Pakistan’s fiscal deficit fell to its lowest level in 22 years during fiscal year 2025-26, according to a statement issued by the Ministry of Finance. The improvement came alongside a sharp rise in the country’s primary surplus.
The ministry said the fiscal deficit stood at 2.6% of gross domestic product (GDP) during FY2025-26. Meanwhile, the primary surplus reached 2.9% of GDP, its highest level in 26 years, with Pakistan recording a primary surplus for the third consecutive year.
According to the Finance Ministry, total revenue during the fiscal year reached Rs19,800 billion. Tax revenue accounted for Rs14,800 billion, reflecting the government’s continued focus on strengthening domestic revenue collection and improving fiscal management.
Interest payments also declined significantly during the year. The government’s interest-related payments fell to Rs6,950 billion, compared with Rs8,900 billion recorded during the previous fiscal year, providing some relief to the country’s overall fiscal position.
The ministry said defence spending increased by 18% to Rs2,588 billion during the year. The increase came as the government maintained spending on national security and defence requirements amid a challenging regional security environment.
At the same time, spending on subsidies declined by 22%, falling from Rs1,300 billion to Rs1,001 billion. Development expenditure also decreased, with spending falling from Rs786 billion in the previous year to Rs727 billion during FY2025-26.
The latest figures indicate a significant improvement in Pakistan’s fiscal position, with the Pakistan fiscal deficit reaching a 22-year low and the primary surplus recording a 26-year high. The government says the results reflect stronger fiscal management, higher revenues and lower interest costs.
