According to the report released by SBP, Fiscal Year (FY14) was a better year for the macro-economy. Report told that most prominent developments during the year were tangible improvement in the country’s foreign exchange reserves; the unprecedented appreciation of the PKR in early-March; the reduction in the fiscal deficit; the lower than expected inflation rate; the improvement in private sector credit; and the relatively contained current account deficit.
According to the Report, although inflation increased marginally in FY14 to 8.6 percent, it was significantly milder than SBP’s initial projection.
The SBP views the fiscal deficit at 5.5 percent of GDP was significantly lower than the FY14 target of 6.5 percent and when compared to trends in the past three years.
The report stated that with the start of a new IMF program, external inflows from other international financial institutions (IFIs) also began after a gap of almost three years, which helped to stem the gradual depletion of SBP’s foreign exchange reserves.
During FY14, the worker remittances were higher by US$ 1.9 billion than last year, exhibiting an increase of 13.8 percent. The strong growth in remittances partially offset the impact of a rise in trade deficit and other factors on the current account balance, said report.
Meanwhile, the report observes that public sector enterprises (PSEs) continue to be a fiscal burden on the federal government.
On the other hands, many of the targets were missed during the FY14 as real GDP growth was recorded at 4.1 percent against the target of 4.4 percent, similarly agriculture at 2.1 percent against target of 3.8 percent, services 4.3 percent against 4.6 percent while inflation was 8.6 percent against 8 percent.