The country’s fiscal deficit was recorded at 3.8pc of the Gross Domestic Product (GDP) during the first three quarters of the current fiscal year compared to the 3pc deficit recorded during the corresponding period of last year. The deficit during July-March (2021-22) stood at Rs2,565.6b compared to the deficit of Rs1,652.0b during July-March (2020-21), says Monthly Economic Update and Outlook, May 2022 released by finance ministry. The increase in deficit has been observed because of the higher expenditures due to the rise in subsidies and grants. It is expected that the expenditure side would come under further pressure in the remaining months of the current fiscal year.
Similarly, the primary balance posted a deficit of Rs447.2b against the surplus of Rs 451.8b during the period under review. Meanwhile, on the revenue side, tax collection has been currently showing a remarkable performance by posting a growth of 29pc during the first ten months of the current fiscal year.
The first ten months’ data shows that the revenue collection has surpassed the target by Rs237b. This is despite tax relief measures, which have impacted revenue collection by approximately Rs73b just in the month of April 2022. Total revenues grew by 17.7pc in July-March (FY-2022) against the growth of 6.5pc recorded in the same period of last year.
Higher growth in revenues has been achieved on the back of the significant rise in tax collection, the outlooks says adding, total tax collection (federal & provincial) increased by 28.1pc whereas non-tax collection declined by 14.3pc during the period under review.
FBR has taken various policy and administrative measures, which paid off in terms of improved tax collection during the current fiscal year. It is expected that with the current growth momentum, FBR would be able to achieve its target during FY 2022. Total expenditure witnessed a sharp rise of 27.0pc during Jul-Marc FY2022 against a 4.2pc rise in the same period of last year.
Higher growth in total expenditure during the period has been observed because of 21.2pc growth in current spending and 54.6pc increase in development expenditures. The government is taking all possible measure to counter the downside risks associated with the economy, which currently has been facing challenges to sustain growth it had achieved during the fiscal year 2021-22, says Monthly Economic Update and Outlook, May 2022 released here.
“Although the economy of Pakistan has achieved GDP growth of 5.97pc in FY2022, but the fiscal situation and external sector performance are making it difficult to sustain and impacting the growth outlook in coming year,” noted the report. It says, the International commodity prices were on rising trend and expected to increase further, adding the pass-through of the increase in global commodity prices was somewhat contained due to government measures. Even then, it is expected that Consumer Price Index (CPI) inflation will remain in double digit in May 2022.