With Dar gone, govt revises its budget deficit upwards

Gap stands at Rs431 billion, 33% higher than Rs324 billion reported earlier


Shahbaz Rana November 29, 2017
Ishaq Dar. PHOTO: FILE

ISLAMABAD: After raising false hopes of fiscal discipline, the federal government on Tuesday admitted that budget deficit in the first quarter of current fiscal year actually stood at Rs431 billion, higher by one-third than the amount announced last month.

The admission came after Prime Minister Shahid Khaqan Abbasi took back the portfolio of finance minister from Ishaq Dar last week.

“Based on actual data, the overall fiscal deficit for July-September 2017 has been worked out at 1.2% of gross domestic product (Rs431 billion),” said the Ministry of Finance in a statement.

On October 9, the ministry had sparked surprise by claiming that the budget deficit in the first quarter was 0.9% of GDP or Rs324 billion.

The revised 1.2% deficit indicates that like the previous fiscal year the government will miss the annual 4.1% target by a wide margin this year too.

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The new reading is roughly 33% or Rs107 billion higher than the earlier figure. Dar had announced provisional data prematurely, though there were indications that the deficit would be significantly higher.

The Establishment Division also notified on Tuesday that Finance Secretary Shahid Mahmood would retire on January 6, 2018 after reaching the age of superannuation.

While deviating from the practice of unveiling a consolidated fiscal operations summary on its website, the finance ministry has released only a press statement.

It has already withheld release of the Debt Risk Management Report apparently because of worsening indicators. The International Monetary Fund has urged the government to release the debt report.

In October, the finance ministry claimed that it had managed to restrict the overall budget deficit to Rs324 billion in the wake of strict controls over federal development spending.

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On Tuesday, the ministry said the revised deficit reading came after finalisation of the debt and fiscal operations data of the government. In the first quarter of previous fiscal year, the gap was calculated at Rs438 billion or 1.3% of GDP. The government closed last year with a record deficit of Rs1.863 trillion.


CREATIVE COMMONS

The ministry said the data of revenue receipts and expenditure in the first quarter of 2017-18 had been received from the Auditor General of Pakistan Revenue, Economic Affairs Division (external financing) and State Bank of Pakistan (bank and non-bank).

Civil accounts containing revenues and expenditures of provincial governments have also been received.

The consolidated federal and provincial revenues amounted to Rs1.025 trillion in the first quarter, reflecting an increase of 18.9% over the same period of previous year. Tax collection by the Federal Board of Revenue amounted to Rs765 billion, a growth of over 20%.

Non-tax receipts came in at only Rs114 billion against Rs111.5 billion last year.

Total expenditure amounted to Rs1.466 trillion, of which current expenditure comprised Rs1.241 trillion, said the finance ministry. Development expenditures by provinces and the federal government stood at Rs221 billion in the Jul-Sep quarter.

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A spokesman for the finance ministry clarified that the deficit reported earlier was based on daily cash balance reports of the State Bank which did not include financing on account of project aid and financing from National Savings Schemes.

Now, the ministry said, debt numbers from relevant agencies such as the Economic Affairs Division, budget wing, national savings and State Bank had been received and consolidated for the first quarter.

It revealed that the provisional gross public debt increased approximately Rs652 billion in the Jul-Sep quarter. This is Rs221 billion higher than the budget deficit in the quarter, but the ministry did not explain the purpose of taking the additional debt.

The increase in domestic debt in the quarter was recorded at Rs520 billion. Similarly, the external debt showed a provisional increase of approximately Rs132 billion, which was primarily driven by losses on account of appreciation of international currencies against the US dollar and depreciation of the rupee against the dollar.

Published in The Express Tribune, November 29th, 2017.

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COMMENTS (6)

Shahid Butt | 6 years ago | Reply Add planning department and implementation departments and institution i deal with them.
candy | 6 years ago | Reply Whether it's budgets, terrorism etc - smoke eventually blows away and the truth is revealed. Many people suspected that Dar was cooking the books - same people suspect that Pakistan secretly supports the Afghan Taliban. Cooking the books and supporting the Afghan Taliban both have consequences. Buckle up.
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