ISLAMABAD, Feb 29: Pakistan's defence expenditure, which amounted to 54.5 per cent of the total annual allocation, has outpaced development expenditure which stood at 35.5 per cent during first half (July-December) of the current fiscal year.

Latest statistics submitted to the International Monetary Fund (IMF) by the ministry of finance suggest that defence expenditure during the first six months of the current year has amounted to Rs87.319 billion against development expenditure of Rs56.8 billion. Both defence and development have been allocated Rs160 billion each for the full fiscal year.

"At this pace of spending, the government would hardly be able to utilize Rs110-120 billion by end of the fiscal year against a PSDP allocation of Rs160 billion while defence spending would end up in the vicinity of Rs180 billion instead of Rs160 billion budgetary allocation," said a senior government official.

The official requesting anonymity said the slow PSDP (Public Sector Development Programme) utilization during earlier part of the year would force the authorities to make hasty releases in the last quarter, thus, compromising the quality of project implementation.

The public sector spending have remained slow despite the fact that principal accounting officers of the respective ministries and divisions have been authorised to draw up to 45 per cent of total allocation without prior approval to ensure maximum utilization, quality implementation and timely completion of projects.

Official figures duly verified by the Auditor-General of Pakistan Revenue and the State Bank of Pakistan also suggest that total expenditure during the first six months stood at 9.4 per cent of the GDP and out-paced revenue collection which was recorded at 8.6 per cent of the GDP. The country's GDP is currently estimated at Rs4.42 trillion.

The total public sector expenditure during the first half of the year stood at Rs412.795 billion while current expenditure amounted to Rs352.5 billion against a full year target of Rs805 billion and Rs645 billion, respectively.

Of this, the federal expenditure amounted to Rs252.3 billion while provincial expenditure stood at Rs100 billion. As such, the total expenditure turned out to be 9.4 per cent of the GDP while current expenditure amounted to 8 per cent of the GDP.

Total revenue amounted to Rs379 billion, of which CBR revenue, surcharges and non-tax revenue amounted to Rs231 billion, Rs33 billion and Rs101.4 billion, respectively.

Total privatization proceeds amounted to Rs1.697 billion during the first half of the year which has declined from Rs1.999 billion in September 2003. Total interest payments during the July-December 2003 period amounted to Rs98.8 billion or 2.2 per cent of the GDP.

Thus, the budget deficit during the period July-December 2003 was recorded at Rs33.7 billion or 0.8 per cent of the GDP against a full year target of Rs179 billion.

This gap was bridged through a combination of external resources at Rs10 billion and domestic borrowing of Rs22 billion. The bank borrowing went into negative by Rs8.3 billion but non-bank borrowing increased to Rs30 billion.

Similarly, the four provinces collected a total of Rs126.5 billion. The provincial share in the federal taxes amounted to Rs90.5 billion while total provincial expenditure stood at Rs135 billion during the first half of the current fiscal year. Federal loans and transfers to the provinces amounted to Rs11 billion.

PUNJAB: The Punjab collected a total revenue of Rs60 billion and its total expenditure amounted to Rs74.5 billion. Of this, Rs44.5 billion share went to the federal revenue while its provincial taxes amounted to Rs7.9 billion.