Around three million jobs are expected to be lost in the “initial round” of the novel coronavirus outbreak, the finance ministry told the Senate in a written response submitted on Friday.
Out of the three million jobs, the industrial sector is likely to lose one million and the remaining two million will be lost in the services sector. The Pakistan Institute of Development Economics, the finance ministry said, estimated a loss of 18m jobs in agricultural, services and industrial sectors collectively.
The ministry had submitted a response to a three-part question by Senator Mushtaq Ahmed, who asked about the estimated loss to the economy, increase in budget deficit, debt and dollar value, and the government’s plan to cope with the challenges.
In its answer, the finance ministry also said the proportion of those living in poverty will increase from 24.3 per cent to 33.5pc.
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The fiscal deficit is also expected to rise from the initial target of 7.5pc to 9.4pc of the gross domestic product due to revenue shortfall and an “increase in public spending due to fiscal stimulus package”. The ministry added that the increase in debt burden will depend on the fiscal deficit.
Furthermore, exports may fall to $21-22 billion owing to low commodity prices and decreased economic activity in the United States, European Union, United Kingdom and the Middle East. Before the pandemic, they amounted to $25.5bn.
Remittances are also expected to fall from $23bn to $20-21bn. Federal Board of Revenue may also not be able to achieve its target and tax revenue is expected to fall from Rs4,800bn to Rs3,905bn. Between April and June, the FBR is expected to incur a loss of Rs700-900bn.
The ministry also informed the Senate about the currency value, which depreciated by 7.5pc in March over February. The value of rupee against the dollar in February was Rs154.23 but in March, it decreased to Rs166.70. In April, the value of rupee had increased to Rs160.17 as the “volatility observed in domestic financial and foreign exchange markets […] somewhat subsided”, the finance ministry said.
Rupee value in May fell slightly to Rs163.10 in May, the report addded.
Before the pandemic, GDP growth for fiscal year 2020 was estimated as 3.24pc out of which:
agricultural sector was expected to record a 2.85pc growth
industrial sector was expected to record a 1.95pc growth
services sector was expected to record a 4.04pc growth
However, the year posted a negative growth of 0.4pc out of which industrial sector recorded -2.64pc, agricultural sector 2.67pc and services sector -0.59pc.
The finance ministry also provided details of the relief package of Rs1,240 trillion that was announced “to mitigate the impact of Covid-19 on economy and vulnerable sections of society”.
The economic relief package covers emergency response, relief for citizens and business support, the ministry explained.
‘Want to run PSM in partnership with private sector’
During today’s sitting of the Senate, Minister of Industries Hammad Azhar told senators that the government wished to “run Pakistan Steel Mills in partnership with the private sector”.
He was responding to questions about Economic Coordination Committee’s decision to axe more than 9,000 employees of the PSM with a one-time severance cost of about Rs20bn. The decision was taken on the revised summary of the Ministry of Industries and Production on the basis of an updated “human resource rationalisation plan” in line with the instructions issued by Dr Shaikh on May 13. The previous plan envisaged laying off 8,000 employees with a cost of Rs18.74bn.
In today’s sitting, Azhar blamed the previous governments for PSM’s woeful financial situation, saying that the mill was shut down in 2015 and yet salaries were being paid to employees. The amount being paid in salaries, Azhar said, amounted to Rs35bn.