ISLAMABAD, Nov 30 (APP):The fiscal deficit narrowed to 0.8 percent of Gross Domestic Product (GDP) during the first quarter of the fiscal year 2021-22, according to monthly Economic Update and Outlook for November released by the finance ministry here.
Last year, the deficit during the period was recorded at 1.1 percent of GDP, it says adding the revenue growth outpaced the growth in expenditures.
In absolute terms, the fiscal deficit has been reduced to Rs 438.5 billion in Q1 FY2022 against Rs 484.3 billion in the comparable period of last year.
The primary balance remained in surplus and stood at Rs 184.2 billion (0.3 percent of GDP) in Q1 FY2022 against the surplus of Rs 257.7 billion (0.6 percent of GDP) last year
“The fiscal performance remained strong during the first quarter of the current fiscal year on the back of healthy growth in tax revenues, careful expenditure management and higher provincial surplus,” the report says.
During the period under review, total revenues posted an impressive growth that outpaced the rise in expenditures.
Total revenues grew by 22.3 percent, primarily driven by 36.6 percent growth in tax collection from both federal and provincial levels.
On the other hand, total expenditures increased by 14.5 percent with 8.6 percent growth in current expenditures and 23.0 percent rise in development expenditures and net lending.
Within the development, expenditures under PSDP grew by 63.2 percent to Rs 262.1 billion during Q1 FY2022 against Rs 160.5 billion in the same period of last year.
Similarly, the cumulative surplus of all the four provinces was higher than the previous year as it recorded at Rs 276.9 billion in Q1 FY2022 against Rs 44.4 billion last year.
It says, the board was highly committed to further improve the tax collection through documentation and maximum taxpayer’s facilitation.
Meanwhile, the government was proficiently dealing with COVID-19 challenges through timely effective measures while it had speed up the vaccine process so that the economic activity remains on track without any disruption.
While increasing expenditure on priority areas, the government is adhering to a strict spending management strategy.
On the one hand, the government has increased the spending on growth-oriented projects, while on the other; it is focusing on bolstering the social safety net through various Ehsaas poverty alleviation programmes.
The current fiscal performance reaffirms the government’s commitment to strike a balance between fiscal deficits due to COVID 19 and boosting the growth of the economy, keeping the primary balance at a sustainable level, and protecting social spending.
The government’s efforts to maintain fiscal discipline through an effective revenue mobilization strategy and better expenditure management will continue to aid in further reducing the budget deficit during the current fiscal year, the report adds.
The report says Pakistan was on a high growth path while at the same time, it is confronted with persistent inflationary pressure.
The level and degree of persistence of inflation was the consequence of depreciation that followed the previous balance of payments crises, reinforced by the acceleration of worldwide inflation and the exceptional surge in international commodity prices.
These events put a lot of stress on the external accounts, more specifically on the balance in trade of the goods and services and from there on the current account balance, it adds.
Government aims to alleviate this stress as much as possible by implementing structural measures as well as by demand policy management, according to the report.
In terms of demand management, fiscal consolidation, while protecting the vulnerable sections of the population from the surge in food and energy prices, is the main objective of fiscal policy.
At the same time, SBP is redirecting monetary policy from an accommodative to a more neutral stance, it adds