ISLAMABAD: The country’s primary balance posted a robust surplus of Rs 4,105.5 billion (3.2 percent of GDP) during the first half (July–December) of fiscal year 2025-26, reflecting continued fiscal consolidation and improved revenue performance.
The primary surplus showed an increase from Rs 3,603.7 billion (3.2 percent of GDP) recorded in the corresponding period of last fiscal year, indicating strengthened fiscal discipline amid prudent expenditure management and enhanced revenue mobilization, according to the latest Monthly Economic Update and Outlook for February 2026.
The report highlighted that overall fiscal consolidation efforts are gaining traction, with total revenues rising by 9.4 percent to Rs 10,683.6 billion during July–December FY2026. The growth was driven by a 10.9 percent increase in tax revenues and a 7.0 percent rise in non-tax revenues.
On the expenditure side, total spending declined by 10.3 percent to Rs 10,141.7 billion. The contraction was largely attributed to a 5.2 percent reduction in current expenditures, mainly due to a significant 30.7 percent decline in markup payments.
Meanwhile, development expenditures increased by 43.2 percent, primarily supported by higher provincial development spending.
As a result, the overall fiscal balance registered a surplus of 0.4 percent of GDP (Rs 541.9 billion) during the period under review, compared to a deficit of 1.3 percent of GDP (Rs 1,537.9 billion) in the same period last year
The report further noted that the improved primary balance — which excludes interest payments — underscores the government’s commitment to sustainable debt management and macroeconomic stability. A sizeable portion of public debt was also retired ahead of schedule, marking a significant step toward prudent fiscal management.
During July–January FY2026, the Federal Board of Revenue (FBR) collected Rs 7,176.9 billion, posting a growth of 10.5 percent compared to last year. The increase was broad-based, with direct taxes growing by 11.1 percent and indirect taxes by 9.8 percent
The Finance Division maintained that sustained fiscal consolidation, coupled with improved macroeconomic fundamentals, is expected to reinforce economic stability and support growth momentum in the remaining months of the fiscal year.
According to the report, overall economy entered the third quarter of fiscal year 2025-26 with strengthened macroeconomic fundamentals and significantly improved growth prospects.
The momentum is expected to further accelerate in the remaining months of the fiscal year and steer the country toward sustainable economic growth.
