Federal's extravagant expenses main reason for budget deficits: WB
Business
Pakistan has reached the highest level of financial losses since last 22 years
ISLAMABAD (Dunya News) – World Bank (WB) said federal expenses are one of the biggest reason for budget deficits. The bank held low tax collection as a vital reason as well.
The World Bank has issued a report on Pakistan's federal expenditure, indicating that the country has the lowest tax collection rate compared to other regional countries. Pakistan needs to control its growing financial losses and debts, as per the report.
The report states that the burden of government employees' salaries, pensions, and interest payments on loans is piling up. A significant reason for the growing budget deficit in Pakistan is the plunging tax collection. Over the past 12 years, the tax-to-GDP ratio in Pakistan has only remained 12.8%.
According to the World Bank, Federal government gets 46% of the income under the NFC award, while its budget expenditures are 67%, decline in GDP growth is expected to diminish per capita income as well.
The report suggests by curtailing unnecessary expenses and subsidies Rs.2tr can be saved. By limiting unnecessary expenses, subsidies, and increasing taxes, Pakistan can collect an additional Rs.2723bn.
As per the World Bank, during the fiscal year 2022, Pakistan has reached its highest level of financial losses in the past 22 years. The debt-to-GDP ratio has reached 78% during the fiscal year 2022.
