The Economic Outlook for 2022-23 The outcome following the floods will also be higher expenditure on relief and rehabilitation in the form of larger grants and subsidies. Also, the full emergency provision of Rs 195 billion will need to be used. In addition, debt servicing costs are likely to be larger because of the enhancement in interest rates and greater reliance on relatively high-cost domestic borrowing, due to limited access to external financing. However, there is likely to be a big cut in development spending to restrict the size of the deficit. The resulting change in projections is shown in Table 4.9. Table 4.9: Federal Budget Projections for 2022-23 Incorporating the Impact of Floods (Rs in Billion) 2021-22 (Actual) 2022-23 (Original Budget Estimate) 2022-23 (Estimate Post­Floods) Difference Revenues 7,327 9,405 8,950-455 Tax Revenues 6,142 7,470 7,200-270 Non-Tax Revenues 1,185 1,935 1,750-185 Revenue Transfers -3,588-4,373-4,217+156 Net Revenue Receipts 3,739 5,032 4,733-299 Total Expenditure 9,350 9,579 10,008 429 Current Expenditure 8,451 8,708 9,508 800 Development Expenditure 440 871 500-371 Federal Budget Deficit -5,611-4,547-5,275 728 Provincial Surplus 351 750 400-350 Consolidated Budget Deficit -5,260-3,797-4,875 1,078 Primary Surplus/ Deficit -2,078 153-525-678 Consolidated Budget Deficit -7.9-4.9 (% of the GDP) -6.0-1.1 Overall, the budget deficit incorporating the impact of the floods is likely to be over 1 percent of the GDP larger than the original deficit. A summary is finally given of the pre-floods and post-floods outlook for the economy in 2022-23 in Table 4.10. The perilous state of the economy is vividly highlighted by the projections. Table 4.10: Pre- and Post-Floods Macroeconomic Projections for 2022-23 Pre-Floods* Post-Floods Difference GDP Growth Rate(%) 3.5-1.0-3.5 Rate of Inflation(%) 19.9 24 – 26 4.1 – 6.1 Current Account -9.4-8.4-1.0 Deficit($ billion) Foreign Exchange 16.8 Reserves($ billion) 6.8-10.0 Budget Deficit (% of GDP) -4.9-6.0-1.0 *IMF 57