Pakistan’s ongoing fiscal consolidation efforts are starting to pay off, with noticeable improvements in the country’s fiscal position during the first seven months of the fiscal year 2024–25. According to the latest data, the federal fiscal deficit has declined significantly, dropping to 1.7 percent of GDP during the July to January period of FY2025, compared to 2.6 percent in the same period last year. This marks a substantial improvement in fiscal discipline, underpinned by a strong focus on both revenue generation and spending efficiency.
A particularly encouraging development is the increase in the primary surplus, which surged to Rs. 3,518.7 billion — equivalent to 2.8 percent of GDP — up from Rs. 1,938.8 billion (1.8 percent of GDP) in the same period last year. The rise in surplus highlights the government’s intensified efforts to manage the country’s finances prudently, especially in the context of challenging macroeconomic conditions and the need to maintain investor confidence.
On the revenue side, net federal receipts witnessed a remarkable 45.3 percent year-on-year increase, reaching Rs. 6,362.5 billion in Jul–Jan FY2025 from Rs. 4,379.5 billion last year. This jump is driven by strong growth in both tax and non-tax revenues, signaling effective revenue mobilization. Non-tax collections played a pivotal role, soaring by an impressive 75.8 percent, which reflects improved administrative efficiencies and more effective collection mechanisms.
The Federal Board of Revenue (FBR) also posted a robust performance, with tax collections reaching Rs. 7,343.9 billion during Jul–Feb FY2025 — up by 25.9 percent from Rs. 5,831.3 billion in the corresponding period last year. A deeper breakdown shows that domestic tax revenue grew by 27.4 percent, while customs duty collections also saw a solid rise of 15.4 percent. This broad-based revenue expansion demonstrates growing economic activity in the formal sector, alongside better enforcement and compliance measures introduced by tax authorities.
On the expenditure front, the government maintained a cautious approach. Total expenditure during Jul–Jan FY2025 increased by 23.9 percent to Rs. 9,330.1 billion compared to Rs. 7,531.5 billion a year ago. Current expenditures reached Rs. 8,596.7 billion, reflecting a 16.8 percent increase from the previous year. While markup payments rose by 20 percent — largely due to elevated interest rates and debt servicing obligations — non-markup current spending saw a more modest rise of 11.4 percent.
A key highlight within non-markup expenditures was the reduced spending on subsidies, contributing to better control over non-essential expenditures. Meanwhile, development spending under the Public Sector Development Program (PSDP) was not compromised and in fact, rose by 27.2 percent during the review period, indicating a balanced strategy of fiscal tightening without stifling growth-oriented investments.
The latest fiscal data presents a strong case for continued fiscal reform, and the numbers point toward a possible containment of the full-year fiscal deficit within manageable levels, as targeted. With this trajectory, Pakistan may find more room to pursue long-term economic reforms, reduce reliance on external financing, and improve its credit outlook in global markets.
As the government moves further into FY2025, its ability to sustain this momentum — through consistent policy implementation and continued institutional strengthening — will be vital to ensuring macroeconomic stability and building a resilient financial foundation.