FY23 closes with Rs6.52 trillion deficit

ISLAMABAD: Pakistan’s budget deficit has surged to Rs6.52 trillion, equivalent to 7.7 percent of the Gross Domestic Product (GDP) during the fiscal year 2022-23, which concluded on June 30, 2023.

For the first time in the last two decades, external financing for budgetary purposes has remained negative, amounting to Rs0.679 trillion in the last fiscal year. This shift is primarily attributed to the previous regime’s failure to revitalise the IMF’s Extended Fund Facility (EFF) programme.

Consequently, external loans for the budget turned into a deficit. Domestic financing of the budget deficit reached Rs7.2 trillion, while external financing stayed negative at Rs0.679 trillion, resulting in an overall budget deficit financed to the extent of Rs6.52 trillion.

The primary deficit amounted to Rs0.69 trillion or 0.8 percent of GDP in the last fiscal year. This is in contrast to the government’s commitment to achieving a surplus in the previous fiscal year under the IMF’s EFF arrangement.

The fiscal operations report for the financial year 2022-23, released on Thursday, revealed that total revenues reached Rs9.6 trillion, including tax revenues of Rs7.8 trillion and non-tax revenues of Rs1.81 trillion. Total expenditures amounted to Rs16.15 trillion, with a significant portion allocated to debt servicing — Rs5.8 trillion — for both domestic and foreign loans. Notably, a statistical discrepancy of Rs0.38 trillion was observed in the last fiscal year. While the federal-level statistical discrepancy stood at Rs0.49 trillion, the provinces generated a surplus of Rs0.9 trillion, reducing the overall discrepancy to Rs0.38 trillion.

Defence spending for the last fiscal year totaled Rs1.585 trillion.

Among the non-tax revenues, the government garnered Rs1.8 trillion, with the federal government contributing Rs1.64 trillion. This includes petroleum development levy of Rs0.579 trillion, SBP profit of Rs0.371 trillion, PTA profit of Rs0.84 trillion, dividends of Rs0.68 trillion, royalties on oil and gas of Rs0.120 trillion and other sources.

Regarding expenditures, pension payments amounted to Rs0.66 trillion, civil government operations to Rs0.634 trillion, subsidies to Rs1.08 trillion, and grants to others to Rs0.98 trillion.

The utilization of the Total Public Sector Development Program (PSDP) reached Rs1.8 trillion, including the federal PSDP of Rs0.651 trillion and provincial development spending of Rs1.24 trillion.

The fiscal position of the federal government has weakened as its total revenue receipts amounted to Rs8.8 trillion, with a transfer of Rs4.2 trillion to the provinces. Therefore, the net revenue receipts of the federal government stood at Rs4.6 trillion.

Total federal government expenditure was recorded at Rs11.3 trillion, of which current expenditures reached Rs10.86 trillion. Debt servicing consumed Rs5.831 trillion, leading to net revenue receipts turning negative by over Rs1.2 trillion after meeting major expenditure obligations.