The 2021-22 budget for Pakistan aims to reduce the fiscal deficit to 6.3% of GDP, with projected revenues primarily from a 24% increase in FBR collections. Despite a projected revenue shortfall, higher GDP growth is expected to enhance tax revenues, while subsidies and current expenditure are set to rise significantly. Key areas of expenditure include increased subsidies to the power sector and higher transfers to provinces.

1. F O R C I R C U L AT I O N
Key takeaways from Budget 2021-22
Macro Pakistani

2. 2
Ambitious target setting for revenues continues with fiscal deficit budgeted at 6.3%
Government Revenues Government expenditure Fiscal deficit
Note: B shows budgeted figures while P shows projected
Source Annual budget statement 2021-22

3. 3
Recap: Budget 2021 was expected to lead to a reduced deficit through increased
revenue collection in a recessionary environment
Source Budget in Brief 2021-22
No foreign loans to
be repaid as a result
of debt relief due to
COVID-19
2 0 2 1 B U D G E T
Tax refunds
In addition to provincial
surplus of PKR 242, overall
fiscal deficit would be PKR
3,195 or 7% of GDP

4. 4
Despite revenue shortfall, higher GDP growth and low interest rates helped keep
fiscal deficit at budgeted levels in 2021
Source Budget in Brief 2021-22
2 0 2 1 P R O J E C T E D
Projected deficit is at 7.1%
of GDP after taking into
account provincial surplus
Shortfall of PKR 178 B
due to lower FBR
projected revenues
Low
international
interest rate
environment
Higher
subsidies to
power sector

5. 5
Higher GDP growth is expected to bring in higher tax revenues and lower deficit
Source Budget in Brief 2021-22
2 0 2 2 B U D G E T
Provincial surplus of PKR
570 B will be required to
bring overall fiscal deficit to
6.3% of GDP or PKR 3,420 B
Increase in grants,
subsidies, pay and
pensions

6. 6
Increase in revenue to come mainly from a 24% increase in FBR revenue
specifically from direct and sales taxes
Note: 11 month gross collection of FBR revenue estimated at PKR 4,386 leaving shortfall of PKR 305 to be collected in June 2021
Source: Budget in Brief 2021-22; FBR
(PKR B) Budget 2020-21 Projected 2020-21 Budget 2021-22
Budget Variance
2021
Budget Increase
2022
Revenue 6,573 6,395 7,909 (2.7%) 23.7%
FBR Revenue* 4,963 4,691 5,829 (5.5%) 24.3%
Direct 2,043 1,789 2,182 (12.4%) 22.0%
Custom 640 700 785 9.4% 12.1%
Sales Tax 1,919 1,927 2,506 0.4% 30.0%
Excise 361 275 356 (23.8%) 29.5%
Non-Tax Revenue 1,610 1,704 2,080 5.9% 22.0%
Property & PSEs 211 177 266 (15.9%) 50.0%
Civil Admin 646 728 684 12.7% (6.0%)
SBP Surplus 620 700 650 12.9% (7.1%)
Other 754 800 1,130 6.1% 41.3%
Petroleum Levy 450 500 600 11.1% 20.0%

7. 7
Expenditure to rise mainly for subsidies, development expenditure and higher
transfer to provinces
Source: Budget in Brief 2021-22
(PKR B) Budget 2020-21 Projected 2020-21 Budget 2021-22
Budget Variance
2021
Budget Increase
2022
Current Expenses 6,349 6,561 7,523 3.3% 14.7%
Markup payments 2,946 2,851 3,060 (3.2%) 7.3%
Domestic 2,631 2,611 2,757 (0.8%) 5.6%
Foreign 315 240 303 (24.0%) 26.3%
Defense 1,293 1,299 1,373 0.5% 5.7%
Pensions 470 470 480 – 2.1%
Military 359 359 360 – 0.3%
Civil 111 111 120 – 8.1%
Subsidies 209 430 682 105.7% 58.6%
Dev. Expenses 792 662 964 (16.4%) 45.5%
Borrowing 3,435 3,532 3,990 2.8% 13.0%
Provincial transfer 2,874 2,704 3,412 (5.9%) 26.2%

8. 8
Within current expenses, increase in power sector subsidies, lack of spending on
housing and expanded coverage of Ehsaas program stand out
Note: ~83% of contingent liabilities against power sector and 8% against Aviation
Source: Budget in Brief 2021-22, Annual budget statement 2021-22
(PKR B) Budget 2020-21 Projected 2020-21 Budget 2021-22
Budget Variance
2021
Budget Increase
2022
Current Expenses 6,349 6,561 7,523 3.3% 14.7%
Subsidies 209 430 682 105.7% 58.6%
WAPDA/PEPCO 124 350 511 182.5% 45.9%
KESC 16 16 85 3.2% 431.3%
Housing Scheme 30 5 30 (83.3%) 500.0%
Grants 905 932 1,168 3.1% 25.2%
Cont. Liabilities* 323 323 340 – 5.3%
Ehsaas (BISP) 200 195 246 (2.5%) 26.2%
COVID provision – – 100 – –
Civil Government 477 488 479 2.4% (1.8%)
Education 83 88 92 5.7% 4.4%
Healthcare 25 52 28 105.2% (45.8%)