ISLAMABAD, March 7: The government has made major revisions in budget estimates for the current fiscal year and expects to add $2.2 billion this year in the country’s foreign exchange reserves despite unprecedented trade and current account deficits mainly because of higher inflows.

According to Dr Salman Shah, adviser to the prime minister on finance, the foreign exchange reserves were expected to reach $14.8 billion during the current fiscal as against $12.6 billion of last year, an increase of about 17.5 per cent.

The budget 2005-06 had estimated an reserve build up of $510 million but higher inflows as a result of earthquake related funds has been jacked up to $2.2 billion.

The 17.5 per cent targeted increase in foreign exchange reserves is based on expectations of primarily higher privatization and capital market proceeds and foreign aid inflows during the current year as compared to last financial year.

The sources said most of the budget estimates has been revised recently. The trade deficit, according to official estimates, would be around $6.6 billion at the end of the year as against budgeted target of $4.2 billion.

The current account deficit target has now been revised to $5.2 billion, as against budgeted target of $2.7 billion. Similarly, amortization of principal debt was originally estimated at $1.4 billion which has been reduced to $1.04 billion.

Under the revised estimates, the government expects to get a total of about $8.8 billion foreign exchange inflows against $4.9 billion received in fiscal year 2004-05, showing an increase of about 79 per cent. These inflows include privatization, grants, capital market proceeds, project and programme aid and foreign investment.

The government estimates $1.645 billion in privatization proceeds during the current fiscal year, compared with $363 million of last year. Grants this year would be $583 million compared with $231 million of last year.

Similarly, capital market earnings are expected to be $1.5 billion during the current fiscal year compared with $600 million of last year, up by about 150 per cent. Likewise, project and programme aid during the current year are estimated at $3.15 billion against $2.04 billion of last year, showing an increase of 54 per cent.

Moreover, foreign investment is estimated at $1.9 billion, up by more than 13 per cent of last year’s $1.676 billion.

On the other hand, latest estimate of current account deficit has been put at $5.14 billion, against $1.75 billion deficit witnessed last year, showing an increase of about 192 per cent.

Amortization this year estimated at $1.04 billion compared with $1.43 billion of last year while other payments would amount to $6.6 billion compared with $4.69 billion of last year.

The foreign exchange reserves at $14.8 billion would, however, decline in terms of import coverage as these would be enough to fund imports for 30 weeks. Last year’s $12.6 billion foreign exchange reserves were sufficient to meet 32.3 weeks of imports.

The foreign exchange reserves in 1999-2000 were sufficient to finance only seven weeks of imports.