ISLAMABAD: Ministry of Finance has informed the Senate that the coronavirus pandemic can result in an estimated Three (3) million people being unemployed and the poverty rate to surge to 33.5 per cent.
In a written reply submitted to the upper house on Friday, the finance ministry warned that the budget deficit will increase to 9.34 per cent due to the ongoing pandemic which has proven to be a setback for businesses around the globe.
The ministry stated that ut of the 3mn estimated who could lose their jobs due to the pandemic, a million from the industrial sector will be unemployed while 2mn people will lose their jobs from the services sector. It added that the rate of unemployment will rise from 24.3 per cent to 33.5 per cent.
“The rupee was also devalued by 7.5 per cent per month due to the coronavirus pandemic from February till March,” the ministry told the lawmakers. It added that the DGP growth before the pandemic was expected to be 3.24 per cent. However, the 0.4 per cent negative growth was recorded in the ongoing fiscal year.
On the other hand, the ministry also said that FBR revenue from April to June would fall between Rs700bn and Rs900bn. It warned that FBR’s tax revenue can decrease to Rs3.9 trillion, adding that the board’s tax target was Rs4.9 trillion.
“The fiscal deficit will increase from 7.5 per cent to 9.5 per cent,” the ministry told the senators in its response, adding that the virus will also hamper the country’s exports which are expected to reduce to $22.22 billion.
Remittances from overseas workers will also be reduced by $2 billion and the budget deficit can increase to 9.4 per cent, said the finance ministry.
Millions could be pushed into unemployment: report
A report published last month had warned that the ongoing health crisis in the country would push millions into unemployment and poverty, Geo News reported.
Due to “a shortfall in revenues; re-prioritizing of expenditures and increase in public spending,” the post-pandemic fiscal deficit could reach as high as 9.4 per cent against an earlier projection of 7.4 per cent, finance ministry documents confirmed.
Shaikh had said that the economy is to likely contract -1 per cent to -1.5 per cent due to losses suffered due to the COVID-19 pandemic.
“We think that right now where we are, it is likely to worsen,” he had said at a webinar.
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