Pakistan’s fiscal deficit increases to 4% of GDP in 9MFY22

April 26, 2022 (MLN): Pakistan’s overall fiscal deficit in 9MFY22 stood at Rs2,566 billion (4% of GDP) against Rs1,652bn (3% of GDP) in 9MFY21, showing an increase of 55% YoY.

The data issued by Ministry of Finance on fiscal operations for FY22 showed that during Jul-Mar FY22, the government primary balance recorded a deficit of Rs447bn or 0.7% of GDP compared to a primary surplus of Rs452bn (0.8% of GDP) in the same period previous fiscal year.

Government data showed all four provinces Punjab, Sindh, Baluchistan and KPK, taking cumulative surplus to Rs599.8bn. Individually, Punjab, Sindh, KPK, and Baluchistan provinces recorded a budgetary surplus of Rs392.455bn, Rs115.15bn, Rs1.6bn, and Rs90.54bn respectively. Compared to same period last year, Punjab, Sindh, KPK, and Baluchistan province recorded a budget surplus of Rs244.8bn, Rs67.4bn, Rs34.5bn, and Rs65.9bn respectively.

Revenues and Expenditures

As the fiscal deficit is the difference between the expenditures and revenues of the government. During 9MFY22, total revenues and expenditures of the government as a percentage of GDP stood at 9.2% and 13.2% respectively, compared to 9% and 12% recorded in the same period last year. while in absolute terms, the total revenues amounted to Rs5.87trillion and the expenditures to Rs8.4tr, showing a growth of 18% and 27% YoY respectively.

Tax Revenues stood at Rs4.8tr during 9MFY22, up by 28% YoY. Of the total tax revenues, about Rs4.4tr came from Federal revenues and Rs438.3bn came from provincial. Moreover, within the tax revenues, Direct taxes, Indirect taxes, Custom duties and Sales Tax (Federal) have increased by 27%, 31%, 32%, and 32% YoY, respectively. Direct tax amounts to Rs1.579tr vs Rs1.2tr, indirect taxes stood at Rs2.8tr vs Rs 2.15tr, custom duties Rs715bn vs Rs541bn and sales tax amounted to Rs1.8tr against Rs1.4tr.

Meanwhile, the tax to GDP ratio in 9MFY22 was 9.2% as opposed to 9% in 9M of FY21.

However, Non-Tax Revenues decreased by 14% YoY to Rs1tr attributed to a significant 66% YoY decline in Petroleum Levy to Rs125bn.

Going by the data, surplus profit from SBP went down by 5% YoY to Rs473.6bn from Rs497.5bn in 9MFY21. Non-tax to GDP ratio stood at 1.6%, compared to 2.7% during 9MFY21.

On the expenditure front, Current Expenditures have increased by 21% YoY during 9MFY22, where Mark-up Payments were up by 1% YoY. 

Government Expenditures (Current minus Markup and Defense) increased by 27% YoY during 9MFY22, while Defense Expenditures were increased by 12% YoY. Development Expenditures & Net Lending also surged by 45% YoY Rs480bn. With that, total expenditure to GDP was 13.2% in 9MFY22.

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Posted on: 2022-04-26T23:30:31+05:00

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