ISLAMABAD -The federal government would heavily rely on non-tax revenues and cut on developmental budget to restrict the budget deficit below six percent of the GDP (Rs 1560 billion) after slashing revenue collection target by Rs 200 billion during outgoing financial year.
The incumbent government had agreed with International Monetary Fund (IMF) to restrict budget deficit at less than six percent of the GDP (Rs 1560 billion) by end of June 2014. However, the government had revised the annual revenue collection target by Rs 200 billion to Rs 2275 billion for FY2014 from budgetary target of Rs 2475 billion. Therefore, the economic gurus of the country would depend on non-tax revenues and slashing public sector development programme to cover the revenue shortfall of Rs 200 billion.
“The government has two options, non-tax revenue and cut in PSDP, to control the budget deficit of the country agreed with the IMF”, said eminent economist Dr Ashfaque Hassan Khan while talking to The Nation. He further said that government would utilise the Saudi Arabia’s grant of $1.5 billion (around Rs 150 billion as non-tax revenue during outgoing fiscal year. “The grant worth of $1.5 billion was not mentioned in budget, as Saudi Arabia dropped it from helicopter, out of way”, he added.
Talking further, Dr Khan said that government has other best option available is to further slash the PSDP, as earlier it was reduced to Rs 420 billion from budgetary target of Rs 540 billion. The economist was of the view that government would not release more than Rs 350 billion by the end of June 2014 to keep the budget deficit within the target agreed with IMF. Dr Ashfaque Hassan Khan said that government would achieve the target of budget deficit within FY2014 due to the aforesaid two steps, non-tax revenue and cut in PSDP.
It is worth mentioning here that the government is already heavily relying on non-tax revenues and provincial budget surplus during so far period (July to March) of the outgoing financial year to control budget deficit. The government has successfully restricted budget deficit at 3.1 percent of the GDP (Rs 811.66 billion) during three quarters (July-March) of the outgoing financial year, which was 4.4 percent of the GDP in the corresponding period last year.
According to the latest figures of Finance Ministry released on Monday, the government’s expenditures stood at Rs 3.29 trillion (12.6 percent of the GDP) against revenue of Rs 2.48 trillion (9.5 percent of the GDP). Therefore, the budget deficit was restricted at Rs 811.66 billion (3.1 percent of the GDP) during July-March FY 2014.
The break-up of total revenues Rs 2477.38 billion revealed that government has collected Rs 1786.19 billion as tax revenue and Rs 691.187 billion as non-tax revenue. In non-tax revenue, the government has accumulated Rs 34.65 billion as development surcharge on gas, Rs 59.49 billion as royalty on oil/gas, Rs 20.92 billion as gas infrastructure development cess and Rs 67.715 billion as foreign grants.
Similarly, the break-up of Rs government’s expenditures Rs 3.29 trillion showed that Rs 909.06 billion was spent on interest payment, Rs 451.71 billion spent on defence, Rs 60.054 billion on public orders and safety affairs, Rs 542 million spent on environmental protection, Rs 6.92 billion spent on heath, Rs 45.151 billion on recreation, culture and religion, Rs 45.151 billion on education affairs and services and Rs 1.135 billion on social protection during the first three quarters of current financial year.
According to the figures, the development expenditures and net lending stood at Rs 555.81 billion. The break-up showed that government spent Rs 469.929 billion on development and net lending stood at Rs 85.884 billion. The government spent Rs 469.929 billion of development expenditures, federal public sector development programme (PSDP) expenditures recorded at Rs 193.268 billion, provincial PSDP at Rs 199.703 billion and other development expenditures at Rs 76.96 billion during July-March of the fiscal year 2013-14.
According to figures, the four provincial governments recorded surplus budget of Rs 216.929 billion, as provincial expenditures were recorded at Rs 1031.098 billion against the revenue of Rs 1248.03 billion during first three quarters (July-March) of the current fiscal year. The Punjab province recorded budget surplus of Rs 62.986 billion during July-March period of the year 2013-14, as expenditures were recorded at Rs 486.63 billion against the revenue of Rs 549.617 billion. The Sindh province recorded budget surplus of Rs 58.63 billion, as expenditures province was recorded at Rs 299.49 billion as compared to the revenue of Rs 358.126 billion during period under review.
Meanwhile, the Khyber Pakhtunkhwa province recorded budget surplus of Rs 53.59 billion, as expenditures were recorded at Rs 158.67 billion against the revenue of Rs 212.285 billion. The Balochistan province recorded budget surplus of Rs 41.721 billion. The expenditure of the Balochistan province was recorded at Rs 86.278 billion as compared to revenue of Rs 127.999 billion during period under review.