February 09, 2021 (MLN): Pakistan’s overall fiscal deficit in 1HFY22 stood at 2.1% of GDP (Rs1.37 trillion) against 2.5% of GDP (Rs1.137tr) in 1HFY21, showing a surge of Rs233 billion or 20% YoY, data issued by Ministry of Finance on fiscal operations showed on Wednesday.
As per the details, the government was able to maintain a surplus of Rs81bn in primary balance (0.1% of GDP) in 1HFY22 compared to a primary surplus of Rs337.23bn (0.7% of GDP) in the same period previous fiscal year.
As per the data, the government external and domestic borrowings to aid the budget deficit were stood at Rs1.02tr and Rs827bn respectively during 1HFY22, showing a more than twofold increase in external financing whereas the domestic financing plunged by 12% compared to the same period last year.
Government data showed three provinces Punjab, Sindh, and Baluchistan recorded a budget surplus while KPK reported a budget deficit, taking a cumulative surplus to Rs480.76bn. Individually, Punjab, Sindh and Balochistan provinces recorded a budgetary surplus of Rs332.7bn, Rs93.8bn, and Rs86.2bn, respectively, while KPK registered a budget deficit of Rs32bn.
Revenues and Expenditures
As the fiscal deficit is the difference between the expenditures and revenues of the government. During 1HFY22, total revenues and expenditures of the government as a percentage of GDP stood at 6.2% and 8.3% respectively, compared to 7.4% and 9.9% recorded in the same period last year. while in absolute terms, the total revenues amounted to Rs3.95tr and the expenditures to Rs5.32tr, showing a growth of 18% and 18.6% YoY respectively.
Tax Revenues stood at Rs3.19tr during 1HFY22, down by 23% YoY. Of the total tax revenues, about Rs2.9tr came from federal revenues and Rs271.2bn came from provincial. Moreover, within the tax revenues, direct taxes and sales tax (Federal) have increased by 22.71% YoY and 38% YoY, respectively. The tax to GDP ratio in 1HFY22 was 5% vs 5.4% in 1HFY21.
However, non-tax revenues decreased by 14.5% YoY to Rs764.9bn compared to Rs895.2bn in 1HFY21. To note, the government has budgeted to collect Rs610 billion from the petroleum levy for the entire fiscal year, targeting around Rs152.5bn from each quarter.
Going by the data, surplus profit from SBP inched up by 2% YoY to Rs380bn from Rs372.5bn in 1HFY21. The non-tax to GDP ratio stood at 2% in 1HFY22, compared to 1.2% in the same period last year.
On the expenditure front, current expenditures stood at Rs4.67tr during 1HFY22, where Mark-up Payments clocked in at Rs1.45tr.
Defence expenditures were declined by 71% YoY to stand at Rs140bn while development expenditures surged by 36.5% YoY. However, net lending witnessed a notable decline by 89% to Rs6bn. With that, total expenditure to GDP was 8.2% in 1HFY22.
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