Pakistan’s fiscal balance in the outgoing first quarter of FY23 posted a deficit of PKR 809bn, 84% YoY higher than the prior year’s deficit. In terms of % GDP, the deficit arrived at 1.0% in 1QFY23, higher than last year’s same period figure of 0.7% of GDP. However, the primary balance during 1QFY23 posted a surplus of PKR 145bn (0.2% of GDP) compared to a surplus balance in primary account of PKR 184bn witnessed in the same period last year (0.3% of GDP).

Primarily, total revenue growth of 12% in 1QFY23 to PKR 2.0trn (1QFY22: PKR 1.8trn) aided the fiscal balance, translating to 2.6% of GDP vs. 2.7% in same period last year. The total tax revenue collection was up by 16% YoY to PKR 1.8trn. FBR taxes clocked-in at PKR 1.6trn during the period, 17% YoY higher than 1QFY22’s collection of PKR 1.4trn. Jump in indirect taxes (+4% YoY to PKR 951bn) mainly on the back of higher sales tax (+3% YoY to PKR 642bn), and direct taxes (+42% YoY to PKR 683bn), both contributed to the overall collection.

Albeit, the government collected PKR 235bn in non-tax revenues, displaying a decline of 15% YoY. This was particularly owed to a lower profit of the Pakistan Telecom Authority during 1QFY23 to PKR 13.1bn (-57% YoY) and absence of surplus profit of the SBP amid the amendments in the SBP Act 1956. On the contrary, the Petroleum Levy collection increased during 1QFY23 to PKR 47.5bn (+257% YoY).

In addition, total expenditure went up by 26% YoY to PKR 2.8trn (3.6% of GDP vs. 3.4% of GDP in 1QFY22). Further breakup revealed that current expenditure underwent an uptick of 29% YoY of which defence rose by 20% YoY. However, markup payments marked a growth of 53% YoY to PKR 954bn. Moreover, development expenditure and net lending undertaken by the government decreased by 17% YoY to PKR 220bn.

Total PSDP expenditure in 1QFY23 arrived at PKR 219.2bn (-16% YoY) with provincial expenditure at PKR 152bn (-38% YoY), outdoing federal disbursement of PKR 67bn (-1.2% YoY).

Courtesy – AHL Research