affanpervez
Minister (2k+ posts)
BUDGETARY SUPPORT: GOVERNMENT BORROWS RS 600 BILLION IN TWO MONTHS
A shortfall in the revenue collection has resulted in massive government borrowing from domestic banking sector particularly the SBP. The federal government's borrowing for budgetary support from the central bank has crossed Rs 600 billion mark in first two months of the current fiscal year. "Below the target revenue collection and higher current expenditures are responsible for the substantial budgetary borrowing from the SBP," bankers said.
They said massive borrowing from the banking system clearly reflects that the government is still facing financial difficulties, despite taking several measures to increase its revenue collection and curtail the rising expenditures. The government had increased General Sales Tax (GST) from 16 percent to 17 percent in the Budget 2014 to enhance its income. In addition, the government has increased power and gas tariff to reduce the burden of subsidies, however, the government steps for the higher revenue generation seems to have failed as the budgetary borrowing is continuously increasing, they pointed out.
They said borrowing of Rs 500 billion to the power sector to settle the circular debt issue is also a reason for higher borrowing during this fiscal year. According to the State Bank of Pakistan the federal government's borrowing for budgetary support has registered a notable increase during two months of current fiscal year (FY14). The federal government budgetary borrowing rose to Rs 637 billion in July-August of FY14 against retirement of Rs 78.393 billion in the same period of last fiscal year.
However, during the period under review, provinces have shown a better financial management as cumulatively four provinces retired some Rs 66.748 billion to the SBP. In previous years, the SBP made several requests for limited borrowing for budgetary support. In order to restrict the federal government from higher borrowing from the central bank, the SBP also made some amendment to its Act.
According to the State Bank of Pakistan (Amendment) Act (2012), the government borrowing from the SBP is required to be repaid at the end of each quarter and the existing stock is to be retired within eight years. In addition, if the government fails to fulfill this quarterly repayment the minister of finance will give an explanation on the National Assembly's floor.
Recently, the ministry of finance has assured the International Monetary Fund (IMF) that the ceiling on net government borrowing from the SBP (including provincial governments, stock, billions of Pakistani rupees) will be Rs 2,690 billion at end of September 2013.
Economists emphasized on the importance of fiscal consolidation which requires an effective tax system and restraining unproductive expenses, particularly those related to public sector enterprises and subsidies to energy sector. They said it seems difficult for the federal government to maintain net zero borrowing at the end of every quarter due to financial problems.
https://www.google.com/#q=BUDGETARY+SUPPORT:+GOVERNMENT+BORROWS+RS+600+BILLION+IN+TWO+MONTHS
A shortfall in the revenue collection has resulted in massive government borrowing from domestic banking sector particularly the SBP. The federal government's borrowing for budgetary support from the central bank has crossed Rs 600 billion mark in first two months of the current fiscal year. "Below the target revenue collection and higher current expenditures are responsible for the substantial budgetary borrowing from the SBP," bankers said.
They said massive borrowing from the banking system clearly reflects that the government is still facing financial difficulties, despite taking several measures to increase its revenue collection and curtail the rising expenditures. The government had increased General Sales Tax (GST) from 16 percent to 17 percent in the Budget 2014 to enhance its income. In addition, the government has increased power and gas tariff to reduce the burden of subsidies, however, the government steps for the higher revenue generation seems to have failed as the budgetary borrowing is continuously increasing, they pointed out.
They said borrowing of Rs 500 billion to the power sector to settle the circular debt issue is also a reason for higher borrowing during this fiscal year. According to the State Bank of Pakistan the federal government's borrowing for budgetary support has registered a notable increase during two months of current fiscal year (FY14). The federal government budgetary borrowing rose to Rs 637 billion in July-August of FY14 against retirement of Rs 78.393 billion in the same period of last fiscal year.
However, during the period under review, provinces have shown a better financial management as cumulatively four provinces retired some Rs 66.748 billion to the SBP. In previous years, the SBP made several requests for limited borrowing for budgetary support. In order to restrict the federal government from higher borrowing from the central bank, the SBP also made some amendment to its Act.
According to the State Bank of Pakistan (Amendment) Act (2012), the government borrowing from the SBP is required to be repaid at the end of each quarter and the existing stock is to be retired within eight years. In addition, if the government fails to fulfill this quarterly repayment the minister of finance will give an explanation on the National Assembly's floor.
Recently, the ministry of finance has assured the International Monetary Fund (IMF) that the ceiling on net government borrowing from the SBP (including provincial governments, stock, billions of Pakistani rupees) will be Rs 2,690 billion at end of September 2013.
Economists emphasized on the importance of fiscal consolidation which requires an effective tax system and restraining unproductive expenses, particularly those related to public sector enterprises and subsidies to energy sector. They said it seems difficult for the federal government to maintain net zero borrowing at the end of every quarter due to financial problems.
https://www.google.com/#q=BUDGETARY+SUPPORT:+GOVERNMENT+BORROWS+RS+600+BILLION+IN+TWO+MONTHS
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