Pakistan slashes FY26 fiscal deficit 46% to Rs3.3tr

Mettis Global reported that Pakistan's fiscal deficit for FY26 narrowed to Rs3.313 trillion, or 2.6% of GDP, its lowest in 22 years. That figure was 46% below the Rs6.168 trillion, or 5.4% of GDP, recorded in FY25. The primary balance also swung to a surplus of Rs3.634 trillion, equal to 2.9% of GDP, the highest in at least 26 years.

Total revenue climbed 10% to Rs19.774 trillion, with tax collections up 12% to Rs14.219 trillion. Direct taxes rose 14% to Rs6.586 trillion, while sales tax, customs duties and federal excise all increased. On the spending side, total outlays dropped 4% to Rs23.087 trillion, as mark-up payments fell 22% to Rs6.948 trillion amid monetary easing.

Net external financing rose 90% to Rs1.178 trillion, while domestic financing dropped 61% to Rs2.136 trillion. Public debt expansion reached its weakest pace in 20 years during the period. S&P Global Ratings raised the sovereign grade to 'B', with its outlook marked 'Stable', and pointed to firmer fiscal consolidation and better sovereign fundamentals.