Figure fudging?: Budget deficit understated by Rs280b

Budget documents reveal gap between national income and expenses is around Rs1.7 trillion.


Shahbaz Rana June 14, 2014
Budget documents reveal gap between national income and expenses is around Rs1.7 trillion. DESIGN-FAIZAN DAWOOD/FILE

ISLAMABAD:


The federal government has understated the overall budget deficit by as much as Rs280 billion, budget documents have revealed.


According to the documents, the actual gap between national income and expenses stands at around Rs1.7 trillion.

In his budget speech on the floor of the National Assembly, however, Finance Minister Ishaq Dar said the overall budget deficit would be 4.9% of Gross Domestic Product (GDP) or Rs1.424 trillion for the new fiscal year 2014-15, commencing from next month.

The federal government has excluded the implications of other development expenditures worth Rs162 billion and net lending of Rs120 billion while calculating the overall budget deficit, showed the calculations made on the basis of the Budget-in-Brief document.

Dar’s ministry came to 4.9% fiscal deficit figure after assuming that total revenues will be 14.5% of GDP or Rs4.2 trillion against the total expenditure of 19.4% of GDP or Rs5.64 trillion.

Within the total expenditure, it has estimated current expenditures at 15.2% of GDP or Rs4.43 trillion and development expenditures at Rs1.2 trillion or 4.2% of GDP. For the next fiscal year the federal development spending outlay is Rs525 billion while four provinces will spend Rs650 billion.

However, calculations showed that development expenditures were understated by 0.9% of GDP or Rs280 billion.

The same document shows other development expenditures and net lending as part of the total development expenses but while calculating the fiscal deficit the federal government did not show it as part of total national development spending.

Despite repeated attempts, finance ministry spokesman Rana Assad Amin was not available for comments.

Finance ministry sources said projected development spending equivalent to 4.2% of GDP is not consistent with the national development budget outlay approved by the National Economic Council.

While the government has excluded the other development expenditures and net lending from its calculations of the fiscal deficit for the new fiscal year, it has included the same in its estimates for the outgoing fiscal year 2013-14.

The original estimates for the outgoing fiscal year showed that the federal government had projected development spending at 5.1% of GDP. It had come to this figure by adding Rs540 billion federal spending, Rs615 billion provincial spending and Rs171 billion in other development expenditures. Had it not included the other development spending in its calculations, the development spending could have been 4.4% of GDP in the original estimates of the outgoing fiscal.

Since the federal and provincial governments could not spend the announced development budgets, the revised estimates put the development spending equivalent to 4.7% of GDP, which is inclusive of other development spending and net lending.

The federal government is going to spend Rs425 billion against the Rs540 billion budget. The spending by provinces is expected to remain at Rs390 billion, against Rs615 billion. However, the other development spending volume has been shown at Rs289.4 billion, up from Rs171 billion. The federal government showed $1.5 billion (Rs157 billion) grant from Saudi Arabia as other development spending aimed at balancing the books.

It has included Rs89 billion net lending in revised development spending, taking the total development spending at Rs1.193 trillion or 4.7% of GDP.

Published in The Express Tribune, June 14th, 2014.

Our Publications

COMMENTS (2)

ishrat salim | 6 years ago | Reply

PML N govt has done PhD is figure fudging & was exposed by the WB during their last stint.....since the govt is made up of mostly businessmen & industrialists, they know how to play with the figures for tax evasion. Same technique has been employed by them in running of the State....

H.A. Khan | 6 years ago | Reply

Good article. But the fact remains that in a country with extremely low tax base, and high expenditure on defence and debt servicing , from where does the government get funds. The state of tax non compliance is so bad, that out of 1580 FBR officers,1090 had not filed their own Income Tax Returns till 2o May 2014.These Returns were due on 30 October 2013

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ