Pakistan Records Rs. 197 Billion Primary Deficit in Q3 FY24

Pakistan recorded its first negative primary balance of FY24 during the quarter that ended on March 31, 2024 (3QFY24), amounting to a deficit of Rs. 197 billion.

However, during 9MFY24, the economy recorded a primary surplus amounting to Rs. 1.6 trillion, equivalent to 1.5 percent of the GDP. Furthermore, Pakistan achieved a revenue collection of Rs. 6.7 trillion for the FBR revenue collection, in line with the target set by the government, Arif Habib Limited said in a report.

Notably, the International Monetary Fund in November 2023 requested Pakistan to convert its primary deficit into a surplus.

During 9MFY24, Pakistan experienced a fiscal deficit of Rs. 3.9 trillion, indicating a 27 percent YoY rise over the corresponding period in the previous year. In terms of the GDP percentage, the deficit settled at 3.7 percent during this period, in contrast to the 3.6 percent recorded in 9MFY23.

Total revenue clocked in at Rs. 9.8 trillion (9.2 percent of GDP), up 41 percent YoY. This represents a significant improvement from Rs. 6.9 trillion recorded in 9MFY23. Specifically, tax revenue experienced a YoY increase of 29 percent, reaching Rs. 7.3 trillion. Total revenue collected by the FBR marked a 30 percent YoY growth.

Indirect taxes in Pakistan exhibited a 21 percent YoY growth, amounting to a total of Rs. 3.5 trillion. This growth was mainly driven by increases in sales tax, customs duty, and federal excise duty, which recorded YoY increments of 18 percent, 15 percent, and a substantial 64 percent, respectively. These increments resulted in a cumulative collection of Rs. 2.2 trillion for sales tax, Rs. 808 billion for customs duty, and Rs. 402 billion for FED. On the other hand, direct taxes witnessed a YoY growth of 41 percent, totaling Rs. 3.3 trillion.

Non-tax revenues witnessed a remarkable 91 percent YoY growth, reaching a total of Rs. 2.5 trillion. This substantial increase can be primarily attributed to a significant surge in Petroleum Levy collections which experienced a staggering 99 percent YoY rise, reaching Rs. 720 billion.

Furthermore, total expenditure rose by 37 percent YoY to Rs. 13.7 trillion (12.9 percent of GDP). The current expenditure experienced a 33 percent YoY increase to Rs. 12.3 trillion. To note, interest payments experienced a substantial growth of 54 percent YoY, totaling Rs. 5.5 trillion.

During 9MFY24, the overall PSDP reached Rs. 1.16 trillion, reflecting a 14 percent YoY increase. At the provincial level, PSDP amounted to Rs. 888 billion, marking a 23 percent jump on a YoY basis. On the other hand, the federal disbursements stood at Rs. 270 billion, down 8 percent YoY.

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