· Country fiscal deficit for the 1QFY22 came out at 0.81% of GDP as opposed to 1.1% of GDP recorded in 1QFY21 and 3.7% of GDP during 4QFY21. The improvement was mainly driven by growth in revenue collection, up by 0.11%YoY in 1QFY22.

· Total tax collection reported a growth of 37%YoY to PkR1.5trn on the back of strong performance from FBR tax collection. However, non-tax revenues reported a decline of 23%YoY on the back of lower collection of petroleum levy as GoP decided not to put added burden general public amid higher international oil prices.

· Total expenditures on the other hand reportedly declined by 0.14%YoY on the back of 16%YoY decline in debt servicing cost. However, 17%YoY growth in defense related expenditures contained the headline decline in current expenditures.

· Development expenditures at the same time grew by 23%YoY on the back of 53%YoY growth in federal PSDP which grew to PkR108bn as opposed to PkR71bn during SPLY.

· We expect FY22 to close with a headline fiscal deficit of 6.8% of GDP while the primary deficit likely clocking in at 0.8% of GDP. Risks to our macro forecasts come from higher than anticipated jump in debt servicing costs where we expect a cumulative jump of 125bps during remainder of FY22.

Courtesy – AKD Research