ISLAMABAD  -  Pakistan’s budget deficit was recorded at Rs484.3 billion (1.1 percent of the GDP) during first quarter of the current fiscal year.

The country’s expenditures stood at Rs1.963 trillion as against the revenues of Rs1.479 trillion during July-September period of FY2021. The budget deficit, gap between government’s expenditures and revenues, was recorded at Rs484.3 billion (1.1 percent of the GDP). Primary balance was recorded at Rs257 billion or 0.6 percent of the GDP. The government has met budget deficit financing through Rs161 billion external and Rs322 billion domestic resources, including Rs230 billion bank borrowing and Rs92 billion non-bank borrowing. According to the latest data of the ministry of finance, the country’s expenditures were recorded at Rs1.693 trillion (4.3 percent of the GDP). The government had spent Rs742.1 billion on paying domestic and foreign debt servicing. The break-up of interest payment showed that Rs685 billion was spent on domestic debt and Rs57.2 billion on the foreign debt. The government had allocated Rs2.946 trillion for interest payment for the entire current fiscal year. Meanwhile, an amount of Rs224.5 billion was spent on defence budget. The government had allocated Rs1.289tr for the defence for the current fiscal year. 

Meanwhile, the government had spent only Rs70.7 billion on federal development projects in the first quarter of the present financial year. Meanwhile, the provincial governments had spent Rs89.8 billion on the development projects. The spending on development projects had remained low. The documents showed that the government spent Rs86.7 billion on pension payments, Rs89 billion on running expenditures of the civil government, Rs2.85 billion on subsidies and Rs108.3 billion as grants to the others during July to September period of the current financial year.

Of the total revenues of Rs1.479 trillion, the government collected around Rs343.01 billion as non-tax revenues during the first quarter of the FY2021. In non-tax revenues, the government had collected Rs25.7 billion as mark-up on public sector entities, Rs1.5 billion as dividend, Rs105 billion as surplus profit of the State Bank of Pakistan, Rs8.152 billion as profit of Pakistan Telecommunication Authority (PTA), Rs2.88 billion as defence, Rs2.96 billion as passport fee and Rs1.45 billion as discount remained on crude oil, Rs14.6 billion as royalties on gas and oil, Rs321 million as windfall levy against crude oil and Rs19.1 billion through other sources.

Tax collection has helped the government in controlling the budget deficit. Federal Board of Revenue (FBR) had collected Rs1004 billion in first quarter (July to September) of the current fiscal year, exceeding the tax collection target by Rs40 billion. This was the first time FBR has managed to cross the figure of Rs1 trillion in gross as well as net collection in first quarter of a fiscal year. The gross revenue stood at Rs.1052 billion. The breakup of tax collection of Rs1004 billion showed that FBR had collected Rs363.6 billion as Income Tax collection in the first quarter. Similarly, collection of Sales Tax, Federal Excise Duty and Customs Duty remained at Rs435.7 billion, Rs. 56 billion and Rs.155.3b respectively. 

The four provincial governments recorded budget surplus of Rs44.4 billion during July to September period of FY2021, as their expenditures remained at Rs614.5 billion as compared to the revenues of Rs658.9 billion. The government had budgeted provinces to give budget surplus of Rs242 billion during current fiscal year. In annual budget 2020-21, the government had set fiscal deficit target at 7.1 percent of the GDP (Rs3437 billion) for the ongoing fiscal year. The Asian Development Bank (ADB) in its recent report had projected that Pakistan’s fiscal deficit is projected to decline to the equivalent of 7.0% of GDP in FY2021. Revenue is projected to increase, reflecting ambitious revenue-mobilization targets following initiatives to withdraw tax exemptions, rationalize tax concessions, and broaden the tax base. This forecast depends on COVID-19 risks subsiding and rapid economic recovery to pre-COVID norms.