Shared Vision On Economy

As it has become a very challenging task for the government to take the national economy back on track by resolving all the economic problems facing the country, combined efforts of all sides   and sectors are required. The growing gap between the government’s revenue collection and expenditure, and the existing liquidity crunch in the banks and financial institutions (BIFs) have remained major financial issues. An unfastened monetary policy embraced during the COVID-19 pandemic is considered as one of the root causes behind the current economic slump. Rising interest rates because of a shortage of liquidity, low absorbing capacity and growing tendency of spending budget at the end of the fiscal year have also been responsible for the deterioration of the nation's economic health.  Low capital spending has been another reason for the slackness in the circulation of money in the market. The government has taken such financial issues seriously and started working out plans to tackle them in an effective manner. Looking at the nature of these financial problems, it appears that they may be addressed only through adopting reform measures.   

What is upsetting is that the national coffers have reeled from a negative cash balance of Rs. 187 billion in the first nine months of the fiscal year 2022/23. As per the reports of the Financial Comptroller General Office (FCGO), the fiscal deficit amount rose by 133 billion in the initial nine months of the current fiscal year as compared to the previous fiscal year. At the end of 2021/22, the government's reserve fund was at a negative of Rs. 54.74 billion. During the review period, the government made an income of Rs. 809 billion, but its expenditure increased to Rs. 943 billion. The FCGO's records show that the government collected Rs. 635 billion in revenue and got Rs. 11.94 billion in grants. Of the total earnings, it received Rs. 160 billion in domestic and external borrowings. The recurrent expenditure of the government surpassed revenue collection by Rs. 71 billion as its spending only under the heading of recurrent expenditure stood at Rs. 706 billion. This signals a worsening fiscal scenario. 

Bearing this in mind, the federal government has taken some austerity measures. Recently, the government came up with a decision to revoke the projects that had not begun their work by mid-April. The decision is likely to affect numerous new projects for which Rs. 20 billion was invested. Besides, it has decided to cut down the public expenditure because of a significant deficit in revenue collection. In the starting nine months of the current fiscal year, revenue collection stood at about Rs. 350 billion less than the target. The MoF has already shortlisted projects and asked the ministries concerned to forward only high priority projects. It has also called on relevant authorities not to hold seminars and conferences. Besides, it has stopped releasing funds for activities under almost two dozen subheads. 

Against this backdrop, Minister for Finance Dr. Prakash Sharan Mahat has urged every stakeholder to join hands with the government for reviving the ailing economy. Responding to the queries raised by lawmakers in the deliberation over a proposal of urgent public importance on economic improvement tabled at the National Assembly on Wednesday, Dr.  Mahat said that the government's efforts alone would not be adequate to revive the economy. He called for developing a shared perspective of ruling as well as opposition political parties in order to invigorate the economy. According to him, discussions were underway at the leadership level towards charting out a shared vision of all political parties for economic reforms.