Markup Payments
ISLAMABAD: The fiscal year 2023 witnessed a significant rise in total expenditure that grew by 21.5 percent to Rs. 16.155 trillion against Rs.13.295 trillion in FY2022. Higher expenditures were realized mainly due to a 26.6 percent increase in current spending. In absolute terms, it stood at Rs.14.583 trillion in FY2023 against Rs.11.52 trillion recorded in FY2022.
The increase in current expenditure is largely attributed to an 83.2 percent rise in markup payments while non-markup spending was restricted to 5 percent. Development expenditure grew by 17.1 percent largely due to a 62.8 percent rise in federal PSDP during FY2023.
Markup Payments expanded in FY23, leading to a robust growth in expenditures.
On the revenue side, total revenues grew by 19.9 percent to reach Rs.9634 billion in FY2023 from Rs.8035 billion in FY2022. Within total, tax revenues (federal and provincial) grew by 15.7 to Rs.7819 billion in FY2023 as compared to Rs.6755 billion in FY2022.
During FY2023, FBR tax collection grew by 16.7 percent to Rs.7169 billion against Rs.6143 billion in the same period of last year. Finance Division has mentioned these developments in its latest Economic Update and Outlook for the month of August 2023.
In July FY2024, FBR tax collection not only grew by 17.5 percent but also surpassed the collection target by Rs.4 billion. Within total tax collection, revenues from domestic taxes grew by 19 percent while from customs duty 9 percent growth has been registered. On the other hand, FY2023 registered a significant rise in non-tax collection largely attributed to higher receipts from petroleum levies followed by markup (PSEs & and others) and Royalties on oil/gas.
Overall, non-tax collection grew by 42 percent to Rs.1815 billion in FY2023 against Rs.1280 billion in FY2022. Thus, FY2023 witnessed a fiscal deficit of 7.7 percent of GDP (Rs.6521 billion) against 7.9 percent of GDP (Rs.5260 billion) in the last year. Similarly, the primary deficit was restricted to 0.8 percent of GDP in FY2023 against 3.1 percent of GDP recorded in FY2022 mainly due to limited growth in non-markup spending.
The Current Account posted a deficit of $ 809 million for July FY2024 as against a deficit of $ 1.3 billion last year, largely reflecting an improvement in the trade balance. Exports of FOB declined by 4.6 percent during July FY2024 and reached $ 2.1 billion ($ 2.2 billion last year). Imports on fob declined by 23.5 percent during July FY2024 and reached $ 4.2 billion ($ 5.5 billion last year).
Resultantly the trade deficit (July FY2024) reached $ 2.1 billion as against $ 3.3 billion last year. Exports in Services during July FY2024 increased by 2.3 percent to $ 538 million as against $ 526 million. The imports in services increased by 45.3 percent to $ 811 million as compared to $ 558 million same period last year.
Trade Deficit in July 2023
The trade deficit in services stood at $ 273 million as against $ 32 million last year. As per PBS, during July FY 2024, exports stood at $ 2.1 billion ($ 2.3 billion last year) and declined by 8.1 percent. The major export commodities that have shown positive growth during the review period include Fish and fish Preparation (27.2 percent in quantity & and 2.2 percent in value), Fruits (29.5 percent in quantity & and 4.6 percent in value), Cotton Yarn (37.8 percent in quantity& 36.0 percent in value), Plastic Materials (176.2 percent in quantity & 64.8 percent in value) and pharmaceutical products (144.3 percent in quantity & 8.9 percent in value). 2.5.1
Foreign Investment
Foreign Investment FDI reached $ 87.7 million during July 2024 ($ 74.8 million last year) increased by 17.3 percent. FDI received from China $ 18.0 million (20.5 percent), Hong Kong $ 16.9 million (19.2 percent), Netherlands $ 12.1 million (13.8 percent), and Switzerland $ 10.1 million (11.5 percent of total FDI). The power sector attracted the highest FDI of $ 45.1 million (51.4 percent of total FDI), Oil and gas exploration of $15.2 million (17.3 percent), and communication of $8.0 million (9.1 percent).
Foreign Private Portfolio Investment has registered a net inflow of $ 16.3 million during July FY2024. Foreign Public Portfolio Investment recorded a net inflow of $ 6.0 million. The total foreign portfolio investment recorded an inflow of $ 22.3 million during July FY2024 as against an outflow of 13.9 million last. Total foreign investment during July FY2024 recorded an inflow of $ 110.0 million as against $ 60.9 million last year.
