Finance Minister meets global bond investors in London

April 26, 2022 (MLN): Pakistan’s overall fiscal deficit in FY9MFY22 was Rs 2,566 billion (4% of GDP) compared to Rs 1,652 billion (3% of GDP) in FY9MFY21, a 55% year-over-year increase.

Data released by the Ministry of Finance on fiscal operations for FY22 showed that in FY22 July-March, the government’s primary balance recorded a deficit of 447 billion rupees or 0.7 % of GDP compared to a primary surplus of Rs 452 billion (0.8% of GDP) over the same period. period of the previous year.

Government data showed that the four provinces of Punjab, Sindh, Balochistan and KPK carried the cumulative surplus to 599.8 billion rupees. Individually, the provinces of Punjab, Sindh, KPK and Balochistan recorded a budget surplus of Rs392.455 billion, Rs115.15 billion, Rs1.6 billion and Rs90.54 billion respectively. Compared to the same period last year, Punjab, Sindh, KPK and Balochistan province recorded a budget surplus of Rs244.8 billion, Rs67.4 billion, Rs34.5 billion and Rs65.9 billion respectively .

Income and expenditure

As the budget deficit is the difference between government expenditure and revenue. In FY9MFY22, total government revenue and expenditure 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, total revenue stood at 5.87 billion rupees and expenditure at 8.4 billion rupees, showing growth of 18% and 27% year-on-year respectively.

Tax receipts amounted to Rs4.8tr during 9MFY22, up 28% YoY. Of the total tax revenue, approximately Rs4.4tr came from federal revenue and Rs438.3bn came from the provinces. Moreover, in tax revenue, direct taxes, indirect taxes, customs duties and sales tax (federal) increased by 27%, 31%, 32% and 32% respectively year-on-year. Direct taxes stand at Rs1,579tr versus Rs1.2tr, Indirect taxes stand at Rs2.8tr versus Rs 2.15tr, Customs duties Rs715bn versus Rs541bn and Sales tax stands at Rs1.8tr against Rs1.4tr.

Meanwhile, the tax-to-GDP ratio in FY9MFY22 was 9.2% versus 9% in the 9 months of FY21.

However, non-tax revenue declined by 14% YoY to Rs1tr, due to a significant 66% YoY drop in Petroleum Tax to Rs125bn.

According to the data, SBP’s excess profit fell 5% year-on-year to 473.6 billion rupees from 497.5 billion rupees in 9MFY21. The non-tax/GDP ratio was 1.6%, compared to 2.7% in FY9MF21.

On the spending front, current spending was up 21% YoY during 9MFY22, where surcharge payments were up 1% YoY.

Government spending (actual minus profit margin and defense) increased 27% year-over-year in fiscal year 9MFY22, while defense spending increased 12% year-over-year. Development expenditure and net lending also jumped 45% year-on-year to Rs 480 billion. With this, total expenditure to GDP was 13.2% in 9MFY22.

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