Pakistan forecasts fiscal deficit of 7% of GDP in FY2021 as coronavirus bitesPakistan forecasts fiscal deficit of 7% of GDP in FY2021 as coronavirus bites
Spread of the coronavirus disease (COVID-19) in Peshawar

ISLAMABAD (Reuters) – Pakistan’s government said on Friday it expected a fiscal deficit of 7% of gross domestic product in the 2020-21 financial year as it announced its annual budget amid a fast-growing coronavirus outbreak.

Minister for Industries Hammad Azhar added that the government had set a GDP growth target of 2.1% for the next fiscal year as he presented the budget in parliament.

“Due to the long lockdown, the closures of the businesses … and maintenance of social distancing, economic activities have diminished, which has brought negative impact on growth rate and investment,” Azhar said.

Azhar acknowledged that it was difficult to predict the economic impact of the pandemic. The government’s targets were rosier than the World Bank’s recent projection that Pakistan would see another year of negative growth at -0.2%.

Despite its challenges, the government set a tax revenue target of 4.9 trillion Pakistani rupees ($29.8 billion), contingent being able to mitigate the effects of the coronavirus outbreak on economic activity, Azhar said.

Pakistan has struggled to contain its epidemic, and the World Health Organization has warned that the acceleration of infections could overwhelm its under-funded healthcare system.

Official statistics showed a record 6,397 new cases and 107 deaths on Thursday, taking the tally to 125,933 cases and 2,463 fatalities.

($1 = 164.2500 Pakistani rupees)

(Reporting by Asif Shahzad and Syed Raza Hassan; Writing by Charlotte Greenfield; Editing by Kevin Liffey)