November 9, 2021 (MLN): Pakistan’s overall fiscal deficit in 1QFY22 stood at 0.8% of GDP (Rs 438.49 billion) against 1.1% of GDP (Rs 484.32 bn) in 1QFY21, showing a decline of Rs46bn or 9% YoY.
The data issued by Ministry of Finance on fiscal operations for FY22 showed that the government was able to maintain a surplus of Rs184.2 in primary balance as it recorded a deficit of Rs654bn or 0.3% of GDP in 1QFY22 compared to a primary surplus of Rs257.7bn (0.6% of GDP) in the same period previous fiscal year.
As per the data, the government plugged 106% of the deficit through External borrowing of Rs466.12bn (1% of GDP) as government retired net Rs27.63bn through domestic financing. Compared to the same period last year, the government domestic and external borrowings to aid the budget deficit were stood at Rs322.9bn and Rs161.37bn respectively.
Government data showed three provinces Punjab, Sindh, and Baluchistan recorded a budget surplus while KPK reported a budget deficit, taking cumulative surplus to Rs277bn. Individually, Punjab, Sindh, and Baluchistan provinces recorded a budgetary surplus of Rs183.2bn, Rs60.25bn, and Rs36.6bn, respectively, while KPK recorded a budget deficit of Rs3.18bn. Compared to same period last year, Punjab and Baluchistan province recorded a budget surplus of Rs28.24bn and Rs29.52bn respectively, while Sindh and KPK reported a budget deficit of Rs8.58bn and Rs4.8bn respectively.
Revenues and Expenditures
As the fiscal deficit is the difference between the expenditures and revenues of the government. During 1QFY22, total revenues and expenditures of the government as a percentage of GDP stood at 3.4% and 4.2% respectively, compared to 3.2% and 4.3% recorded in the same period last year. while in absolute terms, the total revenues amounted to Rs1.8trillion and the expenditures to Rs2.24tr, showing a growth of 22% and 14% YoY respectively.
Tax Revenues stood at Rs1.53tr during 1QFY22, up by 37% YoY. Of the total tax revenues, about Rs1.39tr came from federal revenues and Rs134.79bn came from provincial. Moreover, within the tax revenues, Direct Taxes and Sales Tax (Federal) have increased by 32% YoY and 43% YoY, respectively. The tax to GDP ratio in 1QFY22 was 3% vs 2% in 1QFY21.
However, Non-Tax Revenues decreased by 23% YoY to Rs275.73bn attributed to a significant 90% YoY decline in Petroleum Levy to Rs13.35bn. To note, government has budgeted to collect Rs610 billion from 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 4% YoY to Rs109bn from Rs105bn in 1QFY21. Non-tax to GDP ratio remained unchanged at 1% in during 1QFY22.
On the expenditure front, Current Expenditures have increased by 9% YoY during 1QFY22, where Mark-up Payments were down by 16% YoY. This was due to higher net external financing and lower policy rate, a report by Topline Securities cited.
Government Expenditures (Current minus Markup and Defense) increased by 28% YoY during 1QFY22, while Defense Expenditures were increased by 9% YoY. Development Expenditures & Net Lending also surged by 23% YoY Rs264.6bn. With that, total expenditure to GDP was 4% in 1QFY22.
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