Pakistan’s budget deficit at 5.4% of GDP; primary surplus climbs to 2.4% in FY25

Pakistan’s budget deficit was recorded at Rs6.17 trillion, i.e. 5.4% of the GDP, during the fiscal year 2024-25, marking a 9-year low, showed data released by the Ministry of Finance.

A summary of consolidated federal and provincial fiscal operations for July-June 2024-25, released by the Finance Division showed that total revenue stood at Rs17.997 trillion (15.7% of the GDP) against the total expenditure of Rs24.165 trillion (21.1% of the GDP) during the fiscal year, hence budget deficit has been recorded at Rs6.168 trillion (5.38% of the GDP).

“The deficit of 5.38% is better than the government’s revised forecast of 5.6% of GDP (earlier budgeted 5.9%) for FY25,” said Topline Securities. “Similarly, the International Monetary Fund (IMF) also projected a deficit at 5.6% of GDP.”

2.4% of GDP: Jul-Mar budget deficit stands at Rs2.97trn

The primary balance posted a surplus of Rs2.719 trillion, accounting for 2.4% of GDP.

“Pakistan has recorded a primary balance of 2.4% of GDP, the highest surplus % in the recent past (over 2 decades),” said Topline Securities.

The brokerage house noted that a higher primary surplus was achieved as revenue growth surpassed expenditure growth. “This surplus of 2.4% of GDP is better than the government’s revised projection of 2.2% of GDP and the IMF forecast of 2.1%,” it noted.

As per figures provided by the Finance Division, the total revenue of Rs17.997 trillion included Rs12.722 trillion in tax and Rs5.274 trillion in non-tax revenue.

Of the tax revenue, the Federal Board of Revenue (FBR)’s tax collection remained Rs11.744 trillion during FY25.

“FBR tax (with petroleum development levy [PDL]) to GDP ratio has increased to 11.3% in FY25, a 7-year high compared to 9.7% in FY24 and an average of 9.9% in the last five years (FY20 to FY24,” said Topline.

Provincial governments’ tax collection was recorded at Rs978 billion in FY25.

During FY25, Pakistan’s total GDP stood at Rs114.692 trillion.

“Pakistan is expected to post its third consecutive year of primary surplus in FY26 after 2 decades. While overall fiscal deficit is expected to clock in at 4-4.1% of GDP in FY26, the lowest in 2 decades,” said Topline Securities.