ISLAMABAD – Budget deficit remains out of government’s control because of unavailability of financial aid promised by the ‘Friends of Pakistan’ and the Kerry-Lugar Bill.
According to Finance Ministry sources, the government had allocated Rs 30 billion as power subsidy in 2010-11 budget but it still has to pay Rs 200 billion. Similarly, the circular debit in power sector has become worst, exceeding Rs 300 billion to Rs 600 billion.
While announcing budget, Federal Bureau of Revenue had assured the recovery of Rs 165 billion but only Rs 100 billion were recovered. Hopes for Rs 72 billion were pinned on the RGST which is still in limbo.
The government has also borrowed Rs 400 billion from the State Bank during the first six month of the current year which has doubled the inflation as the bank printed new currency notes for it and there is possibility of further increase in the budget deficit and in the inflation, which is expected to climb by 4.5 percent to 7.5 percent.
According to sources, budget deficit will exceed Rs 800 billion to Rs 1250 billion in the coming budget. The government had requested nine extra months for the implementation of its six-point agreement with the IMF but has not been able to fulfil it and seems to be in deep trouble.
