Pakistan’s fiscal deficit has clocked in at 2.5% of the GDP, or Rs 1,138 billion during July-December 2020-21 as compared to 2.3% of GDP, or Rs 995 billion, in the first half of 2019-20. It translates into an increase of 14% when comparing with the first half of the previous fiscal year.

The government financed 40% of the overall deficit through net external financing and 60% through internal financing. The government arranged Rs 454 billion external financing and Rs 683 billion through net internal financing to bridge the fiscal deficit.

In the second quarter of the fiscal year 2021, the overall budget deficit has shrunk by 8% on year on year basis. All four provinces recorded budgetary surpluses during the first half of 2020-21, clocking in a cumulative surplus of Rs 255 billion.

An analyst at Topline Securities expects Pakistan’s fiscal deficit to clock in at around at 8 to 8.5% of the GDP in 2020-21, compared to 8.1% of the GDP in 2019-20.

Tax revenues remained largely the same as of last year at Rs 2,456 billion during the first half of this year. However, petroleum levy is now classified as a non-tax revenue, while adjustments for these tax revenues are up by 6% year on year bases, the report stated. Direct taxes and sales tax has increased by 6% and 7%, respectively, compared to the previous year.

Current expenditures have increased by 8% as compared to the corresponding period of the last year but defence expenditures came down by 8%.


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