Leading Issues in the Economy of Pakistan: Agenda for Reforms 1.7 Public Finances The trends in public finances are presented in Tables 1.8 to 1.10. They have been derived from the information on fiscal operations released quarterly by the federal Ministry of Finance. Sustainability of the growth process requires that fiscal deficits remain at a manageable level in terms of access to relatively low-cost financing and that the level of government debt is restricted. The Fiscal Responsibility and Debt Limitation Act of 2005 had set the limit on government debt at 60 percent of the GDP. This limit was breached for the first time in 2012-13. Table 1.8 presents the picture of public finances of the federal and provincial governments combined. Total revenues as percentage of the GDP have shown a variable trend. They attained a peak in the tenure of the PML(N) Government. This was achieved by enhancement of the tax-to-GDP ratio to 11.5 percent. However, during the tenure of the PTI Government it has fallen to 10 percent of the GDP. Table 1.8: Broad Trends in Public Finances (Consolidated Position of Federal and Provincial Governments) (% of GDP)* PPP PML(N) PTI First Year 2008-09 Terminal Year 2012-13 First Year 2013-14 Terminal Year 2017-18 First Year 2018-19 Fourth Year 2021-22* Total Revenue 13.5 12.0 13.0 13.4 11.2 12.0. Tax Revenue 8.8 8.8 9.2 11.5 10.2 10.1 Non-Tax Revenue 4.7 3.2 3.5 1.9 1.0 1.9 Total Expenditure 18.5 19.3 18.0 19.2 19.0 19.9 Current Expenditure 14.9 14.7 14.4 15.0 16.2 17.2 Debt Servicing 4.7 4.0 4.1 3.9 4.7 4.8 Defense Expenditure 2.4 2.2 2.3 2.6 2.6 2.1 Others 7.8 8.5 8.0 8.5 8.9 10.3 Development Expenditure 3.6 4.6 3.6 4.2 2.8 2.5 and Net Lending Budget Deficit-5.0-7.3-5.0-5.8-7.8-7.9 Primary Deficit-0.3-3.3 0.9-1.9-3.1-3.1 *at current prices with base year of 2015-16 Source: MOF Total expenditure has remained at close to 19 – 20 percent of the GDP in the last five years. Earlier, it had shown a rising trend from under 20 percent of the GDP in the initial years of 14