The Big Squeeze

The Federal Government is expected to pay around Rs.3.6 Trillion on account of defence spending and debt servicing that is equal to 68.2 per cent of the FY2019’s revised budget. After meeting these obligations the net federal revenues for FY2019 is a negative Rs.632 Billion. With the Federal government’s total gross revenues estimated at Rs.5.5 Trillion, the provinces would receive Rs.2.581 Trillion as their share in the federal divisible pool, leaving net Federal revenues at Rs.3 Trillion, out of which debt and defence spending is expected to be Rs.3.62 Trillion, or 121 per cent of the net federal revenues, leaving no option but to borrow to pay salaries, pensions, run hospitals, schools and build roads. In effect every Rupee of the Center’s development spending is borrowed through different sources.

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