KARACHI: Pakistan reduced its budget deficit to its lowest level on record during the first nine months of fiscal year 2025-26, driven by stronger revenue collection, tighter spending controls and lower debt-servicing costs, according to the Economic Survey 2025-26 released Thursday.
The deficit narrowed to 856.4 billion rupees, or 0.7% of GDP, down from 2.97 trillion rupees, or 2.6% of GDP, in the same period a year earlier.
The improvement came as tax revenues rose 11.3% to 10.17 trillion rupees and non-tax revenues increased 9.5% to 4.63 trillion rupees. Total government receipts grew 10.7% to 14.8 trillion rupees.
Debt-servicing costs fell sharply by 23.2% to 4.95 trillion rupees, reflecting lower domestic interest rates and improved debt management. Total government expenditure declined 4.2% year-on-year to 15.66 trillion rupees.
The primary surplus, which excludes interest payments on debt, rose to 4.09 trillion rupees, or 3.2% of GDP, from 3.47 trillion rupees, or 3.0% of GDP, a year earlier. The survey said the figure exceeded the International Monetary Fund’s target for the period.
Development expenditure and net lending rose 18.7% to 1.83 trillion rupees, while spending under the Public Sector Development Program grew 26.8% to 1.95 trillion rupees, signaling continued government investment in infrastructure.
Federal Board of Revenue collections climbed 10.1% to 9.31 trillion rupees, with provincial tax revenues recording stronger growth of 25.8% to 860.7 billion rupees.
The survey described the fiscal performance as encouraging, citing expenditure restraint, provincial budget surpluses and ongoing structural reforms.
The government aims to use the improved position to build long-term sustainability and create space for inclusive growth.
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The Economic Survey was released a day before the federal government is scheduled to present the FY2026-27 budget in parliament.
