Karachi, February 14, 2020: The government has reported a fiscal deficit of 2.3 percent of GDP in first half of this fiscal year (1HFY20) compared to a fiscal deficit of 2.7 percent of GDP in same period of last fiscal year (1HFY19).
Importantly though, the primary balance during the period clocked in at 0.7 percent of GDP (last year was -0.3 percent of GDP), within the target of 0.6 percent set by the IMF.
According to a report issued by Topline, in the 2QFY20, the fiscal deficit came in at 1.6 percent of GDP compared to 1QFY20’s fiscal deficit of 0.7 percent of GDP. All the four provinces recorded a budgetary surplus during the 1HFY20 and 2QFY20.
During the 1HFY20, Total Revenues increased by 39 percent YoY, where the improvement was led by 18 percent YoY higher Tax Revenues (however less than targeted) and 213 percent YoY higher Non-Tax Revenues.
Looking into further breakup of revenues, the government collected 17 percent YoY higher Direct taxes, 24 percent YoY higher Sales Tax and 68 percent YoY higher Petroleum Levy during 1HFY20.
The government hugely benefitted from 575 percent YoY higher profits from State Bank of Pakistan (SBP) in 1HFY20 (also 31 percent QoQ higher in 2QFY20), which is around 0.8 percent of GDP. The fees fetched through the auction of telecom licenses (PTA profits: 607 percent YoY higher in 1HFY20) also helped the government achieve the primary balance target.
On the expenditures front, total expenses increased by 26 percent YoY. Current expenditures increased by 25 percent YoY, where Mark-up Payments were up 46 percent YoY and Defense expenses were up 10 percent YoY. Excluding these items, government’s own expenses increased by 17 percent YoY during the 1HFY20 (also up 49 percent QoQ in 2QFY20).
The development expenditure remained healthy, where the growth of 28 percent YoY was witnessed in 1HFY20 and 122 percent QoQ in 2QFY20.