Leading Issues in the Economy of Pakistan: Agenda for Reforms Table 4.8: Budgetary Projections for 2022-23 2021-22 TOTAL REVENUES 8,035 Tax Revenues 6,755 Non-Tax Revenues 1,280 TOTAL EXPENDITURE 13,295 Current Expenditure 11,521 Development Expenditure 1,657 Statistical Discrepancy 116 BUDGET DEFICIT -5,260 % Of GDP-7.9 PRIMARY SURPLUS/DEFICIT -2,077 % Of GDP-3.1 Source: IMF and MOF 2022-23 10,370 9,220 1,150 14,284 12,355 1,929 ­3,914 -4.9 153 0.2 g(%) 29.1 36.5 -10.2 7.4 7.2 16.4 -25.6 The salient features of the projections are as follows: i) Tax revenues are expected to show potentially the highest ever growth rate of over 36 percent, based on taxation proposals of Rs 600 billion and a persistent high rate of inflation in the tax bases of over 20 percent. ii) Current expenditure is projected to increase by only 7 percent. This is to be achieved, in particular, by a big cut in subsidies and single digit increase in defense expenditure. iii) A moderate growth of 16 percent is proposed in development expenditure. iv) A very big cut in the budget deficit is targeted for of over 3 percent of the GDP and a decline in the absolute magnitude of Rs 1,314 billion. This extent of stabilization has never been achieved before. Impact of Floods The budgetary outcome in 2022-23 is also likely to be negatively impacted by the floods as shown in Table 4.9, for the following reasons: i) There will be slower growth in the tax base of imports, for reasons given above, and consequently in revenues from the sales tax and customs duty. However, domestic revenues could rise faster due to a higher rate of inflation than built into the IMF Program projections. ii) Current expenditure growth is expected to be restricted to only 7 percent in the IMF program estimates. The target, in particular, is to reduce subsidies by over 56 percent. The current trends, in fact, indicate a rise in the outlay on subsidies. 56