Pakistan’s Budget Deficit Narrows to 9-Year Low in FY25

Data from the Ministry of Finance reveals that Pakistan’s budget deficit reached Rs6.17 trillion, equivalent to 5.4% of GDP, in the fiscal year 2024-25. This represents the lowest deficit in nine years.

According to the Finance Division’s summary of consolidated federal and provincial fiscal operations for July-June 2024-25, total revenue amounted to Rs17.997 trillion (15.7% of GDP), while total expenditure stood at Rs24.165 trillion (21.1% of GDP). Consequently, the budget deficit was recorded at Rs6.168 trillion (5.38% of GDP).

Topline Securities stated that the deficit of 5.38% surpasses the government’s revised projection of 5.6% of GDP for FY25, which was initially budgeted at 5.9%. The International Monetary Fund (IMF) had also anticipated a deficit of 5.6% of GDP.

Primary Balance Shows Surplus

The primary balance indicated a surplus of Rs2.719 trillion, which is 2.4% of GDP.

Topline Securities highlighted that Pakistan achieved a primary balance of 2.4% of GDP, marking the highest surplus percentage in over two decades.

The brokerage house pointed out that this higher primary surplus resulted from revenue growth exceeding expenditure growth. The surplus of 2.4% of GDP exceeds both the government’s revised forecast of 2.2% of GDP and the IMF’s projection of 2.1%.

According to the Finance Division, the total revenue of Rs17.997 trillion comprised Rs12.722 trillion in tax revenue and Rs5.274 trillion in non-tax revenue.

The Federal Board of Revenue (FBR)’s tax collection for FY25 totaled Rs11.744 trillion.

Topline noted that the FBR tax (including petroleum development levy [PDL]) to GDP ratio increased to 11.3% in FY25, the highest in seven years, compared to 9.7% in FY24 and an average of 9.9% over the past five years (FY20 to FY24).

Provincial governments’ tax collection reached Rs978 billion in FY25.

Pakistan’s total GDP for FY25 was recorded at Rs114.692 trillion.

Topline Securities anticipates that Pakistan will achieve its third consecutive year of primary surplus in FY26 after two decades. The overall fiscal deficit is projected to be between 4-4.1% of GDP in FY26, the lowest in 20 years.