August 12, 2020 (MLN): Pakistan’s fiscal deficit in FY20 stood at 8.1 percent of the GDP, compared to the deficit of 8.9 percent of GDP in FY19.
In terms of Rupees, the country’s total budget deficit in FY20 clocked in at Rs 3.376 trillion, whereas, in FY19 it stood at Rs 3.444 trillion.
Much of the rise in the deficit came in the April-June 2020 quarter. The fiscal deficit had stood at just 3.8% of GDP on March 31, 2020 but increased to 8.1 percent over the remainder of the financial year.
Earlier, the government had estimated that Pakistan's fiscal deficit will reach at around 9.1% of GDP in FY20, against the original budget proposal of 7.1%, on the basis of Rs 1.24 trillion Covid-19 relief package announced by the government. The International Monetary Fund and the Fitch Ratings had also projected deficit at 9.2 percent and 9.5 percent respectively mainly because of a major revenue shortfall due to the economic fallout from pandemic and additional expenditure arising out of Covid-19 relief package.
According to the data released by Ministry of Finance, government plugged this deficit through domestic borrowing of 2.48 trillion, while external borrowing to plug the deficit amounted to Rs 895.5 billion. Compared to FY19, the government domestic and external borrowings to aid budget deficit were stood at Rs 3.028 trillion and Rs 417 billion respectively.
The data also revealed that the primary deficit which is other than debt servicing clocked in at Rs 757 billion or 1.8 percent of GDP.
As the fiscal deficit is the difference between the expenditures and revenues of the government. During FY20, total revenues and expenditures of the government as percentage of GDP stood at 15 percent and 23.1 percent respectively, while in absolute terms, the revenues amounted to Rs 6.27 trillion and the expenditures to Rs 9.648 trillion
The revenue from taxes stood at Rs4.747 trillion. Of this, about Rs 4.334 trillion came from federal revenues and Rs 413.6 billion came from provincial.
On the other hand, non-tax revenue arrived at Rs1.524 trillion. This included about Rs1.422 trillion non-tax revenue of the federal and Rs102 billion of the provincial governments.
During FY20, the current expenditure of the government came in at Rs 8.532 trillion. This included federal expenditure of about Rs 6.016 trillion and provincial expenditure of Rs 2.516 trillion.
Mark-up payments during the year were increased to Rs2.619 trillion or 6.3 percent of GDP, compared to Rs 2.109 trillion or 5.4 percent of GDP in FY19.
Defense spending, though increasing in absolute terms, remained unchanged at 3 percent of GDP when compared with last year.
The total development expenditure and net lending during FY20 was amounted to Rs 1.204 trillion. This encompassed total development expenditure of Rs 1.090 trillion of which provinces utilized about Rs 622 billion, federal utilized Rs 467.74 billion on development schemes and Rs 65.5 billion were spent on Other development expenditures. The net lending stood at Rs 48.5 billion.
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