Pakistan’s budget deficit escalated to a historic height by touching Rs 5.259 trillion, equivalent to 7.9 per cent of Gross Domestic Product, in the last fiscal year
ISLAMABAD: Despite ballooning economic size after rebasing national accounts, Pakistan’s budget deficit escalated to a historic height by touching Rs 5.259 trillion, equivalent to 7.9 per cent of Gross Domestic Product, in the last fiscal year.
The primary deficit calculated after excluding mark-up payments on total public debt including domestic and external is considered sacrosanct in eyes of the IMF and other multilateral creditors soared to Rs 2.077 trillion or 3.1 per cent of GDP during the fiscal year ended on June 30, 2022. The government had envisaged throwing a primary surplus of 0.7 per cent of GDP for the last fiscal year but its fiscal position deteriorated thus pushing up the primary deficit of 3.1 per cent of GDP despite having tight IMF scrutiny.
The expansionary fiscal policies created imbalances on the economic front and ultimately pushed up inflationary pressures in the range of over 25 per cent CPI- based inflation on monthly basis. The gap between total revenues and expenditures of the country known as budget deficit widened to a historic height and touched the absolute figure of Rs 5.3 trillion first time in the country’s history. The debt servicing repayments have outpaced all other expenditure heads as it stood at Rs 3.18 trillion in the last fiscal year. The defense spending utilized Rs 1.41 trillion. It’s ironic that the federal Public Sector Development Programme (PSDP) became the major victim and its utilization faced a major slash down and stood at just Rs 400 billion.
The rebasing of national accounts accumulated the size of the economy close to Rs 66.9 trillion (close to Rs 67 trillion) paving the way for achieving the budget deficit at 7.9 per cent of Gross Domestic Product (GDP). If the previous size of the economy is taken into account then the budget deficit might have exceeded 10 per cent of GDP.
According to fiscal operation released on Friday, the total revenues fetched stood at Rs 8.03 trillion in the fiscal year 2021-22 and expenditures booked at Rs 13.2 trillion so the gap stood at Rs 5.3 trillion for the fiscal year ended on June 30, 2022.
The Pakistan Democratic Movement (PDM) led government blamed the PTI-led regime for its worsened fiscal position during its rule of first nine months in the last fiscal year. But the PTI leadership argued that the official figures did not lie as the budget deficit was under control in the first three quarters but the PDM-led government hiked the budget deficit up to unprecedented levels.
The fiscal operation shows that the gross tax revenue receipts stood at Rs 7.3 trillion and transfer to the provinces under the NFC shares and other heads consumed Rs 3.58 trillion. The net revenue receipts were left to the tune of Rs 3.73 trillion. The expenditure of the federal government went up to Rs 9.35 trillion out of which the current expenditures stood at Rs 8.45 trillion. The federal government’s budget deficit stood at Rs 5.61 trillion and the provinces generated a revenue surplus of around Rs 350 billion so the consolidated budget deficit reduced to Rs 5.3 trillion for the last fiscal year 2021-22.
Out of total revenues of Rs 8.035 trillion, the government fetched tax revenues of Rs 6.755 trillion including FBR’s tax revenue of Rs 6.142 trillion and non-tax revenues of Rs 1.28 trillion in the last fiscal year. Out of non-tax revenues, the major revenue spinners of surplus profit of SBP to the tune of Rs 473.5 billion, petroleum levy Rs 127 billion, profit of PTA Rs 103 billion and royalties on oil and gas Rs 90 billion etc.
Of the total booked expenditures, the mark-up payment consumed Rs 3.182 trillion, defense Rs 1.4 trillion, pension Rs 0.584 trillion, running of civil government Rs 0.546 trillion, subsidies Rs 1.5 trillion, grants to provinces and others Rs 1.2 trillion and grants to others Rs 1.4 trillion in the last fiscal year.