KARACHI: Pakistan’s budget deficit has climbed to 1.6 per cent of the GDP during the first quarter of FY11 [fiscal year 2010-11] from 1.5 per cent during the corresponding period last year, the Ministry of Finance sources said here Wednesday. According to the ministry, the budget deficit during the period reached Rs276.1 billion from Rs223.7 billion in July-September 2009/10. The total revenue for the period came down to Rs400.1 billion from Rs427 billion, while the total expenditures rose to Rs676.3 billion against Rs650.9 billion.
The size of the GDP for the quarter stood at Rs17.1 trillion. Analysts say that the budget deficit has reached an alarming level and the government should reduce its expenditures. “The budget deficit for the current fiscal year is estimated
at 6.5 per cent, considering the ongoing trend,” said Khurram Shahzad, the head of research at InvestCapital.
The government has agreed with the International Monetary Fund to curtail budget deficit at 4.7 per cent for the ongoing fiscal year, which appeared to be a difficult task for the government. The analysts said that though the tax revenues have increased during the period, but the government had failed to curtail its expenditures and spent only Rs62.7 billion on the development expenditures during the first quarter.
The tax revenue increased to Rs317.2 billion in July-September 2010 from Rs298.8 billion during the corresponding quarter last year. The finance ministry data revealed that the current expenditures reached Rs566.7 billion in which interest payment or debt servicing cost stood at Rs161.5 billion and defence expenditures stood at Rs93.1 billion.
The budget deficit had been met through external and domestic sources in which external finance stood at Rs56.8 billion and domestic finance at Rs219.3 billion. The analysts said that the economic growth was badly affected by the floods during the first quarter, which revised all the indicators downward. The economic growth after the flood catastrophe is estimated at 2.5 per cent for FY11, which was earlier projected at 4.5 per cent.
The analysts also attributed the rise in the fiscal deficit to sharp decline in the profits of the State Bank of Pakistan, which stood at Rs40 billion during the first three months of the current fiscal year against Rs70 billion during the same months last year.
Where analysts stressed the government to curtail expenditure, they also urged that the defence expenditures should be brought down. The defence expenditures during the quarter registered an increase of eight per cent to reach Rs93.1 billion from Rs86.2 Billion.
Input from Agencies