July-January fiscal deficit restricted to three percent of GDP

The government has succeeded in containing the fiscal deficit at 3 percent of Gross Domestic Product (GDP) during the first seven months of current fiscal year due to tight fiscal management, it was learnt. Sources in the Finance Ministry revealed that during the first seven months disbursements to defence stood at 50 percent against the budgetary target of 54 percent.
Informed sources within the Finance Ministry revealed that expenditure during the first seven months of the ongoing fiscal year (July-January) stood at Rs 1,345 billion, 52 percent of the total current expenditure of Rs 2,767 billion for the entire fiscal year. The budgetary target for the first seven months was 58 percent or Rs 1,605 billion which shows a considerable saving on the expenditure side.
Total collection of the Federal Board of Revenue stood around Rs 970 billion during the first seven months of the current fiscal year, excluding non-tax revenue. The total foreign inflows for the first seven months were around Rs 35 billion. This was possible largely because of tight fiscal management pursued by former finance secretary Dr Waqar Masood.
The departure of Waqar Masood, the Finance Ministry officials revealed on condition of anonymity, accounts for the subsequent unloosening of the treasury purse strings: Masood had urged Pakistan Railways to arrange finances through a consortium of banks with the final liability for repayment on Railways while the PR ministry insisted on Rs 6.1 billion cash injections from the treasury. Sources revealed that the decision to inject cash from the treasury has been taken and the money would be released soon. The decision to release Rs 6 billion to the power sector to help ease the current energy crisis was taken on Monday (February 20, 2012).
Economists maintain that the rise in expenditure and the inability to raise tax collections would result in a ballooning of the budget deficit with obvious negative repercussions on the rate of inflation. Fiscal discipline is the need of the hour but political considerations given the impending general elections are determining the economic decision making, the Finance Ministry officials said on condition of anonymity.