Pakistan’s government finances showed clear improvement in the fiscal year 2025-26. The fiscal deficit dropped to 2.6 percent of GDP, the lowest level in 22 years, according to the Ministry of Finance.
At the same time, the primary surplus, the amount left after paying for everything except interest on debt, rose to 2.9 percent of GDP. This is the highest primary surplus in 26 years. Pakistan has now recorded a primary surplus for three years in a row, a sign of better control over spending and stronger tax collection.
Total government revenue reached Rs 19.8 trillion. Of this, tax revenues made up Rs 14.8 trillion. Interest payments fell sharply to Rs 6.95 trillion, down from Rs 8.9 trillion the previous year. This reduction in debt-servicing costs gave the government more breathing room.
Not all spending rose. Subsidies were cut by 22 percent to about Rs 1.001 trillion. Development spending also declined to Rs 727 billion from Rs 786 billion. Defence spending, however, increased by 18 percent to Rs 2.588 trillion.