ISLAMABAD: With doubling of statistical discrepancy, Pakistan’s debt servicing and defence spending have outpaced the development expenditures with a wide margin during the first nine months (July-March) period of the current fiscal year 2025-26.
According to the fiscal operation released by the Ministry of Finance on Tuesday, the statistical discrepancy shows the inability of the government to reconcile revenues and expenditures, which had now doubled in the first nine months of CFY -- it stands at Rs444 billion in 2025-26 against Rs205.69 billion in the same period of the last financial year. The statistical discrepancy ballooned in the provinces with the highest discrepancy in Punjab to the tune of Rs246.62 billion, Sindh Rs39.939 billion, KPK Rs111.918 billion and Balochistan Rs104.327 billion.
At the federal level, the expenditures revolved around three Ds, debt servicing that consumed the largest chunk of resources to the tune of almost Rs5 trillion, then defence spending of Rs1.689 trillion and federal Public Sector Development Program (PSDP) which was restricted at only Rs333 billion in the first nine months of the current fiscal year.
The country’s overall fiscal deficit was curtailed at 0.7 percent of GDP, equivalent to Rs856.357 billion in the first nine months of the current fiscal year, compared to 2.6 percent of GDP in the same period of the last financial year. The FBR fetched Rs9.3 trillion and fell short of achieving its desired target. The non-tax revenue brought Rs4.6 trillion, with the highest from the SBP profit to the tune of Rs2.428 trillion, petroleum levy of Rs1.205 trillion, and others in the first nine months of the current fiscal year.
The primary balance, which is considered sacrosanct under the IMF program, stood at Rs4.09 trillion, equivalent to 3 percent of GDP in the first nine months of the current fiscal year. The IMF is pleased with the performance of curtailing the fiscal deficit of 0.7 percent of GDP and throwing primary surplus of 3 percent of GDP in the first nine months of the current fiscal year.
The country’s total revenues stood at Rs14.8 trillion, including tax revenues of FBR of Rs9.3 trillion, provincial revenues of Rs0.86 trillion, while non-tax revenues were standing at Rs4.6 trillion at the federal level and Rs0.277 trillion at provincial levels. Total expenditures were incurred of Rs15.66 trillion, out of which the current expenditures were the highest heads, including debt servicing of Rs4.947 trillion, and defence of Rs1.689 trillion. The overall fiscal deficit of the country remained at Rs856 billion, equivalent to 0.7 percent of GDP in the first nine months of CFY.
The budget deficit of the federal government stood at Rs2.49 trillion, but the provincial balance of Rs1.636 trillion helped the Centre to reduce the overall budget deficit to the tune of just Rs0.85 trillion, equivalent to just 0.7 percent of GDP in the first nine months of the current fiscal year.
It is yet to be seen how the government restricts the fiscal deficit within the desired level of 3.9 percent of GDP by the end of the current fiscal year on June 30, 2026 when the FBR’s revenue shortfall is widening every passing month. It remains to be seen how it will resolve the statistical discrepancy of over Rs500 billion by the provinces.
