Instability of Federal Government Revenues and Expenditures in Pakistan

Muhammad Hussain Malik, Attiya Yasmin


As in many other countries, in Pakistan too, the government
provides a number of social goods and services. For this purpose, the
government has to spend huge amounts of money every year. Federal
government expenditures in real terms have grown at an annual average
rate of 8.84 percent during the past fifteen years. Also, the share of
the federal government expenditures in GNP has increased from 20.93
percent in 1971-72 to 25.19 percent in 1985-86. The main component of
the federal government expenditures is of the recurrent type and is
devoted to defence, civil administration, debt servicing, health,
education, roads, and other such services. At present, the level of
social goods and services provided by the government is not considered
satisfactory. Moreover, public demand for them is on the increase due to
an increasing population growth rate and rising standards of living in
the country. The government needs resources to meet the public demands
for its goods and services and to fulfill the development requirements
of the country. For this purpose, the government generates revenue
through various taxes and tapping other revenue sources. It is important
that these taxes and other revenue sources yield a stable revenue over
time. If there are large year to year fluctuations in revenue, it
becomes very difficult for the government to meet its inflexible
obligations and to implement development plans. Stability of revenues,
therefore, becomes very important for fiscal management and development

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