Revenues increase to Rs3.5trln in 9 months of FY2019

ISLAMABAD: The total tax and non-tax revenues increased to Rs3,583.7 billion (9.3 percent of GDP) during first nine months of the fiscal year 2018-19 from Rs3,582.4 billion (10.3 percent of GDP) during comparable period of last year.

Decelerated performance of total revenues is primarily due to marginal growth of 2.8 percent in tax revenues and negative growth of 16.7 percent in non-tax revenues, according to Pakistan Economic Survey 2018-19 launched here by Advisor to Prime Minister, Dr Abdul Hafeez Shaikh.

The tax revenue registered a growth of 2.8 percent during Jul-Mar, FY2019 (to Rs 3,162.1 billion or 8.2 percent of GDP) compared with Rs 3,076.2 billion (8.9 percent of GDP) in the same period last year.

Within overall tax revenue, federal taxes grew by 2.8 percent during the period under review against 13.5 percent growth during same period of last year.

The Federal Board of Revenue (FBR) tax collection increased to Rs 2,704.5 billion (7.0 percent of GDP) during first nine month of current fiscal year compared with Rs 2,627.6 billion (7.6 percent of GDP) in the same period of FY2018.

Provincial tax revenue registered a growth of 2.8 percent during Jul-Mar of CFY against 21.4 percent during the same period last year.

Non-tax revenue declined by 16.7 percent (during Jul-Mar, FY2019) from Rs 506.2 billion to Rs 421.6 billion.

Major factors responsible for this sharp decline in non-tax revenues include negative growth of State Bank of Pakistan (SBP) profit which declined by 3.5 percent as depreciation of rupee had a strong effect on rupee income, negative growth of 33.7 percent in mark-up payments (PSEs and others) and a 4.2 percent fall in dividends received from PSEs and other investments.

Meanwhile, on the total expenditures increased to Rs 5,506.2 billion (or 14.3 percent of GDP) during first nine months of CFY compared with Rs 5,063.3 billion (14.6 percent of GDP) during the comparable period of last year.

According to the Survey, this implies a growth of 8.7 percent in expenditure during Jul-Mar, FY2019 against the growth of 15.5 percent in the same period last year.

Current expenditures grew by 17.7 percent (to Rs 4,798.4 billion (or 12.4 percent of GDP) compared with Rs 4,075.4 billion (11.8 percent of GDP) in the same period of last year.

Federal and provincial government current expenditures grew by 19.9 and 13.7 percent, respectively compared with 8.8 and 22.0 percent during same period last year.

Share of federal and provincial current expenditures in total current expenditures stood at 66 and 34 percent, respectively.

The increase in federal government’s current expenditure was mainly on account of increase in interest payments, which grew by 24.4 percent to Rs 1,459.2 billion during Jul-Mar, FY2019 compared with Rs 1,172.8 billion during same period last year.

Growth in interest payments was caused by continued increase in stock of public debt (both domestic and external), large increase in interest rates and a sharp depreciation in exchange rate.

The defence expenditures grew by 24.2 percent against a growth of 16.5 percent last year. This acceleration in defence expenditure of heightened security concerns in the region. During July-March, FY2019 subsidies reached Rs 96.8 billion, against Rs 88.7 billion during same period of FY2018, posting a growth of 9.2 percent.

Development expenditures (excluding net lending) decreased to Rs 655.9 billion during Jul-Mar FY2019 compared with Rs 993.3 billion last year – a decline of 34.0 percent.

The Public Sector Development Programme  (PSDP) spending witnessed a negative growth of 37.9 percent, with federal expenditure declining by 14.5 percent and provincial by 52.2 percent.