Pakistan’s fiscal deficit lowers by 9.5% in first quarter

Pakistan’s fiscal deficit lowers by 9.5% in first quarter

KARACHI: Pakistan’s fiscal balance in the outgoing first quarter of 2021/2022 posted a deficit of PKR 438 billion, -9.5 per cent YoY lower than prior year’s deficit, according to data released by the finance ministry on Tuesday.

In terms of per cent GDP, the deficit arrived at 0.8 per cent in 1QFY22 compared to 1.1 per cent recorded in 1QFY21 (PKR 484 billion), said analysts at Arif Habib Limited.

However, the primary surplus during the period stood at PKR 184 billion (0.3 per cent of GDP in 1QFY22) , down 29 per cent YoY, compared to a primary surplus of PKR 258 billion witnessed same period last year (0.6 per cent of GDP).

Primarily, total revenue growth of 22 per cent in 1QFY22 to PKR 1.8 trillion (1QFY21: PKR 1.5 trillion) aided the fiscal balance, translating into 3.4 per cent of GDP vs. 3.2 per cent same period last year.

The total tax revenue collection was up by 37 per cent YoY to PKR 1.5 trillion. Indirect taxes (+42 per cent YoY to PKR 917 billion) mainly on the back of higher sales tax (+43 per cent YoY to PKR 264 billion), and direct taxes (+32 per cent YoY to PKR 481 billion amid higher number of tax payers), contributed to the overall collection.

In addition, the government collected PKR 276 billion in non-tax revenues, displaying a decline of 23 per cent YoY. This was particularly owed to lower Petroleum Levy (-90 per cent YoY | PKR 13 billion). On the flipside, the surplus profit of State Bank of Pakistan and Pakistan Telecommunication Authority increased during 1QFY22 to PKR 109 billion (+4 per cent YoY) and PKR 30 billion (+269 per cent YoY), respectively.

In addition, total expenditures went up by 14 per cent YoY to PKR 2.3 trillion (4.2 per cent of GDP vs. 4.3 per cent of GDP in 1QFY21).

Further breakup revealed that current expenditure underwent an uptick of 9 per cent YoY of which defence rose by 17 per cent YoY.

However, the markup expenses went down by 16 per cent YoY to PKR 623 billion. Moreover, development expenditure and net lending undertaken by the government increased by 38 per cent YoY to PKR 180 billion.

Total PSDP expenditure in 1QFY22 arrived at PKR 262 billion (+63 per cent YoY) with provincial expenditure at PKR 154 billion (+71 per cent YoY), outdoing federal disbursement of PKR 108 billion (+53 per cent YoY).