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Shehbaz Govt deteriorates financial discipline by missing fiscal targets

ISLAMABAD (Eshfak Mughal):- The Coalition Federal Government led by former premier Shehbaz Govt has closed its tenure with 7.7 percent budget deficit against the original target of 4.9 percent during the last fiscal year 2022-23 mainly due to high markup payments and non-compliance of commitments by provinces to provide surplus budget.

According to the summary of consolidated fiscal operations uploaded by Finance Division, the total revenue during the last fiscal year was Rs 9633 billion against the total expenditure of Rs 16154 billion.

The PDM Govt had estimated budget deficit by 4.9 percent (Rs.(3,797 billion) during the budget. The incumbent government closed the last fiscal year with 7.7 percent to GDP (Rs.6.52 trillion). The historical budget deficit was recorded despite Rs.381 billion Statistical Discrepancy. The amount of Statistical Discrepancy is the amount which is not visible and has no record but it is also not added in the budget deficit.

This was the highest level of budget deficit in real terms due to many reasons including low revenue and unbudgeted expenditure during the last fiscal year.

The document shows that the total expenditures of the government was swelled to Rs.16.155 trillion against the original target of Rs.9.579 trillion during the current fiscal year.

The government has spent Rs.5.831 trillion for markup payments against the original target of Rs.3.950 trillion during the fiscal year. It has paid Rs.5,071 billion interest on domestic loans and Rs.760 billion on external loans. The markup payments were equal to four years of defense budgets. It is important to mention here that the Shehbaz Govt has jacked up the policy rate from 13 percent to 22 percent due to pressure of the International Monetary Fund for securing the loan program which was stalled. The Washington based international creditor wants to push up the policy rate to equal of inflation ration which is blinking on 29 percent.

The government has also missed the target of defense related spending during the fiscal year. The document shows that the defense spending was Rs.1585 billion against the original target of Rs.1563 billion during the period.

The documents show that the burden of pension has been surpassed to overall cost of running the affairs of civil government. The government spent Rs666 billion on pension against the original estimate of Rs.609 billion. it has also spent Rs634 billion against the original estimates of Rs553 billion to run the affairs of the civil government including salaries and perks and privileges of the bureaucracy and government officials.

The govt has spent Rs.652 billion on the federal public sector development against the target of Rs.727 billion during the last fiscal year.

The overall revenue of the government was also Rs.9633 billion against the original target of Rs.9579 billion during the fiscal year. The government earned Rs.7819 billion through federal and provincial tax revenues during the last fiscal year. The Federal Board of Revenue has missed the revenue target by wide gap. The federal tax collection agency has collected Rs7,169 billion against the target Rs7470 billion with the shortfall of Rs301 billion.

Out of total Rs 7169 billion tax revenue; Direct taxes Rs 3272 billion, Taxes on international trade (Customs) Rs 943.4 billion, sales tax Rs 2592.1 billion and federal excise Rs 369.7 billion.

The govt has also missed the target of non tax revenue of both federal and provincial governments. The non tax revenue was collected Rs 1815 billion against the target of Rs1935 billion during the last fiscal year. The govt has faced Rs120 billion shortfall on nontax revenue during the period.

Out of total nontax revenue, the govt has collected Rs580 billion against the original target of Rs855 billion in account of Petroleum Development Levy during the last fiscal year.

Meanwhile, the provincial sales tax on services was recorded Rs 416.9 billion, Excise Duty Rs 9.6 billion, Stamp duties Rs65 billion, Motor vehicles tax Rs.31.7 billion and other taxes Rs 126 billion.

Mark-up (PSEs & Others) taxes remained Rs 144.6 billion, Dividend Rs68 billion, Profit PTA & others Rs84.5 billion, Surplus Profit of State Bank of Pakistan Rs371 billion, Defence Receipts Rs21 billion, Passport Fee Rs34 billion, Discount retained on Crude Oil Rs23.08 billion, Royalties on Oil\ Gas Rs120 billion, Windfall Levy against Crude Oil Rs27.7 billion, Petroleum Levy on LPG Rs3.4 billion, Gas Infrastructure Development Cess Rs10.9 billion, Natural Gas Development Surcharge Rs10.6 billion, Petroleum Levy Rs579 billion and Rs148 billion collected in other taxes during last year.

The govt has gotten nothing from privatization against the target of Rs.96 billion. The data shows that the govt could not move to proceed the privatization of loss making enterprises during the fiscal year.

According to the document, Primary Balance remained Rs 690 billion and Statistical Discrepancy Rs 380 billion.

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