ISLAMABAD - The government has succeeded in controlling the fiscal deficit during the first seven months of the ongoing fiscal year 2011-2012, as it was recorded at 3.1 per cent of the GDP during July-January period against 3.4 per cent in the same period of last year (2010-2011).

Despite the fact that the government has reduced the fiscal deficit to 3.1 per cent of the GDP during seven months of current fiscal year against 3.4 per cent of last year, there still is a mammoth challenge for the government to restrict it under the revised target of 4.7 per cent of the GDP. The International Monetary Fund (IMF) in its recent report has projected that fiscal deficit could go to seven per cent against the target of 4.7 per cent at the end of June 30.

However, the officials of the Finance Ministry are optimistic that they would achieve the revised target by further controlling the expenditures and increasing the revenue collection in the remaining five months (February-June) of the ongoing financial year. “The federal expenditure was limited to 53 per cent of the budget as against proportionate budget target of 58 per cent, demonstrating federal government’s austerity drive and resulting in the savings of 5 per cent of the budget”, said an official handout which was issued after a meeting chaired by Dr Abdul Hafeez Sheikh, Advisor to Prime Minister on Finance and Revenue. Federal Board of Revenue (FBR) revenues registered a growth of 27 per cent during July-January of 2011-2012 (Rs 975 billion against Rs 770 billion of last year).

The meeting was informed that economic situation was well on track during the first seven months of the current fiscal year, as CPI inflation stood at 10.7 per cent as compared to 14.3 per cent during the corresponding period of the previous financial year. The food inflation dropped from 19.3 per cent to 11.5 per cent during the period under review. Exports increased by 7.2 per cent and foreign remittances registered a growth of 21 per cent, resulting in stability in foreign exchange reserves at $ 16.8 billion.

The total federal development releases during the first seven months of the ongoing financial year amounted to Rs 202 billion including the foreign project aid disbursement of Rs 60 billion. The government is committed to achieve the PSDP annual target of Rs 300 billion, which is an increase of about 30 per cent over the last fiscal year’s actual spending.

The Advisor to Prime Minister on Finance and Economic Affairs has emphasized the importance of continued efforts to maintain fiscal austerity, revenue mobilization reforms and focus on completion of development projects. He also stressed the need to keep vigil on all economic fronts in the face of a possible global recession.

Deputy Chairman Planning Commission Dr Nadeem-ul-Haque, Chairman FBR Mumtaz Haider Rizvi, Secretary Finance Wajid Rana, Secretary Economic Affairs Division (EAD) Dr Waqar Masud Khan and officials of the Finance Ministry attended the meeting.