ISLAMABAD: Amid a widening statistical discrepancy that ballooned to Rs853 billion—exposing an ongoing inability to reconcile revenues and expenditures between the federal government and the provinces, particularly Punjab—Pakistan’s overall budget deficit was contained at Rs3.13 trillion, equivalent to 2.6 percent of GDP in the financial year 2025-26.
The statistical discrepancy in the previous fiscal year, 2024-25, stood at Rs328.8 billion. The Ministry of Finance did not offer any justification for the persistent rise in this figure.
Under the tight scrutiny of the IMF programme, the country posted a primary surplus of Rs3.63 trillion, or 2.9 percent of GDP, in FY26, which ended on June 30, 2026.
According to the fiscal operations data released by the Ministry of Finance for the last fiscal year, the FBR collected total taxes of Rs13.010 trillion, while non-tax revenue amounted to Rs5.178 trillion—including a major contribution of Rs2.42 trillion from SBP profits and Rs1.567 trillion from petroleum levy. Total gross revenue receipts stood at Rs18.18 trillion. After transferring Rs7.668 trillion to the provinces under the NFC Award, net revenue receipts were left at Rs10.51 trillion.
Total expenditures were recorded at Rs15.28 trillion, of which current expenditures remained the largest component. This included mark-up payments on borrowed loans amounting to Rs6.9 trillion, defence spending of Rs2.587 trillion, pensions of Rs1.001 trillion, civil government running costs of Rs1.033 trillion, subsidies of Rs1.013 trillion, grants to provinces of Rs0.149 trillion, grants to others of Rs2 trillion, and development spending on the Public Sector Development Programme (PSDP) of Rs0.917 trillion. The statistical discrepancy at the federal level stood at Rs0.449 trillion.
The fiscal operation report further shows that the provinces generated a surplus of Rs1.449 trillion, which helped restrict the consolidated budget deficit of the country to Rs3.13 trillion by the end of June 2026. Punjab’s statistical discrepancy alone stood at Rs266.4 billion in FY25-26.
Meanwhile, Advisor to the Ministry of Finance Khurram Schehzad stated in a post on ‘X’ that Pakistan has closed FY2025-26 with a historic strengthening of its public finances, marking a decisive shift from recurring fiscal stress toward discipline, stability and sustainable growth. He noted that the fiscal deficit fell to just 2.6 percent of GDP—the lowest in 22 years—while the primary surplus reached a record 2.9 percent of GDP, the highest since at least FY2000-01.
He described the outcome as a historic fiscal turnaround, from a record deficit in FY22 to a 22-year low. Pakistan has now delivered three consecutive years of primary surpluses, with FY24 at 0.9 percent of GDP, FY25 at 2.4 percent, and FY26 at a record 2.9 percent. At the same time, the fiscal deficit has fallen sharply, from 7.9 percent of GDP in FY2022 and 7.8 percent in FY2023 to 6.8 percent in FY24, 5.4 percent in FY25, and 2.6 percent in FY26. He added that in just three years, the fiscal deficit has improved by 5.2 percentage points of GDP, while the primary balance has swung by 3.9 percentage points—from a 1.0 percent deficit to a record 2.9 percent surplus.
He further stated that revenues in FY26 reached Rs19.8 trillion, including Rs14.2 trillion in tax revenues, while disciplined expenditure management helped deliver the strongest fiscal outcome in decades. Interest payments fell to around Rs6.95 trillion from Rs8.9 trillion a year earlier—a reduction of nearly Rs2 trillion. Interest payments also declined from roughly 61 percent of total revenues in FY24 to 35 percent in FY26, materially improving fiscal capacity. Development expenditure and net lending reached Rs3.25 trillion.
The result, he said, is a fiscal deficit of Rs3.31 trillion alongside a record primary surplus of Rs3.63 trillion. This is not simply deficit reduction; it reflects a fundamental strengthening of Pakistan’s fiscal position, driven by stronger revenues, expenditure discipline and sustained reforms.
Schehzad observed that persistent fiscal deficits have historically been one of Pakistan’s biggest macroeconomic vulnerabilities, adding to debt, financing requirements, inflationary pressures and external imbalances. He noted that three consecutive primary surpluses and sharply lower deficits are now translating into stronger debt dynamics. Debt growth has slowed to a 20-year low, debt-to-GDP has declined to around 68 percent, and debt servicing costs have fallen materially, meaning lower financing pressure, improving debt sustainability, and greater fiscal space for development.
The fiscal turnaround, he added, is reinforcing Pakistan’s broader macroeconomic stabilisation. Lower fiscal imbalances, improving debt dynamics, stronger external accounts and rebuilding reserves are reducing vulnerabilities and strengthening sovereign credibility. The progress is also being externally recognised: S&P upgraded Pakistan’s sovereign rating from B- to B with a Stable Outlook in July 2026, specifically acknowledging faster fiscal consolidation, stronger revenue mobilisation, rebuilding reserves, and declining government debt-to-GDP. Together, these improvements provide a stronger foundation for investment, development and sustainable, inclusive growth, he added.
