Pakistan has kicked off the current fiscal year 2025-26 with a powerful display of fiscal discipline, achieving a substantial budget surplus in its first quarter. This positive financial turnaround signals a strengthening economic position for the nation.
National Fiscal Performance Exceeds Expectations
According to the official summary of consolidated federal and provincial fiscal operations released by the Finance Division, the country recorded a budget surplus of Rs2.1 trillion from July to September. This impressive figure represents 1.6 percent of the nation's Gross Domestic Product (GDP).
The robust surplus was driven by total revenues significantly outpacing expenditures. Total revenue stood at a formidable Rs6.2 trillion (4.8 percent of GDP), while total expenditure was contained at Rs4.1 trillion (3.1 percent of GDP). Even more notably, the primary balance—which excludes interest payments—posted an even larger surplus of Rs3.5 trillion (2.7 percent of GDP).
Detailed Breakdown of Revenue and Spending
The government's revenue stream was bolstered by two main sources. The Federal Board of Revenue (FBR) contributed Rs2.88 trillion in tax collection, while non-tax revenue brought in an even larger sum of Rs3.046 trillion.
A significant portion of the non-tax revenue came from the surplus profit of the State Bank of Pakistan, which amounted to a massive Rs2.4 trillion. Other notable non-tax contributors included a petroleum levy of Rs371.6 billion, royalties on oil and gas at Rs22.8 billion, and dividends of Rs26.6 billion.
On the expenditure side, the government spent Rs4.047 trillion in the first quarter. A major component was interest payments, which totaled Rs1.38 trillion. This was split between domestic interest of Rs1.18 trillion and foreign interest of Rs201.2 billion.
Other significant expenditures included:
- Pensions: Rs672.557 billion
- Running of civil government: Rs558.767 billion
- Defence: Rs447.5 billion
- Grants to others: Rs319 billion
- Subsidies: Rs119.6 billion
Strong Fiscal Performance Across All Provinces
In a remarkable show of nationwide fiscal health, all four provincial governments recorded budget surpluses during the first quarter of FY26. Collectively, the provinces achieved a surplus of Rs781 billion, with total revenues of Rs2.22 trillion surpassing expenditures of Rs1.44 trillion.
Punjab led the provinces with the largest surplus of Rs441 billion. The province generated revenues of Rs1.021 trillion against expenditures of Rs579.8 billion. Punjab received Rs882.3 billion from the federal government while generating Rs109.1 billion from its own sources.
Sindh recorded a healthy surplus of Rs208.8 billion, with revenues of Rs675.2 billion against expenditures of Rs466.4 billion. The province collected Rs135.5 billion in tax revenue and received Rs441.6 billion from the federal government.
Khyber Pakhtunkhwa (KP) posted a surplus of Rs77.2 billion, with revenues of Rs348.2 billion and expenditures of Rs271 billion. KP collected Rs15.88 billion in taxes and received Rs287.1 billion under the National Finance Commission (NFC) award.
Balochistan also recorded a positive fiscal position with a surplus of Rs53.5 billion. The province's revenues reached Rs178.3 billion against expenditures of Rs124.8 billion. Balochistan collected Rs8.5 billion in taxes and received Rs164.3 billion from the federal government under NFC.
This coordinated fiscal performance across both federal and provincial governments marks a significant achievement in Pakistan's economic management, providing a strong foundation for the remainder of the fiscal year.
