With fiscal deficit at 1.2pc, first quarter shows strong financial performance

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ISLAMABAD, Nov 28 (APP):With fiscal deficit recorded at 1.2 per cent of the gross domestic product (GDP), the federal government’s financial operations
and debt statistics for first quarter of the current fiscal year show strong performance and prudent expenditure.
On one hand, revenue collection, especially tax revenue collection, registered a strong growth of over 20 per cent during
the first quarter, while on the other the government borrowings, both domestic and external, were kept under check, a finance ministry spokesman of said in a statement here Tuesday.
He said there were expenditure controls as well, which reflected on the prudent fiscal management and government’s resolve to maintain this momentum in the remaining quarters of the year.
Based on actual data, the overall fiscal deficit during the first quarter of the current fiscal year has been recorded at 1.2 per cent of GDP as against 1.3 per cent during the corresponding period of last year, the spokeman added.
He said the total consolidated federal and provincial revenue amounted to Rs1025 billion reflecting an increase of 18.9
per cent over same period last year.
The tax collection by Federal Board of Revenue amounted to Rs.765 billion showing a strong growth of over 20 per cent
while the non tax receipts for the period amounted to Rs 114 billion, which are also higher when compared to the same period
last year.
Total expenditure during the period amounted to Rs1,466 billion, of which current expenditure was Rs1,241billion while development expenditure was Rs221 billion.
Statistical discrepancy for the period July-September, 2017 amounted to Rs4 billion as against Rs38 billion during the
same period last year.
The spokesman said the civil accounts data of revenue receipts and expenditure of the federal government for Q1 of CFY
had been received from the office of AGPR, financing data from EAD (external financing) and from SBP (bank and non bank) as
well as civil accounts containing provincial governments revenue and expenditure have been received from provincial AGs.
He added that the deficit figure reported earlier was based on daily cash balance reports of the SBP which did not include financing on account of project aid and financing from National Savings Schemes.
The financing from project aid was substantially higher on account of roads and infrastructure, he said.
The spokesman said around 47 per cent of the budget estimates were received as project aid financing during
July-September, 2017 on that account. This has mainly been received during the month of September, 2017, while incremental receipts on account of National Savings Schemes have recently been reported by SBP, he added.
The federal government deposits with SBP, he said, also reduced during the month of September, 2017. Therefore, after including the afore-mentioned financing data, overall fiscal deficit for the period July-September, 2017 amounted to 1.2 per cent
of GDP as against 1.5 per cent to 1.8 per cent of GDP being projected by some writers which was being calculated using wrong assumptions and self-manufactured data.
The spokesman said a section of the media had drawn some premature conclusions on debt performance of the government based on the data for the first two months of the current fiscal year. He clarified that evaluating debt statistics based on two-month numbers was flawed and misrepresentation.
He said as debt numbers from relevant agencies such as Economic Affairs Division, Budget Wing, National Saving and State Bank, had been received and consolidated for the first quarter of current fiscal year, it had become quite clear that the increase in public debt was well below the projections that were being made by some critics.
The debt statistics at the end of first quarter of 2017-18 clearly depict that Provisional Gross Public debt increased by approximately Rs. 652 billion during first quarter of 2017-18 as against Rs1 trillion reported in various media reports, he added.
Similarly, the spokesman said, domestic debt recorded an increase of Rs853 billion during first two months of current fiscal year while it settled at Rs520 billion during first quarter of current fiscal year.
The temporary increase in the domestic debt during first two months of current fiscal year was due to timing mismatch
between revenue and expenditures and on account of cash buffers built to comfortably meet the bullet maturities, he added.
The increase recorded in the domestic debt during July-August, 2017, the spokesman said, was subsequently reversed as
the revenue figures picked up and government reduced its cash buffers primarily to retire some of the in-quarter borrowings.
Resultantly domestic debt stock was reduced by Rs333 billion during the month of September 2017, he added.
He said there was a need to understand that seasonality in government borrowings/deposits may be observed during short period of time owing to timing mismatches between the revenue and expenditure streams.
However, it is usually reversed at the end of each quarter. Specifically, any disconnect between borrowing and fiscal deficit financing is reversed on half yearly or annual basis which is a normal practice throughout the world and Pakistan is no exception, he
added.
It is worth noting that out of gross increase in domestic debt amounting Rs520 billion, net increase in domestic debt was recorded at Rs428 billion while the rest of the increase went to increase the liquid assets of the government that could be used in the subsequent period towards meeting government’s financing requirement/contingencies, he said.
Similarly, the spokesman said, external public debt recorded a provisional increase of approximately Rs132 billion which was predominantly driven by translational losses on account of appreciation of international currencies against US Dollar and depreciation of Pak Rupee against US Dollar.
Therefore, incremental mobilization from external sources was almost negligible during first quarter of current fiscal year.