ISLAMABAD (May 05 2009): The revenue target for the current fiscal seems to be an uphill task and could pose a downside risk to the ongoing economic stabilisation programme, said the Ministry of Finance in its Review of Economic Situation for July-March 2008-09 released here on Monday.

According to the economic outlook, the growth target at around 2.5 to three per cent is still achievable on the back of growth in agriculture sector. But the revenue target of Rs 1,250 billion seems a herculean task without the corrective measures in the last quarter and the downside risk to the stabilisation programme may come from the below target revenue collection.

The total revenue collection, quoted by the Ministry for the first eight months was Rs 813.6 billion against the target of Rs 1,250 billion set for the current fiscal. Pakistan macroeconomic environment was affected by the war on terror and deepening global financial crisis, which penetrated the domestic economy through substantial decline in export earnings and slowdown in foreign direct inflows.

The law and order situation, coupled with energy shortage as well as high interest rate, affected large scale manufacturing (LSM), which posted a negative growth of 5.7 per cent. Despite these challenges, the economic growth target of around 2.5 to three per cent is still getable because the real gross domestic product (GDP) growth drew strength from agriculture sector where all indicators are pointing at healthy growth.

On the monetary side, the net domestic assets (NDA) have increased by Rs 307 billion till April 18 as compared to an increase of Rs 627.5 billion for the whole year and net government borrowing recorded an increase of Rs 240.5 billion against Rs 336 billion in the comparable period of last year.

Credit to private sector witnessed a net increase of Rs 55.4 billion during July 1, 2008 to April 18, 2009 as compared to Rs 359.7 billion for the same period of last year. The current trade accounts balance has improved, but there is some slippage on account of current transfers. However, buoyancy in remittances is more than offset by substantial declining trends in inflows through exchange companies.

However, the deficit to the income account widened by 500 million dollars owing to lower receipts, while payments remained stagnant at around four billion dollars. The review in its conclusion said that the economy is geared up and the fiscal target of 4.3 per cent of the GDP and the current account deficit of 5.9 per cent is now within achievable range.

The two extremes in the remittances data like massive growth from the UAE and negative from the US need some assessment because if somebody has lost a job in the UAE, he has to return with retained saving immediately while a person in similar situation in the US can wait for better tomorrow by consuming part of his savings.

It could only be ascertained through last quarter\'s data on external sector as how many impact global financial crises had on Pakistan economy. According to the outlook, the CPI inflation for the ongoing fiscal will remain around 20 per cent with end year inflation around 11 per cent.