Karachi, August 27, 2019: The Government has reported 4QFY19 fiscal deficit of 3.9 percent of GDP, taking full-year FY19 deficit to 8.9 percent of GDP or Rs3.4 trillion vs. 6.6 percent or Rs2.2 trillion in FY18 which is a record high. Previous high deficit was seen in FY12 at 8.8 percent.
The numbers are different from the revised estimates of 7.2 percent which the Govt. presented in Budget FY20. The fiscal deficit fell short of Govt. expectations mainly on the back of lower than expected FBR tax revenue collection of Rs3.8 trillion (against revised estimates of Rs4.1 trillion).
Interest expense as percentage of tax revenues increase to all time high of 47 percent vs. FY18 ratio of 34 percent. Higher interest expenses is due to increase in interest rates coupled with bank borrowings to finance fiscal slippages.
