Development expenditures have been set at PkR786bn in Budget FY11. In our view, any slippage in current expenditures or lower than target revenues will eat into the funds allocated for infrastructural development. Based on the analysis we have presented in our post budget report, we estimate that in net terms the slippage on the fiscal side will only be marginal in FY11. Our forecast are based on two primary assumptions:
· SBP refrains from raising interest rates in FY11 as this will lead to higher than budgeted domestic debt servicing and lower than target tax generation
· International oil prices remain at their current levels where any increase will make it difficult to reduce the subsidy spending
AKD Research
8 June 2010
