Karachi, May 24, 2012 (PPI-OT): Country’s fiscal deficit during the 9MFY12 period has surged to Rs 1.286 trn owing to inadequate budgetary expenditures by the present government.
According to Alfalah Securities Limited, currently, the Fiscal deficit has reached to 6.1% of GDP and is already higher by 51.5% from the budgetary limit of PkRs 849 bn or 4% of GDP set in the Budget FY12. The targeted budget deficit was however revised to 4.7% of GDP after severe calamities caused by floods. Fiscal Data released from the Finance Ministry for the period under review suggests that the tax to GDP ratio has declined to 8.3% of GDP from 8.6% in the same period last year, thus highlighting the failure of government in implementing revenue mobilization measures.
Total revenue during the 9M period witnessed an increase of 16%YoY as it stood at PkRs 1.74 trn against PkRs 1.5 trn in the corresponding period. Out of the total, tax revenue amounted to PkRs 1.37 trn (maintained at 6.5% of GDP) from PkRs 1.117 trn in the corresponding period, showing an increase of 22.65%YoY while non-tax revenue during the period under review dropped to PkR 0.369 trn (dropped to 1.7% of GDP from 2.2% earlier) from PkR 0.379 trn, declining by 2.64%YoY. Total Expenditure improved in terms of a percentage to GDP where it stood at PkR 2.634 trn (12.5% of GDP) from PkRs 2.279 trn earlier (13.2% of GDP). Moreover, the servicing of debt increased slightly to 3% of GDP than the corresponding period’s 2.9%. Alfalah Securities Limited expects the fiscal deficit would widen up to 7% of GDP keeping in view the inability of the government to restrict its rising expenditures and continuous support being given from the banking system to finance the budget deficit.