Federal Revenue Nears Rs10 Trillion, But Interest Payments and Subsidies Dominate Expenditures
ISLAMABAD: Pakistan’s federal government successfully reduced the country’s fiscal deficit to Rs7,090 billion, or 5.4% of GDP, during the fiscal year 2023–24, according to a new report by the Ministry of Finance (MoF). The fiscal improvement comes as part of Pakistan’s ongoing commitment to meet performance benchmarks agreed upon with the International Monetary Fund (IMF).
The report, released on Wednesday, provides a detailed breakdown of the government’s revenue, expenditures, and budget execution between July 2023 and June 2024. The data shows that while revenue improved, Pakistan’s spending continued to be dominated by rising interest payments and subsidies.
Revenue Growth Meets Milestone, But FBR Misses Collection Target
Federal income reached Rs9,946 billion, closing in on the Rs10 trillion mark. However, the government’s total expenditure soared to Rs17,036 billion, with more than half consumed by interest payments alone. A large portion of revenue — Rs6,854 billion — was transferred to provinces via the divisible pool, significantly constraining the federal government’s fiscal space.
Breakdown of key expenditures includes:
- Rs8,847 billion on interest payments (largest expense)
- Rs2,193 billion on defense spending
- Rs1,297 billion on subsidies
- Rs910 billion for pensions
- Rs891 billion to run the civil government
- Rs1,049 billion on development projects (up 43% year-on-year)
Despite these costs, Pakistan posted a primary budget surplus of Rs2.7 trillion, surpassing the IMF-agreed target of Rs2.4 trillion, reflecting improved fiscal discipline when excluding interest payments.
However, tax collection fell short. The Federal Board of Revenue (FBR) managed to collect Rs11,744 billion, missing its annual target of Rs12,970 billion. The government’s Trader-Friendly Scheme, designed to broaden the tax base, underperformed as well, generating just Rs50 billion against projections.
Provinces Show Surpluses but Fall Short of Combined Target
All four provinces reported budget surpluses, although collectively below the targeted Rs1,200 billion:
- Punjab: Rs348 billion
- Sindh: Rs283 billion
- Khyber Pakhtunkhwa: Rs176 billion
- Balochistan: Rs114 billion
Total provincial savings amounted to Rs921 billion. While falling short of expectations, these surpluses contributed positively to the national fiscal framework.
