ISLAMABAD - The federal government has no plan to upward revise the budget deficit target for the current fiscal year despite projecting massive shortfall in tax collection as it would depend on non-tax revenue including telecom licenses renewal fee and privatisation of LNG based power plants.
The Federal Board of Revenue (FBR) is facing massive shortfall of Rs165 billion in tax collection during four months (July to October) of the ongoing fiscal year. The FBR had collected Rs1.28 trillion in four months of the year 2019-20 against the target of Rs1.447 trillion.
The ministry of finance and FBR had projected the tax collection shortfall to reach Rs300 billion by the end of current fiscal year.
The government had set challenging tax collection target of Rs5550 billion for the year 2019-20.
Independent economists believed that government could not achieve the target without additional revenue measures after facing massive shortfall in tax collection in four months.
“The government has no plan to revise the budget deficit target or to announce mini budget to meet the tax collection shortfall,” said an official of the ministry of finance.
He said that government had already successfully controlled the budget deficit in the first quarter (July to September) despite facing shortfall in tax collection. The government, he informed, is depending on non-tax collection, which would increase during this year.
Another 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.
Giving breakup, he informed that government had already collected Rs406 billion in first quarter, while an additional Rs338 billion would be collected from telecom sector, Rs200 billion from profit of State Bank of Pakistan (SBP), Rs300 billion from the privatization of two LNG based power plants, Rs120 billion from dividends and interest and Rs250 billion from petroleum development levy.
It is worth mentioning here that the government had controlled the pace of soaring budget deficit in first quarter of the current financial year.
The budget deficit had recorded at Rs476 billion in first quarter of the year 2019-2020, which was Rs738 billion in corresponding period of previous financial year. The non-tax collection had recorded massive growth as it collected Rs406 billion, which helped the government in reducing the budget deficit.
The government 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.