ISLAMABAD – Pakistan’s budget deficit has swelled to record Rs1.9 trillion (5 percent of GDP) in just nine months due to massive increase in expenditures and shortfall in tax collection.
The country’s expenditures have enhanced to Rs5.51 trillion as compared to the revenues of Rs3.58 trillion during nine months (July to March) of the current fiscal year. The budget deficit was recorded at Rs1.9 trillion (5 percent of the GDP), according to the latest data of ministry of finance. The deficit was only 4.3 percent of the GDP (Rs1.48 trillion) in the same period of previous fiscal year.
The deficit is rapidly enhancing due to the whopping increase in expenditures especially in interest payment. Meanwhile, the government is also facing record shortfall in tax collection, which is another reason behind widening of budget deficit . The incumbent government had introduced two mini budgets and slashed the development budget to control the deficit. Interestingly, the austerity plan announced by Prime Minister Imran Khan has also failed to control the expenditures of the country. The deficit has touched all-time high Rs1.9 trillion in nine months’ period.
The previous PML-N government had estimated budget deficit at 5.1 percent of the GDP for the entire current fiscal year. However, the deficit has already swelled to the budgeted target in only nine months period. A top official of the ministry of finance last month had said that budget deficit would tough Rs2.7 trillion in the current financial year, which would be equal to 7 percent of the gross domestic product (GDP). However, the nine months’ trend showed that budget deficit may go to around Rs3 trillion (7.5 percent of the GDP) by the end of current fiscal year.
Deficit increased due to massive increase in expenditures and shortfall in tax collection
According to the data, the country’s expenditures were recorded at Rs5.51 trillion (14.3 percent of the GDP). The government had spent Rs1.46 trillion on paying domestic and foreign debt servicing. The break-up of interest payment showed that Rs1.28 trillion was spent on domestic debt and Rs182.43 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 has touched historic level of Rs154, which would further increase the interest payment in next three months (April to June) of the ongoing financial year.
Meanwhile, an amount Rs774.71 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 Rs302.45 billion on federal development projects in the first nine months of the present financial year. Meanwhile, the provincial governments had spent Rs276 billion on the development projects. The documents showed that the government spent Rs293.3 billion on pension payments, Rs106.14 billion on public order and safety affairs, Rs69 billion on education, Rs11.05 billion on health and Rs8.4 billion on recreation, culture and religion.
Of the total revenues of Rs3.58 trillion, the government collected around Rs421.6 billion as non-tax revenues during the first nine months of the FY2019. In non-tax revenues, the government had collected Rs14.4 billion as mark-up on public sector entities, Rs30.2 billion as dividend, Rs138.2 billion as profit of State Bank of Pakistan, Rs10.7 billion as defence, Rs16.3 billion as passport fee and Rs10.4 billion as discount remained on crude oil, Rs61.8 billion as royalties on gas and oil, Rs6.1 billion as windfall levy against crude oil and Rs112.5 billion through other sources.
The four provincial governments recorded budget surplus of Rs291.6 billion during July to March period of FY2019, as their expenditures remained at Rs1.91 trillion as compared to the revenues of Rs2.2 trillion. The government had budgeted provinces to give budget surplus of Rs285.6 billion during current fiscal year.
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