Govt admits missing fiscal deficit target ISLAMABAD: The government on Wednesday admitted to have missed the budget deficit reduction target for a second consecutive fiscal year in 2015-16.
The government projected to reduce the gap between its income and expenses to 4.3 per cent of gross domestic product in FY16, but it ended up having a deficit of 4.6pc, according to a summary of consolidated figures of federal and provincial budgetary operations released by the finance ministry on Wednesday.
However, the budget deficit was 8.8pc of GDP when the PML-N government came to power in 2013.
In 2015-16, the total revenue stood at Rs4.446 trillion as against the total expenditure Rs5.796tr, indicating a budget deficit of Rs1.35tr, or 4.6pc of GDP. The statistical discrepancy stood at Rs212.01 billion in July-June FY16.
The financing of the budget deficit was bridged through external financing of Rs370.465bn and domestic financing of Rs978.858bn in the preceding fiscal year. Of the domestic financing, the government generated borrowing of Rs787.015bn through banking avenues and Rs191.843bn through non-banking channel.
Pakistan’s budget mainly revolves around three Ds — debt servicing, defence and development.
The break-up of the current expenditure in the outgoing fiscal year shows that servicing of domestic debt consumed Rs1.15tr (3.9pc of GDP) and foreign debt Rs112.56bn (0.4pc of GDP), respectively.
The defence spending reached Rs757.63bn (2.6pc of GDP). The overall development spending of both Centre and provinces stood at Rs1.3tr (4.4pc of GDP).
Both domestic and external debt servicing has outpaced development and defence spending.
The government disbursed only Rs593.39bn for development projects under the Public Sector Development Programme (PSDP) in the previous fiscal year as against the total projected allocation of Rs700bn.
Of these total spending, the federal government spent Rs284.77bn in Punjab for development projects, followed by Rs134.39bn in Sindh, Rs112.83bn in Khyber Pakhtunkhwa and Rs60.43bn in Balochistan. This reflects that maximum share of the PSDP allocations went to projects in Punjab.
In 2015-16, the Centre transferred Rs1.862tr to provinces as share from the federal revenue under the National Finance Commission award. The total revenue the provinces generated on their own stood at Rs283.27bn in the preceding fiscal year.
From the federal revenue, Rs901.45bn was transferred to Punjab, followed by an amount of Rs488.66bn to Sindh, Rs302bn to KP and Rs169.99bn to Balochistan.