ISLAMABAD - The government is likely to keep budget deficit target at Rs3 trillion (6.6 percent of the GDP) during next fiscal year (FY21).
The country’s budget deficit is expected to widen to Rs3.916 trillion (9.3 percent of the GDP) during current financial year. Budget deficit would swell to Rs3.916 trillion in the current fiscal year (FY20) after coronavirus situation against the early projection of Rs3.2 trillion. However, the government has projected to bring it down to Rs3 trillion in FY21.
The International Monetary Fund (IMF) had made the projections in recent reports on Pakistan’s economy. Tax collection target for Federal Board of Revenue (FBR) has been projected at Rs5.1 trillion for the next fiscal year. The International Monetary Fund (IMF) had recently estimated that the government would miss the tax collection target of Rs5.55 trillion by Rs1.647 trillion during ongoing financial year. The Federal Board of Revenue (FBR) tax collection would record at Rs3.908 trillion after COVID-19 against the initial target of Rs5.55 trillion. The FBR would also miss the revised target of Rs4.8 trillion by Rs892 billion.
The government has projected to keep non-tax collection target at Rs1.150 trillion for the FY21. In expenditures, the government would spend Rs2.865 trillion on interest payment. Domestic interest payment would cost Rs2.508 trillion and interest payment on foreign loans is projected at Rs338 billion. Meanwhile, the defense spending would cost Rs1.331 trillion in FY21 as compared to revised Rs1.197 trillion of the outgoing year. However, spending on Public Sector Development Programme (PSDP) is projected at Rs1.280 trillion in FY21 as compared to Rs949 billion of the FY20. The government would spend Rs303 billion on subsidies in next year.
The IMF stated that the government’s overall debt, including its debt towards the IMF, will also surge to 85 per cent in comparison to the previous projection of 80.4 per cent, including domestic debt of 53.8 per cent and external debt of 31.5 per cent. It is worth mentioning here that the IMF has also approved $1.38 billion under the Rapid Financing Instrument (RFI) apart from the Extended Fund Facility (EFF) to support Pakistan’ economy during the pandemic.