ISLAMABAD - Pakistan’s budget deficit has swelled to Rs1.48 trillion during nine months (July to March) of the ongoing fiscal year mainly due to massive interest payment and on defence services.

The country’s expenditures were recorded at Rs5. 13 trillion (14.9 percent of the GDP) as compared to revenues of Rs3.65 trillion (10.6 percent of the GDP), taking the deficit to Rs1.48 trillion (4.3 percent of the GDP), according to the data of Ministry of Finance. The budget deficit is widening due to the massive increase in expenditures especially in interest payment.

The government had revised the budget deficit target to 5.5 percent of the GDP. Earlier, the government had set budget deficit target at Rs1.48 trillion (4.1 percent of the GDP) for the ongoing financial year 2017-18. However, keeping in view the nine months trend, the budget deficit could go beyond 6 percent of the GDP (above Rs2 trillion) by the end of June this year.

The data showed that government had borrowed massively to meet the deficit. Financing of budget deficit of Rs1.48 trillion of the nine months was bridged through borrowing Rs956.6 billion from the internal sources and Rs524.3 billion from foreign lenders.

One of the main reasons of increase in the budget deficit was the massive payment of Rs1.118 trillion on domestic and foreign debt servicing during July-March period. Debt payment is rapidly increasing every year as the successive governments had taken massive loans from the international financial institutions as well as from local banks. The government had allocated Rs1363 billion for the interest payment during the whole fiscal year. Later, the interest payment amount was upward revised to Rs1.526 trillion due to rupee depreciation and other reasons.

Debt payment always remained on top in consuming budget among three Ds (debt servicing, defence and development). Interest payment had once again gone beyond than the spending on defence and development during first quarter of the current fiscal year.

The government had spent Rs623.8 billion on defence of the country during nine months of the current fiscal year. The government had allocated Rs920 billion for the defence services for the outgoing fiscal year, which later was revised to Rs999 billion. The lowest spending among three Ds were on federal development, which remained at Rs402.8 billion during July-March period of the ongoing financial year. The documents showed the government spent Rs245 billion on pension payments, Rs94 billion on public order and safety affairs, Rs64.5 billion on education, Rs10.7 billion on health sector and Rs7.5 billion on recreation, culture and religion.

On the other hand, of the total revenues of Rs3.7 trillion, the government has collected around Rs573.8 billion as non-tax revenues during the first nine months of the present fiscal year. In non-tax revenues, the government collected Rs21.67 billion as markup on public sector entities, Rs33.6 billion as dividend, Rs143.2 billion as profit of State Bank of Pakistan, Rs9.3 billion as defence, Rs11.9 billion as passport fee and Rs6.5 billion as discount remained on crude oil, Rs42.4 billion as royalties on gas and oil, Rs2.28 billion as windfall levy against crude oil and Rs293 billion through other sources.

The four provincial governments recorded budget surplus of Rs174.2 billion during July-March of the current fiscal year as their expenditures remained at Rs2010.4 billion as compared to the revenues of Rs2184.6 billion.