Govt misses major budgetary targets

Source: Published in Current Affairs on Friday, May 23, 2014

ISLAMABAD: The federal government has not been able to achieve major budgetary target set for the current fiscal year as it missed revenue projections and breached expenditure limits.

According to budget documents prepared by the Ministry of Finance and available with Dawn, the government missed targets on overall tax revenue, FBR tax collection and resultantly the provinces could not get their promised share of the federal divisible pool.

The government had set a target of Rs3.421 trillion for tax revenue but is now expected to face a shortfall of about Rs40 billion as revised estimates have been put at Rs3.381tr. This gap would have been much higher but an unexpected inflow from Saudi Arabia narrowed it down as non-tax revenue target surpassed by a wide Rs90 billion margin.

According to budget summary, the government had set a non-tax revenue target of Rs749bn but is expected to end up receiving Rs859bn.

Against a target of Rs2.475 trillion for Federal Board of Revenue (FBR), the government is now expected to face a shortfall of about Rs200bn as the target has now been revised to Rs2.275tr.

Against a budgetary target of Rs1.502tr for the current fiscal year, the federal government has now estimated to transfer Rs1.403tr to the four provinces as their share in the federal divisible pool. The shortfall on this account was Rs99bn.

On the expenditure side, the government breached limits on all counts. It is estimated to spend Rs3.611tr during this fiscal year against budgetary target of Rs3.591tr. The total expenditure breached limit by Rs20bn.

The government had set a limit of current expenditure at Rs3.170tr for current year but had now revised it to Rs3.198tr – an increase of Rs18bn. The government had set a target for Public Sector Development Programme (PSDP) expenses at Rs540bn but curtailed it significantly by a Rs115bn. The PSDP target has now been revised to Rs425bn.

The federal government had set a limit of Rs1.673tr but due to huge savings on account of reduced PSDP expenditure rounded off its fiscal deficit at Rs1.633tr. The provincial governments were, however, able to give a much higher budget surplus at Rs157bn against a budget target of Rs23bn.

The finance ministry also reported that its total expenditure on mark-up during current year stood at Rs1.194 trillion against a budget target of Rs1.151tr. The defence expenditure has now amounted to Rs636 billion against budget target of Rs627bn.

It said the expenditure target for pensions was set at Rs171bn but these expenditures have now gone up to Rs186bn. Also, the government had allocated Rs270bn for subsidies but it has now gone up to Rs338bn.

On top of that, the government had projected public debt for the current year at Rs15.46tr but it has now been estimated at Rs16.87tr. The domestic debt was budgeted at Rs10.5bn but it had gone beyond Rs11.4tr. Foreign debt was projected at Rs4.88tr but has now gone beyond Rs5.166tr.