LAHORE: As many as four to six million people have lost their jobs in Punjab as the province suffered an economic loss to the tune of $3-5 billion owing the novel coronavirus (Covid-19) pandemic, indicate the provincial budget documents.
The documents highlight that Covid-19 has caused a major setback to the national and provincial economies alike. All economic indicators of the country have fallen into the negative zone. Estimates of different multilateral agencies, like the International Monetary Fund (IMF) and the World Bank, show that the real GDP growth rate of the country dropped from 2.4% to minus 1.3-1.5% after the novel coronavirus outbreak during the current fiscal year.
The budget documents show that the fiscal deficit of the country will swell by nearly 2% and hover bet wren 9.2% and 9.5% of the GDP. Estimates show that export growth rate dropped from 5.6% to minus 2.1% due to the pandemic. Remittances were expected to increase 3.4% but they dropped by 4.8% to 6.5%.
The documents underline that the federal and provincial governments have to make concentrated efforts for recovery from the economic setback.
The IMF has already predicted a U-shaped recovery for Pakistan, with economic growth reaching 2% by the end of next financial year, the budget documents indicate.
In initial response the government took emergency steps to provide financial assistance of Rs25 billion to affected population. The efforts, however, are still ongoing and require further support in the fight against the disease and its destructive impacts on the economy and society.
Apart from direct spending on relief and recovery, the government took other initiatives to help support the economy and the fiscal base of the province and provided relief in various provincial taxes of Rs18 billion.
The government has reduced stamp duty rate to 1% in urban areas to provide economic relief of around Rs10 billion. Urban Immovable Property Tax (UIPT) has been waived to provide Rs3.1 billion relief. Electricity duty has been suspended to give relief of Rs2.3 billion. Provincial sales tax on services has been suspended for over 20 sector to grant Rs1.4 billion discount. The Punjab Infrastructure Development Cess has been suspended and professional tax waived to give relief of Rs1 billion and Rs200 million to the citizens, respectively.
As the economic situation of the province is very unstable, budget priorities have been reviewed and aligned with current ground realities.
To create additional fiscal space for health, disaster management and social protection during the next financial year, the government has decided to shift focus to administrative efficiency by setting priorities like improvement in conditions for revival of various sectors of the economy to minimise the impact of unemployment and layoffs with special focus on micro, small and medium enterprises (MSMEs); efforts to increase the provincial revenues by broadening the tax base as per current structures through efficient enforcement by revenue collection departments; implementation of strict austerity measures; efforts for recovery of receivables of Punjab government; and privatisation of companies and assets owned by the province.
However, the budget documents have also exposed the inadequacy of the provincial healthcare system and failure of successive governments in this regard. It highlights that though the provincial government initiated its response to combat the pandemic at quite an early stage, the virus poses a big challenge for the government and policymakers in the lower middle income country, which spends less than 1% of the GDP on health. It points out that the pandemic crippled the healthcare system of even the developed countries within the first couple of weeks.
The documents highlights that there is a huge disparity in the rural and urban healthcare delivery systems.
Published in The Express Tribune, June 18th, 2020.