ISLAMABAD: Pakistan’s fiscal deficit touched 2.2 per cent of gross domestic product (GDP) in the first half of this fiscal year despite reasonable cash surpluses offered by the four provinces.

As part of the budget 2017-18, the government had set a target of containing fiscal deficit below 4.1pc but the actual deficit in first half of the year has already moved past 2.2pc (almost 54pc of the limit), revealed fiscal operations data of the Ministry of Finance. With this pace, the deficit seems unlikely to stay lower than 4.8pc at the end of the fiscal year.

The ministry said the consolidated fiscal deficit amounted to Rs796.3 billion during July-December 2017 period or 2.2pc of GDP compared to Rs799bn of same period last year when half-year gap between expenditure and revenues stood at 2.5pc and ultimately reached 5.8pc at the end of full fiscal year.

The four provincial governments contributed a cumulative cash surplus of Rs150bn to the federal government. The centre expects the provincial governments to provide Rs347bn surplus over the full fiscal year.

Interestingly, the country’s largest province by population and control over resources contributed the lowest cash surplus of just Rs12.48 billion in six months even though Punjab is ruled by PML-N, the ruling party at the centre. Sindh gave the highest surplus of Rs55.3bn, followed by about Rs41bn each by Khyber Pakhtunkhwa and Balochistan.

The current half-yearly deficit is higher than 1.7pc of GDP of 2015-16 when full year deficit reached 4.6pc, and 2.2pc deficit in the first half of 2014-15 and 2.1pc in 2013-14. The full-year deficit stood at 5.3pc in 2014-15 and 5.5pc in 2013-14.

Data showed the pace of both revenue collection and expenditure in the first half of this fiscal year was higher than last year. On the positive side, the growth in revenue collection outpaced the increase in expenditure.

The ministry said the total revenue in first six months this year increased to Rs2.385tr against Rs1.99tr of same period last year. As a result, total revenue to GDP ratio improved to 6.6pc this year from 6.2pc last year.

Tax revenue also inched up to 5.6pc of GDP this year compared to 5.5pc last year. Tax revenues reached Rs2.027tr compared to Rs1.74tr last year. Of this federal tax collection amounted to Rs1.85tr compared to Rs1.595tr of last year.

Non-tax revenue also improved slightly to 1pc of GDP in first half of current year compared to 0.8pc of last year.

On the other side, total expenditure amounted to Rs3.18tr or 8.9pc of GDP compared to Rs2.78tr or 8.8pc of GDP same period last year. Current expenditure also inched up to 7.1pc of GDP or Rs2.55tr this year against Rs2.24tr or 7pc of GDP last year.

Mark-up payments increased to Rs752bn in first half of the year or 2.1pc of GDP compared to Rs647bn or 2pc of GDP last year. Defence expenditure remained static at 1.1pc of GDP even though it was higher in absolute terms this year at Rs393.4bn instead of Rs336bn of last year.

Development expenditure in first six months of 2017-18 amounted to Rs614bn or 1.7pc of GDP compared to Rs497bn of same period last year (1.6pc). Of this, the federal development expenditure stood at Rs242bn and Rs317bn of provincial governments.

Published in Dawn, February 21st, 2018