Charter of the Economy Table 2.1: Size of the Budget Deficit(% of GDP) Budget Deficit (Budgeted) (Actual) Budget Deficit Difference 2019-20 7.1 8.1 1.0 2018-19 4.9 8.9 4.0 2017-18 4.1 6.6 2.5 2016-17 3.8 5.8 2.0 2015-16 4.3 4.6 0.3 Source: MOF, fiscal operations prime causes for the jump in the rate of inflation. The year, 2018-19 witnessed an unprecedented divergence of 4 percent of the GDP between the targeted and the actual budget deficit. The consequence was an unplanned resort to massive domestic bank borrowing. It was budgeted at Rs 1 trillion in 2018­19 and turned out to be more than Rs 2.5 trillion. Consequently, the monetary expansion was 18 percent and this is one of the The problem with optimistic projections is that they create a false sense of complacency. Corrective action is delayed until it becomes almost too late and draconian steps have then to be taken to remedy at least partially the situation. 2.8. Improving the Economic Information System and S t a ti s ti c s Formulation of appropriate policies and early identification of emerging crises hinge crucially on the development and operation of an adequate economic information system. Currently, there are major gaps in the statistical data base which need to be filled on a top priority basis. These gaps include the following: a) Quarterly GDP series by sector : It is vital from the viewpoint of timely and respon­sive economic governance that the PBS should start preparing quarterly GDP series by sector. There is substantial seasonality in economic activities in Pakistan, linked partly to the crop seasons. India has had a quarterly GDP series for many years now. Examination of the Indian quarterly GDP series reveals that quarterly growth rates can vary significantly, sometimes by 3 to 5 percentage points. Therefore, preparation a of quarterly GDP time series will give an early picture of how the economy is performing. b) Estimation of Provincial Gross Regional Products: Pakistan has devolved to the four Provincial Governments who enjoy considerable freedom in planning the develop­ment of their respective jurisdictions. Almost 57 percent of the public development spending is by the Provincial Governments today as compared to less than 30 percent two decades ago. A fundamental prerequisite for effective regional planning is the knowledge of the size, composition by sector/expenditure and growth of the Provincial economy. Here again, India is ahead with state-wise GRP estimates since the 60s. in the context of 26