The Ministry of Finance of Pakistan has disclosed financial figures for the first half of the current fiscal year, highlighting significant spending on debt repayments amid escalating interest rates.
During this period, 64% of the national budget, amounting to PKR 4.2 trillion, was dedicated to interest payments, marking a substantial 65% increase from PKR 2.6 trillion spent in the corresponding period last year. Of the total PKR 7.3 trillion budgeted for debt and interest payments for the entire fiscal year, 58% has already been allocated.
A breakdown of the payments shows that PKR 3.72 trillion was directed towards local debt settlements, while foreign debt repayments totalled PKR 502 billion. The outflow indicates that only PKR 158 billion was utilized from the PKR 950 billion reserved for development programs, considerably below the expected 50% expenditure.
The country’s fiscal health further reflects a widening deficit, with the federal government’s fiscal deficit escalating to PKR 2.7 trillion or 2.5% of the GDP, up from PKR 1.78 trillion or 2.1% in the previous year. Despite this, there was a notable increase in the cash surplus from the provinces, which rose to PKR 289 billion from PKR 101 billion the year before, bringing the total federal deficit to 2.3% of the GDP.
Financing for the fiscal deficit predominantly came from domestic sources, contributing 77% of the funds. From July to December 2023, the country saw a 63% increase in overall revenue, with tax revenues rising by 30% and non-tax revenues surging by 117%. This resulted in total revenues exceeding PKR 4 trillion, a substantial jump from PKR 2.5 trillion in the previous year.
Furthermore, the Federal Board of Revenue reported a 30% increase in revenue collection, totalling PKR 4.5 trillion. The primary surplus for the first six months stood at PKR 1.8 trillion, indicating some fiscal resilience despite the broader challenges.
