ISLAMABAD - Pakistan’s budget deficit has skyrocketed to Rs5.3 trillion (7.9 percent of the GDP) during previous fiscal year mainly due to the massive subsidy announced by the previous government of PTI on oil products and electricity.

The country’s budget deficit – the gap between federal income and expenditures – was recorded at Rs5.3 trillion during the year 2021-22. 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, deficit skyrocketed mainly due to the policies of the previous government. Overall, the government had given massive subsidy of Rs1.5 trillion in previous fiscal year.

Primary balance, which is the difference between government’s revenue and its non-interest expenditure, recorded a deficit of Rs2.1 trillion. Primary balance was in surplus of Rs81.073 billion, in first six months. However, the previous government had increased its expenditures, which pushed the country’s budget deficit to 7.9 percent of the GDP, according to the latest data of the ministry of finance.

The previous government had announced subsidy on oil products and electricity tariff after no confidence move against former Prime Minister Imran Khan. The massive subsidy had not only resulted in suspension of International Monetary Fund (IMF)’s programme but it has also widened the budget deficit to higher side. Budget deficit has increased despite massive growth in tax collection and provincial governments’ surplus of Rs350 billion in the year 2021-22. The Federal Board of Revenue (FBR) has surpassed its annual tax collection target and fetched around Rs6,125 billion for the outgoing fiscal year 2021-22 ending on June 30, 2022.

Pakistan’s overall expenditures were recorded at Rs13.295 trillion in the last fiscal year as against the revenues of Rs8.035 trillion leaving deficit at Rs5.3 trillion. Finance Minister Miftah Ismail soon after assuming charge in April this year had announced that budget deficit is expected to touch Rs5600 billion as against projected Rs4000 billion during the previous fiscal year.

In expenditures, interest payment has once again increased massively, as it cost Rs3.182 trillion. The government has paid interest worth of Rs2.828 trillion on domestic loans and Rs353.8 billion on foreign loans. Meanwhile, defence spending has remained at Rs1.4 trillion. The spending on development expenditures including federal as well as provincial remained at Rs1.6 trillion in the year 2021-22. In other expenditures, the government has paid Rs541.9 billion as pension payment, Rs546.7 billion on running of civil government expenditures, Rs1.5 trillion as subsidy and Rs1.14 trillion as grants to others.

Of the total revenues of Rs8.035trillion, the government collected around Rs1.28 billion as non-tax revenues during the FY2022. In non-tax revenues, the government had collected Rs87.8 billion as mark-up on public sector entities, Rs42.9 billion as dividend, Rs473.5 billion as surplus profit of the State Bank of Pakistan, Rs103.4 billion as profit of Pakistan Telecommunication Authority (PTA), Rs17.26 billion as defence, Rs21.6 billion as passport fee and Rs16.5 billion as discount remained on crude oil, Rs90.8 billion as royalties on gas and oil, Rs14.4 billion as windfall levy against crude oil and Rs113.4 billion through other sources.

The four provincial governments recorded budget surplus of Rs350.991 billion during FY2022, as their expenditures remained at Rs4.336 trillion as compared to the revenues of Rs4.687 trillion. The government had budgeted provinces to give budget surplus of Rs570 billion during current fiscal year.