Non-tax revenue plunges due to steep fall in SBP profit

The federal government's non-tax revenue declined sharply, ie, 44 percent during FY19, mainly due to a steep decline in the State Bank of Pakistan' profit.

According to the SBP, the federal government's non-tax revenue stood at Rs 427.3 billion in the last fiscal year (FY19) compared to Rs 761 billion in FY18, depicting a sharp decline of Rs 333.7 billion.

The SBP profits have lately become an important revenue source for the government, as these have constituted nearly one third of non-tax revenues over the past 5 years. Since mark-up earned on government debt constitutes the bulk of central bank's earnings, the transfer of SBP profit effectively represents a partial reimbursement of interest payments.

In FY19, however, the profit of SBP took a steep plunge as it incurred heavy exchange rate losses on external liabilities. The SBP massive profit during the FY18 turned into loss in the last fiscal year followed by massive exchange loss due to the Pak rupee depreciation against USD and SDR. The SBP has incurred a net loss of Rs 1.043 billion (consolidated) in FY19 as compared to a profit of Rs 175.673 billion in the FY18. During FY18, the SBP's share in overall non-tax revenue stood at Rs 233.2 billion against Rs12.5 billion in FY19. Moreover, the decline in Public Sector Development Programme (PSDP) spending for two consecutive years, which involves government's lending to public sector institutions, led to lower mark-up payments from Public Sector Enterprises (PSEs).

Most of the decline was visible in collections from National Highway Authority, Wapda, Discos, and Chashma Nuclear Power Plant. The cumulative decline in revenue from these sources more than offset the higher collections from energy-related components of non-tax revenues, including royalties on gas and oil, discount retained on crude oil and other levies. The increase in these revenues mainly stemmed from a rise in the rupee value of crude oil. Royalties on gas and oil increased from Rs 58.2 billion in FY18 to Rs 87.9 billion in FY19.