ISLAMABAD, Oct 27 (Wealth Pakistan) – Pakistan recorded a strong primary surplus of Rs2.9 trillion during the first quarter of FY2026, reflecting improved fiscal discipline, higher revenues, and effective financial management in line with IMF program targets.
Strong fiscal performance
According to the Finance Division’s Monthly Economic Update & Outlook (October 2025), total government revenues increased significantly, driven by strong tax and non-tax inflows, while expenditures remained within budgeted limits.
The report said the government’s fiscal consolidation efforts, combined with higher receipts from petroleum levies and State Bank of Pakistan (SBP) profit transfers, strengthened fiscal indicators. The primary balance posted a surplus of Rs2,938.9 billion during July–August FY2026 compared with Rs49.4 billion in the same period last year.
Surplus replaces deficit
The overall fiscal balance recorded a surplus of Rs1,509.2 billion, reversing a deficit of Rs648.8 billion from the corresponding quarter of FY2025. This improvement was attributed to robust revenue growth, restrained spending, and efficient cash management.
Federal Board of Revenue (FBR) collections reached Rs2,884.4 billion during July–September FY2026, marking a 12.5 percent increase over last year. Non-tax revenues rose sharply, led by SBP profits, dividends, defense receipts, petroleum levies, and the Gas Infrastructure Development Cess.
Fiscal discipline and IMF alignment
The Finance Division said this performance reflected better governance, enhanced revenue administration, and a continued commitment to prudent fiscal management under the IMF program. Improved fiscal control also reduced reliance on domestic borrowing, freeing liquidity for the private sector and credit expansion.
Economists said maintaining a primary surplus for consecutive quarters would strengthen Pakistan’s fiscal sustainability and reduce the debt-to-GDP ratio. They noted that the development marks a significant step toward long-term fiscal health and international credibility.
Expenditure management and reform focus
The report cautioned that sustaining this momentum would require careful spending prioritization, continued tax reforms, and targeted subsidy rationalization. Fiscal authorities were advised to avoid populist measures and focus on development projects with high economic impact.
The Finance Division said fiscal sustainability was supported by improved external indicators, including stable foreign-exchange reserves and a contained current account deficit. It added that post-flood rehabilitation expenditures were being managed within the approved budget, avoiding unplanned deficits.
Coordination and future outlook
According to the report, fiscal coordination with provincial governments has improved, contributing to better overall balance management. Progress on privatization, state-owned enterprise reforms, and digital governance is also expected to strengthen fiscal space and long-term stability.
With improved fiscal and external indicators, the Finance Division said Pakistan’s economic outlook for FY2026 remains positive. It projected that strong revenue growth, fiscal discipline, and prudent expenditure policies would continue to anchor macroeconomic stability and investor confidence.