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Economy

Fiscal Deficit Up Over Last year

ISLAMABAD: Fiscal deficit in 6 months ended Dec 2020 stood at 2.5% of GDP, versus 2.3% same period last year. The full year target is 7.1%.

Government release amount of Rs 1475 billion under the head of mark-up payments. In the same period last fiscal year mark-up payments stood at Rs 1,281 billion.

Amount released for defense expenditure stood at Rs 487 billion in six months to Dec 2020. In the same period last defense expenditure was around Rs 529 billion.

Petroleum levy collection in six months was almost doubled. In the six months to Dec. 2020 PL was Rs 275 billion vs Rs 137 billion collected in same period last year.

SBP profits declined by 12.7% to Rs 372 billion in the six months ended Dec 31, 2020. To bridge fiscal deficit external borrowing amounted to Rs 454 billion in six months of 2020. To bridge fiscal deficit external borrowing amounted to Rs 513 billion in six months of 2019. Domestic borrowing in six months of 2020 was at Rs 683 bln vs Rs 481 billion borrowed last year.

The Fiscal consolidation measures taken by the government have resulted in financial discipline, higher revenues and controlled expenditures. The same strategy will be followed
during the remaining period of the CFY to achieve the fiscal sustainability. The continuity in fiscal consolidation, stable exchange rate, improved current account and better financial
management, presents a promising economic outlook.

However, there are certain risks to fiscal sustainability. Going forward the fiscal position would depend on the domestic and international evolution of Covid. On the other hand faster than anticipated economic revival is likely to increase demand for inputs. Finance Division has adopted the facilitative policy of release of funds to meet the expenditures, both re-current and development, in accordance with the government spending priorities.

Nevertheless, the half year fiscal position indicates that it will remain on track to
meet the annual fiscal targets.

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