PDM government ended FY2023 with massive 7.7% fiscal deficit of GDP

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The previous PDM government overtook a massive fiscal deficit of 7.7 percent in the financial year 2022-23 ending June 30, which is significantly higher than the claims of a deficit of 7 percent of gross domestic product (GDP).

According to the financial operations data released by the Ministry of Finance, the total fiscal deficit during the financial year 2023 was Rs 65.21 trillion (7.7 percent of GDP), while passing the budget for the current financial year 2024 in June, the government had claimed the total fiscal deficit to be Rs 59.4 trillion (7 percent of GDP). A difference of billion rupees has been revealed, both documents are available on the website of the Ministry of Finance.

Similarly, the previous government had claimed the basic deficit to be 0.5 percent of GDP, which amounts to Rs 421 billion for fiscal year 2023, but the latest official figures show that the basic deficit was 0.8 percent of GDP or Rs 690 billion.

While the provincial governments contributed to the deficit by not fulfilling their commitment to the Centre, the federal government itself was responsible for the huge fiscal deficit.

The federal government, while presenting the budget for fiscal year 2024 to overcome the fiscal deficit of fiscal year 2023, estimated a surplus of Rs 459 billion from the provinces, but the provinces provided only Rs 155 billion, which led to a deficit of about Rs 304 billion while the remaining deficit of about Rs 385 billion was from the federal government.

In comparison, despite all the ‘financial irregularities and violation of global agreements’ during the last financial year of the PTI government, the deficit stood at Rs 7.9 per cent or Rs 52.6 trillion of GDP, slightly higher than the current deficit.

This showed a huge increase of 83% in the repayment of loans and interest over a period of one year, loan repayments including interest in FY22 stood at Rs 31.8 trillion or 4.8% of GDP, reaching 58.3 trillion or 6.9% in FY23.

With a growth of 12 per cent in a year, defence spending also accounts for a large part of the current expenditure, but in terms of inflation rate and GDP ratio, it is nothing compared to 2.1 per cent in FY22 which was 1.9 per cent in FY23.