Govt. likely to fall short of the 4.7% fiscal deficit target, says SBP – Alfalah Securities Limited
Karachi: The State Bank of Pakistan (SBP) in its 1QFY12 report has indicated that the government is likely to fall short of its 4.7% fiscal deficit target for the current financial year (FY12) owing to concerns over adequate revenue collection from taxes, high government expenditure, lack of funding from external sources and heavy reliance on the auctions of 3G technology license.
According to Alfalah Securities Limited, SBP data highlighted the fiscal deficit for 1QFY12 stood at 1.2% of GDP as compared to 1.5% in the same period last year, indicating an improvement of 0.3% due to a rise in tax collection efforts from domestic sources as well as from high imports. On the contrary, it also added that an improvement in budget deficit is short-lived and would further deteriorate in the upcoming time to come on the back of high government expenditures arising due to scheduled debt repayments on external loans and high subsidies on fertilizer and POL products whereas, the government’s reliance on provinces to post a budget surplus of PKR 125 billion and the auction of 3G licenses to yield a significant amount is least likely to materialize. SBP’s view on the budget deficit is in line with Alfalah Securities Limited’s projections where Alfalah Securities Limited expects the fiscal deficit to reach 6.5-7% of GDP.