Keeping in view the massive revenue shortfall in first six months, the government is likely to revise up the budget deficit target for the ongoing financial year 2012-2013 from current 4.7 per cent of the GDP to 5.3 per cent, it was learnt on Thursday.

Sources informed that Federal Board of Revenue would ask the Finance Ministry to revise down the revenue collection target by Rs 150 billion to Rs 2231 billion from Rs 2381 billion, as FBR faced massive revenue shortfall of around Rs 70 billion during the first half (July-December) of the current fiscal year 2012-2013. Therefore, sources said, Finance Ministry would have to revise up its budget deficit target for the financial year to be ended on June 30 2013 if it decides to reduce the revenue collection target.

“The budget deficit will be revised to 5.3 per cent of the GDP (around Rs 1,255 billion) from 4.7 per cent of the GDP (Rs 1,105 billion) if FBR requested Finance Ministry to reduce the revenue collection target by Rs 150 billion for the current financial year”, said Rana Assad Amin, spokesperson and advisor to the Finance Ministry while talking to The Nation. He further said that decision in this regard would be taken when FBR chairman would request to finance minister.

The FBR had so far collected Rs 900 billion in the first six months (July-December) of the current fiscal year 2012-2013 against the projected target of Rs 970 billion, leading to shortfall of around Rs 70 billion. FBR has to collect Rs 246.67 billion every month in next six months to reach the annual target of Rs 2381 billion, which seems challenging for FBR keeping in mind country’s current economic situation. Sources said that tax amnesty schemes, if approved from the parliament, could not help the FBR to reach it annual tax collection target. Therefore, it would ask the Finance Ministry to revise the target. 

The government has already set ambitious budget deficit target of Rs 1105 billion (4.7 per cent of the GDP) for the current fiscal year. The budget deficit is likely to reach 3 per cent of the GDP during the first half (July-December) of the current fiscal year. The budget deficit would go much higher from 3 per cent in the first half if it (government) did not receive $1.9 billion from United States under Coalition Support Fund (CSF) since July 2012.

It is worth mentioning here that Pakistan’s budget deficit remained 6.65 per cent of the GDP on average in last four years (2008-09 to 2011-12) and government never meet the target set on the eve of federal budget. Therefore, sources were of the view that budget deficit might once again go to around six per cent of the GDP at the end of June 2013. The International Monetary Fund (IMF) has also projected in its report that Pakistan’s budget deficit would go to 6.5 per cent of the GDP (Rs 1540 billion) during the ongoing financial year against the government’s target of 4.7 per cent of the GDP (Rs 1105 billion) on the basis on of current policies.