Islamabad: A local newspaper has reported that the overall budget deficit has touched a new peak of Rs1.864 trillion for financial year (FY) 2016-17.
It seems the austerity and budget deficit reducing policies championed by the IMF during the period of its bailout package to Pakistan have been dropped by the incumbent government as the election year looms.
This record budget deficit figure of Rs1.864t is Rs 654b which forms 2pc of GDP which is much more than the ceiling limit set by the government in last year’s budget.
Rs1.864t is equivalent to 5.8pc of the country’s GDP against the proscribed limit of 3.8pc set by the government. This figure of budget deficit is the highest ever during the 4 year tenure of the incumbent government and it seems unlikely it will meet the target set of 4.1pc for this FY.
To plug this gap of budget deficit, foreign loans worth Rs541b were received by Pakistan and Rs1.22t in domestic funding was received in this given regard.
The gross amount of foreign loans was recorded at Rs1.058t and loans worth Rs544.3b were paid off by getting fresh loans.
And not helping the situation is the ballooning current account deficit which swelled to a record $12.1b during FY 2016-17.
The reason attributed to this Rs1.864t budget deficit were revenue slippages. The forecast target for total expenditure had been set at Rs6.3t in comparison to the actual expenditure of Rs6.8t, resulting in revenue slippage of Rs478b.
All the four provinces instead of reporting a cash surplus of Rs300b posted a cumulative budget deficit of Rs163.2b.
Punjab reported total expenditures of Rs1.15t as opposed to revenues of Rs1.14t resulting in an Rs5b deficit.
Sindh generated total revenues of Rs692.6b against expenditures of Rs754b, resulting in Rs61.5b deficit.
Khyber-Pakhtunkhwa generated total revenues of Rs361.7b against expenditures of Rs436b, resulting in Rs74.9b deficit.
Balochistan generated total revenues of Rs224.3b against expenditures of Rs246.2b, incurring a deficit of Rs21.9b.
After paying out provincial shares, the federal government’s total revenue stood at Rs2.58t against expenditures of Rs4.36t, incurring a deficit of Rs1.778t.