Pakistan’s fiscal deficit for the third quarter of the ongoing financial year stood at Rs2.97 trillion, or 2.4 per cent of GDP, showing a notable improvement from the Rs3.9 trillion deficit (3.7 per cent of GDP) recorded during the same period last year, according to data released by the Ministry of Finance.
The primary balance — which excludes interest payments — showed a surplus of Rs3.46 trillion (2.8 per cent of GDP), more than double the Rs1.61 trillion (1.5 per cent of GDP) recorded in the third quarter of fiscal year 2024.
To finance the fiscal gap, the government relied heavily on domestic borrowing, raising Rs1.62 trillion. However, there was a net outflow of Rs78.7 billion in external financing. In contrast, during the same quarter last year, domestic borrowing had reached Rs2.95 trillion and external sources added Rs19.5 billion.
Revenue increases on strong tax, non-tax collection
Government revenues rose significantly, totalling Rs13.36 trillion (10.8 per cent of GDP), up from Rs9.78 trillion (9.2 per cent of GDP) a year earlier. Tax revenue contributed Rs9.13 trillion, while non-tax revenue made up the remaining Rs4.29 trillion.
Within tax revenue, direct taxes led the collection with Rs4.12 trillion, followed by sales tax at Rs2.86 trillion. Customs duties brought in Rs927.5 billion, and Federal Excise Duties added Rs9.27 billion.
Non-tax revenue was largely driven by the State Bank of Pakistan’s surplus profit, which amounted to Rs2.5 trillion. The petroleum levy also contributed Rs2.43 billion, slightly up from Rs1.73 billion in the previous year’s corresponding period.
Total government expenditure reached Rs16.13 trillion (13 per cent of GDP), up from Rs13.47 trillion (12.7 per cent of GDP) during the same period last year. Most of this spending went towards current expenditures, which included Rs10.58 trillion in interest payments, Rs1.42 trillion for defence, and Rs672.5 billion in pensions.
All four provinces posted budget surpluses during the quarter. Punjab led with Rs441.12 billion, followed by Sindh with Rs395 billion, Khyber Pakhtunkhwa at Rs111.3 billion, and Balochistan at Rs105.79 billion.
