Economy in Pakistan failed to eliminate fiscal deficit of 6-7 percent

Economy in Pakistan

ISLAMABAD – It seems that despite receiving Saudi gift of $ 1.5 billion, bounding US dollar below Rs 100 and with country’s top stock market scoring more than 27000 points – the fiscal deficit for the year 2013-14 would still remain 6 to 7 percent of GDP.

The warning came from the State Bank of Pakistan (SBP) as it issued second quarterly report of current fiscal year.

The SBP said that higher development expenditure and an anticipated increase in debt servicing would push up overall spending in the second half of the fiscal year.

It expressed concern over the performance of the Federal Board of Revenue and said the annual revenue target could not be met this year. The half-yearly target was missed by Rs 80 billion. “This implies that tax collection needs to grow by 36.6 percent in the second half of the fiscal year to meet the full year target which appears difficult,” the report said, adding that non-tax revenue was also on the lower side.

The SBP cautioned that inflation would remain in the range of 8.5 to 9.5 percent “unless the government announces an increase in household gas tariff, which was due in January”.

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