The government remained successful in containing the fiscal deficit as the deficit stood at 1.1% of GDP in the third quarter of Fiscal Year 2021, compared to 1.7% in the corresponding period of the previous year. This improvement was fueled by the rapid growth of 24.6 percent in tax collection by FBR, which outstripped nominal spending growth of 0.3 percent for the quarter.
According to the latest report from the State Bank of Pakistan (SBP) for the third quarter of FY2021, the significant increase in FBR taxes in the third quarter was due to continued economic growth, efforts by the FBR to improve tax administration, impact on the increase in some categories and a low base.
On a cumulative basis, the Fiscal deficit declined to 3.5% of GDP in FY21 in July’2020-March’2021 period compared to 4.1% in the corresponding period last year, thanks to the government’s prudent policy to strengthen the tax administration’s operations and save on core operating costs.
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