The first year of the Pakistan Tehreek-i-Insaf (PTI) government concluded with a record 8.9 per cent fiscal deficit — perhaps the highest in the country’s history — as revenues plummeted while expenditures remained at the same level they were at the previous year, when expressed as a percentage of GDP. In absolute terms, however, expenditures broke previous records while revenues were stagnant.
As a result, the fiscal deficit, which is the difference between revenues and expenditures of the federal government, came in at a record 8.9pc of GDP. As late as June 2019 the government had announced that it intended to keep the deficit at 7.1pc of GDP, whereas its target at the start of the year was set at 4.9pc. Since the country’s GDP is Rs38.6 trillion at current market prices, each percentage point increase in the deficit numbers denotes significant slippage.
The details of fiscal operations released by the ministry of finance on Tuesday put the country’s full year fiscal deficit at Rs3.445tr or 8.9pc of GDP — the highest since 1979-80 as per past Pakistan Economic Surveys. The deficit stood at Rs2.26tr or 6.6pc of GDP in the previous year.
