Economic Performance of Three Governments the PPP government. The lid on total expenditure as percentage of the GDP has implied a sharp cut in the level of development spending in the presence of a rising level of current expenditure, with negative impact on the growth process. In particular, the cost of debt servicing has risen significantly as percentage of the GDP. Budget deficits as percentage of the GDP have been relatively low during the tenure of the PML(N) government. However, the last year of both the PPP and PML(N) governments has witnessed the use of expansionary fiscal policies to improve election prospects. Table 1.9: Trend in Tax-to-GDP Ratio PPP 1 st Year 2008-09 5 th Year 2012-13 A. FEDERAL 9.4 8.3 Direct Taxes 3.2 2.9 Income Tax 3.2 2.9 Indirect Taxes 6.3 5.4 Sales Tax 3.4 3.8 Customs Duty 1.0 1.1 Excise Duty 0.9 0.5 B. PROVINCIAL 0.3 0.6 C. TOTAL TAXES 9.7 8.9 Share of Direct Taxes 33.0 32.6 *With the GDP with base year 2015-16 Source: MOF PML(N) 1 st Year 2013-14 5 th Year 2017-18 8.1 9.9 3.2 4.0 3.2 4.0 4.9 5.9 3.6 3.8 0.3 1.6 0.5 0.5 0.6 1.1 8.7 11.0 36.7 36.0 (%) PTI* 1 st Year 2018-19 4 th Year 2021-22 9.3 9.7 3.3 3.4 3.3 3.4 6.0 5.9 3.3 3.8 1.6 1.5 0.5 0.5 0.9 0.9 10.2 10.2 32.8 33.3 The trend in revenues from different taxes is shown in Table 1.9. The peak was attained during the tenure of the PML(N) Government. A number of proposals were implemented to broaden the income tax base and raise the effective tax rates in indirect taxes. The tax­to-GDP ratio now stands at close to 10.2 percent of the GDP and the share of indirect taxes has declined somewhat. 1.8 Balance of Payments Perhaps the most critical area from the viewpoint of management of the national economy is the balance of payments in external transactions of the country. Table 1.10 presents the trends from 2007-08 onwards in different accounts of the balance of payments. These accounts are respectively the current account, the capital account, and the financial account. 15