Economy faces serious fiscal risks: ministry

Highlighting fiscal risks at the end of the current fiscal year, the Ministry of Finance (MoF) on Tuesday wished the inflation peaking at 34-36 per cent this month would start descending owing to the ease in international commodity prices that would absorb the negative impact of currency depreciation. “The inflation may remain in the range of 34-36pc for May,” said the ministry in its monthly economic update and outlook, adding that there are certain downside risks to the financial sector towards the end of the current fiscal year. “These risks may emerge due to higher-than-expected expenditures mainly due to rise in debt servicing costs and higher expenditures for the flood rehabilitation activities”, it said. Similarly, on the revenue side, the Federal Board of Revenue (FBR) collection increased by 16.1pc during July-April FY23, however, it remained less than the target. The slowdown in economic activity and import compression explain a substantial portion of the lower-than-expected tax revenue during the review period. Recognising these issues, the government was taking steps to reduce non-productive spending through austerity measures and focus on targeted subsidies.