The federal government has succeeded in converting its reserve funds into a surplus of Rs 44.9 billion as of Thursday, after the government reduced its expenditure compared to revenue collection in around seven months of the current fiscal year.
The change in the status of public finance was a result of the government reducing its expenditure despite receiving borrowings. The government borrowed internal loans worth Rs 1.48 billion at an average interest rate of 5 percent in the past seven months.
Last year, by mid-February, the federal government’s reserve funds were in a deficit of Rs 150 billion due to the overspending by the government bodies. However, this year, financial management has resulted in a significant turnaround, with the accumulated fund now showing a reduced deficit of Rs 137 billion.
The government has adopted a policy to minimize the deficit of the state coffers without increasing borrowings, said officials of the Ministry of Finance (MoF). As of Thursday, the government collected receipts worth Rs 718 billion, while expenditures amounted to Rs 672.61 billion during the same period. This shows that the federal government maintained its reserve funds in surplus of over Rs 44 billion due to the reduction in expenditure.
The government collected revenue from various sources, including Rs 561 billion from tax and non-tax revenue, Rs 8.33 billion from foreign grants, Rs 4.47 billion from the return of loan investments and remaining Rs 144.2 billion from external and internal loans.
In terms of public expenditure, the government exhausted Rs 501.18 billion in recurrent expenditure, Rs 59.44 billion in capital expenditure and Rs 112 billion in financial management.
The government expenditure declined mainly because of the government’s decision to not allow cash transfer funds. Similarly, the MoF refused to pay for the development projects if the projects were not included in the Red Book for the current fiscal year.
While the MoF has been endeavoring to reduce the deficit of the reserve funds through curtailing the public expenditure, banks have been unable to disburse loans to private businesses citing the slump in economic activities. An MoF official said the situation is likely to reduce the government revenue collection further.
