Pakistan’s Fiscal Deficit Rises to Highest Level in 28 Years
Budget gap rose to 8.9% in year ended June from 6.6% year ago.
(Bloomberg) -- Pakistan’s budget deficit rose to the highest in almost three decades, ahead of the International Monetary Fund’s first quarterly review of a bailout program that sought to curtail a fiscal blowout.
The deficit increased to 8.9% of the nation’s gross domestic product in the year ended June compared with 6.6% a year earlier, according to provisional numbers released by the Finance Ministry. That’s a big miss for the government, which targeted a narrower 5.6% gap.
The South Asian nation must also increase government revenue by more than 40% in the fiscal year that began in July, as part of the conditions for a $6 billion loan. Pakistan’s loan from the IMF could be in jeopardy if the trend of the government missing revenue target continues.
Read More: IMF Says Pakistan’s Fiscal Strategy Should Focus on Revenue
“It seems an uphill task,” said Samiullah Tariq, director research at Arif Habib Ltd., in Karachi. “If they’re unable to meet the target for the quarter, then a mini budget to raise taxes is possible in order to clear the next IMF quarterly review.”
The total revenue declined by 20% in the latest quarter due to a 98% decline in non-tax revenue, according to Tariq.
To contact the reporter on this story: Faseeh Mangi in Karachi at fmangi@bloomberg.net
To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Karthikeyan Sundaram
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