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In the first half of this fiscal year, the government keeps the budget deficit to Rs1.37 trillion.

ISLAMABAD – The government has restricted the budget deficit to Rs1.37 trillion mainly due to the healthy growth in tax collection and surplus provincial budgets in first half (July to December) of the current fiscal year.

Pakistan’s budget deficit – the gap between federal income and expenditures – was recorded at Rs1.37 trillion (2.1 percent of the GDP) during July to December period of year 2021-22. Budget deficit was 2.5 percent of the GDP during the same period of the previous year. Primary balance, which is the difference between government’s revenue and its non-interest expenditure, was recorded in surplus of Rs81.07 billion.

The government has controlled the budget deficit due to massive growth in tax collection. The Federal Board of Revenue (FBR) had surpassed the tax collection target by Rs287 billion. The FBR collected Rs2,920 billion during July-December period of current Financial Year 2021-22 and had exceeded the target of Rs2,633 billion by Rs287 billion.

Pakistan’s overall expenditures were recorded at Rs5.3 trillion in first half of the ongoing fiscal year as against the revenues of Rs3.96 trillion, leaving deficit at Rs1.37 trillion. According to the ministry of finance, the government has increased its expenditures under grants and subsidies. In particular, under grants, government spending is focused on social protection (BISP & poverty alleviation) and COVID 19 (vaccine procurement). Meanwhile, subsidies to the power sector have also witnessed a sharp rise during the period under review. Thus, an increase in both grants and subsidies has been attributed to a significant rise in current expenditures. With the start of the 5th COVID wave driven by the Omicron variant, the expenditure side may come under further pressure.

The government of Pakistan had set the budget deficit target at Rs3.4 trillion (6.3 percent of the GDP) for the current fiscal year. However, the ministry of finance’s warning of increase in expenditures might dent the government’s efforts to restrict the deficit at Rs3.4 trillion by the end of current fiscal year.



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