July-December budget deficit exceeds Rs one trillion

The budget deficit has increased to 2.7 percent of the GDP (or Rs 1,030 billion) during the first six months of current fiscal year (July-December 2018) in spite of Rs 248 billion surplus created by the provinces, according to the Finance Ministry.
A summary of consolidated budgetary operation of the federal and provinces government shows that total revenue collection stood at Rs 2,327 billion during July-December 2018 against the total expenditure of Rs 3,357 billion, Rs 1,030 billion higher to the income. The Federal Board of Revenue's tax collection was Rs 1,795.41 billion during the current fiscal year while non-tax revenue was Rs 244 billion.
The present government announced austerity drive the reduced the current expenditure; however, Rs 3,357 billion current expenditure in the current fiscal year is higher by Rs 175 billion over July-December 2017. The revenue collection of Rs 2,327 billion during July-December 2018 is lower by Rs 57 billion from Rs 2,385 billion for July-December 2017.
Of the total expenditure of Rs 3,357 billion for the first six months of the current fiscal year, current expenditure was Rs 2,984 billion which included Rs 876 billion mark-up payment and Rs 479.5 billion defence spending. The development expenditure and net lending was Rs 369.388 billion while statistical discrepancy of Rs 3.249 billion.
The budget deficit of Rs 1,030 billion was financed through external and domestic borrowing with heavy reliance on bank borrowing. The external borrowing to finance the budget deficit was Rs 218 billion and domestic borrowing remained Rs 812 billion with bank borrowing Rs 577.587 billion and non-bank borrowing Rs 234.357 billion.
The non-tax collection during the first six months of the current fiscal year was recorded at Rs 244 billion with markup of PSEs and other at Rs 5.7 billion, dividend Rs 30 billion, Rs 63 billion surplus profit of State Bank of Pakistan, Rs 42 billion royalties on oil and gas and Rs 59 billion others.
The total revenue collection as percentage of GDP was 6.1 percent during the first six months of the current fiscal year while total expenditure remained 8.7 percent. Tax revenue collection during the period under review was 5.4 percent and non-tax revenue remained 0.6 percent of the GDP.
Current expenditure as percentage of GDP stood at 7.8 percent during the first six months with markup payment 2.3 percent and defence expenditure 1.2 percent. The development expenditure and net lending was 1 percent of the GDP during the first six months of the current fiscal year.