Pakistan’s fiscal deficit soars to 1.03tr in six months 

  • Govt struggles to restrict the budget deficit despite introducing two mini-budgets in last six months
  • Country’s expenditures stood at Rs3.36tr (8.7pc of the GDP) against the revenues of Rs2.33tr

ISLAMABAD: Despite a drastic cut in the development budget and others measures taken through two supplementary budgets, the country has witnessed budget deficit rise to Rs1.03 trillion in the six months (July to December) of the current fiscal year, amounting to 2.7 per cent of GDP.

According to the fiscal operations data of the Ministry of Finance, unlike the Rs1.03 trillion deficits recorded during the first half of 2018-19, a deficit of Rs796 billion (2.2pc of the GDP) was recorded in the same period in 2017-18. The government is struggling to restrict the budget deficit despite introducing two mini-budgets in the last six months.

As per the data, the country’s expenditures stood at Rs3.36 trillion (8.7pc of the GDP) as against the revenues of Rs2.33 trillion during the first half of the ongoing fiscal year.

The government had spent Rs876.7 billion on domestic and foreign debt servicing.

The break-up of interest payment showed that Rs752.098 billion were spent on domestic debt while Rs124.6 billion on 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 depreciation in the value of rupee.

Meanwhile, an amount of Rs479.6 billion was spent on the defence budget. The government had allocated Rs1.1 trillion for defence for the current fiscal year. Besides, the government had spent only Rs160.5 billion on federal developments projects in the first half of the present financial year.

Moreover, the provincial governments had spent Rs167.7 billion on development projects. The documents showed that the government spent Rs186.7 billion on pension payments, Rs68.8 billion on public order and safety affairs, Rs41.9 billion on education, Rs7.2 billion on health and Rs5.9 billion on recreation, culture and religion.

Of the total revenues of Rs2.33 trillion, the government collected around Rs244.6 billion as non-tax revenues during the first half of FY2019. In non-tax revenues, the government had collected Rs5.8 billion as mark-up on public sector entities, Rs30.2 billion as dividend, Rs63.2 billion as profit of State Bank of Pakistan, Rs6.3 billion as defence, Rs9.3 billion as passport fee and Rs6.5 billion as discount remained on crude oil, Rs41.9 billion as royalties on gas and oil, Rs4.5 billion as windfall levy against crude oil and Rs59.2 billion through other sources.

The four provincial governments recorded a budget surplus of Rs273.2 billion during July to December period of FY2019, as their expenditures remained at Rs1.22 trillion as compared to the revenues of Rs1.47 trillion. The government had budgeted provinces to give budget surplus of Rs285.6 billion during the current fiscal.

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Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]
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