Pakistan reports primary surplus in FY24 after gap of 20 years

ISLAMABAD: The federal government’s net revenue receipts were insufficient to cover even one major expenditure item during the fiscal year 2023-24, leading to a rapidly escalating debt trap.

Additionally, the Ministry of Finance reported a statistical discrepancy of Rs281 billion, indicating ongoing issues with reconciling government accounts. Despite these challenges, the government achieved a primary balance of Rs0.952 trillion, equivalent to 0.9 percent of GDP, in line with the IMF conditions.

According to fiscal operations for 2023-24, ending on June 30, 2024, released by the Ministry of Finance on Tuesday, net revenue receipts of the federal government shrank to Rs7.09 trillion. However, the largest expenditure item, debt servicing, consumed Rs8.2 trillion, indicating the government had to borrow approximately Rs1 trillion just to cover this cost. Gross revenue receipts totaled Rs12.36 trillion, with transfers to the provinces under the NFC Award at Rs5.263 trillion, leaving net revenue receipts at Rs7.097 trillion for the last fiscal year.

This situation clearly shows that all other expenditures — including defence, development, running of civil government, pay and pensions, as well as subsidies and grants — were financed through additional borrowing. The country has plunged into a debt trap, offering no easy solutions for policymakers, especially in the context of the 18th Constitutional Amendment and NFC Award.

The fiscal operations report shows that total revenues reached Rs13.3 trillion in the last fiscal year, while total expenditures amounted to Rs20.5 trillion, resulting in a gap of Rs7.2 trillion. Out of the total revenues, Rs10.08 trillion came from government revenues, with the Federal Board of Revenue (FBR) collecting Rs9.311 trillion and the provinces generating Rs0.774 trillion. Non-tax revenue collections stood at Rs3.2 trillion, with the federal government contributing Rs2.96 trillion and the provinces Rs0.23 trillion. Major sources of federal non-tax revenues included a petroleum levy of Rs1.019 trillion and SBP profits of Rs0.972 trillion.

Total expenditures for the country amounted to Rs20.47 trillion, with the largest portion, Rs18.57 trillion, going to current expenditures. The biggest expenditure item was debt servicing, consuming Rs8.2 trillion, followed by defence spending at Rs1.858 trillion.

Development spending at the federal level, through the Public Sector Development Programme (PSDP), was Rs0.635 trillion, while provincial development utilisation was Rs1.4 trillion. The overall statistical discrepancy at the consolidated level was Rs0.173 trillion, with the federal government’s discrepancy being higher at Rs0.283 trillion.

To finance the budget deficit of Rs7.2 trillion, the government secured financing of Rs6.9 trillion, with external financing amounting to a meagre Rs0.32 trillion.