Fiscal deficit contained at 3.2pc in July-Feb

ISLAMABAD: The country’s fiscal deficit in first eight months of this fiscal year amounted to Rs832 billion or 3.2 per cent of gross domestic product (GDP), showing results of tight fiscal stance and reduced Public Sector Development Programme.

This was disclosed at a meeting chaired by Finance Minister Ishaq Dar on Friday with his aides to set the stage for budget preparations for the next fiscal year.

Secretary Finance Dr Waqar Masood Khan presented a review of the various budgetary indicators on the basis of a three-year Medium-Term Budgetary Framework (MTBF) announced in June last year.

An official said the budget-makers were advised by the finance minister that the next year budget would remain on the same broad outline put in place last year and agreed to with the International Monetary Fund under the Extended Fund Facility.

The government has projected fiscal deficit target at 6.3pc for 2013-14.

The minister expressed satisfaction over provisional fiscal results of first eight months of this fiscal year and noted that 3.2pc fiscal deficit was well below the proportionate target of 3.5pc up to February and estimated by the IMF. It was noted that the deficit was also lower than 4.2 per cent over the same period of last year.

Finance Ministry’s spokesman and adviser Rana Assad Amin said the meeting was first in a series of budget preparation exercise in which MTBF was reviewed.

He said the minister made it clear that the overall MTBF benchmarks would remain unchanged for next year and fiscal deficit would be contained at around 5.3pc during next fiscal year so that the overarching target of 4 per cent fiscal deficit in the terminal year 2015-16 set under the MTBF could be achieved.

Dar directed the secretary finance to ensure continued vigilance on expenditure in line with revenue receipts so that the budgetary targets on fiscal deficit were achieved without fail. The government has already decided to cut down over Rs115 billion block allocation for new development programmes to contain PSDP at around Rs425bn against Rs560bn announced in the budget because of a revenue shortfall of about Rs130bn.

While commenting on the preparatory exercise, presented to him, the minister said the austerity will continue to remain the hallmark of PML-N’s budget strategy and fiscal management.

He asked his ministry to issue clear and meaningful indications of budgetary ceilings to all federal ministries and for PSDP so that they can prioritise and formulate their expenditure proposals well in time.