Budget 2020-21: Government to provide incentives to hotels , airlines and other sectors affected by COVID-19
The government’s next budget is expected to include a 12 per cent increase in defense spending and will target growth of 2.3 per cent in the 2020-21 fiscal years as Pakistan fights the coronavirus pandemic. The Government is expected to deliver its 2020-21 budgets at a legislative session on Friday, which will be witnessed by just 25 per cent of the legislature owing to the COVID-19 health measures.
“GDP development for 2020-21 is projected at 2.3 per cent with contributions from agriculture (2.9 per cent), manufacturing (0.1 per cent) and services (2.8 per cent),” said the Reuters Planning Commission Working Paper. That forecast is much rosier than the 0.2% contraction projected by the World Bank earlier in June in 2020-21. The multilateral lender sees growth of-2.6 per cent this fiscal year, ending on 30 June, while the government expects a 0.4 per cent contraction.
A recent increase in COVID-19 cases has rendered economists pessimistic about a fast recovery in the South Asian community. PM Imran said on Monday that it was not expected that the outbreak would reach its peak until July or August. The Planning Commission paper projects an average inflation rate of 6.5 per cent in 2020-21, a trade deficit of 7.1 per cent of GDP and a current-account deficit of 1.6 per cent of GDP. Exports and imports are expected to rise at 1.5% and 1.1% respectively. Inflation reached a decade-high 14.56% in January.