Islamabad: The federal government has managed to limit the overall budget deficit to 8.1% of the country’s Gross Domestic Product (GDP), corresponding to a figure of PKR 3.4 trillion; lower than the International Monetary Fund (IMF)’s forecast of 9.2% (PKR 3.9 trillion) — a news source reported on August 13. This move was made possible as a result of the government making back-cuts in expenditures, as well as the recent accrual of provincial surpluses.
According to the Ministry of Finance’s report, the 8.1% deficit also looks attractive in the face of independent assessments that predicted the deficit to be around 10%, due to the effects of the ongoing coronavirus pandemic. However, the deficit is higher than the original pre-COVID target of 7.1% of the GDP, which had been approved under the budget of 2019-20. The government also had to reduce the federal development budget by PKR233 billion to limit the deficit.
Additionally, Pakistan’s primary deficit was also in a better position than the IMF’s original prediction. The IMF had forecasted the deficit to be around 2.7% of the GDP, while Pakistan’s primary deficit (revenue minus interest payments) stood at 1.8% of the GDP.
