Pak govt's expenses shoot up to PKR1.1 trillion in 2 months

Pakistan's federal government's current expenditures shot up to nearly PKR1.1 trillion which is equivalent to more than $4.5 billion even before the floods struck the South-Asian country and despite squeezing of some essential expenses, indicating that the budget had become irrelevant.

Over 71% of the current expenses during the July-August period of the current fiscal year were on account of just two heads –the interest payments on loans and the defence, reports Express Tribune citing sources in the Pakistani finance ministry.

It has left very little behind to spend on the welfare and the development of the country. The fiscal figures are provisional and are subject to changes once the reconciled data is available at the end of the quarter (July-September).

However, Pakistan has assured the International Monetary Fund (IMF) that if monthly fiscal operations data indicate that spending is running higher than the first quarter and subsequent target; this will trigger immediate remedial action to put in place the contingency revenue measures.

The initial trend indicates that even if the floods had not struck Pakistan, it was impossible to achieve the primary budget surplus target of PKR153 billion the government agreed with the IMF. The early data compiled by the Pakistani Ministry of Finance showed that during the first two months of the fiscal year, the current expenditures amounted to PKR1.09 trillion, which were equal to 12.5% of the annual allocations. The current expenditures were also PKR43 billion or 4.1% higher than the previous fiscal year.

Over PKR580 billion was spent on mere debt servicing of the previously obtained loans. The spending on debt was PKR156 billion or 37% higher than the previous fiscal year. It was an alarming trend, which suggests that Pakistan can no more spend on anything except servicing its debt or paying for the salaries of the armed forces and the civilian employees.

PKR191 billion was spent on defence, which is PKR28 billion or 17% more than the previous fiscal year. The cumulative spending on debt and defence amounted to PKR773 billion – equal to 71% of the current expenses. The PKR773 billion spending was 46% or PKR245 billion more than the net income of the federal government during July-August period.

Compared to this, the development spending by the Pakistani federal government amounted to mere PKR28 billion, which is PKR35 billion or 56% less than the previous fiscal year.

P[akistan's federal government's total expenditures during the current fiscal year shot up to PKR1.111 trillion.

Pakistan's federal budget deficit during July-August period is provisionally estimated at around PKR584 billion.  The federal budget deficit was equal to 0.7% of the GDP while it booked a marginal primary deficit of PKR2 billion.

The Pak government has even stopped provision of newspapers to the public relations wings but has been expanding the list of cabinet members, which has already swelled to 70 despite these harsh times. 

Under the IMF programme, Pakistan is committed to gradually convert the primary deficit into a surplus. For this fiscal year, the government is bound to convert the primary deficit – calculated after excluding interest payments – into a surplus of 0.2% of GDP, down from last fiscal year's 3.6%.

However, the World Bank in its fresh assessment said that due to floods, the country may again run an overall primary deficit of 2.8% of the GDP in the current fiscal year.