ISLAMABAD, Aug 29: With the power sector’s receivables at a record Rs472 billion, the government has already paid over Rs50 billion in power sector losses in just 58 days against an annual target of Rs120 billion, calling into question the fiscal deficit target at 4.7 per cent of GDP for the current financial year.

Officials in the ministry of finance said the grim start to the new financial year was on top of the poorly managed fiscal year of 2011-12 with a consolidated fiscal deficit of 8.45 per cent of GDP or Rs1.771 trillion – a record in the country’s history.

It also included Rs391 billion, or 1.9 per cent of debt consolidation on account of power sector’s Rs312 billion and commodity operations of Rs78 billion. The normal deficit through fiscal operations stood at 6.6 per cent, or Rs1.370 trillion.

The budgeted target for the previous year was set at four per cent of GDP, which showed the dismal fiscal management resulted in more than double the budgetary limit set for the consolidated deficit because of the failure in achieving revenue target, higher than targeted expenditures and inability to yield major earnings envisaged through PTCL privatisation proceeds and third-generation telecom licences.

Officials said the power sector’s losses paid out of the federal budget were expected to cross Rs60 billion in 60 days as the Pakistan State Oil was likely to be paid another Rs10 billion to clear its foreign liabilities due this week.

Sources said a meeting, presided over by Finance Minister Dr Abdul Hafeez Shaikh and attended by ministers and secretaries of finance, water and power and petroleum, was informed on Wednesday that the power sector’s receivables crossed Rs466 billion on Aug 23 and the losses had been increasing at a rate of Rs1 billion per day since then.

HELPLESS PSO: The meeting was told that the government’s power companies under the Pakistan Electric Power Company (Pepco) had outstanding payables of about Rs215 billion to the PSO alone, whose total receivables had gone beyond Rs230 billion.

An official said the PSO was supplying, on an average, Rs3 billion worth of furnace oil to the power sector under strict directives of the prime minister so as to keep loadshedding within politically acceptable limits. But this practice is causing financial pain to the country’s largest fuel supplier along with other supply chain, including refineries, producers and gas utilities.

The meeting, however, could not take any decision to restructure the power sector or reduce daily capital injections from the federal exchequer. The final data regarding fiscal operations of the government in the last financial year finalised on Wednesday suggest the federal government failed to meet most of the targets on revenue earning and expenditure control.

For example, the final data suggest the Federal Board of Revenue could collect only Rs1.881 trillion during 2011-12 against a target of Rs1.952 billion.

The non-tax revenue also remained short of target and stood at Rs514 billion against budgeted Rs569 billion.

On the other hand, the total current expenditure amounted to Rs3.132 trillion against a revised target of Rs3.060 trillion.

The expenditure on the public sector development programme and net lending amounted to Rs665 billion against a target of Rs654 billion. It included a federal PSDP expenditure of Rs317 billion against an allocation of Rs300 billion because the political leadership wanted to finance popular schemes in preparation for the general election.

The expenditure on debt servicing stood at Rs889 billion against a target of Rs844 billion.

The expenditure on running the civilian government stood at Rs227 billion against a target of Rs216 billion. Even the federal pension expenses went up to Rs140 billion against a budgeted estimate of Rs135 billion.

The defence expenditure amounted to Rs507 billion against a revised estimate of Rs510 billion, or budgeted expenditure of Rs495 billion.

The tariff differential subsidy to Wapda companies stood at Rs100 billion against a target of Rs50 billion while another Rs45 billion was thrown out to the Karachi Electric Supply Company against a subsidy target of Rs24 billion.