ISLAMABAD, Oct 27 (Wealth Pakistan) – Pakistan posted a rare fiscal surplus during the first quarter of FY2026 as government revenues rose sharply and expenditures stayed within budgetary limits. The development reflects improved fiscal management and continued adherence to the IMF program.
Revenue performance strengthens
According to the Finance Division’s Monthly Economic Update & Outlook (October 2025), net federal revenues increased 231.4 percent to Rs3,269.8 billion during July–August FY2026 compared to Rs986.7 billion in the same period last year.
The surge was driven by a 721.1 percent jump in non-tax revenues, along with a 14.1 percent rise in tax receipts collected by the Federal Board of Revenue (FBR). Non-tax inflows increased mainly due to higher profit transfers from the State Bank of Pakistan (SBP), dividends, defense receipts, the petroleum levy, the Gas Infrastructure Development Cess, and the Windfall Levy on crude oil.
During July–September FY2026, total FBR collections reached Rs2,884.4 billion, reflecting a 12.5 percent year-on-year increase.
Spending discipline and fiscal balance
The government maintained tight control over expenditures, which grew only 7.6 percent to Rs1,760.6 billion compared with Rs1,636 billion last year. As a result, the federal fiscal balance recorded a surplus of Rs1,509.2 billion, a major turnaround from a deficit of Rs648.8 billion in the same period last year.
The primary balance also improved significantly, reaching a surplus of Rs2,938.9 billion compared with Rs49.4 billion previously.
Alignment with IMF targets
The report said this improvement demonstrated the government’s commitment to maintaining fiscal discipline while managing flood-rehabilitation costs within the allocated budget. The performance remained consistent with IMF program targets and reflected the administration’s focus on sustainable revenue generation.
The Finance Division attributed the results to higher non-tax receipts, improved FBR enforcement, and reduced government borrowing. Contained budgetary borrowing also allowed banks to lend more to the private sector, supporting overall economic activity.
Outlook for fiscal stability
Fiscal experts said Pakistan’s stronger primary balance and controlled spending pointed to improving fiscal stability. However, they cautioned that future risks could emerge from potential increases in energy subsidies and liabilities of public-sector enterprises if reforms were delayed.
The Finance Division emphasized that continued fiscal discipline and reform implementation would be crucial for long-term debt sustainability. The improved fiscal outlook, together with external stability and moderating inflation, was expected to strengthen investor confidence.
It added that with better tax collection and strong non-tax inflows, Pakistan’s fiscal sustainability outlook had improved notably. Fiscal buffers were being rebuilt, creating fiscal space for targeted social protection and development investment.
“The government remains committed to prudent fiscal management and will continue to meet program targets under the IMF arrangement,” the Finance Division said.