Pakistan Fiscal Surplus Falls 40% in First Quarter of FY27

Pakistan’s fiscal surplus shrank 40% in the first quarter of the current financial year, official figures show, falling to Rs1.27 trillion — 0.9% of GDP — in July–September 2026, from Rs2.12 trillion, or 1.7% of GDP, a year earlier.

Interest payments ate the surplus

The biggest drag was the cost of servicing debt. Interest payments rose about 23% to Rs1.70 trillion in the quarter, from Rs1.38 trillion a year earlier — more than three and a half times what the government spent on development, and roughly 57% of the entire primary surplus. Non-tax revenue fell about 14% to Rs2.62 trillion, even though the State Bank of Pakistan’s profit came in at more than Rs1.9 trillion.

Revenue down, spending up

Total revenue stood at Rs6.00 trillion, or 4.2% of GDP, down from 4.9% a year earlier, while expenditure reached Rs4.73 trillion. Tax collection came in at Rs3.4 trillion. Provincial cash surpluses shrank 23%, and Balochistan swung to a Rs16 billion deficit from a Rs53 billion surplus in the same quarter last year.

The government’s case — and the IMF

The government points out that this is the third consecutive first-quarter surplus, after 23 years in which the first quarter always ended in deficit. The primary surplus — revenue minus spending, excluding interest — was Rs2.97 trillion, or 2.1% of GDP, already above the 2% target set for the full year, though the first quarter is usually the strongest because the State Bank books its annual profit in it. Finance Minister Muhammad Aurangzeb said Pakistan had met three of the IMF’s four fiscal conditions, and an IMF board review next month is expected to consider $1.2 billion in loan tranches under the $7 billion programme.