ISLAMABAD: Pakistan spent Rs18,486.19 billion out of the Rs21,837.24 billion of its total budget in fiscal year 2020-21 (FY21) to repay debt and interest payments.
According to a report by the Auditor General of Pakistan (AGP) in which the federal government’s financial management in FY21 was analysed, 95.74 per cent of the FY21 budget was utilised on general public service of which 84.65 per cent was used for the repayment of principal debt and interest payments.
Following this, the federal government was left with a meager 13.99 per cent or Rs3,150.65 billion for socio economic functions other than general public service. However, it was comparatively higher than the last fiscal (FY22) wherein it allocated 7.81 per cent for the same.
Documents show that the percentage of the budget spent on defence affairs and services was 0.03 per cent, totalling Rs5.98 billion, out of total expenditures as per the federal audit jurisdiction. Public order and safety affairs were 0.86 per cent or Rs187.95 billion, economic affairs 1.20 per cent or Rs262.01 billion, environmental protection 0.03 per cent or Rs6.38 billion, housing and community amenities 0.04 per cent or Rs8.59 billion, health 0.23 per cent or Rs51.21 billion; recreation, culture and religion 0.05 per cent or Rs11.68 billion, education 0.57 per cent or Rs124 billion, and social protection 1.24 per cent or Rs271.09 billion.
Over the past five years, there has been a gradual decrease in domestic floating debt. However, in FY21, there was a reasonable dip in receipt of domestic floating debt which declined to Rs13.81 trillion as compared to last year’s receipt of Rs14.13 trillion.
Similarly, domestic permanent debt also decreased to Rs0.96 trillion as compared to Rs1.23 trillion last year while foreign debt decreased from Rs1.36 trillion last year to Rs0.96 trillion this year. This was because
The federal government attempted to reduce floating debt by mainly relying on domestic permanent debt in the total debt mix.
Data shows that the federal government paid off Rs13.81 trillion of floating debt, Rs0.96 trillion of domestic permanent debt and Rs0.96 trillion of foreign debt in the fiscal under review.
To meet its expenditure in FY21, the federal government mainly relied on borrowings in the shape of public debt which contributed Rs19,965.38 billion or 84.60 per cent to the total receipt. However, there was less reliance on borrowings as compared to FY20 when public debt to the tune of Rs19,432.39 billion or 85.59 per cent was part of the total receipts. It may be noted that receipts of public debt are further divided into domestic floating debt, domestic permanent debt and foreign debt.
The total tax receipts for FY21 amounted to Rs3,472.10 billion in comparison to the previous year’s Rs4,209.696 billion.
The provincial share under NFC award amounting to Rs2,644.627 billion was transferred to provinces, leaving behind Rs2,057.582 billion for the federal government. This was Rs149.80 billion less than the original target of Rs2,207.383 billion although it was Rs727 billion more than the previous year’s collection of Rs1,479.857 billion.
According to the AGP’s report, there was a nominal growth in sales tax, federal excise and income tax receipts. Customs duty and other tax collections increased to Rs2,057.582 billion as compared with figures of FY20.
According to the Economic Survey of Pakistan, an amount of Rs1,149.95 billion, 27 per cent of the tax receipt, was booked as tax expenditure which was a lost opportunity. The report stated that this amount stood at Rs1,314.273 billion in FY20, which was 37.85 per cent of the tax receipt.
It added that the government was also experiencing a decline in the receipt of defence services and other non-tax receipts.
The survey highlighted the need for strenuous efforts to increase non-tax receipts along with tax receipts in order to reduce debt.
