Investor Presentaiton
Chapter - Macroeconomic Outlook and Challenges
In order to face the challenges posed by the Coronavirus, the Government has developed a comprehensive and holistic response through the
Responsive Investment in Social Protection and Economic Stimulus Framework. It integrates seven critical pillars to help Punjab fight back
health, economic and special protection challenges.
Macroeconomic Outlook
As explained above, the Government had made considerable progress towards resolving the issue of Macroeconomic imbalances. However,
after March 2020 the situation changed drastically as a result of Coronavirus Pandemic and subsequent lockdowns. This resulted in reduction
of Economic output of the country by 0.4% for FY 2019-20 as against a budget projection of 2.4%. Likewise tax collection and fiscal balance
situation deteriorated as shown in the table below. Inflation eased down to single digit as a result of decrease in aggregate demand. Going
forward, the economy is projected to start growing again. The Federal Government has projected real GDP to grow by 2.1% in 2020-21. The
growth should further pick up to 4.5% by 2022-23. Inflation is expected to hover around 6% during next 3 years. The Government is target to
improve its Fiscal balance by increasing FBR tax collection from 9.4% of GDP in FY 2019-20 to 12.6% of GDP. The table below summarizes
the Medium Term Macroeconomic Framework, as projected by Federal Government:
Macroeconomic outlook 2019-20 to 2022-23*
Target for
Items
Budget 2019-20 Revised 2019-20
Budget 2020-21
2021-22
2022-23
=L
lil
Real GDP Growth (%)
2.4
-0.4
2.1
4
4.5
Inflation (%)
11-13
11-12
6.5
6.2
6
FBR Tax Revenue
12.6
9.4
10.9
11.8
12.6
A
Fiscal Balance
-7.1
-9.1
-7.0
-5.6
-4.8
GDP at market prices (Billion PKR)
44,003
41,727
45,567
50,443
55,991
In the above Macroeconomic scenario, the Punjab Budget 2020-21 aims to provide maximum healthcare facilities to fight the Coronavirus
Pandemic. Similarly, the Budget includes Social Protection schemes to protect the poor and vulnerable. Economic stimulus would be another
important priority of the Budget 2020-21. Investments will be made in public infrastructure with the objective of creating greater employment
and to help construction related industries in the Province. No new tax has been suggested in the budget. The rate of taxes has been reduced
for construction sector in line with the vision of the Prime Minister. The Government would further aim to improve business climate in the
Province to help businesses recover from the existing problems. Further details regarding the Budget 2020-21 are provided in the following
chapters.
iAnnual Budget Statement 2020-21, Government of Pakistan
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