The reserve fund of the federal government stood at a negative of Rs 204 billion as of mid-June this year, mainly due to the excessive government expenditure compared to the low receipts that the government generated during the period.
A report prepared by the Financial Comptroller General Office (FCGO) shows that the negative balance in the reserve fund increased by Rs 23.70 billion in the review period. By the end of the fiscal year 2022/23, the figure was Rs 181 billion.
As of Monday, the government earned total receipts of Rs 944.59 billion. This included tax revenue of Rs 829.03 billion and non-tax revenue of Rs 90.15 billion. Likewise, the government received Rs 2.75 billion in grants and Rs 22.65 billion in heading of ‘other receipts’ that include domestic and external borrowings.
On the other hand, the government spent Rs 1.181 trillion during mid-July 2023 and mid-June, 2024, which was Rs 3 billion more than the amount spent in the review period last year. This included recurrent expenditure of Rs 822.80 billion and capital expenditure of Rs 134.97 billion. The government spent Rs 223.50 billion on interest and loan repayments.
According to officials of the FCGO, the government will be unable to provide payment if its negative reserve fund widens further. “As of now, the government issued checks are cashable mainly due to funds it has which are supposed to be settled under various contexts,” the source said.
In the first 11 months this year, the government took domestic borrowing of Rs 235 billion, which was 11 percent more than the amount in the same period last year. Now, the government has fiscal space of only Rs 5 billion to take loans for the current fiscal year.
The negative balance of the government’s reserve fund seems to increase more in the last month of the current fiscal year. As of now, the government spent only 44.68 percent of its liabilities on development projects. In this regard, the government will need to release more money in the final month as the proportion of capital expenditure soars in the eleventh hour every fiscal year.
In addition, the government will have to allocate around Rs 70 billion for debt servicing. The government will also have to manage Rs 140 billion to provide fiscal equalization and matching grants to the sub-national governments.
