About 3mn jobs likely to be lost due to COVID-19, Senate told

About 3mn jobs likely to be lost due to COVID-19, Senate told

Islamabad (Staff Rweport/Agencies): The Ministry of Finance has informed the Senate that the COVID-19 pandemic can result in an estimated 3 million people being unemployed and the poverty rate to surge to 33.5 percent.

In a written reply submitted a response to a three-part question by Senator Mushtaq Ahmed, who asked about the estimated loss to the economy, increase in budget deficit, debt and dollar value, and the government's plan to cope with the challenges, the ministry warned that the budget deficit will increase to 9.34% 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 fiscal deficit is also expected to rise from the initial target of 7.5pc to 9.4pc of the gross domestic product due to revenue shortfall and an "increase in public spending due to fiscal stimulus package". The ministry added that the increase in debt burden will depend on the fiscal deficit.

Furthermore, exports may fall to $21-22 billion owing to low commodity prices and decreased economic activity in the United States, European Union, United Kingdom and the Middle East. Before the pandemic, they amounted to $25.5bn.

Remittances are also expected to fall from $23bn to $20-21bn. Federal Board of Revenue may also not be able to achieve its target and tax revenue is expected to fall from Rs4,800bn to Rs3,905bn. Between April and June, the FBR is expected to incur a loss of Rs700-900bn.

“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.