• In report on fiscal risks, country’s finance team lists climate change among nearly dozen challenges to budget, medium-term outlook
• Ministry calls for comprehensive measures to address fiscal challenges

ISLAMABAD: The government has highlighted almost a dozen critical risks to next year’s budget and medium-term outlook, including higher interest rates, currency depreciation and greater subsidy requirements, challenging revenue targets, lower than estimated economic growth, unexpected climatic or natural disasters and continuing poor performance of State-Owned Entities (SOEs).

In a written statement of fiscal risks submitted to parliament, required under the Public Finance Management Act 2019, Finance Minister Muhammad Aurangzeb and Secretary Imdadullah Bosal said that a combination of three risks — higher than the estimated interest rate, lower than non-tax revenue collection and higher subsidies — had the most significant impact on fiscal variables across the board.

“The combination of reduced revenues, increased expenditure on subsidies, and potential financing needs due to higher interest rates lead to substantial fiscal deficit and higher debt stock,” it said, underscoring the interconnectedness of fiscal policy and the need for comprehensive approaches to address fiscal challenges.

These risks are critical in view of a record Rs12.97tr revenue target for the FBR for next fiscal year, up 40pc from Rs9.415tr missed target during this besides a mammoth Rs2.5tr funds expected from State Bank profits.

However, both the technocratic and bureaucratic heads of the Ministry of Finance do not see the prevailing political situation and weak coalition government to be of any risk to the fiscal and economic plans of the newly formed federal and provincial governments.

It said any increase in the interest rate on external and........

© Dawn Business