Pakistan’s fiscal position has strengthened notably in FY2026, driven by remarkable improvements in revenue collection and effective expenditure control. The federal government’s commitment to fiscal discipline and reform-oriented financial governance has resulted in one of the most promising starts to a fiscal year in recent memory, according to the latest official data.
During the first two months of FY2026 (July–August), net federal revenues surged by an impressive 231.4 percent to reach Rs. 3,269.8 billion, compared to Rs. 986.7 billion in the corresponding period of the previous fiscal year. This extraordinary improvement reflects both enhanced tax compliance and exceptional growth in non-tax revenues, a trend that underscores the government’s focus on broadening fiscal space while maintaining expenditure efficiency.
The most significant contributor to this uptrend was the surge in non-tax revenues, which jumped by a staggering 721.1 percent year-on-year. This growth was primarily led by higher profits from the State Bank of Pakistan (SBP), which transferred record earnings to the national exchequer. Additional inflows were driven by dividends from state-owned enterprises, defence-related receipts, proceeds from the Windfall Levy on crude oil, the Gas Infrastructure Development Cess (GIDC), and the petroleum levy. Together, these sources provided a strong boost to fiscal buffers and eased pressure on the tax collection system.
On the taxation front, the Federal Board of Revenue (FBR) continued its upward trajectory, recording a 14.1 percent increase in tax collections during the July–August period compared to last year. The momentum carried into the following month, as FBR’s cumulative tax collection for July–September FY2026 reached Rs. 2,884.4 billion, representing a 12.5 percent year-on-year increase. This performance reflects progress in digitization of the tax system, improved enforcement measures, and ongoing structural reforms designed to enhance compliance and transparency.
On the expenditure side, the government maintained a disciplined approach, keeping total outlays under check despite increased development and social spending needs. Total federal expenditures rose modestly by 7.6 percent, reaching Rs. 1,760.6 billion during the period under review. This balanced approach highlights the administration’s emphasis on prudent fiscal management—focusing on efficiency, prioritizing essential sectors, and limiting non-productive spending.
As a result of this effective revenue-expenditure balance, the federal fiscal account posted a surplus of Rs. 1,509.2 billion during July–August FY2026, a dramatic turnaround from a deficit of Rs. 648.8 billion recorded in the same period last year. The primary balance—a key indicator of fiscal health excluding interest payments—also demonstrated significant improvement, posting a surplus of Rs. 2,938.9 billion, compared to Rs. 49.4 billion in the corresponding period of FY2025.
Economic analysts note that such fiscal performance is indicative of growing macroeconomic stability and enhanced confidence in Pakistan’s financial management framework. The sharp rebound in non-tax revenues, coupled with sustained tax collection growth, suggests that fiscal consolidation efforts are yielding measurable results. Moreover, this improvement comes at a time when the country is also navigating external challenges, such as global inflationary pressures and shifting commodity prices.
Looking ahead, maintaining this fiscal momentum will depend on continued reforms in public finance management, the rationalization of subsidies, and efficiency improvements in state-owned enterprises. The government’s strategy to diversify revenue sources—particularly through the petroleum levy and the expansion of the tax base—will remain critical to sustaining long-term fiscal resilience.
With higher revenues, disciplined spending, and a surplus fiscal balance, Pakistan’s economy is positioned on a more stable path heading into the remainder of FY2026. The fiscal turnaround not only reinforces investor confidence but also provides the government greater fiscal room to support growth-oriented initiatives and social development programs in the months ahead.
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