A source told The Express Tribune that Pakistan has shared its revised budget framework with the International Monetary Fund (IMF), amid concerns from international financial institutions about the credibility of the data.
Disagreement over the impact of floods on the financial framework is a major stumbling block for an IMF mission’s upcoming visit to Pakistan to negotiate the release of a $1.2 billion loan tranche.
Sources said the figures are being discussed with the IMF and the government is ready to revise them based on inputs from international lenders.
He said that the government had framework estimated a budget deficit of only Rs 990 billion, of which Rs 850 billion was due to increase in debt servicing costs alone.
He added that the overall budget deficit of Rs 3.8 trillion framework approved by Parliament is now likely to be close to Rs 4.8 trillion.
The coalition government has approved unbudgeted checks worth billions of rupees for exporters and farmers, despite the fact that the country is facing the worst floods in its history.
He also gave up a revenue of Rs 400 crore in favor of traders.
However, there was no significant increase in non-monetary expenditure and tax revenue,framework making the figures unrealistic.
The Federal Revenue Service’s (FBR) collection estimates have not changed.
Almost all of the Rs 990 crore shock was reflected in expenditure, with a small framework negative impact of Rs 55 crore on the oil tax target, sources said.
Neither the finance ministry nor the IMF’s resident representative responded to requests for comment.
But a government official, speaking privately, said the government would still run a core budget surplus in the current scenario.
After deducting interest payments, the primary budget surplus is calculated.
One view is that the government increased the interest expenditure of the approved budget from Rs 3.95 trillion to Rs 4.8 trillion.
The government is pushing for the move because the IMF does not track interest payments under the $6.5 billion program.
Sources said the cushion used for price overruns could be used to cover other costs.
However, senior government officials said the 15 percent policy rate would definitely increase interest payments.
Sources said the government told the IMF that a core budget of Rs 14 billion would be a surplus or 0.02 percent of GDP against a budget of Rs 153 billion.
However, this estimate contradicts the World Bank report which states that Pakistan’s primary budget deficit is 3 percent of GDP.
Sources said the government has estimated total expenditure including states at Rs 15.1 trillion, an increase of Rs 934 billion.
He added that the current cost is Rs 9.7 trillion and it has increased by Rs 1.1 trillion.
However, interest expense is expected to increase from INR 3.95 trillion to INR 4.8 trillion, an overspend of 21.5%.
Subsidies were the second factor for which the government accounted for a gap of Rs 240 billion (up from Rs 664 billion to Rs 906 billion), representing over 36 percent.
Sources said that out of these 240 billion rupees, 195 billion rupees will be deducted from the annual emergency reserve.
Pension is the third current head of expenditure with annual expenditure expected to increase from Rs 25 billion to Rs 634 billion.
According to the sources, the development expenditure of the federal government has been reduced from 175 billion rupees to 469 billion rupees.
The cost structure has not changed.
Given the original assumption of revenue collection, the FBR target remains at Rs 7,470 crore, but the board has informed the finance ministry that it may fall short of the half-yearly target by Rs 150 crore.
Despite collecting only Rs 47,000 crore in the first three months of the current financial year, the oil tax collection is estimated at Rs 855,000 crore.
The government expects to collect at least Rs 400 crore in oil tax on petrol alone for the remainder of this fiscal year at current rates.
State Bank’s profit estimate is Rs 371,000 crore, which is Rs 71,000 crore higher than the budget estimate.
The remaining revenue forecasts remain unchanged.
The government budget deficit increased and
