ISLAMABAD - Pakistan’s budget deficit was recorded at Rs324 billion during first quarter (July-September) of the current fiscal year as against Rs438 billion in the same period of the last year due to robust tax collections and lower expenditure.

In terms of GDP, the overall deficit decreased to 0.9 percent in the first quarter of current financial year as compared to 1.3 percent recorded in the first quarter of last year. Reduced fiscal deficit means lower public debt accumulation which supports alignment to targets defined in the amended Fiscal Responsibility and Debt Limitations Act.

The government had set budget deficit target at Rs1.48 trillion (4.1 percent of the GDP) for the ongoing financial year 2017-18. The government would have to adopt austerity plan and robust tax collection during current fiscal year to restrict budget deficit within target of 4.1 percent of the GDP. The country budget deficit, a gap between expenditures and revenues, had recorded at 5.8 percent of the GDP during last fiscal year (FY2017) as against the target of 3.8 percent of the GDP. The country’s expenditures were recorded at Rs6.8 trillion (21.3 percent of the GDP) as compared to revenues of Rs4.9 trillion (15.5 percent of the GDP), taking the deficit to Rs1.9 trillion, according to the documents of the Ministry of Finance.

Finance Minister Senator Ishaq Dar chaired a meeting at the Ministry of Finance on Monday to review fiscal out turns of the first quarter (July to September) of current fiscal year. The finance secretary presented provisional data on fiscal operations during the meeting, and stated that the first quarter has closed on strong fiscal performance. The finance secretary stated that as per the provisional data, the FBR tax collections remained robust. Total collections of Rs765 billion during July-September 2017 demonstrated growth of over 20 percent as compared to collections in the first quarter of last year. Because of higher tax collections, the amounts transferred to the provinces also increased substantially. As compared to transfers of Rs416 billion last year this year the total transfers have so far reached Rs570 billion, including arrears.

The meeting was informed that on the expenditure side, the federal government maintained strict fiscal discipline. As against total expenditure of Rs914 billion in first quarter last year, the federal government spent Rs894 billion in the first quarter this year. This was despite the fact that increased investments were carried out through the development budget.

Dar expressed satisfaction over the growth in revenue collections by the FBR and appreciated the measures taken to achieve fiscal prudence in the first quarter. The minister reiterated the government’s resolve of continuation on the path of fiscal discipline. He directed officials to ensure achievement of fiscal targets in the remaining three quarters of the current fiscal year.

While commending inflation containment, low interest rates, positive and strong growth in large-scale manufacturing, recent increase in exports and remittances,

Dar stressed on the need to maintain focus on acceleration of economic growth for continued reduction in unemployment and poverty. Senior officials of the Ministry of Finance also attended the meeting.