Despite many challenges, the fiscal deficit is contained at 2.1 percent of Gross Domestic Product (GDP) during the first half (H1) of the current fiscal year whereas the primary balance remained in surplus during the period. Fiscal deficit is contained at 2.1 percent of GDP during the H1 of current fiscal year. The primary balance, on the other hand, remained in surplus of Rs 81.1 billion during July-December FY2022, compared to Rs 337.2 billion in the previous year.
Despite significant pressure on the expenditure side due to COVID-19 grants, IPPs circular debt settlement, social sector spending, better expenditure control and effective resource mobilization strategy remained in place for better fiscal outcomes. Furthermore, the cumulative surplus of all the four provinces was higher than the previous year. The government would continue to follow the same strategy for the rest of the year in order to contain the fiscal deficit within manageable limits.
On the revenue side, according to monthly Economic Update and Outlook for February 2022, FBR has been able to achieve more than 57.5 percent of its annual target during the first seven months of the ongoing fiscal year, whereas the overall budget achievement for the first seven months during last year stood at 54.7 percent. FBR has implemented a variety of initiatives both at the policy and operational level to increase the revenue potential through digitization, transparency and the taxpayer’s facilitation.
Consequently, it has also resulted in healthy and consistent growth in revenue collection. It is, therefore, expected that FBR tax collection would meet its target set for the current fiscal year.
Meanwhile, during July 1st–February 4th, FY2022 money supply (M2) observed growth of 0.8 percent (Rs 193.0 billion) compared to growth of 3.4 percent (Rs 710.6 billion) in last year.
During July-January FY2022, the current account deficit was recorded at $ 11.6 billion, the report adds.
Under these circumstances, Consumer Price Index (CPI) based monthly inflation increased by 12.24% on year-on-year (YoY) basis during the month of February 2022 against the corresponding month of last year. The average inflation rate during the period from July to February (2021-22) increased up to 10.52 over same period of the preceding year. On month-on-month (MoM) basis, it increased by 1.15% when compared to previous month (January).
On year-on-year basis, the food commodities that contributed in urban food inflation during February 2022 over the same month of last year included tomatoes (310.06%), mustard oil (49.85%), cooking oil (41.03%), vegetable ghee (38.82%), pulse Masoor (38.42%), vegetables (33.31%), fruits (26.07%), gram whole (24.38%), meat (23.64%), pulse gram (13.90%), beans (13.03%), besan (11.97%), rice (11.89%) and milk (10.84%).
The food commodities that witnessed decline in prices included pulse Moong (25.64%), condiments & Spices (13.63%), sugar (5.43%), onions (5.35%) and chicken (4.62%). The non-food commodities that witnessed increase in prices included Liquefied Hydrocarbons (54.60%), motor fuel (39.72%), cleaning & laundering (22.90%), washing soap/detergents/match box (17.09%), motor vehicle accessories (15.86%), solid fuel (12.67%), plastic products (11.43%) and stationery (10.50%).
