Pakistan records Rs541.7b budget deficit
ISLAMABAD – Pakistan has recorded a budget deficit of Rs541.7 billion during the first quarter (July to September) of the ongoing fiscal (FY2019) year despite provincial government generated massive surplus and cut in development budget.
The country’s expenditures have stood at Rs1.64 trillion as against the revenues of Rs1.1 trillion during July-September period of FY2019. The budget deficit has recorded at Rs541.7 billion (1.4 percent of the GDP), according to the latest data of ministry of finance. The budget deficit during first quarter of current financial year is higher than the deficit of corresponding period of previous year when it was 1.2 percent of the GDP.
The budget deficit may swell to 6.5 to 7 percent of the GDP if the current trend continues in next three quarters of FY2019. However, the incumbent PTI led government had made the fiscal adjustment of 2.5 percent of GDP in September 2018 to restrict the budget at 5.1 percent of the GDP during FY2019. The government had slashed the Public Sector Development Programme (PSDP) by Rs125 billion to Rs675 billion for the ongoing fiscal year. The reduction of was the part of the mini budget, which was announced by the incumbent government to control the budget deficit. In mini- budget, the government had also taken additional taxation measures worth of Rs178 billion. The government claimed budget deficit otherwise would have swelled to Rs2.9 trillion (7.2 percent of the GDP) as against the budget estimates of Rs1.89 trillion in current fiscal year.
“The impact of mini budget will reflect in the data of second quarter (October to December), as the government implemented the amended Finance Bill 2019 from October,” said an official of the ministry of finance. He was optimistic that government would restrict the deficit at 5.1 percent of the GDP by the end of the ongoing fiscal year.
According to the data, the country’s expenditures were recorded at Rs1.64 trillion (4.3 percent of the GDP). The government had spent Rs507 billion on paying domestic and foreign debt servicing. The break-up of interest payment showed that Rs461.7 billion was spent on domestic debt and Rs45.3 billion of the foreign debt. The government had allocated Rs1.6 trillion for interest payment for the entire current fiscal year. However, the amount could surge due to the sharp rupee depreciation. Dollar value had touched historic level of Rs135 last month.
Meanwhile, an amount Rs219.4 billion was spent on defence budget. The government had allocated Rs1.1 trillion for the defence for the current fiscal year. Meanwhile, the government had spent only Rs50.9 billion on federal developments projects in the first quarter of the present financial year. Meanwhile, the provincial governments had spent Rs55.7 billion on the development projects. The spending on development projects had remained low due to the process of change in government.
The documents showed that the government spent Rs84.7 billion on pension payments, Rs32.7 billion on public order and safety affairs, Rs19.5 billion on education, Rs3.3 billion on health and Rs3.6 billion on recreation, culture and religion.
Of the total revenues of Rs1.1 trillion, the government collected around Rs126.9 billion as non-tax revenues during the first quarter of the FY2019. In non-tax revenues, the government had collected Rs1.15 billion as mark-up on public sector entities, Rs4.5 billion as dividend, Rs50.7 billion as profit of State Bank of Pakistan, Rs2.4 billion as defence, Rs3.3 billion as passport fee and Rs3.1 billion as discount remained on crude oil, Rs23.6 billion as royalties on gas and oil, Rs2.1 billion as windfall levy against crude oil and Rs29 billion through other sources.
The Federal Board of Revenue (FBR) had faced a massive tax collection shortfall of Rs60 billion during July to September period of the year 2018-19. The FBR had targeted a total collection of Rs892 billion for the first quarter of this year. However, the FBR collected Rs832 billion during the period under review. The shortfall of Rs60 billion was one of the reasons behind massive increase in budget deficit.
The four provincial governments recorded budget surplus of Rs246.6 billion during July to September period of FY2019, as their expenditures remained at Rs540.6 billion as compared to the revenues of Rs787.2 billion. The government had budgeted provinces to give budget surplus of Rs285.6 billion during current fiscal year