ISLAMABAD-Owing to healthy growth in revenues, the fiscal deficit during the first quarter (Q1) of the current fiscal (2023-24) declined to 0.9 percent of gross domestic product (GDP) compared to one percent shortfall during the same period of last year.
“On the fiscal front, healthy growth in revenues outpaced the growth in expenditures during the first quarter of FY2024,” the finance ministry said in a report. According to monthly Economic Update and Outlook for November 2023, both tax and non-tax collection attributed to a significant rise in total revenues, however, a substantial increase in non-tax collection on the back of higher receipts from petroleum levy remained the major source of the increase, “Thus, with healthy growth in revenues relative to expenditures, the fiscal deficit reduced to 0.9 percent of GDP in July-September FY2024 from 1.0 percent of GDP last year” it added. According to breakup figures, during July-September FY2024, the fiscal deficit stood at Rs.962.8 billion Rs.819.3 billion last year.
Meanwhile, the primary balances continued to be in surplus and improved to Rs.416.8 billion (0.4 percent of GDP) in 1st quarter of FY2024 from Rs.134.7 billion (0.2 percent of GDP) last year. The revenues during the period registered a notable growth of 33.2 percent, reaching Rs.2685.8 billion from Rs. 2017.0 billion last year. Non-tax collection witnessed an impressive growth of 99.6 percent to Rs. 468.8 billion against Rs. 234.9 billion in the corresponding period last year.
The substantial increase in non tax collection can be attributed to higher receipts from petroleum levy, passport fees, royalties on oil/gas, and mark-up (PSEs & others) etc, the report added. Tax collection on the other hand increased by 24.4 percent to Rs. 2216.9 billion against Rs. 1782.1 billion last year. According to the latest available data, July-October FY2024, FBR tax collection grew by 27.9 percent and stood at Rs. 2748.4 billion against Rs.2149.0 billion last year. Encouragingly, the tax collection has surpassed the target by Rs.66 billion. Domestic tax collection grew by 30.2 percent to stand at Rs.2404.7 billion in July-October FY2024 against Rs.1847.5 billion last year.
Within total tax collection, direct taxes grew by 38.4 percent while indirect taxes increased by 20.5 percent on the back of a sharp rise in revenues from FED. Total expenditure stood at Rs.3648.6 billion during the first quarter of FY2024 against Rs.2836.3 billion in the same period of last year, thus growing by 28.6 percent. Current expenditures grew by 25.0 percent to reach Rs.3172.6 billion against Rs.2538.1 billion last year. Within total current, mark-up payments experienced a substantial surge of 44.6 percent, primarily attributable to a higher policy rate.
Meanwhile, the growth in non-mark-up spending remained restricted to 13.2 percent. The expenditures under the running of civil government and pensions remained the major contributor in stimulating the growth of non-mark-up spending, while expenditures on subsidies and grants to others witnessed a substantial decline during the first quarter of the current fiscal year.