Fiscal deficit widens to 3.6pc in 9MFY21

ISLAMABAD: The country’s fiscal deficit has increased to 3.6 per cent of gross domestic product (GDP) or Rs1.652 trillion during the first nine months (July-March) of the current fiscal year despite a drastic cut in development, almost static defence expenditure, healthy provincial cash surpluses and record petroleum levy collections.

The consolidated data on fiscal operations for the first three quarters of the year released by the finance ministry on Thursday showed that the total revenue incre­ased by 6.45pc to Rs4.99tr in nine months against a rise of about 4.2pc to Rs6.644tr in total expenditure.

The data showed that the total revenue posted a healthy growth of 12.6pc during the third quarter (January-March), but poor performance in the first two quarters pulled down the average revenue growth to 6.45pc. The total expenditure was curtailed at a nominal growth of 0.3pc but average growth in expenditure increased to 4.2pc due to higher expenditures in the first two quarters.

Federal Board of Revenue (FBR) tax collection during the first three quarters of the current fiscal year was Rs3,394 billion following direct taxes Rs1,246bn, taxes on international trade Rs541bn, sales tax Rs1,415bn, and federal excise duty Rs191.6bn. 

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Provincial tax collection during the same period recorded Rs370.16bn which included Rs210.8bn sales tax on services, Rs6,3bn excise duty,  Rs40.3bn  stamp duties, Rs20.5bn motor vehicles tax and Rs92.3bn others taxes. 

Also, tax revenue increased by 4.7pc to Rs3.8tr during the first nine months of the current fiscal year while non-tax revenue went up by 12pc during the same period. Current expenditure, on the other hand, increased by 8.4pc to Rs6.1tr.

Federal non-tax revenue of Rs1,145bn included surplus profit of SBP Rs497.5bn, petroleum levy Rs 369.210bn, mark up of PSEs and others Rs53.2bn, dividend Rs19.60bn, profit PTA and others Rs19.99bn defence receipts Rs10.5bn, passport fee Rs10.2bn, discount retained on crude oil Rs7.051bn, royalties on oil and gas Rs53.3bn, windfall levy against crude oil Rs1.396bn, petroleum levy on LPG2.32bn, gas infrastructure development cess Rs15.4bn, natural gas development surcharge Rs17.3bn, and others Rs68.3bn while the provincial non tax collection stood at Rs82.1 bn. 

Non tax revenue both federal and provincial was Rs1,227bn during the first three quarters of the current fiscal year. 

Provincial budget surplus included Rs244bn by Punjab, Rs67bn by Sindh, Rs66bn by Balochistan and Rs66bn by Khyber Pakhtunkhwa (KP).  

Development expenditure dropped to 1.6pc of GDP against 1.8pc of GDP, while defence expenditure went down to 1.7pc from 1.8pc.

The primary balance, on the other hand, stood at Rs562bn surplus or 1pc of GDP, compared to Rs194bn or 0.4pc of GDP last year.

The finance ministry reported that direct taxes increased by 8.8pc to Rs1.246tr or 2.7pc of GDP this year against Rs1.15tr of last year or 2.6pc of GDP. Indirect taxes, on the other hand, increased by 13.2pc to Rs2.15tr from last year’s Rs1.898tr.

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Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]

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