According to the finance ministry, interest expenses on public debt have surged by 260% over the past two years, causing the gap between tax collection and debt servicing to narrow significantly, falling from Rs2.9 trillion to Rs1 trillion.
The finance minister further shed light on the fact that tax revenues increased to Rs 7.2 trillion in 2022-23, but interest expenses had also increased to Rs 5.7 trillion, which narrowed the gap to Rs 1.5 trillion.Â
The figures for 2023-24 indicated that tax collections had reached Rs 9.3 trillion, whilst interest expenses climbed to Rs 8.3 trillion, and further minimised the gap to Rs 1 trillion.
Despite this, Aurangzeb underscored that the claim that the government’s entire tax revenue had been spent on debt servicing was not entirely true or accurate.Â
He insisted that federal revenues continuously remained higher than the interest expenses.
With the introduction of Shariah-compliant financial instruments by the government via the Pakistan Stock Exchange, he also hoped to broaden the investor base beyond the banking sector.Â
Addressing another question, the minister also revealed that as of June 30, commercial bank lending totaled Rs38.535 trillion. The debt owed by Public Sector Enterprises (PSEs) amounted to Rs 2.13 trillion, which represented 5.6% of the total commercial bank lending. This reflects a retirement of Rs72.2 billion during FY24 along with marking a 3.3% decline in comparison to the 29.6% increase during the corresponding period the previous year.
Aurangzeb also reported that credit to the private sector had been Rs8.78 trillion as of June 30, which accounted for 22.8% of total commercial bank lending.Â
Credit to the private sector grew by Rs 494 billion during FY24, signifying a 6% increase compared to a marginal 0.2% growth in the previous year’s corresponding period.
Additionally, the finance minister pointed out that the FBR has consistently worked to expand the tax base through various initiatives.Â
During the tax year 2023, more than 3.5 million new taxpayers were registered, but based on ongoing efforts and the results achieved, over the next five years the FBR anticipates on adding 4.5 million new taxpayers.Â
In order to support this expansion, 146 District Tax Offices (DTOs) have also been established with the specific purpose of registering new taxpayers as well as ensuring that non-filers submit returns.Â
These efforts are tracked through monthly performance reports from field formations and are continuously monitored via a dedicated dashboard.
