The overall budget deficit – the gap between income and expenditure – widened to 5% of gross domestic product or Rs1.9 trillion in Jul-Mar 2018-19, according to the Ministry of Finance.
In absolute terms, it is the highest-ever budget deficit that Pakistan recorded for Jul-Mar in any fiscal year.
The PTI government failed to ensure financial discipline mainly because of a shortfall in tax collection which surged to Rs345 billion in the first ten months of the current fiscal year.
Total expenditure was registered at Rs5,506.2 billion against the total revenue of Rs3,583.7 billion during July-March FY 2019, according to a report released on Tuesday.
In absolute terms, the budget deficit during the first nine months was Rs441 billion higher as compared to the same period of the last fiscal year.
The high cost of debt payments and increasing defence expenditures are reported to be the two main reasons of high budget deficit which is likely to cross 7% of GDP at the close of the fiscal year 2018-19.
The federal government spent Rs1,459 billion as markup payments on loans while Rs774.7 billion on defence during the first three quarters, while Rs684.1 billion expenditure was registered on development and net lending, according to the finance ministry.
The government borrowed Rs1,922.4 billion from different sources to cover the budget deficit, which includes Rs 1398 billion from domestic banking and non-banking channels, and Rs 524.45 billion from external sources.
Tax revenue remained at Rs3,162 billion while non-tax income was registered at Rs421.60 billion during the first three quarters of FY 2018-19.
The provinces spent Rs292 billion less against their budget targets. Punjab saved Rs157 billion, Sindh Rs52 billion, Balochistan Rs43 billion and KP Rs 38 billion, according to official documents.
The overall budget deficit remained at 6.6 % of the GDP [Rs2,260 billion] during the last fiscal year 2017-18. The revised target of the budget deficit is 6.1 % of GDP for 2018-19.