ISLAMABAD   -   Pakistan’s budget deficit was recorded at Rs4.7 trillion during ten months (July to April) of the current fiscal year.

The deficit has been reduced to 4.5 percent of GDP (Rs.4726.0 billion) from 4.7 percent of GDP (Rs.3929.3 billion) last year. The primary balance posted a surplus of Rs1611.5 billion (1.5 percent of GDP) during Jul-Apr FY2024 against a surplus of Rs.99.1 billion (0.1 percent of GDP) last year.

During Jul-Apr FY2024, net federal revenues grew by 51 percent to reach Rs.5627.5 billion against Rs.3715.3 billion last year. The substantial rise in revenues was primarily driven by a 96 percent growth in non-tax collection and a 31 percent rise in tax receipts. Non-tax revenues witnessed a broad-based growth, however, higher receipts from petroleum levy, markup (PSEs and others), SBP profit, and natural gas development surcharge remained the main drivers to trigger a substantial growth in non-tax collection. FBR net provisional tax collection grew by 30.8 percent to Rs8125.7 billion in Jul-May FY2024 against Rs6210.1 billion last year. Within total, direct tax grew by 40.5 percent, sales tax by 19.7 percent, FED by 55.4 percent, and customs by 20.2 percent.

On the expenditure side, total expenditures increased by 38 percent to Rs10,922.5 billion during Jul-Apr FY2024 as compared to Rs7,891.9 billion last year. The increase is largely attributed to a 41 percent rise in current expenditures due to 57 percent higher markup payments. However, the government was able to contain the growth in non-mark-up spending to 22 percent. Consequently, the primary balance posted a surplus of Rs. 1611.5 billion (1.5 percent of GDP) during Jul-Apr FY2024 against a surplus of Rs99.1 billion (0.1 percent of GDP) last year. The government has revised the budget deficit target to Rs8.4 trillion or 7.4 percent of the GDP for the outgoing fiscal year, which was initially Rs6.9 trillion or 6.5 percent of the GDP. For the next fiscal year 2024-25, the government has projected budget deficit at Rs7.3 trillion or 5.9 percent of the GDP. Primary budget would be in surplus of 2 percent of the GDP or Rs2.5 trillion in the upcoming fiscal year.

The ministry of finance in its monthly report has stated that during Jul-Apr FY2024, the fiscal accounts improved on the back of consolidation efforts that helped in increasing the revenues from both tax and non-tax collection. In contrast, higher interest payments exerted significant pressure on expenditure management. To cope with the challenge of rising expenditures, the government adopted a cautious expenditure management strategy to release both current and development spending. These measures helped in improving the primary balance surplus to 1.5 percent of GDP which is well above the target of 0.4 percent of GDP. Similarly, the fiscal deficit has also been contained to 4.5 percent of GDP. Going forward, on the revenue side, FBR is putting all its efforts into meeting its full-year tax revenue target, while on the expenditure side, the government continues to adhere to a cautious approach to keep the fiscal deficit within manageable limits.