KARACHI: Despite a massive increase in revenue collection, the government’s budgetary borrowing increased by over 186 per cent in the first 11 months of the outgoing fiscal year.
The latest data issued by the State Bank of Pakistan showed that the federal government’s budgetary borrowing soared to Rs2,488.5 billion during 11MFY22 against Rs868.4bn in the same period of last year.
The tax collection by the Federal Board of Revenue (FBR) also swelled to Rs5.349 trillion in 11MFY22. Compared with Rs4.164tr in the corresponding period of 2020-21, a growth of 28.5pc in the July-May period. However, the collection fell short of the projected target by Rs18 billion.
According to an official report during the first 10 months, the FBR exceeded its revenue target by 5.2pc. Despite massive tax relief, including zero sales tax on petroleum and some other essential items, the tax authorities managed to collect higher revenue.
Further details showed that the government borrowed a lesser amount of Rs2,231.9bn from banks during 11MFY22 for budgetary support compared to Rs2,577bn in the same period last year.
However, despite a 28.5pc higher revenue collection that yielded an additional Rs1,185bn in 11MFY22, the spending was even higher which compelled the government to borrow Rs1,620bn more for the budgetary support during the period.
During July-March FY22, the fiscal deficit was recorded at 3.8pc of GDP (Rs2,565.6bn) as compared to 3pc (Rs1,652bn) in the comparable period of last year. Similarly, the primary balance posted a deficit of Rs447.2bn against the surplus of Rs451.8bn during the period under review.
However, the fiscal deficit for the entire FY22 has been estimated as 8.6pc. Finance Minister Miftah Ismail in his budget speech said the government would target a fiscal deficit of 4.9pc of GDP for 2022-23.
He further said the government would prevent tax evasion that would help increase revenue by 20pc to Rs7tr in 2022/23 and bring down the fiscal deficit.
A Ministry of Finance report said that an increase in deficit has been observed on account of the higher expenditures due to the rise in subsidies and grants.
Published in Dawn, June 19th, 2022