Debt servicing is eating up 48 percent of total government earnings mainly due to high interest rates during the first quarter of the current fiscal year 2023-24.
The Finance Ministry has issued a Fiscal Operation Report for the First quarter of the current fiscal year almost one week ahead of the scheduled timeline due to the IMF Review Meeting.
The Government has allocated Rs. 7,304 billion for debt servicing of the internal and external debt for the current fiscal year. It had allocated Rs. 6,430 billion ($22.17 billion) for internal public loans for the current fiscal year.
The govt has estimated Rs. 872 billion ($3.1 billion) in debt servicing for external loans for the current fiscal year. It is pertinent to mention here that the central government debt has reached Rs. 63.966 trillion up to Aug 31, 2023.
The internal debt stock has swelled to Rs. 39.792 trillion and external debt has gone beyond to Rs. 24.174 trillion during the period.
On the other hand, the authorities have jacked up the policy rate by 6 percent from 17 percent to 23 percent to control the inflation in the last year. The State Bank of Pakistan has raised the policy rate mainly to curtail the demand in the country.
Both, policy rate and heavy borrowing from internal sources have pushed up the debt servicing pressure on national ex-checker.
The data in the Fiscal Report shows that the markup spending surged to Rs. 1,379 billion ($4.75 billion) during the first quarter of the current fiscal year. The government has paid Rs. 1,252 billion on domestic public loans during the first quarter of the current fiscal year. It has paid Rs. 127 billion on external debt during the period.
According to the Fiscal Operation Report, the total expenditures stood at Rs. 3.648 trillion which include Rs. 3.172 trillion current expenditure, Rs. 1.379 trillion mark-up payments, Rs. 343.068 billion defense expenditure, Rs. 203.303 billion pensions, Rs. 131.917 billion running of civil govt, Rs. 2.488 billion subsidies and Rs. 177.303 billion on the account of grants to others.
Development expenditure & net lending stood at Rs. 282.387 billion during the first three months.
Federal PSDP was Rs. 40.925 billion and provincial Rs. 245.53 billion while statistical discrepancy at Rs. 193.563 billion.
Overall, Pakistan’s budget deficit has surged to Rs. 963 billion (0.9 percent GDP) during the first quarter of the current fiscal year 2023-24
Financing of the budget deficit was met through net external borrowing of Rs. 425.170 billion and domestic (net) borrowing of Rs. 537.631 billion.
The primary balance was recorded at Rs. 416.811 billion (0.4 percent).
Tax revenue was recorded at Rs. 2.216 trillion with Federal Board of Revenue taxes standing at Rs. 2.041 trillion with direct taxes of Rs. 934.789 billion and indirect taxes of Rs. 1.106 trillion which included taxes on international trade (Customs) Rs. 252.220 billion, sales tax Rs. 726.944 billion, federal excise Rs. 127.594 billion. Provincial tax collection was Rs. 175.391 billion.
Total non-tax revenue collection was Rs. 468.815 billion with federal non-tax revenue of Rs. 452.069 billion which included mark-up (Provinces) Rs. 18.142 billion, mark-up (PSEs & Others) Rs. 66.762 billion, dividend Rs. 33.816 billion, profit PTA & others Rs. 3.581 billion, defense receipts Rs. 6.600 billion, passport fee Rs. 14.541 billion, discount retained on crude oil Rs. 6.317 billion, royalties on oil/gas Rs. 41.652 billion, windfall levy against crude oil Rs. 5.710 billion, petroleum levy on LPG Rs. 870 million, gas infrastructure development cess Rs. 378 million, petroleum levy Rs. 222.067 billion and others Rs. 32.633 billion and provincial Rs. 33.888 billion.
