Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
Figure 2.12. Budget balance in selected South and South-West Asian economies, 2010-2012
4
2
Percentage of GDP
0
-2
-4
-6
-8
-10
-12
Bangladesh
Bhutan
India
Iran (Islamic Republic of)
Maldives
Nepal
Pakistan
Sri Lanka
Turkey
-14
-16
-18
Source: ESCAP, based on national sources.
Note: Data for 2012 are estimates.
2010 2011 2012
and electricity prices and to preserve the safety
nets for the vulnerable groups, have added to
government expenditures. Solving energy sector
problems will help macroeconomic stability through
improving GDP growth, higher revenues and less
subsidy expenditures.
India also has seen a growing budget deficit in recent
years. Its budget deficit rose to 5.7% of GDP in
2011 due to lower than expected tax revenue and
higher than expected subsidy payments, which were
a result of elevated global prices for oil and fertilizer.
However, through expenditure restraint the budget
deficit was brought down to 5.2% of GDP in 2012.
The budget for 2013 is aimed at achieving further
fiscal consolidation, and the deficit is targeted at
being 4.8% of GDP. The lower budget deficit should
provide space for more productive private investment
as a result of lower government borrowing. This
should also help in containing inflation.
In Bangladesh, the budget deficit fell slightly to 4.4%
of GDP in 2012 from 4.1% in 2011. With growing
tax revenues, the tax-to-GDP ratio has been rising
and stood at 13% of GDP in 2012, which was
higher than the 11.8% rate in 2011. Improvement
in tax revenue can be attributed to reforms in tax
policy and administration, including modernization and
automation of tax administration, expansion of the tax
net and coverage, reduction of tax exemptions and the
creation of awareness among citizens about paying
taxes. The debt financing strategy being pursued
by the Government is to seek more concessional
financing to minimize the cost of debt financing and
avoid crowding out of the private sector.
The budget deficit in Sri Lanka though still high
has been narrowing in recent years. It came
down to 7.8% of GDP in 2011 from 8.1% of GDP
in 2010. It was expected that the Government’s
target for budget deficit at 6.2% of GDP in 2012
would be achieved by restraining expenditure and
improving revenue collection, particularly through
the strengthening of tax administration. In Maldives,
the budget deficit still remains high but it was
brought down to 7.5% of GDP in 2011 and 12.6%
in 2012. In Nepal, with growing tax revenues, the
tax-to-GDP ratio has been improving and it stood
at more than 14% in 2011. The budget deficit in
recent years has been about 3.5% of GDP. The
budget deficit of Bhutan rose to 4.4% of GDP in
2012 from 2.3% in 2011.
Fiscal policy in the Islamic Republic of Iran is
being tightened gradually as oil exports fall which
consequently reduces government revenues. About
60% of the country’s total fiscal revenue originates
from oil exports. In the country’s fifth five-year
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