Pakistan recorded its strongest fiscal performance in more than 20 years during the 2025-26 financial year, with the fiscal deficit shrinking to 2.6 per cent of gross domestic product (GDP), according to Adviser to the Finance Minister Khurram Schehzad.
Sharing the figures on X on Thursday, Schehzad said the deficit has fallen for the third consecutive year after standing at 7.9 per cent of GDP in FY22. He added that the country also achieved a primary surplus, which excludes interest payments, of 2.9 per cent of GDP in FY26, calling it the best result in 22 years.
He said the latest figures showed Pakistan had moved away from recurring fiscal pressures towards greater financial discipline and stability.
According to the adviser, the primary surplus improved from 0.9 per cent of GDP in FY24 to 2.4 per cent in FY25 before reaching 2.9 per cent in FY26. Over the past three years, the fiscal deficit has narrowed by 5.2 percentage points, while the primary balance has shifted from a one per cent deficit to a record surplus.
The overall fiscal deficit stood at Rs3.31 trillion during FY26, while the primary surplus reached Rs3.63 trillion. Government revenues climbed to Rs19.8 trillion, including Rs14.2 trillion collected through taxes.
Schehzad also said interest payments dropped sharply to around Rs6.95 trillion from Rs8.9 trillion a year earlier, easing pressure on public finances.
He credited the improvement to higher revenues, tighter control over spending and continued economic reforms. He added that government debt growth had slowed to its lowest pace in two decades, while the debt to GDP ratio declined to around 68 per cent, helping reduce debt servicing costs and creating more room for development spending.
Schehzad noted that the stronger fiscal position had been supported by improving external accounts and higher foreign exchange reserves. He also referred to S&P Global Ratings’ decision in July to raise Pakistan’s sovereign credit rating from B minus to B, citing faster fiscal consolidation, stronger revenue collection, rebuilding reserves and a lower debt burden.
Pakistan recorded its lowest fiscal deficit in more than two decades as stronger revenues and spending controls improved public finances.
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