Pakistan recorded its lowest fiscal deficit in at least 27 years during July–March of the current fiscal year, driven by high provincial surpluses, record petroleum levy collections and a sharp decline in interest payments, official data showed.
According to the Ministry of Finance, the fiscal deficit stood at Rs. 856 billion in the first nine months of the fiscal year, compared with Rs. 2.97 trillion in the same period last year. This marks an improvement of 71 percent.
The fiscal year began with a Rs. 2.1 trillion surplus, which narrowed to Rs. 542 billion by mid-year before turning into a deficit by the end of the third quarter.
Provincial governments posted a combined cash surplus of Rs. 1.636 trillion, exceeding the full-year target of Rs. 1.464 trillion.
Punjab contributed the largest surplus at Rs. 824 billion, followed by Sindh with Rs. 441 billion, Khyber Pakhtunkhwa with Rs. 253 billion, and Balochistan with Rs. 118 billion.
The petroleum development levy emerged as the federal government’s largest revenue source, rising 45 percent to Rs. 1.205 trillion from less than Rs. 835 billion a year earlier.
Also read: Pakistan Expects $200M IMF Climate Funding
Profit transfers from the State Bank of Pakistan also remained strong during the period.
Interest payments declined sharply by nearly Rs. 1.5 trillion, falling to Rs. 4.948 trillion from Rs. 6.44 trillion last year. The primary surplus reached Rs. 4.1 trillion, equivalent to 3.2 percent of GDP.
The overall revenue-to-GDP ratio declined to 11.4 percent from 11.7 percent last year. Tax revenues stood at 7.8 percent of GDP, while non-tax revenues slipped to 3.6 percent.
Direct taxes remained unchanged at 3.6 percent of GDP. Sales tax collection declined to 2.4 percent, while customs duty fell to 0.7 percent.
Total expenditure dropped to 12.1 percent of GDP from 14.2 percent, mainly due to lower debt servicing costs.
Also read: Pakistan Prepares IMF-Aligned Federal Budget With Limited Relief Measures
Defence spending increased to Rs. 1.69 trillion, compared with Rs. 1.423 trillion last year. Subsidies also rose to Rs. 632 billion from Rs. 466 billion.
The Federal Board of Revenue reported tax collections of Rs. 9.306 trillion during July–March, while provincial tax revenues grew 26 percent to Rs. 861 billion.
