VID-20230206-WA0020

When asked, a senior official disclosed that the provincial fiscal framework and their expenditures were still one of the major bones of contention as the IMF assessed that the provincial revenue surplus of Rs750 billion might not be achievable. So the revised estimates were required to be placed into the overall fiscal framework of the country.

Budget deficit
In a related development, the Ministry of Finance has revised upward its projection for the budget deficit target from 4.9% of Gross Domestic Product (GDP) to 6.5% of GDP for the current fiscal year mainly because of overrun in expenditures on account of debt servicing, subsidies and less than projected tax and non-tax revenue targets of the current fiscal year.

The total debt servicing is projected to go up from Rs3.9 trillion to Rs5.2 trillion. Out of the total surge in fiscal deficit by 1.6% of GDP, as it escalated from 4.9% of GDP to 6.5% of GDP, the major jump in the budget deficit was caused by an increase in debt servicing requirements in the wake of an increase in the policy rate