Budget deficit remains on lower side at 2.6pc of GDP

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ISLAMABAD - The Coalition Support Fund and provincial budget surplus helped the federal government to restrict countryís budget at Rs 624.655 billion (2.6 per cent of GDP) during July-December of the fiscal year 2012-13. Pakistanís expenditures were recorded at Rs 2086.497 billion (8.8 per cent of GDP) against the revenue of Rs 1461.842 billion (6.2 per cent of GDP), leaving budget deficit at Rs 624.655 billion during the first half (July-December) of the current fiscal year.

Pakistan received $1.8 billion from Untied States under Coalition Support Fund (CSF) in the first six months of the ongoing financial year 2012-2013 and four provincial governments had recorded surplus budget of Rs 142.288 billion. Due to these two factors, countryís budget deficit remained on lower side at 2.6 percent of the gross domestic product (GDP), otherwise, it would have been at 3.0 or 3.1 percent of the GDP.

The government has target to keep budget deficit at 4.7 per cent of the GDP during the ongoing financial year, which is challenging due to unlikely foreign inflow of worth $2.1 billion under various heads, lower revenue collection and high power subsidy. The International Monetary Fund (IMF) recently noted that Pakistanís budget deficit would go to 7.5 per cent of the GDP (Rs 1,624 billion) during the ongoing financial year against the governmentís target of 4.7 per cent of the GDP (Rs 1,110 billion) mainly due to unlikely foreign inflow of worth $2.1 billion under various heads, lower revenue collection and high power subsidy. The State Bank of Pakistan, in monetary policy, noted that government would miss the budget deficit target by wide margin.

The government has budgeted non-tax collection around $2.1 billion for the ongoing financial year 2012-2013. The government has projected to receive $850 million by auctioning 3G licenses, disbursement of $800 million by Etisalat for privatisation of PTCL and $500 million by introducing Eurobond in the budget 2012-2013. However, with more than half year gone, there are clear indications that non-tax revenue of $1.6 billion on account of Etisalat and auction of 3G spectrum and introduction of Eurobond would not materialise in the current fiscal year.

FBR has revised down the revenue collection target to Rs 2231 billion from Rs 2381 billion.† The budget deficit will be increased by 0.6 per cent of the GDP after reduction of revision of revenue collection target. Similarly, the budgetary allocation of power subsidies which was Rs 185 billion have already been consumed in just six months and subsidies to be required to finance the tariff differential of the second half (January to June) period of the ongoing fiscal year 2013 would increase the budget deficit by around 1.0 percent of the GDP, economic experts in the private sector believe.

The break-up of revenue collection of Rs 1461.842 billion revealed that government collected Rs 1012.733 billion as tax revenue and Rs 449.109 billion as non-tax revenue during July-December period of the ongoing fiscal year 2012-13.

The official figures further revealed that total expenditures stood at Rs 1999.928 billion. The expenditure on interest payment was recorded at Rs 552.612 billion in the first six months of the current fiscal year 2012-13, defence expenditure increased to Rs 256.570 billion, public orders and safety affairs cost Rs 33.514 billion and environmental protection cost Rs 283 million during the period under review. The government spent Rs 4.007 billion on heath, Rs 2.538 billion on recreation, culture and religion, Rs 21.637 billion on education affairs and services and Rs 2.581 billion on social protection during the first half of the year 2012-13. The development expenditures were recorded at Rs 277.775 billion.

The governmentís net borrowings to finance the budget deficit stood at Rs 624.655 billion during the first half (July-December) of the current financial year 2012-13. The break-up of Rs 624.655 billion borrowing revealed that Rs 626.062 billion come from banking source and Rs 1.407 billion from non-banking source in July-December period of the 2012-13.

According to figures, the four provincial governments recorded surplus budget of Rs 142.288 billion during the first half of the current fiscal year, as provincial expenditures were recorded at Rs 740.886 billion against their revenue of Rs 598.597 billion during July-December period of 2012-13. The break-up of Rs 598.597 billion expenditures revealed that current expenditures were recorded at Rs 476.134 billion and development expenditures (Public Sector Development Programme) at Rs 122.463 billion during the period under review.

Courtesy: The Nation


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