Leading Issues in the Economy of Pakistan: Agenda for Reforms The primary factor contributing to the rapid increase in government debt is the growing divergence between the level of revenues and the level of expenditure, as shown in Table 16.2. Consequently, with a rising budget deficit, the financing needs through borrowing have increased exponentially. Table 16.2: Long-Term Trends in the Public Finances of Pakistan TOTAL REVENUES TOTAL EXPENDITURE Tax Non-Tax Total Debt Total Revenues Revenues Revenues Servicing Expenditure 2005-06 9.4 3.2 12.6 2.8 16.4 2010-11 8.6 5.4 14.0 3.5 17.4 2015-16 11.2 2.4 13.6 3.9 17.7 2016-17 11.2 2.7 13.9 3.8 19.1 2017-18 11.4 1.9 13.3 3.8 19.1 2018-19 10.2 1.0 11.2 4.8 19.1 2019-20 10.0 3.2 13.2 5.5 20.2 2020-21 9.5 3.9 12.4 4.9 18.5 2021-22 10.1 1.9 12.0 4.8 19.9 Source: MOF, Fiscal Operations DEFICIT Budget Deficit Primary Deficit/ Surplus -3.8-1.0 -3.4 0.1 -4.1-0.2 -5.2-1.4 -5.8-2.0 -7.9-3.1 -7.0-2.5 -6.1-1.2 -7.9-3.1 There has been virtually no increase in the tax to GDP ratio as shown in Table 16.3. It reached a peak of 11.4 percent of the GDP in 2017-18 and has since actually fallen to 10.1 percent of the GDP in 2021-22. Simultaneously, the non-tax to GDP ratio has shown a fluctuating trend. Overall, total revenues have fallen from the peak of 13.9 percent of the GDP in 2016-17 to 12 percent of the GDP in 2021-22. Total expenditure has been showing a rising trend. It has increased from 16.4 percent of the GDP in 2005-06 to almost 20 percent of the GDP in 2021-22. Overall, the budget deficit has risen rapidly from 3.8 percent of the GDP to almost 8 percent of the GDP in 2021-22. Table 16.3: Trend in Individual Tax and overall Tax-to-GDP Ratio FEDERAL TAXES* PROVINCIAL TAXES Year Income Sales Customs Excise Total Tax on Others Total Sales to-GDP Ratio Overall Tax­Tax Tax Duty Duty Services 1999­2.7 2.8 1.4 1.3 8.2 0.0 0.4 0.4 8.6 2000 2004-05 2.5 3.3 1.5 0.7 8.0 0.0 0.3 0.3 8.3 2009-10 3.4 3.4 1.0 0.8 8.6 0.0 0.3 0.3 8.9 158