Budget deficit at 5.3 per cent in 2010-11

Deficit widened as expected CSF money did not come.

ISLAMABAD:

Budget deficit for fiscal year 2010-11, which ended on June 30, was 5.3 per cent of gross domestic product (GDP), higher than estimated earlier, a finance official said on Wednesday.

Last month, Finance Minister Abdul Hafeez Shaikh projected the deficit for the year at 5.1 per cent of GDP. The budget gap was 6.3 per cent in fiscal 2009-10.

The official, who spoke on condition of anonymity, said the deficit was larger than anticipated because some coalition support fund (CSF) that the ministry had expected by June 30 “did not come in.”

CSF was established by the US to reimburse Pakistan and other countries for their help in fighting extremists. These funds are not officially designated as US foreign aid. Since 2001, the US has provided $8.8 billion to Pakistan under the CSF programme.

During June, the US transferred to Pakistan $190 million for what is called the citizen damage compensation programme. It helps provide assistance to victims of the devastating summer floods of 2010, which caused about $10 billion in damage.

In the fiscal year that began on July 1, Pakistan aims to cap its deficit at four per cent of GDP by decreasing expenditure and broadening tax-to-GDP ratio, which is currently around nine per cent, one of the lowest in the world.

The International Monetary Fund and Pakistani officials are due to meet later this month to discuss the possible release of the sixth tranche of an $11.3 billion bailout programme. The tranche has been delayed since August last year due to slow implementation of fiscal reforms.

Published in The Express Tribune, July 7^th, 2011.