ISLAMABAD: The budget deficit widened to Rs 1.4 trillion during the first six months of the current financial year.
Although the federal government kept tight control over overspending, the budget deficit nevertheless reached Rs 1.4 trillion. According to Finance Ministry sources, the July-December budget deficit was 3.1 percent of GDP (Rs 1.4 trillion).
Meanwhile, interest payments on loans reached Rs 1.5 trillion due to loans are taken to bridge the gap between expenditure and income. As far as the expansion of the economy is concerned, the economic volume remained the same as last year, but the budget deficit widened.
The government has set a budget deficit target of Rs 3.43 trillion (7.5 percent of GDP) for the current financial year. Between July and December, the federal government borrowed Rs 1.2 trillion, up 20 percent from the previous year. The federal government blames the provinces for more debt under the NFC.
It should be noted that the first meeting of the NFC will be held on Thursday which will be chaired by Finance Minister Dr. Abdul Hafeez Sheikh. The meeting will be attended by the four provincial finance ministers.
According to sources, during the meeting, the federal and provincial governments will be briefed on where they stand in the light of the new targets under consideration with the IMF.