Half of Pakistan’s budget spent on debt repayments
Pakistan spent Rs 18486.19 billion (84.65%) out of Rs. 21837.24 billion in total debt repayment and interest payments during fiscal year 2020-21.
According to the documents, a high percentage of expenditure, 95.74%, is spent on the general public service, of which 84.65% (18.486.19 billion) for the payment of principal and interest.
On the other hand, the federal government left a paltry 13.99% (Rs 3150.65 billion) of total spending on socioeconomic functions other than general public service, although it is relatively higher than last year’s 7.81% (3846 , 443 billion Rs).
The document shows that the percentage of defense business and services was 0.03% (Rs 5.98 billion) of total spending under federal control jurisdiction, public order and security affairs 0.86% (Rs 187.95 billion), Economic Affairs 1.20% (Rs 262 0.01 billion), Environmental protection 0.03% (Rs 6.38 billion), Housing and community services 0.04% (Rs 8.59 billion), Health 0.23% (Rs 51.21 billion), Recreation, culture and religion 0.05% (Rs 11.68 billion), Education 0.57% (Rs124 billion) and Social protection 1, 24% (Rs271.09 billion).
Over the past five years, internal floating debt has gradually decreased from Rs. 14.13 trillion to Rs. 13.81 trillion. This year, however, there has been a reasonable decline in pending domestic debt receipts which have fallen to Rs. 13.81 trillion.
Permanent domestic debt also fell to Rs. 0.96 trillion from Rs. 1.23 trillion last year. The federal government is reducing outstanding debt and relying primarily on permanent domestic debt in the overall debt composition.
The debt repayment shows that the federal government has paid off 13.81 trillion rupees of pending debt, 0.96 trillion rupees of permanent domestic debt and 0.96 trillion rupees of external debt this year.
To meet its expenses, the federal government relied mainly on borrowing in the form of public debt, which accounted for 19965.38 crore (84.60%) of total revenue. There is less reliance on loans than last year, when the state debt of Rs 19,432.39 billion (85.59%) was part of the total revenue. Public debt revenues are further divided into floating internal debt, permanent internal debt and external debt.
Total tax revenue for fiscal year 2020-21 is Rs 3472.10 billion compared to Rs 4209.696 billion last year. The provincial share under the NFC award of Rs 2644.627 billion was transferred to the provinces and left Rs 2057.582 billion for the federal government. This was Rs 149.80 billion less than the original target of Rs 2207.383 billion, although Rs 727 billion more than the range of Rs 1479.857 billion last year. There has been nominal growth in sales tax, federal excise and income tax revenue, customs duties and others increased to Rs2057.582 billion from the previous fiscal year 2019-20.
According to the Economic Survey of Pakistan, an amount of Rs 1149.95 billion (27% of tax revenue) was recorded as a tax expense, a missed opportunity. Last year, the amount recorded as tax burden was Rs 1314.273 billion, or 37.85% of tax revenue.
Half of Pakistan’s budget spent on debt repayments
On the other hand, the government is experiencing a decline in defense services and other non-tax revenues.
Great efforts are needed to increase both government non-tax revenue and tax revenue to reduce debt dependency.
