Rising interest payments, uplift spending strained Pakistan's fiscal position in FY27's 1st quarter: ministry

Pakistan’s overall fiscal surplus fell to 0.8% of GDP, or Rs1.198 trillion, in July-September FY27, from 1.7% a year earlier, Dawn reported, citing the Finance Ministry. The primary surplus also declined, to 1.6% of GDP from 2.3%, as interest payments rose 36.6% and development spending climbed 69.5%.

FBR tax collection grew 7% to Rs3.086 trillion, exceeding its target by Rs33.2 billion, while total expenditure increased 20.7%. The current account deficit widened to $874 million, but a $3 billion Eurobond issue and stronger investment inflows helped produce a $3.1 billion balance of payments surplus; SBP reserves stood at $21.5 billion on October 16. The ministry also backed this week’s 50-basis-point policy rate increase to 12%, citing inflation risks.