ISLAMABAD: Pakistan reported a rare fiscal surplus of 1.6% of GDP in the first quarter of the current fiscal year, driven by record interest income from the State Bank of Pakistan (SBP), a 30% increase in petroleum levy collection, and strong provincial cash surpluses. The surplus amounted to Rs2.12 trillion, up 10% from Rs1.896 trillion in the same period last year.
The primary balance, which excludes interest payments, stood at 2.7% of GDP, slightly lower than last year’s 2.8%, but grew in absolute terms to Rs3.497 trillion from Rs3.2 trillion. Despite these gains, the report highlighted weak revenue performance and limited expenditure control, with total revenues rising only 6% to Rs6.2 trillion.
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Tax revenues remained flat at 2.4% of GDP, while non-tax revenues fell to 2.4% from 2.7%. The Federal Board of Revenue (FBR) collected Rs2.884 trillion, up 11% from last year. Provincial tax revenues rose 21% to Rs270 billion, and combined provincial cash surpluses more than doubled to Rs781 billion, with Punjab posting a record Rs442 billion surplus.
Total expenditure increased 3.6% to Rs4.08 trillion, with current spending climbing 12.6% to Rs4.07 trillion. Markup payments reached Rs1.378 trillion, and defence expenditure rose 8.4% to Rs447.5 billion, although its share of GDP slightly declined. Of the total federal non-tax revenue of Rs2.984 trillion, Rs2.43 trillion came from SBP profits, reflecting the impact of the record-high 22% policy rate.
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The report noted that provincial surpluses were boosted by delayed or last-minute federal fund releases. While Punjab and Sindh saw record surpluses, Khyber Pakhtunkhwa and Balochistan experienced declines, highlighting regional disparities in fiscal management.