Deficit at 4.4pc for July to March

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KARACHI: The budget deficit for the July–March 2012-13 period is around Rs1,046 billion, or 4.4 percent of GDP, according to fiscal operation of the first three quarters issued by the ministry of finance on Thursday.


The budget deficit widened sharply during the third quarter of the current fiscal year as compared to 2.6 percent by the end of the second quarter (December 31, 2012).


The budget deficit for the period during the last fiscal year was 4.3 percent, which does not include the one-off payment of Rs391 billion on account of debt consolidation. The inclusion of one-off payment was resulted in the total deficit of 8.5 percent in the last fiscal year, it said.


Economists, however, predicted a lower deficit for the current fiscal year that has been estimated lower than the past year. “The fiscal deficit will remain high at 7.5 percent of the GDP in the fiscal year 2012-13 against the target of 4.7 percent,” said Sayem Ali, economist at Standard and Chartered.


The experts, however, expressed concerns over the financing of the budget deficit, saying that it would result in heavy government borrowing from banks.


During the period July–March 2012-13, budget financing from domestic sources stood at Rs1,050 billion, under which commercial banks contributed Rs856.67 billion during the period.


The document of the ministry of finance revealed that the total expenditures for the period stood at Rs3,171 billion against the total revenue of Rs2,124.85 billion.


The current expenditures for the period increased to Rs2,642 billion, showing an increase of 22.65 percent as compared to Rs2,154 billion in the corresponding quarters of the last fiscal year.


The current expenditures consist of government consumption expenditures, current transfer payments, interest payments, and subsidies.


The federal collection of tax revenue, however, remained stagnant at 6.5 percent of the GDP during the quarters under review. The federal tax collection for the period was Rs1,418 billion against Rs1,314 billion in the same period last fiscal year.


The GDP size for the current fiscal year is provisionally estimated at Rs23,655 billion, which was Rs20,653 in 2011-12.


The State Bank of Pakistan (SBP) in its second quarterly review of Pakistan Economy predicted the budget deficit of around 7.5 percent of GDP.


The SBP said: “Although spending patterns may ease somewhat, the caretaker government, non-discretionary spending could push the fiscal gap to in between 6.5 and 7.5 percent of the GDP for fiscal year 2012-13.”

Courtesy:   The News

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