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

Pakistan’s fiscal surplus narrowed in the opening period of FY27 as interest costs and development outlays rose, despite lower subsidies and tax receipts above target, Dawn reported, citing the Finance Ministry. The overall surplus fell to 0.8pc of GDP, or Rs1.198 trillion, from 1.7pc, or Rs2.124tr, in the same period of FY26; the primary surplus also eased to 1.6pc from 2.3pc. Interest payments climbed 36.6pc, while development spending expanded 69.5pc.

For July-September, FBR revenue increased 7pc to Rs3.086tr, exceeding its target by Rs33.2bn. The report also recorded a first-quarter current account deficit of $874 million, while the balance of payments posted a $3.1 billion surplus, supported by investment inflows and a September Eurobond issue. SBP raised its policy rate by 50 basis points to 12pc earlier in the week, a move the ministry backed; it cited inflation concerns linked to Middle East tensions and high global energy costs.