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KARACHI, Sept 7: The government borrowed Rs60.2 billion from the banking system during the last fiscal year and it made most of this borrowing in the final quarter of the year i.e. between April and June 2005.
The latest data on consolidated fiscal operations of federal and provincial governments show that the government sector’s borrowing from the banking system shot up from about Rs5.8 billion at end-March to Rs60.2 billion at end-June 2005.
During the first quarter of the previous fiscal year i.e. between July-September 2004 the government had rather retired around Rs20 billion of bank loans but at the end of second quarter its net borrowing from the banking system had risen to Rs16.8bn. This came down to Rs5.8bn at the end of third quarter but finally shot up to Rs60.2bn towards the end of the fiscal year in June 2005.
The government’s bank borrowing of Rs60.2 billion during the last fiscal year is far less than what it was anticipating towards the end of the year. While presenting the budget for the current fiscal year on June 7, 2005 the government said it was anticipating that its bank borrowing during fiscal year July-June 2004-05 would not be less than Rs80.8 billion. For the current fiscal year, it set the bank borrowing target even higher — at Rs98 billion.
The revised fiscal data for the outgoing fiscal year released by the Ministry of Finance show that during the last fiscal year, the government also borrowed Rs8 billion through non-bank sources. Besides, privatization of state-held stakes in state-owned entities yielded Rs28.3 billion. So, in total the government arranged Rs96.5 billion through domestic resources to meet partly the budget deficit of Rs217 billion. It had to arrange the remaining Rs120.5 billion through external resources. The external resources of borrowing included project aid, programme loans and other loans; the money raised through launching of Sukuk or Islamic bonds as well as budgetary support grants.
BUDGET DEFICIT: The budget deficit of Rs217 billion booked in the last fiscal year was equal to 3.31 per cent of the GDP. (The GDP was worth Rs6,548 billion). The latest fiscal data posted on the Ministry of Finance’s website show that during the last fiscal year total revenue stood at Rs900 billion whereas total expenditures exceeded Rs1117 billion thus resulting in a budget deficit of Rs217 billion.
As the expenses grew faster in the final quarter of the outgoing fiscal year, the budget deficit which the government had contained at 2.13 per cent of the GDP also moved up to 3.31 per cent at the end of the year. At end-March 2005, i.e. within three quarters of the last fiscal year, total revenues stood at Rs635 billion and total expenditures hovered above Rs766 billion. Thus, the budget deficit was at Rs131 billion or 2.13 per cent of the estimated GDP of Rs6,164 billion.
The data show that the budgetary expenses shot up from Rs766 billion to Rs1,117 billion during April-June 2005 primarily because of a huge increase in the current expenses of the government sector.
The current expenditures which totalled Rs648 billion during July-March 2004-05 jumped to Rs943 billion in the next three months, showing a big increase of Rs295 billion.
