Fiscal operations: Q1 primary surplus stands at Rs 286 billion

The primary surplus for the first quarter of the current fiscal year, as per the summary of the consolidated federal and provincial budgetary operations 2019-20, was Rs 286 billion against a deficit of Rs 48 billion in the comparable period of last year.

The budget deficit for July-September was contained at Rs 288.083 billion (0.76 percent of GDP) against Rs 541 billion (1.4 percent of GDP) in the comparable period last year with only 8.8 percent of the budgeted amount disbursed for Public Sector Development Programme, 11 percent disbursed for grants and no subsidies released. If the fiscal multiplier is non-existent and if the government does not spend then there will be a surplus, an anecdotal survey of economists revealed to Business Recorder, but the economy would shrink with a consequent negative impact on employment levels.

The primary surplus and containment of fiscal deficit, they added, was due to: (i) disbursement of Rs 147 billion for Public Sector Development spending (Rs 70 billion federal and Rs 71 billion provincial) against the budgeted total of Rs 1613 billion (Rs 701 billion federal and Rs 912 billion provincial). A mere 8.8 percent was therefore disbursed in the first quarter for PSDP; (ii) Rs 92 billion grants disbursed while the budgeted total is a whopping Rs 831 billion - 11 percent of the total budgeted; (iii) no disbursement for subsidies during the first quarter against the budgeted subsidies of 271.5 billion; (iv) defence affairs received Rs 242.6 billion against total budgeted outlay of Rs 1.15 trillion - 21 percent of the total budgeted for the year; and (v) debt servicing of Rs 572 billion against total budgeted allocation of 2.8 trillion - 20 percent of the total.

The government claimed that it has achieved nearly 39 percent of the total annual non-tax revenue in July-September however the bulk of this claim is met by State Bank of Pakistan profits - estimated at Rs 185 billion in the first quarter against the budgeted estimate of Rs 406 billion; and Rs 72 billion from sale of renewal of telecommunication licenses against the budgeted Rs 52 billion. However, the matter is in courts with 50 percent of the license fee may be payable subsequent to the settlement of the case in the court.

Revenue for the first quarter was Rs 964 billion against the annual target of Rs 5.5trillion - 18 percent of the budgeted target. Provinces generated Rs 201 billion budget surplus.