Provinces are unlikely to receive budgeted share of revenue from the divisible pool due to expected shortfall in the Federal Board of Revenue (FBR) revenue collection. Sources told Business Recorder that Finance Minister Ishaq Dar is aware that the FBR may be unable to achieve the budgeted projection of Rs 2,475 billion; however there are considerable concerns that the reduced Rs 2,345 billion tax revenue projection by the International Monetary Fund (IMF) may also not be met.
According to a senior official, it has been conveyed to the IMF that the projected revenue collection for the current fiscal year is unrealistic. The official added that over 27 percent growth in revenue collection is required as compared to previous fiscal year to achieve the budgeted target, which is very challenging and the minister knows that but does not want to revise the target downward at this point in time because even the revised target may be missed. The official was optimistic that revenue collection would cross Rs 2,300 billion.
He admitted that provinces share from the divisible pool would decrease proportionally to the shortfall in revenue collection. The provinces are budgeted to receive Rs 1,728 billion in the current fiscal year: Rs 1,379 billion from divisible pool, Rs 538 billion on account of income tax, Rs 597 billion sales tax (excluding GST on services), Rs 89 billion federal excise duty (excluding excise duty on natural gas) and Rs 152 billion from custom tax collection (excluding excise duty on services).
Sources in the Finance Ministry privately acknowledge that the provinces may be unable to generate any budget surplus. They added that expected shortfall in revenue collection as well as provinces'' inability to generate surplus would create problems in achieving the fiscal deficit target of 6.3 percent for the current fiscal year.
Comments
Comments are closed.