First nine months of FY24: Servicing of debt exceeds net revenue

ISLAMABAD: The federal government’s fiscal woes have multiplied, as the net revenue receipts are unable to meet even single expenditure item of debt servicing in the first nine months of the current fiscal year.

Secondly, the statistical discrepancy has also gone up and stood at Rs0.206 trillion in the first nine months indicating the government has failed to reconcile the fiscal accounts. According to the fiscal operation for July-March period released by the Ministry of Finance on Tuesday, the gross revenue receipts of the federal government stood at Rs9.1 trillion out of which the Centre provided Rs3.8 trillion to the provinces under the NFC Award, leaving the net revenue receipts at Rs5.3 trillion.

However, the federal government paid out debt servicing of Rs5.517 trillion in the first nine months (July-March) of the current fiscal year. It clearly indicates that the fiscal situation of the government deteriorated, so it was left with no option but to borrow money to meet all the remaining expenditure heads, including defence, development, subsidies, pension, salaries and running of government.

The federal government spending on the Public Sector Development Program (PSDP) stood at just Rs0.27 trillion only, while the defence spending stood at Rs1.222 trillion in the first nine months of the current fiscal year.

The fiscal operation also shows that the overall budget deficit climbed close to Rs4 trillion in the first nine months, equivalent to 3.7 percent of GDP. The primary balance (excluding the debt servicing) remained surplus at Rs1.6 trillion.

Total revenues fetched Rs9.7 trillion including tax revenues of Rs7.2 trillion, Rs6.7 trillion of the federal government and Rs0.55 trillion of provinces. The non-tax revenues fetched Rs2.51 trillion.

In non-tax revenues, the government fetched Rs0.719 trillion through the petroleum levy during the period as the government jacked up levy on petroleum products up to the maximum level of Rs60 per liter.

Total expenditures incurred to the tune of Rs13.6 trillion out of which the current expenditures stood at Rs12.3 trillion. The debt servicing consumed the largest chunk and stood at Rs5.51 trillion and defence Rs1.22 trillion.

The overall budget deficit ballooned to Rs3.9 trillion in the first nine months of the current fiscal year, which was financed through the domestic financing of Rs3.4 trillion and foreign loans of Rs0.49 trillion during the period.