achieve fiscal consolidation.
It stated that it will be difficult for the government to meet its deficit target of 5.1% of GDP. Moody’s further predicted in fiscal year 2019 as revenue growth will possibly be below government projections and deficit will be large, to 6% of GDP.
The ratings agency projected that the current account deficit will narrow to 4.7% of GDP in FY19 and 4.2% in FY20 compared to 6.1% in FY18, however, it will remain sizable and wider than it was in 2013-16 driving the country’s external financing requirements.
It noted that the country is in negotiations with the International Monetary Fund (IMF) over a new programmes. Besides structural reform policies or technical support and assistance on macroeconomic rebalancing, these programmes will provide a stable additional source of external funding.