Pakistan’s budget deficit is projected to hit a record high of Rs. 2.39 trillion in the current fiscal year 2018-19.This is expected to increase despite the government launching mini-budgets and cutting the development budget on a large scale.
According to a newspaper report in English, the budget deficit is expected to be extended to Rs. $ 2.39 trillion in the current fiscal year, which would equate to 6.3 percent of gross domestic product (GDP). This is the largest deficit registered so far, exceeding the previous Rs level. 2.24 trillion.
Budget Deficit to Hit Record High of Rs. 2.39 Trillion
According to the data, gross revenue is estimated at Rs. 5.57 billion in the years 2018-19. The rupture of Rs. 5.57 billion revenue showed that Federal Revenue Services (FBR) would increase Rs. 4.4 billion while other revenue is projected at Rs. 1.15 billion in the current fiscal year. Under the seventh prize of the NFC, the federal government would have to transfer Rs. 2.58 billion to the four provinces.
The report indicated that the net income received by the federal government would be Rs. 2.99 billion after transferring funds to provinces. The government has planned to cut the Public Sector Development Program (PSDP) into Rs. 100 billion in the current fiscal year.
In addition, the country’s expenses are projected at Rs. 5.38 billion for the current fiscal year. In expenses, current expenses are estimated at Rs. 4.8 billion and the development budget is Rs. 575 billion said the report.
The government also estimated that interest payments would cost Rs. 1.95 trillion. Similarly, defense costs are projected at Rs. 1.68 trillion, including the cost of defense, pensions, SPD and special packages during the period under review.
According to sources, the devaluation of the rupee and a large gap in tax collection lead to a larger budget deficit. The Ministry of Finance has reviewed interest payments on foreign loans to Rs. 1.95 trillion for the years 2018-19.Regarding the budget for the current fiscal year, the government granted Rs. $ 1.62 trillion for interest payments for the current fiscal year. However, the government will have to pay an additional Rs. 330 billion in interest payments, all thanks to the depreciation of the Rupee.
Earlier, in January 2019, Fitch Solutions said it expected Pakistan’s budget deficit to be 6% in the current fiscal year 2018-19, compared with 5.8% in the previous fiscal year.
Government will probably have to reduce spending in the coming months as it focuses on raising funds from the International Monetary Fund (IMF) under the rescue program due to poor revenue growth, the research agency said.
He warned that widening the current account deficit, currency weakening and foreign exchange reserve depreciation indicate that the current fiscal trend, where spending exceeds revenue growth, is not sustainable.
The preliminary collection of FBR is in Rs. 2,060 billion against the desired target of Rs. 2.25 billion for the first seven months (July-January), indicating a deficit of Rs. 191 billion.
The Federal Revenue Service (FBR) requested the government to reduce the tax collection target. The government has set up an Rs. 4.398 million tax collection targets for the current fiscal year.
However, the FBR is struggling to achieve its goal despite the announcement of two supplementary finance accounts over the past five months.
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