The Businessmen Panel (BMP) of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has stressed the need for implementing structural reforms for good governance, curbing unproductive state expenditures, expanding the tax base, fostering public-private partnerships, and reallocating resources to critical sectors to stimulate sustainable growth, as the country is facing with daunting economic challenges, posing a serious threat to the viability of the industry.
Chairman BMP and former president FPCCI MianAnjumNisar observed that it was imperative to understand that fiscal discipline cannot be achieved and sustained without initiating structural reforms. He said that the government in the 2023 budget extended substantial subsidies and grants to loss-making entities, which, in turn, were not only failing to make positive contribution but were also incurring significant losses. We must maintain fiscal discipline and establish controls to create fiscal space to extend relief to the masses.
Quoting the reports, the business leader said that the budget deficit continues to grow, entangling Pakistan in an unrelenting cycle of debt. Even if we exclude the impact of debt servicing, our revenues fall short of covering other expenses, implying that all these were met from borrowed funds. At the close of the fiscal year (FY) 2022-23, Pakistan recorded a budget deficit of Rs 6.52 trillion, equivalent to 7.7% of the GDP, a slight decrease from the previous year’s 7.9% of GDP. However, in absolute figures, the budget deficit surged by a substantial 24%, or Rs 1.26 trillion, within just one year.
Due to this bleak scenario, the primary balance registered a negative Rs 690 billion in FY 2023. Encouragingly, Pakistan achieved a noteworthy reduction of Rs 1.3 trillion or 67% year-on-year in its debt portfolio at the primary balance level during FY 2023. According to the Fiscal Operation report the primary deficit, which stood at 3.1% of GDP in FY2022, was reduced to a more manageable level of 0.8% of GDP in FY 2023. This improvement has created some fiscal room, and with continued efforts we can attain a primary surplus, representing the fundamental level of financial discipline.
It is encouraging to note that at the consolidated level, the government successfully attained an overall primary surplus of Rs 503 billion.
However, by end of the third quarter of FY 2023, overall budget’s balance showed a negative figure of Rs 3.07 trillion.
Yet, in the last quarter of FY 2023, primary surplus turned into primary deficit, with latter recording a primary deficit of Rs 1.1 trillion.
The budget deficit in last quarter of FY 2023 surged to nearly 112% of the cumulative figures from July 2022 to March 2023.—INP
