ISLAMABAD - The financial maladies of the cash-starved government would multiply in the months to come due to unlikely foreign inflow of worth $2.1 billion under various heads, lower revenue collection and high power subsidy that would increase the budget deficit of the country, it was learnt on Tuesday.

Sources said that budget deficit would go beyond the target (4.7 per cent of the GDP or Rs 1105 billion) set by the government for the current financial year 2012-2013. The International Monetary Fund (IMF) has also projected in its report that Pakistan’s budget deficit would go to 6.5 per cent of the GDP (Rs 1540 billion) during the ongoing financial year against the government’s target of 4.7 per cent of the GDP (Rs 1105 billion) on the basis on of current policies.

The government has budgeted non-tax collection around $2.1 billion for the ongoing financial year 2012-2013. The government has projected to receive $850 million by auctioning 3G licenses, disbursement of $800 million by Etisalat for privatisation of PTCL and $500 million by introducing Eurobond in the budget 2012-2013. However, with half year gone, there are clear indications that non-tax revenue of $1.6 billion on account of Etisalat and auction of 3G spectrum and introduction of Eurobond would not materialise in the current fiscal year.

On the other hand, the Federal Board of Revenue (FBR) is struggling to achieve the revenue collection target fixed for the current fiscal year. The FBR has so far collected Rs 900 billion in the first six months (July-December) of the current fiscal year 2012-2013 against the projected target of Rs 970 billion, leading to shortfall of around Rs 70 billion. FBR has to collect Rs 246.67 billion every month in next six months to reach the annual target of Rs 2381 billion, which seems challenging for FBR keeping in mind country’s current economic situation. FBR would ask the Finance Ministry to revise down the revenue collection target by Rs 150 billion to Rs 2231 billion from Rs 2381 billion, as FBR faced massive revenue shortfall of around Rs 70 billion during the first half (July-December) of the current fiscal year. The budget deficit will be increased by 0.6 per cent of the GDP if FBR requested finance ministry to reduce the revenue collection target by Rs 150 billion.

Similarly, the budgetary allocation of power subsidies, which was Rs 170 billion, has already been consumed in just six months and subsidies to be required to finance the tariff differential of the second half (January to June) period of the ongoing fiscal year 2013 would increase the budget deficit by around 1.0 percent of the GDP.

According to the media report, the country’s budget deficit for the first half (July to December) period of the ongoing fiscal year 2012-13 has been estimated provisionally on the lower side at 2.4 percent of the gross domestic product (GDP), mainly because of Coalition Support Fund (CSF) arrears released by the United States. Otherwise, it would have been at 3.0 or 3.1 percent of the GDP.

It is worth mentioning here that Pakistan’s budget deficit has remained 6.65 per cent of the GDP on average in last four years (2008-09 to 2011-12) and government never met the target set on the eve of federal budget. Therefore, sources were of the view that budget deficit might once again go to around 6 per cent of the GDP at the end of June 2013.