Budget deficit shoots up by 84pc: July-March 2004-05
By Mohiuddin Aazim
KARACHI, June 2: Pakistan’s budget deficit went up to Rs131 billion in nine months of this fiscal year from Rs71 billion in the same period last fiscal year, showing an increase of 84.5 per cent. The budget deficit of Rs131 billion in July-March 2004-05 was equivalent to 2.1 per cent of the GDP whereas the deficit of Rs71 billion in July-March 2003-04 had constituted only 1.6 per cent of GDP.
This big increase in the budget deficit in absolute terms as well as in terms of percentage of GDP would leave little room to allocate enough resources for public welfare in the budget for 2005-6 due on Monday. The latest data on fiscal operations show that during July-March 2004-05, government’s total expenditures stood at Rs789.2 billion, including unidentified expenses of Rs23 billion whereas its revenues totalled Rs634.9 billion.
During July-March 2003-04, the government’s expenditures totalled Rs630.8 billion, including unidentified expenses of Rs4.2 billion, and its revenues stood at Rs555.4 billion. Thus, the budget deficit was a little more than Rs71 billion. Out of the total expenses of Rs789.2 billion in nine months of this fiscal year, the government allocated only Rs137.8 billion or 17.5 per cent for the Public Sector Development Programme (PSDP). It spent a huge sum of Rs647.9 billion or more than 82 per cent on current expenditures.
In July-March 2004-05, the share of PSDP allocation and actual current expenses was Rs85 billion or 13.5 per cent and Rs536.2 billion or more than 85 per cent, respectively, in the total expenditures of Rs630.8 billion. So, two important things emerge while analysing the fiscal data of three quarters of this fiscal year with that of a year-ago period. First, the budget deficit is higher than what it was -— 2.1 per cent against 1.6 per cent of the GDP. Secondly, the amount of unidentified expenses is much larger than what it was -— Rs23 billion against Rs4.2 billion.
On the positive side, the allocation for the PSDP during three quarters of this fiscal year is higher than the comparable period of the last fiscal year. This indicates a change for better in government’s policies but much depends on the actual utilization of the PSDP funds. The actual utilization of the PSDP in the first three quarters of this fiscal year was less than 50 per cent.
CURRENT EXPENSES: Within the current expenses of Rs647.9 billion in July-March 2004-05, Rs263 billion went to general public services of the federal government, including Rs123.3 billion on domestic debt servicing and Rs26.8 billion on foreign debt servicing. The defence sector devoured Rs146.4 billion, expenses on public order and safety affairs ate up Rs11.4 billion, and economic affairs consumed Rs32.3 billion. The government somehow managed to spend Rs8.5 billion on education affairs and services, but the most vital health sector received only Rs2.6 billion. Worse still, the government spent only Rs614 million on social protections (direct relief to the poor people) and a negligible sum of Rs39 million on environmental protections.
The Rs2.6 billion spending on the health sector means this sector’s share in the overall current expenses was 0.4 per cent in the first three quarters of this fiscal year. Similarly, Rs39 million spending on environmental protection comes to 0.006 per cent of total current expenses. With Rs8.5 billion claim in the total current expenses, the education sector is not as unfortunate as health and environmental protection but even at this level its share in total current expenses is 1.3 per cent.
