Finance Secretary Abdul Wajid Rana on Thursday said the government borrowing from banking system has exceeded the estimates for the current fiscal year largely because of non-materialisation of budgeted inflows on account of 3-G licenses, Coalition Support Fund (CSF) and remaining payment from Etisalat.
The Secretary informed the Senate Standing Committee on Finance while reviewing Finance Bill 2012-13 that an amount of Rs 75 billion estimated in the budget for 2011-12 on account of 3-G licenses, Rs 90 billion for CSF and Rs 70 billion for privatisation proceeds have not been materialised and consequently reliance on domestic resources to bridge the deficit has led to increase in considerable borrowing from the banking system.
The fiscal deficit for the current fiscal year has been revised upward to 5.5 per cent from budgetary projection of 4 per cent (excluding 1.9 per cent of the GDP on account of consolidation of arrears for electricity and commodities).
Secretary Finance, however, did not agree to the Senators'' concern that growing borrowing of the government from baking system was crowding out private sector and stated that as per the State Bank of Pakistan private sector was disbursed a credit of Rs 234 billion by banks during the 11 months of the current fiscal year. Wajid Rana said Rs 234 billion credit to the private sector during July-May 2011-12 was relatively higher as compared to the same period last year. He maintained that the increase in tax base and Federal Board of Revenue collection would reduce government reliance on borrowing from the banking system.
Senators have expressed their concern that the high-ups of the finance ministry have been continuously estimating foreign inflows in various heads during the last two years which have not been materialised for one reason or the other. The government borrowing massively from the domestic resources during the last couple of years has increased debt to GDP ratio and fuelled inflation. Some of the Senator also expressed their apprehension about disbursement of inflow estimated from Etisalat for privatisation of PTCL in the next fiscal year if the issue of grey traffic was not addressed. Senator Ilyas Bilour said that Rs 1 trillion borrowing by the government to finance budget deficit has left the private sector high and dry in terms of availability of credit.
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