Macro Pakistani | BaKhabar EP 3 | Why can't the Govt of Pakistan balance its budget?

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‘Fiscal Deficit’– If you've heard about it but never quite understood it, Aapne Ghabrana nahi hai. Episode 03 of #BaKhabar will help you make sense of the following: ⚫ Pakistan’s twin deficit crises ⚫ Budget landscape in Pakistan during the past 40 years ⚫ Problem with Pakistan’s tax system and low tax collection

Government & Nonprofit

D R A F T
Why can’t the Government of Pakistan
balance its budget?
Macro Pakistani

2
Government spending in the past 40 years has been constrained
Government
revenue
Government
expenditure
Fiscal deficit
Note: 2020 budget figures shown
Source PES 2019-20; Annual budget statement 2020-21
-
=

3
All Pakistanis pay taxes but not enough file taxes
Low penetration of registered users Low filing of registered users
Note: Excl. unregistered K-Electric users
Source: Federal Bureau of Revenue

4
Most government revenue is spent on servicing existing debt and military
Source: FBR; PBS
Majority of current
expenditure not
linked to debt
servicing and
military is done by
provinces in the
federation
Financed through
internal (bank
borrowing) and
external debt
Foreign debt
repayments
postponed due
to COVID-19

5
Deficit financing has left Pakistan with low levels of private leverage
Source: WDI

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