ISLAMABAD - Pakistan budget deficit is projected to touch highest-ever level of Rs2.39 trillion during ongoing fiscal year 2018-19 despite introducing mini budgets and massively slashing the development budget.

The country’s budget deficit would widen to Rs2.39 trillion in the current financial year, which would be equal to 6.3 percent of the gross domestic product (GDP). The budget deficit would be highest ever by exceeding the previous level of Rs2.24 trillion. The ministry of finance has presented the data in the meeting of National Finance Commission (NFC), which is available with The Nation.

According to the data, the gross revenue receipts are estimated at Rs5.57 trillion in the year 2018-19. The breakup of Rs5.57 trillion revenues showed that Federal Board of Revenue (FBR) would collect Rs4.4 trillion while other revenues are projected at Rs1.15 trillion during the ongoing fiscal year. Under the 7th NFC award, the federal government would have to transfer Rs2.58 trillion to the four provinces. The net revenue receipts left with the federal government would be Rs2.99 trillion after transferring funds to provinces.

On the other hand, the country’s expenditures are projected at Rs5.38 trillion for the ongoing fiscal year. In expenditures, the current expenditures are estimated at Rs4.8 trillion and development budget at Rs575 billion. The government has planned to further cut the Public Sector Development Programme (PSDP) by Rs100 billion during the current financial year.

Earlier, in September 2018, the government revised the development budget to Rs675 billion for the year 2018-19 from the total budgetary allocation of Rs800 billion. However, the federal government has informed the provinces that it would release only Rs575 billion for the development sector.

The government has also estimated that interest payment would cost Rs1.95 trillion. Similarly, the defence expenditures are projected at Rs1.68 trillion including expenditures of defence services, pensions, SPD and special packages during the period under review. The data showed that budget deficit would be Rs2.39 trillion or 6.3 percent of the GDP during the year 2018-2019.

Sources informed The Nation that the rupee devaluation and massive gap in tax collection are resulting into higher budget deficit . The ministry of finance had upward revised the interest payment on foreign loans to Rs1.95 trillion for the year 2018-19. Initially, at the time of budget for current fiscal year, the government had earmarked Rs1.62 trillion for interest payment for the current fiscal year. However, the government would have to pay additional Rs330 billion on interest payment only due to rupee depreciation.

On the other hand, the FBR’s tax collection has gone to Rs191 billion in seven months. The FBR’s provisional collection stands at Rs2,060 billion against the desired target of Rs2,251 billion for the first seven months (July-January) period, indicating a shortfall of Rs191 billion.

The Federal Board of Revenue (FBR) has requested the government to revise downwards the tax collection target.  The government had set Rs4398 billion tax collection target for the current fiscal year.

However, the FBR is struggling to achieve the target despite announcing two supplementary finance bills in last five months.