The government has projected 6.85 percent fiscal deficit for the outgoing fiscal year following the inability of the provinces to generate a surplus of Rs124 billion estimated in the budget, it is learnt.

Sources told Business Recorder that the provincial budget surplus has been revised downward to Rs90 billion from Rs124 projected in the budget after a recent meeting with the provincial Finance Ministers and Finance Secretaries. As a result the budget deficit for the current fiscal year has been revised upward to 5 percent for the current fiscal year from the earlier projection of 4 percent, exclusive of 1.85 percent of the GDP on account of consolidation of arrears on electricity and commodities.

An official of Finance Ministry said that fiscal deficit for the current fiscal year may reach 8 percent of GDP in case estimated inflows on various accounts failed to materialize before the end of current fiscal year. He said the economic managers are no longer expecting the generation of the earlier estimated inflow from sale of 3-G licenses which would add around 0.3 percent to the deficit. The government is still optimistic about $ 400 million disbursement under the US supported Coalition Support Fund (CSF) in the current fiscal year and non-materialization of the amount would add to the fiscal deficit. The high-ups of the Finance Ministry have recently informed the National Assembly Standing Committee on Finance that fiscal deficit has been revised upward and the estimated provincial budget surplus downward.

Source said that major shortfall is being feared on account of non-tax revenue and consequently fiscal deficit would go up considerably for the current fiscal year. Summary of the budgetary operation released by Ministry of Finance for the first nine months, July-March 2011-12 showed a total collection of non-tax revenue of Rs367 billion against the annual target of Rs657.908 billion. Analysis of the first three quarters reveal that non-tax revenue was Rs 124 billion during July-September 2011-12, Rs106 billion in the second quarter of September-December 2011-12 and Rs137 billion in July-March 2011-12. The average quarterly non-tax revenue has been Rs123 billion during the first quarter of the current fiscal year and collection of Rs291 billion in the remaining three months of the current fiscal year seems highly unlikely and consequently the shortfall in revenue would further increase the fiscal deficit.

According to the official, Finance Ministry has reportedly informed the National Assembly’s Standing Committee on Finance that a great deal of subsidies have been doled out to power sector and additional subsidies to this sector in the remaining period of the current fiscal year would lead to further widening of fiscal deficit, the official added. ZAHEER ABBASSI BR