Pakistan: Markup payments exceed net revenue collection

Economic analysts have been warning about the adverse impacts of indiscriminate borrowing and persistent hike in the interest rate, in the name of containing inflation. However, economic managers never paid any attention to this.

Today, I am inclined to refer to a report by Topline Securities, one of the leading brokerage houses of Pakistan. According to the report total markup payments during 9MFY23 were up 69%YoY on the back of higher interest rates and increasing debt stock.

Budget Deficit of Pakistan for 9MFY23 has been reported at PKR3.08 trillion or 3.7% of GDP as against PKR2.56 trillion or 3.8% of GDP in 9MFY22. Budget Deficit for 3QFY23 was reported at PKR1.39 trillion as against a deficit of PKR1.19 trillion for 3QFY22. IMFs has projected budget deficit for the full year FY23 at 4.6%.

The government for 9MFY23 recorded a primary surplus of PKR0.5 trillion or 0.6% of GDP as against a primary deficit of PKR0.45 trillion in 9MFY22. For 3QFY23 primary deficit was posted at PKR0.39 trillion as against a primary deficit of PKR0.53 trillion for 3QFY22. IMFs had projected primary surplus for FY23 at 0.2% of GDP. 

Total Revenue collection for 9MFY23 has been reported at PKR6.94 trillion as against PKR5.88 trillion for 9MFY22, a growth by 18%YoY. Total expenditures increased by 19%YoY to PKR10 trillion for the period under review.

Federal Government Markup Payments for 9MFY23 have been reported at PKR3.58 trillion as against net revenue receipts of PKR3.44 trillion. Total Markup payments during 9MFY23 were up 69%YoY on the back of higher interest rates and increasing debt stock.

Indirect Taxes contributing 55% of FBR revenue were reported at PKR2.84 trillion while Direct Tax collection was PKR2.31 trillion.