There are growing concerns regarding the increasing fiscal deficit as shown by the data of the first half of the year. The newly appointed government of Pakistan Tehreek-i-Insaaf (PTI) pledged to turn the tables for the economy of the country by inviting more investment and coming up with innovative ways of revenue generation. In theory, the plan is exactly what the population expects, however, the first half of the year has been tough on the average taxpayer with increasing prices and load shedding of basic necessities. There is a marked decrease in the revenue collection of the government and it has been recorded as the lowest since 2010-11.

There is no doubt that the growing tensions between the government and the opposition have impacted the governance of the federal unit. After the election of the members of the parliament, the formation of committees was debated for a good amount of time which otherwise sails smoothly due to the experience in government of other mainstream parties. There is still debate around the Public Accounts Committee (PAC) Chairmanship. We have witnessed the result of this in the fiscal deficit increased 30 percent in the current year, amounting to Rs1.029 trillion from July to December 2018.

According to data, there is a significant increase in defense budget along with markup payments. As compared to the last fiscal budget, defense spending has increased from Rs393 billion to Rs479.6 billion. Similarly, there is an increase in markup payments from Rs751 billion to Rs877 billion. This simultaneous increase has impacted the government’s ability to spend on Public Sector Development Programme (PSDP). The investment in this sector has gone down by 37 percent. This is bound to affect the growth of this sector and the government needs to justify this shift along with a projection of the economy with concrete measures that the government will take to make up for these losses.

Till now, there is an improvement in the tax revenue, which has increased from Rs2.03 trillion to Rs2.08 trillion. The government now needs to work on way to sustain this revenue generation and provide a detailed analysis of how foreign direct investments will help improve the economic crunch in Pakistan. The fiscal deficit is a problem which affects the average Pakistani and unless there is coordination between the federal and provincial governments, revenue collection will be impacted. For this, both the government and the opposition need to work collectively.