Pakistan has reported improvements in its fiscal position, with public debt declining to 68% of gross domestic product (GDP) and the fiscal deficit falling to 2.6% of GDP, according to Finance Minister Muhammad Aurangzeb. Speaking during a panel discussion at the World Bank–International Monetary Fund (IMF) Annual Meetings 2026 in Bangkok, Thailand, the minister highlighted progress in fiscal consolidation, revenue mobilisation and economic reforms despite continuing economic challenges. He said Pakistan had recorded primary surpluses for three consecutive years, while tax revenues had increased by 40% over the previous two years. The figures were presented as indicators of changes in the country’s public finances and efforts to improve the government’s capacity to generate revenue and manage its debt obligations.
Aurangzeb shared these developments during a session titled “Mitigating Sovereign Risks in Market-Access Countries,” which examined issues related to government borrowing, fiscal management and the risks faced by countries accessing international financial markets. He said Pakistan’s fiscal deficit had declined to 2.6% of GDP, marking a significant improvement in the government’s fiscal position. The minister also highlighted the achievement of primary surpluses for three consecutive years. A primary surplus occurs when government revenues exceed expenditure excluding interest payments on existing debt. Maintaining such a surplus can help a government meet part of its debt-related obligations through its own revenues, although overall debt sustainability also depends on borrowing costs, economic growth and other fiscal pressures.
The finance minister also pointed to a 40% increase in tax revenues over two years, attributing the progress to efforts to improve revenue mobilisation and implement fiscal reforms. Higher tax collection can provide the government with additional resources to finance public services and development expenditure while reducing reliance on borrowing. However, the long-term impact depends on the sustainability of revenue growth, the effectiveness of tax administration and the broader performance of the economy. Pakistan has continued to face challenges involving fiscal pressures, public expenditure and the need to expand its revenue base. The reported increase in tax receipts therefore forms part of a wider effort to improve the balance between government income and expenditure while supporting economic stability.
Another development highlighted by Aurangzeb was the reduction in Pakistan’s public debt from 75% to 68% of GDP. The decline indicates a lower debt-to-GDP ratio, a measure commonly used to assess the size of government debt relative to the country’s economic output. Changes in this ratio can reflect several factors, including economic growth, government borrowing, repayments and movements in the value of outstanding debt. A lower ratio can improve fiscal indicators, but managing public debt remains dependent on the government’s ability to meet interest and repayment obligations over time. The minister’s remarks placed the decline alongside the reduction in the fiscal deficit and consecutive primary surpluses as part of the country’s reported progress in managing public finances.
Aurangzeb further stated that Pakistan had returned to international capital markets after a four-year gap, raising $3 billion during the period covered by his remarks. Access to international capital markets allows governments to obtain financing from overseas investors, but it also creates obligations involving interest payments, repayment schedules and market conditions. A country’s ability to raise funds depends on investor confidence, its economic outlook and the terms available when securities are issued. Pakistan’s return to these markets was presented by the finance minister as another development accompanying the country’s fiscal adjustment efforts. Continued access to external financing will remain linked to the government’s debt management strategy, foreign exchange position and ability to maintain economic stability.
Discussing the country’s reform programme, Aurangzeb emphasised that Pakistan’s reforms were driven by its own national priorities and supported by the International Monetary Fund. His remarks highlighted the relationship between domestic policy decisions and international financial assistance as the government seeks to address fiscal weaknesses and strengthen the economy. Reform measures have focused on improving public finances and creating conditions for more stable economic management. The minister indicated that the progress achieved so far should provide a basis for the next stage of economic policy, while recognising that stabilisation alone would not be sufficient to secure long-term prosperity.
Aurangzeb stressed that Pakistan’s focus must now extend beyond economic stabilisation towards sustainable growth. This shift would require building on fiscal consolidation and structural reforms while strengthening the economy’s ability to generate investment, employment and productive activity. Although the reported decline in public debt relative to GDP, higher tax revenues and consecutive primary surpluses represent changes in key fiscal indicators, sustaining these developments will depend on continued revenue generation, expenditure management and broader economic performance. The government’s challenge will be to maintain fiscal discipline while supporting productive sectors and creating conditions for durable growth. The discussion at the 2026 World Bank–IMF Annual Meetings placed Pakistan’s fiscal progress within the wider question of how countries managing sovereign risks can strengthen public finances while moving towards a more sustainable growth model.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.