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COVID-19 can render 3m unemployed, poverty rate may surge to 33.5pc: MoF

COVID-19 can render 3m unemployed, poverty rate may surge to 33.5pc: MoF

ISLAMABAD: The Ministry of Finance has informed the Senate that the coronavirus pandemic can result in an estimated 3mn people being unemployed and the poverty rate to surge to 33.5 percent.

In a written reply submitted to the upper house on Friday, the finance ministry warned that the budget deficit will increase to 9.34 percent due to the ongoing pandemic which has proven to be a setback for businesses around the globe.

The ministry stated that out of the 3mn estimated who could lose their jobs due to the pandemic, a million from the industrial sector will be unemployed while 2mn people will lose their jobs from the services sector. It added that the rate of unemployment will rise from 24.3% to 33.5%.

“The rupee was also devalued by 7.5% per month due to the coronavirus pandemic from February till March,” the ministry told the lawmakers. It added that the DGP growth before the pandemic was expected to be 3.24%. However, the 0.4% negative growth was recorded in the ongoing fiscal year.

On the other hand, the ministry also said that FBR revenue from April to June would fall between Rs700bn and Rs900bn. It warned that FBR’s tax revenue can decrease to Rs3.9 trillion, adding that the board’s tax target was Rs4.9 trillion.

“The fiscal deficit will increase from 7.5% to 9.5%,” the ministry told the senators in its response, adding that the virus will also hamper the country’s exports which are expected to reduce to $22.22bn.

Remittances from overseas workers will also be reduced by $2 billion and the budget deficit can increase to 9.4%, said the finance ministry.