ISLAMABAD – Pakistan’s budget deficit soared to 5.3 trillion rupees (7.9% of GDP) in the previous fiscal year, mainly due to the massive subsidy announced by the previous government of PTI on petroleum products and electricity.
The country’s budget deficit – the gap between federal government income and expenditure – was recorded at 5.3 trillion rupees in the year 2021-22. The government of Pakistan had set the budget deficit target at 3.4 trillion rupees (6.3% of GDP) for the current financial year. However, the deficit skyrocketed mainly due to the policies of the previous government. All in all, the government provided a massive subsidy of Rs 1.5 trillion in the previous financial year.
The primary balance, which is the difference between government revenue and non-interest expenditure, recorded a deficit of 2.1 trillion rupees. The primary balance was in surplus by 81.073 billion rupees in the first six months. However, the previous government had increased its spending, which pushed the country’s budget deficit to 7.9% of GDP, according to the latest data from the Ministry of Finance.
The previous government announced subsidies on petroleum products and electricity tariffs after a no-confidence decision against former Prime Minister Imran Khan. The massive subsidy not only led to the suspension of the International Monetary Fund (IMF) program, but it also widened the budget deficit. The budget deficit has increased despite massive growth in tax collection and provincial government surplus of Rs 350 billion in 2021-22. The Federal Board of Revenue (FBR) surpassed its annual tax collection target and collected approximately Rs 6.125 billion for the outgoing fiscal year 2021-22 ending June 30, 2022.
Pakistan’s overall expenditure was recorded at 13.295 trillion rupees in the last fiscal year against revenues of 8.035 trillion rupees, leaving a deficit of 5.3 trillion rupees. Finance Minister Miftah Ismail shortly after taking office in April this year announced that the budget deficit is expected to hit 5.6 trillion rupees against 4 trillion rupees projected in the previous financial year.
In expenditure, interest payment again increased massively as it cost Rs 3.182 trillion. The government paid interest worth 2.828 billion rupees on domestic loans and 353.8 billion rupees on foreign loans. Meanwhile, defense spending remained at 1.4 trillion rupees. Development expenditure, both federal and provincial, remained at 1.6 trillion rupees in 2021-22. In other expenditure, the government provided Rs 541.9 billion as pension payment, Rs 546.7 billion for civil government expenditure management, Rs 1.5 trillion as subsidy and 1, 14 trillion rupees as grants to others.
Out of the total revenue of Rs 8,035 billion, the government collected about Rs 1.28 billion as non-tax revenue in the financial year 2022. In non-tax revenue, the government had collected Rs 87.8 billion as margin on public sector entities, Rs 42.9 billion as dividend, Rs 473.5 billion as excess profit of State Bank of Pakistan, profit title. Pakistan Telecommunications Authority (PTA), Rs 17.26 billion in defence, Rs 21.6 billion in passport fees and Rs 16.5 billion in crude oil rebate, Rs 90.8 billion in Rs 14.4 billion in oil and gas royalties, Rs 14.4 billion in crude oil exceptional levy and Rs 113.4 billion through other sources.
The four provincial governments recorded a budget surplus of 350.991 trillion rupees in the financial year 2022, as their expenditure remained at 4.336 trillion rupees against revenues of 4.687 trillion rupees. The government had budgeted the provinces to give a budget surplus of Rs 570 billion in the current financial year.