ISLAMABAD
The government has failed to achieve the fiscal deficit target for the last fiscal year 2016-17 (FY17), which has increased from the budget target of 4.2 per cent to 5 per cent of GDP at the close of last fiscal year, an informed source said.
The government is making efforts to bring it down to 4.5 per cent of GDP or Rs 1.5 trillion. The final figures are being compiled and would be presented to the International Monetary Fund (IMF) which had earlier warned that if the fiscal deficit target was not met, the fund may not negotiate a new stabilisation or support program, the source added.
The source disclosed that despite Finance Minister Ishaq Dar’s claims of not reverting to IMF in near future, the government would have to restart negotiations immediately with the IMF for another stabilisation program.
The government has already assured the international financial institutions that the energy reforms and privatisation of public sector entities would be expedited to reduce the fiscal deficit.
The government has so far not released the data for the last fiscal year.
The finance ministry is holding Federal Board of Revenue (FBR) responsible for decline in tax revenue that is attributed as the main reason for not meeting the fiscal deficit target.
The FBR collected Rs 3.41 trillion in revenue as against the revised target of Rs 3.5 trillion. The original tax collection target was fixed at Rs 3.6 trillion for the FY17.
The government also failed to generate the budgeted amount through privatisation, as controversy around the privatisation of HEC nearly derailed the process.
Objections by opposition and provinces also held up privatisation of PIA, PSM, DISCOs and GENCOs. Even the sale of 4G spectrum contributed less than the budgeted amount.
The finance minister, last week, had directed the ministry officials to compile data for last fiscal year within the first week of the new financial year the source said adding that, the two-time changes of the finance secretaries have created cumbersome continuation issues and uncertain fixing of the responsibility.
However, experts are of the opinion that the government over-spent during the last year to consolidate its hold on to power. They mention that even though it received less than half amount in the gas development surcharge target of Rs 120 billion, still massive spending was made on the hydel, coal and LNG based power projects to complete them before the end of FY17.
It is important to mention that under the IMF programme the government missed the budget deficit target for the last three fiscal years but it remained on the fiscal consolidation path. The government brought down the fiscal deficit from 5.7 per cent of GDP in FY14 to 5.4 per cent of GDP in FY15 and to 4.6 per cent of GDP in FY16.
