ISLAMABAD: Pakistan’s budget deficit stood at close to 2.3 per cent of Gross Domestic Product (GDP), equivalent to Rs825 billion for first half (July-December) period of the current fiscal year, still posing threats that slippages on fiscal front could result into shoot up of deficit during an electioneering year.

Ministry of Finance has made initial assessment of the budget deficit and estimated at standing close to 2.3 per cent of GDP for first six months of current fiscal year 2017-18 against 2.4 per cent of GDP or Rs799 billion in the same period of last financial year 2016-17.

Precisely, the Finance Ministry estimated that the budget deficit stood at 2.26 per cent of GDP and this number would be shared with the IMF before presenting report of Post Programme Monitoring (PPM) in front of Fund’s Executive Board by end February or early March 2018.

The government had envisaged budget deficit target at 4.1 per cent of GDP on eve of budget 2017-18 which in absolute term stood at Rs1479.6 billion with the expectation that the provinces would throw revenue surplus of Rs347.3 billion by end of the fiscal year.

Now the Centre will have to devise a mechanism that the provinces will not repeat the same mistakes which they committed last year when they generated deficit on June 30, 2017 instead of throwing revenue surplus.

This startling disclosure had resulted into hiking the budget deficit by almost one per cent of GDP that climbed up to 5.8 per cent of GDP which was never thought by the economic managers at any point of time in whole fiscal year of 2016-17.

The Pakistan Business Council (PBC) has projected that Pakistan could export an additional $3.3 billion worth of goods to China if the country manages to get tariffs reduced to zero on certain goods under a free trade agreement (FTA).

In this regard, the PBC – a business policy advocacy group – has shared a list of top 25 products with the Ministry of Commerce, suggesting the government needs to secure zero tariff on these goods in negotiations with China on the second phase of the FTA.

The envisaged target of 4.1 per cent of GDP has already become irrelevant because if one sticks to historical trends the country’s budget could be divided into 40:60 ratios between first and second half of fiscal year respectively and even after restricting the budget deficit at 2.3 per cent of GDP the deficit would definitely cross 5 per cent of GDP by end June 2018.

Internews