Fiscal Performance Improves In FY21: Shaukat Tarin

ISLAMABAD, (UrduPoint / Pakistan Point News - 10th Jun, 2021 ) :The fiscal sector continued to perform better on account of effective revenue mobilization and expenditure management strategy during the first three quarters of the current fiscal year (2020-21), Minister for Finance Saukat Tarin said on Thursday at the launch of Pakistan Economic Survey.

A recovery in domestic economic activity and a slowdown in expenditures other than mark-up payments and COVID-related spending improved the fiscal accounts during the first three quarters of FY2021.

The revenue side, in particular, performed better as a result of increased tax collection both at the Federal and provincial levels. In addition, the cumulative surplus of all the four provinces was higher than the previous year.

The fiscal deficit thus remained on the lower side during July-March, FY 2021 over the same period last year.

According to the consolidated fiscal operations, the fiscal deficit during the first nine months of FY2021 contained at 3.5 percent of GDP against 4.1 percent of GDP in the comparable period of FY2020.

Similarly, the Primary balance posted a surplus of Rs 451.8 billion (0.9 percent of GDP) during July-March, FY2021 against the surplus of Rs 193.5 billion (0.5 percent of GDP) in the same period of FY2020.

During July-March, FY2021, total revenue grew by 6.5 percent against the growth of 30.9 percent in the same period of last year.

In absolute terms, total revenue increased to Rs 4,992.6 billion during July-March, FY2021from Rs 4,689.9 billion in the same period of FY2020.

A major impetus in revenue increase came entirely from double-digit growth in tax revenue which compensated for the decline in non-tax revenues.

Total tax revenue (federal & provincial) grew by 11.9 percent during July-March, FY2021 and stood at Rs 3,765.0 billion against Rs 3,365.5 billion in the comparable period of FY2019.

Within the total, federal tax collection witnessed a significant rise as it grew by 11.5 percent to stand at Rs 3,394.9 billion during July-March, FY2021 against Rs 3,044.3 billion in the same period of FY2020.

The revenue performance was not only a reflection of growing economic activities without any disruption even in the wake of the third wave of COVID-19, but it also suggests that the efforts to improve the tax collection through various policy and administrative reforms are fruitful.

In contrast, the non-tax revenue fell sharply during July-March, FY2021 after witnessing strong growth in the same period of last year.

Non-tax revenue, stood at Rs 1,227.6 billion during July-March, FY2021 against Rs 1,324.4 billion in the corresponding period last year, showing a decline of 7.3 percent.

Out of the total, federal non-tax revenue recorded a decline of 8.0 percent to Rs 1,145.4 billion during July-March, FY2021 against Rs 1,244.8 billion in the same period last year.

The decline is mainly attributed to the absence of a one-off renewal fee for GSM licenses from telecommunication companies.

In addition, lower receipts from a surplus profit of SBP and mark-up (PSEs & others) have also attributed to an overall decline in federal non-tax collection. On the other hand, receipts from Gas Infrastructure Development Cess (GIDC), Natural Gas Development Surcharge and petroleum Levy have witnessed an increase during July-March, FY2021 over the same period last year.

The breakup shows that out of the total, Rs 497.5 billion were collected from SBP profit followed by Rs 369.2 billion from petroleum levy, Rs 53.3 billion from Royalties on Oil/Gas, Rs 53.2 billion from mark-up receipts (PSEs & others), Rs 20.0 billion from PTA profit, Rs 17.2 billion from natural gas development surcharge and Rs 15.4 billion from GIDC etc.

On the expenditure side, total expenditure grew by 4.2 percent during July-March, FY2021 as compared to 15.8 percent growth observed in the same period of FY2020.

The efficient expenditure management helped in curtailing the overall expenditure during the current fiscal year.

In absolute terms, the expenditures stood at Rs 6,644.6 billion (13.9 percent of GDP) during July-March, FY2021 against Rs 6,376.0 billion (15.3 percent of GDP) in the comparable period of last year.

The current expenditure contained at 8.4 percent during July-March, FY2021 against 16.9 percent growth recorded in the same period of last year. In absolute terms, it stood at Rs 6,085.4 billion in July-March, FY2021 against Rs 5,611.6 billion in the same period of FY2020.

Although higher mark-up payments, increase in subsidies and grants to others, contributed significantly to the current fiscal year's growth in current expenditure, the decline in other expenditures like defence, pensions and running of civil government slowed the pace of growth.