Pakistan’s Fiscal Deficit has increased 1.1% of GDP or PKR 484 billion in 1QFY21 as compared to 0.7% of GDP or PKR 286 billion in 1QFY20.
Although the cumulative deficit has increased compared to last year, however the government has managed to keep Primary Balance at 0.57% of GDP or PKR 258 billion, which is as per the IMF’s target set before the arrival of COVID19 Pandemic.
At the provincial level, Baluchistan and Punjab posted budgetary surplus during 1QFY21, while Sindh and Khyber Pakhtunkhwa posted budgetary deficits during the Three Month Period.
The government-financed PKR 161bn of the overall deficit through External Financing and PKR 333bn through Internal Financing.
On revenue front, Tax Revenues declined by 2% YoY during the quarter, wherein Direct Taxes and Sales Tax increased by 2% YoY and 8% YoY, respectively. Though, Federal Excise Duty (FED) and Sales Tax on Services dropped by 8% YoY and 11% YoY.
Non-Tax Revenues increased by 3% YoY on the back of an increase in Petroleum Levy by 110% YoY. That said, Surplus profit from SBP dropped by 43% YoY.
On the expenses side, Current Expenditures increased by 15% YoY during the quarter, where Mark-up Payments were up 30% YoY even though interest rates have sharply come down.
The government expenditure increased by 10% YoY during the quarter, While Defense expenditures came down by 7% YoY.
The crucial factor in the assessment of fiscal deficit that is Statistical Discrepancy was held in surplus during the quarter. Total Statistical Discrepancy marked a surplus of PKR 65 billion (0.14% of GDP) during 1QFY21 as compared to a deficit of PKR 46 billion (0.10% of GDP).
Pakistan’s Total fiscal deficit for the year is estimated to stay up to 8.5% of GDP in FY21 compared to 8.1% of GDP in FY20.
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