By Abdul Wajid Khan ISLAMABAD, April 14 (INP-WealthPK): The government has said that strong growth in the Federal Board of Revenue’s tax collection due to its fiscal consolidation measures is helping improve the country’s fiscal position. According to the finance ministry’s mid-year budget review report for the ongoing financial year 2021-22 (FY22), the fiscal consolidation measures taken by the government have resulted in financial discipline, higher revenues and controlled expenditures. The same strategy will be followed during the remaining period of the FY22 to achieve fiscal sustainability. The budget FY22 reaffirms government’s commitment to carrying the process of fiscal consolidation to its logical conclusion. In the fiscal policy of the ongoing financial year, fiscal deficit has been budgeted at 6.3% of gross domestic product (GDP). At the end of the second quarter of FY22, there was a marked improvement in fiscal parameters when compared to the corresponding period of the previous financial year. According to the latest official data released by FBR, despite massive tax relief, the bureau registered a 29.1% growth in revenue collection during the period from July 2021 to March 2022. According to the provisional information, FBR collected a net revenue of Rs4,382 billion from July 2021 to March 2022, exceeding its target by Rs247 billion. This represents a growth of about 29.1% from Rs3,394 billion collected during the same period of last year. The net collection for in March 2022 was Rs575 billion, representing an increase of 20.5% over Rs477 billion collected in March 2021. On the other hand, the gross collections increased from Rs3,577 billion from July 2020 to March 2021 to Rs4,611 billion from July 2021 to March 2022, showing an increase of 28.9%. Likewise, the amount of refunds disbursed during March 2022 was Rs31.9 billion, while in March 2021 the refunds disbursed were Rs26.3 billion, registering an increase of 21.3%. Similarly, refunds worth Rs229 billion were disbursed from July 2021 to March 2022 compared to Rs183 billion disbursed during the same period of last year, showing an increase of 25%. FBR has introduced a number of innovative interventions both at policy and operational levels with a view to maximising revenue potential through digitisation, transparency and taxpayers’ facilitation. This has not only resulted in ensuring the ease-of-doing business but also translated into a healthy and steady growth in revenue collection. Likewise, FBR has launched a new culture of clean taxation with a clear focus on collecting only the fair tax and not holding up refunds which are due to be paid. This has not only fast-tracked the process of bridging the trust deficit between FBR and taxpayers but also ensured the much-needed cash liquidity for the business community. That's precisely why FBR continues to surpass its assigned revenue targets despite challenges and price stabilisation measures adopted by the government. The State Bank of Pakistan in its first quarterly report for ongoing financial year (Q1-FY22) on the state of Pakistan’s economy also highlighted that the strong growth in FBR tax collection, along with a decline in interest payments, helped improve the country’s fiscal position. During Q1-FY22, the fiscal deficit contracted to 0.8% of GDP, from 1% in the same period last year. The primary balance also recorded a surplus, despite a rise in non-interest spending, although it was lower than in the same period last year. However, additional spending on grants for procuring Covid-19 vaccines and for power subsidies and development outlays led to a sizeable expansion in non-interest spending. The financing space for this spending mainly originated from higher tax collection at both federal and provincial levels. Specifically, FBR taxes showed a record increase during Q1-FY22, which more than offset a decline in non-tax revenues. In addition, an expansion in economic activity, the withdrawal of corporate income tax exemptions, an increase in domestic price level, tax administration efforts and some budgetary measures also contributed to the higher FBR taxes. Interest payments contracted due to the low interest rate environment last year, as well as the debt relief under the G-20’s Debt Service Suspension Initiative. Despite the lower financing needs, the pace of public debt accumulation increased during the quarter, mainly as a result of revaluation losses stemming from the Pakistani rupee’s depreciation against the US dollar. External loans edged up during Q1-FY22 with the issuance of Eurobonds worth $1 billion and disbursements by multilateral agencies. Domestic debt rose slightly thanks to short-term instruments.