ISLAMABAD-The government might suffer shortfall of Rs400 billion in non-tax collection during current fiscal year due to the uncertainty created by the coronavirus pandemic.
The government is unlikely to complete the privatization programme during ongoing fiscal year due to the prevailing situation. The government had projected to generate around Rs400 billion by privatizing the public sector entities before June 30, 2020.
“The government is considering halting the process of privatization programme due to the uncertain economic situation caused by the coronavirus throughout the world,” said an official of the Privatization Commission.
He further said that Privatisation Division had already delayed the sale of 28 properties for final auction due to government restrictions on gatherings and non-availability of auction houses and related facilities.
Pakistan’s economy is already facing setback due to the coronavirus as government had projected decline in exports, tax collection and foreign remittances during the current fiscal year.
However, the government would now face massive shortfall in non-tax collection, which was hope for the economic team to curtail the budget deficit after facing shortfall in taxes.
The government had projected to generate Rs150 billion through privatization programme in budget for the year 2019-2020.
However, later, it had decided that privatization of 6 public sector entities and selling 27 government owned properties will generate around Rs400 billion before June 2020.
The PSEs included, SMEs bank, First Women Bank, two RLNG power plants including Haveli Bhadar Shah and Balloki, government’s 18.5 percent shares in Mari Petroleum Company Limited as well as Services International Hotel Lahore and Jinnah Convention Centre Islamabad.
Only privatization of two power plants located at Balloki and Haveli Bahadur Shah, would generate a minimum of Rs300 billion or $1.5 billion in non-tax revenue.
Earlier, before coronavirus pandemic, the government had decided to offset the tax collection shortfall through revenue generated from the privatization programme.
However, now the tax collection is expected to further widen due to slowdown in economic activities through coronavirus.
The Federal Board of Revenue (FBR) had estimated a revenue loss of over Rs300 billion during the April-June quarter of the current fiscal.
The FBR has already missed the tax collection target of the current financial year by a whopping Rs484 billion in eight months of the ongoing financial year.
It has collected Rs2.725 trillion during this period against the target of Rs3.209 trillion. However, the tax collection shortfall would further widen due to slowdown in economic activities in the country.
The massive shortfall in tax and non tax collection would broaden the budget deficit of the country. Pakistan had committed with the IMF to reduce the budget deficit to 7.2 percent of the GDP (Rs3.15 trillion) in the current fiscal year from all-time high Rs3.44 trillion (8.9 percent of the Gross Domestic Product) in last fiscal year.