Government borrows Rs 49 billion in three weeks

The federal and provincial governments have borrowed Rs 49 billion for budgetary support from the central bank during the first three weeks of current fiscal year because of shortfall in tax revenue. "The government has failed to achieve the last fiscal year's tax target due to slow economic activities and inconsistent policies," economists said.
The Federal Board of Revenue has received tax receipts of Rs 1,327 billion during FY10 against the full year target of Rs 1,380 billion, posting a shortfall of Rs 53 billion, they said. To meet this shortfall and fulfil the requirement of current expenditure, the federal government borrowed a huge amount during the first three weeks of current fiscal year, they added. They said the government has already estimated some 4 percent fiscal deficit for FY11 and as per government estimates its is facing a deficit of some Rs 40-50 billion per month.
According to the central bank, net government borrowing from banking system stood at Rs 42.502 billion during the first three weeks of current fiscal year as compared to Rs 107.87 billion in same period of FY09, depicting a decline of Rs 65.36 billion. During the first 23 days of current fiscal year, budgetary borrowing from the State Bank of Pakistan by the federal and provincial governments stood at Rs 49.193 billion comprising some Rs 37.05 billion by the federal government and Rs 11.30 billion of provincial government as on July 23, 2010.
However, the budgetary borrowing from the central bank by federal and provincial governments is some 43 percent less than the same period of FY09, as budgetary borrowing stood at Rs 86.507 billion during the first 25 days of FY09. Balochistan government borrowed some Rs 3.88 billion, Punjab Rs 12.54 billion and Sindh government Rs 4.33 billion during the period, while Khyber Pakhtunkhwa government retired some Rs 9.4 billion.
The government budgetary borrowing statistics from banks show a decline during the first 23 days and borrowing form banks has reduced by Rs 6.69 billion as on July 23, 2010 as compared to a borrowing of Rs 21.36 billion on July 25, 2009. Economist said the government is already facing financial crunch due to the rising current expenditure and revenue shortfall, while recently relief activities in the flood effected areas has further enhanced the government's borrowing.
"Less than expenses revenue collection, standstill in privatisation and slow foreign inflows has compelled the government to borrow more for budgetary support from local banking system," they added. Similarly, as per latest statistics, Broad Money (M2) registered a negative growth of 1.98 percent during June 30 to July 23 of FY10.