ISLAMABAD: Pakistan’s fiscal deficit in the first nine months (July-March) of this fiscal year stood at 3.8 per cent of GDP or Rs1.686 trillion, showing better discipline compared to 9MFY19 level of 5pc.
The conditionalities of the International Monetary Fund (IMF) programme appear to have kept the overall expenditures under control even though mark-up payments went up significantly. In the same period last year, Pakistan had posted the decade’s highest deficit at 5pc of GDP or Rs1.92tr.
The lower fiscal deficit percentage was partly thanks to a 360pc higher yield from the State Bank of Pakistan and even bigger 600pc increase in telecom income. The overall non-tax revenue jumped 160pc to Rs1.096tr, from Rs422bn last year - rising from 1.1pc of GDP to 2.5pc in 9MFY20.
Data showed the SBP posted a Rs635bn profit in nine months as against Rs138bn last year while the kitty received Rs113bn non-tax revenue versus just Rs16bn from telecom companies as licence fees that were due last year could not be materialised then due to a legal battle. Another windfall came in the shape of a Rs199bn petroleum levy, compared to Rs141bn in July-March FY19.
Total revenue in nine months amounted to Rs4.690tr, up 31pc over Rs3.588tr in corresponding period last year. The latest figure translated into 10.7pc of GDP, versus 9.3pc.
Tax revenue, however, remained unchanged at 8.2pc of GDP although in absolute numbers increased by about 14pc to Rs3.594tr, from against Rs3.162tr.
On the other hand, the Federal Board of Revenue tax rose by 12.5pc on the back of double-digit inflation and stood at Rs3.044tr in 9MFY20, as against Rs2.7tr last year. Direct taxes amounted to Rs1.146tr over Rs997bn, showing an increase of 15pc while indirect jumped 11pc to Rs1.9tr, from Rs1.7tr.
Total expenditure in the first nine months was recorded at Rs6.376tr, higher by 16pc over Rs5.506tr in the same period last year. In percentage terms, it stood at 14.5pc of GDP, slightly higher than 9MFY19 level of 14.3pc.
Current expenditure increased to Rs12.8pc of GDP during the period, from 12.5pc with absolute value higher by 17pc to Rs5.611tr, from Rs4.798tr.
This is explained by an increase in markup payments from 3.8pc of GDP to 4.3pc. In absolute terms, they went up from Rs1.459tr to Rs1.88tr, showing a surge of 29pc. On the other hand, the defence expenditure slightly fell down to 1.8pc, as against 2pc of GDP in 9MFY19 while still rising by 3.5pc to Rs802bn in absolute terms, up from to Rs775bn.
The provincial governments provided a cash balance of Rs344bn in 9MFY20 as against their Rs292bn contribution in the corresponding period last year to check the budget deficit.
Meanwhile, total development budget stood flat at 1.7pc of GDP even though it rose to Rs722bn, from Rs656bn last year. The federal Public Sector Development Programme was at Rs340bn, up from Rs302bn while respective provincial spending jumped to Rs382bn, as against Rs276bn.
Published in Dawn, May 7th, 2020