ISLAMABAD - The government has successfully controlled the soaring budget deficit during first quarter (July to September) of the current fiscal year despite facing shortfall in tax collection.
Pakistan’s budget deficit was recorded at Rs286 billion during July to September period of the year 2019-20. In terms of GDP, the country’s budget deficit was recorded at 0.7 percent during the first quarter of the ongoing financial year as compared to 1.4 percent in the same period of last year, the latest data of ministry of finance showed. The country’s expenditures have stood at Rs1.775 trillion as against the revenues of Rs1.489 trillion during July-September period of FY2020. The budget deficit was recorded at Rs286 billion (0.7 percent of the GDP).
The ministry of finance officials said that non-tax revenue has helped the government to control the deficit. Similarly, he said that tax collection has also recorded by 16 percent in the first quarter. He further said that government has also controlled its expenditures, which helped in controlling the budget deficit during July to September period of the current financial year.
According to the latest data, the country’s expenditures were recorded at Rs1.775 trillion (3.9 percent of the GDP). The government had spent Rs571.7 billion on paying domestic and foreign debt servicing. The break-up of interest payment showed that Rs494.04 billion was spent on domestic debt and Rs77.65billion of the foreign debt. The government had allocated Rs2.9 trillion for interest payment for the entire current fiscal year. Meanwhile, an amount Rs242.6 billion was spent on defence budget. The government had allocated Rs1.152 trillion for the defence for the current fiscal year. Meanwhile, the government had spent only Rs71.6 billion on federal developments projects in the first quarter of the present financial year. Meanwhile, the provincial governments had spent Rs70.6 billion on the development projects. The spending on development projects had remained low. The documents showed that the government spent Rs99.3 billion on pension payments, Rs33.34 billion on public order and safety affairs, Rs15.65 billion on education, Rs2.53 billion on health and Rs1.93 billion on recreation, culture and religion.
Of the total revenues of Rs1.149 trillion, the government collected around Rs321.23 billion as non-tax revenues during the first quarter of the FY2020. In non-tax revenues, the government had collected Rs3.31 billion as mark-up on public sector entities, Rs1.73 billion as dividend, Rs185 billion as profit of State Bank of Pakistan, Rs71.85 billion as profit of Pakistan Telecommunication Authority (PTA), Rs2.6 billion as defence, Rs6.23 billion as passport fee and Rs3.7 billion as discount remained on crude oil, Rs23.77 billion as royalties on gas and oil, Rs1.97 billion as windfall levy against crude oil and Rs10.73 billion through other sources.
The Federal Board of Revenue (FBR) had faced a massive tax collection shortfall of Rs107 billion during July to September period of the year 2019-20. The FBR had targeted a total collection of Rs1071 billion for the first quarter of this year. However, the FBR collected Rs964 billion during the period under review. The shortfall in tax collection is increasing with the passage of every month. The FBR has provisionally collected Rs 1,610 billion during five months (July-November) of the current fiscal year against target of Rs 1,828.4 billion, reflecting a shortfall of Rs 218.4 billion. Official said that tax collection shortfall would be met through additional revenue from non-tax sources. The non-tax collection would increase by Rs400 billion to Rs1.6 trillion in the current fiscal year from budgeted Rs1.2 trillion.
The four provincial governments recorded budget surplus of Rs202 billion during July to September period of FY2020, as their expenditures remained at Rs589.1 billion as compared to the revenues of Rs791.1 billion. The government had budgeted provinces to give budget surplus of Rs423 billion during current fiscal year.
It is worth mentioning here that Pakistan had agreed with the International Monetary Fund (IMF) to reduce the budget deficit to 7.2 percent of the GDP (Rs3.15 trillion) in the current fiscal year. Pakistan had agreed with the IMF to bring down the primary deficit to only 0.6% of the GDP or Rs255 billion. Pakistan’s budget deficit had touched all-time high Rs3.44 trillion (8.9 percent of the Gross Domestic Product) in last fiscal year as the PTI led government failed to enhance tax collection and reduce expenditures despite announcing two mini budgets and so-called austerity measures.