ISLAMABAD: Details of country’s fiscal operations released on Wednesday show debt servicing almost double the expenditures under all other major head, especially defense and development, in total in the current fiscal year.
The country’s debt servicing bill consumed Rs2.573 trillion in the first half (July-Dec) of the current financial year while defense spending stood at Rs0.63 trillion and development expenditure and net lending consumed Rs0.63 trillion. It shows the debt servicing almost double the combined spending on defense and developments as well as net lending.
According to the fiscal operation released by the Ministry of Finance on Wednesday, the fiscal discrepancy suddenly became huge and touched Rs0.315 trillion by the end of the first half while it stood at Rs0.67 trillion in the first quarter (July-September) of the current fiscal year.
The fiscal operation for the first six months showed that the federal government’s total expenditure was booked at Rs4.2 trillion while the current expenditures stood at Rs4.3 trillion, so how it is possible that the current expenditures exceeded the total expenditure of the federal government.
It showed that the Ministry of Finance Budget Wing lacked the capacity and competence to avoid committing blunders in the official release of fiscal operation.
The fiscal operation also demonstrated a very bleak position on the overall fiscal requirements as the total revenues fetched Rs4.69 trillion in the first half of the current fiscal year while total expenditures booked at Rs6.38 trillion, showing a gap of almost Rs2 trillion.
However, the budget deficit stood at Rs1.683 trillion, equivalent to 2 percent of GDP in the first six months of the current fiscal year while Rs0.315 trillion were shown as part of a “statistical discrepancy”.
However, the primary balance has been shown as positive and surplus to the tune of Rs0.889 trillion in the first half of the current fiscal year, equivalent to 1.1 percent of GDP. Under the IMF agreement, the primary balance has been envisaged at Rs153 billion or 0.2 percent of GDP at the start of the current fiscal year. The primary balance, which is considered sacrosanct by the IMF, has so far been shown surplus with a huge margin.
Now the ongoing IMF mission finds out that without taking additional measures, the primary balance will be converted into a deficit in the second half (Jan-June), so the government will have to undertake additional taxation measures and slash the expenditures to keep the primary balance in surplus mode by end of the current financial year ending on June 30, 2023.
The total fetched revenues stood at Rs3.428 trillion by the FBR and Rs0.914 trillion through a collection of Non-Tax Revenues in the first six months of the current fiscal year. Out of the total non-tax revenues, the government fetched Rs177.8 billion, a surplus profit of SBP Rs371 billion, and a surplus profit of PTA Rs32.58 billion.
The fiscal situation has been aggravated by the fact that the total expenditures were booked at Rs6.69 trillion out of which the current expenditure stood at Rs6.06 trillion. The current expenditure of the federal government stood at Rs4.3 trillion while provincial expenditure were standing at Rs1.7 trillion.
The provinces have shown a revenue surplus of Rs101 billion in the first half of the current fiscal year against the total envisaged target of Rs750 billion for the whole financial year. It poses a serious threat to the envisaged overall budget deficit target under the IMF agreement if the provinces remained unable to achieve the revenue surplus for the current financial year.