The government is confronting the issue of budget deficit which has risen to 5.8 percent of the gross domestic product, indicating that the financial health of the country is returning to the same position as it was in 2013 when the Pakistan Muslim League-Nawaz took over the office. The budget deficit indicates the financial condition of a country where expenditures exceed its revenue. The term is generally used to refer to the government spending rather than the spending by business or individual, but can be applied to all of these entities. Incidentally, the budget deficit has already reached Rs1,864 billion mark.The deficit grew by 5.8 percent of the GDP mere in July and August during the current fiscal year against the prescribed limit of four percent which is kept through an amendment in Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005. The amendment was passed by the National Assembly without any debate as no member raised any objection against it.The situation is going from bad to worse due to political instability in the country as no one will be ready to take responsibility of the situation in the new setup.
According to experts, the figures of the budgets in federal and provincial level during the last financial year put fiscal deficit at 6.1 percent, which is the highest during the last four years of the PML-N government. The government is likely to incur budget deficit of over 8 percent this year, but it has apparently no magic wand to narrow the gap between income and expenditure.The total debt of the country reached Rs22.2 trillion during 2016-17 from to Rs14.8 trillion in 2013 and may reach Rs25 trillion.
At least Rs400 billion circular debt has not been included in the budget deficit of 5.8 percent in fiscal year 2016-17. Another Rs250 billion under the head of sales tax refunds has been withheld and the exporters are filing cases against the department concerned for their release. Economists believe the National Assembly was presented misleading figures to put the budget deficit at 4.3 percent in 2016-17 despite the fact the later figures put the deficit at 5.8 percent of the GDP.The rising fiscal deficit and huge debt burden are widening gap between the investment and savings, creating current account deficit. Only a stable government with mandate will have the capacity to resolve the economic mess.
