This statement contains information that has become available since the staff report was circulated to the Executive Board. This information does not alter the thrust of the staff appraisal.
1. Recent fiscal developments broadly confirm staff’s projections. On February 21, 2018, the authorities released data on general government fiscal operations for the second quarter of FY 2017/18 (October–December 2017).1 The fiscal deficit (excluding grants) for the first half of the fiscal year was 2.3 percent of GDP (compared to 2.5 percent of GDP in the first half of FY 2016/17), broadly in line with staff’s projection for the full year. Tax revenue grew by 16 percent y-o-y. Non-interest current expenditure grew by 12 percent y-o-y, unchanged as percent of GDP from the previous year. Development spending increased markedly (25 percent y-o-y).
2. Recently released external sector data for January 2018 also broadly confirm staff’s projections while highlighting risks. In the first seven months of FY 2017/18 (July 2017 through January 2018), the current account deficit reached 2.8 percent of annual GDP. Exports increased by 11 percent y-o-y over this period, and remittances began to recover (3.7 percent y-o-y). However, imports grew by 18.8 percent y-o-y, highlighting risks for a higher current account deficit in FY 2017/18 should import growth not decelerate more in the remaining months of the fiscal year.
Pakistan’s fiscal year runs from July to June.