Reuters : Aug 27, 2019, 10:26 PM
Pakistan’s budget deficit widened to 8.9% of gross domestic product in the financial year that ended in June, according to data on Tuesday that underlines the severe economic crisis facing the country.
The deficit size compared with a 7.1% estimate Prime Minister Imran Khan’s government gave in June and with 6.6% during the year that ended in June 2018.
Pakistan, which in July sealed a $6 billion loan agreement with the International Monetary Fund, has been struggling to avert a balance of payments crisis and to prevent its debt from spiralling out of control.
The full-year’s deficit figure was released on the finance ministry website. Revenue during the year ended June 30 equalled 12.7% of GDP, a fall from the previous financial year’s 15.2%.
The figures showed government expenditure at 21.6% of GDP in the latest financial year, compared with 21.8% a year earlier.
Pakistan has a notoriously narrow tax base, with fewer than 1% of its 208 million people filing income tax returns. There is a vast informal economy and several key sectors of the official economy are largely exempt from tax.
The budget for 2019-20, passed in June, approved measures designed to cut the deficit by bringing in o government coffers the equivalent of 1.7% of GDP. Pakistan has promised a multiyear effort to overhaul its tax and budget system to put its weak public finances on a firmer footing.