Home »Budgets » Analysis » Fiscal deficit rose to five percent in nine months

  • News Desk
  • Jun 1st, 2012
  • Comments Off on Fiscal deficit rose to five percent in nine months
Fiscal deficit increased to 5 percent during July-March 2011-12 against annual target of 4 percent, stated Economic Survey 2011-12, unveiled here on Thursday. According to the survey, the government is focusing on prudent expenditure management and better resource mobilisation to create fiscal space for providing support to growth.

Additional efforts are being made to keep the fiscal deficit within the acceptable level through austerity measures and reforms in public sector enterprises. The government has also announced various tax policy measures through Presidential Ordinance to generate additional revenues and through a combination of Presidential Ordinance and withdrawal of SRO based exemptions, amendments have been made in the Sales Tax Act 1990, Income Tax Ordinance 2001 and Federal Excise Act 2005.

The following tax measures have been taken through these amendments, (i) levy of 15 percent surcharge on income and advance taxes; (ii) Increase the rate of special excise duty from 1 percent to 2.5 percent, however Special excise duty was abolished in 2011-12; (iii) withdrawal of special regime of assessable price for levy of GST at 8 percent on actual value of sugar; (iv) removal of SRO based exemptions from fertiliser, pesticides, tractor and elimination of zero rating from plants, machinery and equipment; (v) Restriction of zero rating to registered person for export of textile, leather, carpets, sports goods and surgical goods; (vi) The withdrawal of exemptions and the left over amount of 15 percent flood relief surcharge contributed an additional amount of around Rs 50 billion during July-March, 2011-12.

Tax collection by the FBR was targeted at Rs 1952.3 billion for fiscal year 2011-12. Revenue collections of FBR stood at Rs 1426.0 billion during July-April 2011-12, thereby reflecting 24.0 percent growth over Rs 1149.8 billion collected during the corresponding period last year. Among the four federal taxes, the highest growth 33.7 percent has been recorded in sales tax receipts, followed by customs 17.7 percent, and direct tax 22.6 percent. It does not include Rs 19 billion collected by Sindh province on GST on services.

For July-April 2012, direct taxes have been a major source of FBR tax revenue collection, contributing 37.0 percent of total receipts. Net collection was estimated at Rs 528.9 billion. Indirect taxes grew by 24.9 percent during July-April, 2012 and accounted for 62.9 percent of the total FBR tax revenue. Net collection was estimated at Rs 897.2 billion.

Total expenditure of Rs 3721.2 billion was estimated for the full year, comprising Rs 2976.3 billion current expenditure (80% of total), and Rs 744.9 billion development expenditure and net lending (20 % of total). During July-March, 2011-12 total expenditures amounted to Rs 2641.9 billion against Rs 2262.6 billion in the same period last year. Current expenditures stood at Rs 2154.1 billion and development expenditures and net lending recorded at Rs 428 billion during July-March 2011-12.

Total revenues reached to Rs 1747.0 billion during July-March 2011-12 against Rs 1495.3 billion in the same period last year. Within Revenues tax revenues stood at Rs 1379.2 billion including Rs 1,321.5 billion of Federal and Rs 57.6 billion of provinces, and non tax revenues remained at Rs 367.9 billion during the same period of fiscal year 2011-12.

MONEY AND CREDIT The SBP lowered the discount rate by cumulative 200 bps points to 12 percent during first half of fiscal year 2011-12, to assist in boosting the private sector credit and investment.

Broad Money (M2) witnessed an expansion of 9.09 percent during July-11th May, 2011-12 as compared to 11.47 percent during the same period in 2010-11. Net Domestic Assets (NDA) during July-11thMay, 2012 stood at Rs 880.9 billion against Rs 481.6 billion during the same period last year, reflecting an increase of 14.89 percent over the last year.

On the other hand Net Foreign Assets (NFA) of the banking system during the period under review declined to Rs 272.2 billion as compared to an increase of Rs 181.1 billion in the same period of 2010-11. The credit to private sector witnessed a net increase of Rs 234.8 billion during July 2011-11th May, 2012 as compared to Rs 107.8 billion in the same period last year. The weighted average lending rate (including zero mark-up) on outstanding loans stood at 12.80 percent while the weighted average deposit rate (including zero mark-up) stood at 6.98 percent in March 2012. Government borrowing from the banking system for budgetary support and commodity operations stood at Rs 1,003.3 billion during July-11th May, 2011-12 as compared to Rs 506.5 billion in the comparable period of the last year. Government has borrowed Rs 442.3 billion from the State Bank of Pakistan, while Rs 642.1 billion borrowed from the scheduled banks.

During July 2011-11th May, 2012 loans for commodity finance registered a net retirement of Rs 81.6 billion against the retirement of Rs 101.1 billion in the same period of fiscal year 2010-11. The retirement was primarily concentrated in the second quarter of fiscal year.

Copyright Business Recorder, 2012


the author

Top
Close
Close