Last month, Finance Ministry Abdul Hafeez Shaikh projected the deficit for 2010/11 at 5.1 percent of GDP.

Pakistan's budget deficit was 6.3 percent of GDP in 2009/10 fiscal year.

The finance official, who spoke on condition of anonymity, said the deficit was larger than anticipated because some "coalition support funds" (CSF) that the ministry had expected by June 30 "did not come in."

The CSF was established by the US after the attacks of Sept. 11, 2001 to reimburse Pakistan and other countries for their help in fighting extremists. These funds are not officially designated as US foreign aid.

Since 2001, the US provided $8.8 billion to Pakistan under Washington's CSF program.

During June, the US transferred to Pakistan $190 million for what is called the citizen damage compensation programme. It helps provide assistance to victims of the devastating summer floods of 2010, which caused about $10 billion in damage.

In the fiscal year that began July 1, Pakistan aims to cap its deficit at 4 percent of GDP by decreasing its expenditure and broadening its tax-to-GDP ratio, which is currently around 9 percent, one of the lowest levels in the world.

The International Monetary Fund and Pakistan officials are due to meet late this month to discuss the possible release of the sixth tranche of an $11 billion bailout programme agreed to in November 2008.

The tranche has been delayed since August due to slow implementation of fiscal reforms.

Copyright Reuters, 2011