KARACHI - Pakistans fiscal deficit for the financial year 2009-10 (July-June) is reported to have soared by 6.3 per cent of GDP, compared to 5.2 per cent in fiscal year 2008-09 and higher than the revised FY10 fiscal deficit target of 5.1 per cent. The fiscal deficit has reached a record Rs930 billion or Rs14,668 billion of GDP during July-June FY10. The higher growth in the governments fiscal deficit is attributed to low tax revenues, high current expenditures and shortfalls in projected external financing. Similarly, the governments heavy budgetary borrowing by the banking sources to meet inflation-hit public expenditures also swelled the size of fiscal deficit to a great extent in FY10. The Ministry of Finance reported on Tuesday that the government has collected total revenues of Rs2.8 trillion, showing 14.2 per cent increase while expenditure recorded at Rs3.8 trillion with 20.5 per cent surge during the entire course of FY10. The upsurge in total expenditure was mainly due to hike in debt servicing costs and spending on military operations in the north, combined with weak tax collection and other spending. According to official statistics, the tax revenue collected by the FBR stood at Rs1.48 trillion or 10 per cent in Jul-Jun 2009-10. In the same way, non-tax collections added Rs653 billion to total revenues during July-June FY10. The said data further showed, the governments current expenditure amounted to Rs2.4 trillion, depicting 16.3 per cent growth. The government received Rs189 billion worth financing from external sources, Rs750 billion from domestic while Rs436 billion borrowed from non-banking and Rs305 billion borrowed from banking sources during FY10 for budgetary support and commodity operations. An economist believes, financing the deficit has remained a challenge and the government has repeatedly printed money to finance its spending, adding to money supply and fuelling inflation and added critical tax reforms, such as the introduction of VAT - which are needed to reduce the high fiscal deficit and the build-up of debt - have been delayed, raising concerns about inflation and the governments ability to meet its FY11 budget targets. Moreover, fiscal deficit is expected to be higher than the target of 4pc of GDP announced for F11 especially on account of heavy economic losses and devastation caused by recent massive flooding in the certain parts of the country. The SBP has already concerned that containing the fiscal deficit within the announced target of 4 percent of GDP for FY11 already seems challenging. The central bank sees meeting the tax collection target of Rs 1,667 billion would require a 25.6 percent growth or a 0.8 percentage point improvement in the tax to GDP ratio, which seems unlikely without broadening of the tax base and added that low tax revenues of the govt have become a serious concern as it has increased reliance on foreign borrowings to meet rising expenditures. Delays or shortfalls in such inflows could put pressure on external accounts sustainability.