Pakistan’s Fiscal Deficit Contracts to 2.1% of GDP in 1HFY22

Pakistan’s fiscal deficit contracted to 2.1 percent of GDP during the first half of the current fiscal year compared to 2.5 percent in the same period of the last year mainly due to rebasing of National Accounts.

According to a report issued by the Ministry of Finance on the fiscal operation of the first half of the FY2021-22, the half yearly debt payments stood at Rs. 1.459 trillion and defense payments stood at Rs. 520 billion out of total expenditures of Rs. 5.3 trillion.

The budget deficit narrowed by 0.4 percent of GDP to 2.1 percent during the first half of the current year. As per the report, the decrease in the budget deficit was recorded because of the rebasing of National Accounts from 2005-6 to 2015-16.

In real terms, the budget deficit increased from Rs. 1138 billion to Rs. 1372 billion during the first half of the current fiscal year compared to the same period of the FY2020-21. Owing to rebasing of the National Accounts, the size of GDP soared to Rs. 63.978 trillion, up from Rs. 45.567 trillion, the report said.

The government bridged the budget deficit mainly from external resources as it took Rs. 1.026 trillion budgetary support from the external side. The government also took Rs. 364 billion from the internal side, which included Rs. 269 billion from the banking sector and Rs. 77 billion from the non-banking sector.

The total revenue of the government increased to Rs. 3.956 trillion from Rs. 3.351 trillion during the period because of substantial growth in tax revenue. The tax revenue surged by Rs. 736 billion to Rs. 3.191 trillion, mainly due to income of the Federal Board of Revenue (FBR), which jumped to Rs. 2.920 trillion from Rs. 2.210 trillion during the first six months of the current fiscal year.

The non-tax revenue, however, contracted from Rs. 895 billion to Rs. 765 billion, mainly due to a significant decrease in income from the petroleum levy. The income from the petroleum levy decreased to Rs. 70 billion from Rs. 275 billion during the same period last year.

The total expenditure of the government increased to Rs. 5.3 trillion from Rs.4.5 trillion during the first half of the current fiscal year compared to the same period of the last fiscal year. Out of the total expenditure, the current expenditure was recorded at Rs. 4.6 trillion, up from Rs. 4 trillion during the same period of the previous fiscal year. The development expenditure & net lending surged to Rs. 571 billion from Rs. 458 billion during the first half of the current fiscal year.

The statistical discrepancy during the first half of the current fiscal year was recorded at Rs. 80.6 billion, up from Rs. 1.6 billion during the corresponding period last year which shows the poor calculation and record of government expenditure.

According to the report, the burden of the interest payments of government loans has slightly decreased as markup payments reduced to Rs 1.459 trillion from Rs. 1.475 trillion during the first half of the current fiscal year against the same period of the last fiscal year.

The expenditure on defense increased to Rs. 520 billion, up from Rs. 487 billion during the first six months of the current fiscal year as compared to the same period of the last fiscal year.

According to the report, the federal government transferred Rs. 1.694 trillion under the National Finance Commission (NFC) to provinces. The provinces surrendered Rs. 481 billion to the federal government to decrease the volume of the budget deficit.



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