The country's fiscal deficit for the first three months of the fiscal year ending June 2012 was 1.2 percent of gross domestic product, the Finance Ministry said on its website on Friday. A Finance Ministry official had said in October the fiscal deficit for the quarter ended September 30 was a provisional 1.1 percent.
Pakistan expects to contain the deficit for the current fiscal year to 4 percent of GDP, but most analysts expect it to miss this target. The government's deficit for the 2010/11 year which ended in June, was 6.6 percent of GDP, above earlier estimates of 5.3 percent - the target agreed to with the International Monetary Fund.
Massive energy subsidies were one of the reasons for the swelling deficit. Pakistan has so far shown little interest in cutting these, however, as the IMF demanded. In 2008, Pakistan and the IMF agreed on a 3-year loan for $11 billion in exchange for economic reforms.
When Pakistan proved unable to meet some of the conditions, the programme ended on September 30 with around $3 billion undisbursed. Pakistan opted not to seek a new programme. Islamabad has to start repaying the loan in early 2012, which will put more pressure on foreign exchange reserves, analysts say. The current account deficit was $1.6 billion in the July-October period compared with $541 million a year earlier.
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