Global Rice News

Optimistic Economic Signs Amid Continued Challenges

Bringing a dose of uplifting news, Pakistan’s economic sector has shown positive strides in the initial two months of the current financial year. Tax collection, a vital economic indicator, notably surpassed its Rs1,183 billion goal, hitting a total of Rs1,207 billion. One notable highlight is the impressive 41% climb in income tax, rocketing from Rs347 billion to Rs488 billion.

Besides the promising tax performance, the agricultural sector is expected to thrive as well. Major crops in Pakistan are anticipated to witness significant boosts in production. Cotton production, for instance, is projected to more than double, from 5.6 million bales last year to a whopping 12 million bales this year. A similar trend of growth is expected for wheat, with output anticipated to scale over 28 million tons, breaking the previous record of 27.46 million tons in 2020-21.

Among the thriving produce, pakistan rice exports play a crucial role. The rice exporters from Pakistan may achieve a record-breaking level of $3 billion during this financial year, with a notable contribution from white broken rice and basmati rice Pakistan exports. This signifies the importance of rice suppliers in the country’s economy.

Enduring Economic Challenges

Despite these promising signs, Pakistan continues to face pressing economic challenges that threaten its long-term fiscal stability and growth. Firstly, there is a pressing need to bolster foreign exchange reserves. However, the initial two months of this financial year reflected a dip in exports from $4.7 billion to $4.3 billion, translating to an alarming fall of over 6%.

Furthermore, the gas sector is plagued by issues such as shortages, circular debt, and increasing losses. The unchecked surge in government expenditure is another major concern, with the potential to push the budget deficit beyond 7.5%.

Rice Export Scenario

The export image, particularly that of rice exporters in Pakistan, needs immediate attention. Over the last fifteen years, no significant trade policy reforms have been undertaken. Here, the private sector’s role, especially that of rice exporters from Pakistan, becomes prominent. While tariffs have been navigated via schemes like GSP Plus, it is important to push for better market access initiatives and trade policy reforms.

Grappling with Gas Sector Issues

Over 40% of Pakistan’s energy requirements are met through domestic and imported gas. With domestic reserves dwindling rapidly, reliance on imported gas is increasing. Therefore, a sustainable solution to balance demand and supply is crucial. Currently, the gas sector incurs a daily loss of Rs1 billion due to outdated pricing structures.

A slew of urgent measures are needed to mitigate these losses. Transitioning from less efficient practices to more efficient alternatives, adopting a weighted average cost of gas to sell local and imported LNG, and signing more long-term contracts for gas supply are vital steps.

Managing Government Expenditure

The burgeoning government expenditure needs to be kept under check. The latest IMF estimates hint at the possibility of an exceeded budget deficit, escalating from Rs6.9 trillion to Rs7.2 trillion. To counter this, a focus on privatisation to reduce subsidies and better fiscal management need to be implemented.

The writer serves in the Tax and FBR Reforms Task Force and has previously served as Pakistan’s ambassador to WTO and FAO’s representative to the United Nations at Geneva.

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