Fiscal operations data for the first six months of the current year has been released by the Ministry of Finance with positive growth in expenditure and revenue in the first and second quarters of the current fiscal year compared to the comparable period of the year before though as a percentage of Gross Domestic Product (GDP), critical indicators, the change is not significant.
GDP was projected at 114,692 billion rupees in 2024-25 (as per data contained in the consolidated fiscal Operations for last year) and is estimated to rise to 129,567 billion rupees in the current year. In the event that the projected GDP is not achieved and is over or under the estimated amount tax revenue and expenditure as a percentage of GDP could show a better or worse performance.
The International Monetary Fund, under the ongoing 7 billion-dollar programme loan, has extended a technical assistance to the Pakistan Bureau of Statistics (PBS), given that “important shortcomings remain in the source data available for sectors accounting for around a third of GDP while there are issues with the granularity and reliability of the Government Finance Statistics.” The TA is scheduled for completion by end June 2026, and it remains to be seen its impact on data collection.
In July-September 2025 federal tax revenue was 2.88 trillion rupees rising to 6.16 trillion rupees July-December 2025 while the comparable figures for 2024 were 2.56 trillion rupees and 5.62 trillion rupees respectively – a rise of 12.4 percent in the first quarter declining to a rise of 9.6 percent in the first half of the current year. This is in spite of repeated claims of improvement by the Chairman Federal Board of Revenue (FBR) that there has been a significant uptick in revenue from enforcement measures (considered to be synonymous with the Board proactively going after the tax avoiders and evaders – a long-standing objective of successive administrations). Be that as it may, FBR tax revenue collections as a percentage of GDP were estimated at 2.2 percent in July-September 2025 and 4.8 percent in July-December 2025 against 2.2 percent July-September 2024 and 4.9 percent July-December 2024 – or no improvement in the first quarter of this year and a 0.1 percent decline (as opposed to a rise) in the first six months of the current fiscal year.
Provincial tax collections as a percentage of GDP were exactly the same in the first quarter and the first half of 2025 compared to the same periods of 2024 — at 0.2 percent and 0.4 percent respectively.
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The IMF in its ongoing loan documents specified that provincial tax reforms will include: (i) the transition of General Sales Tax on services from a positive to a negative list, which will take effect from the start of fiscal year 2026 that may account for the jump in sales tax collections from 261,222 million rupees July-December 2024 to 328,986 million rupees in the same period this year – a rise of around 26 percent.
The total rise is 67,764 million rupees which is 54 percent of the rise in provincial tax collections in the first half of the current year compared to the same period the year before – that in total is estimated at 568,511 million rupees July-December 2025 as opposed to 442,629 million rupees in 2024; and (ii) full alignment of provincial Agriculture Income Tax regimes with the federal personal and corporate income taxes by October 2024 (end-October structural benchmark) with implementation from January 1, 2025 and collection in July 2025. This was undertaken in letter but not in spirit as the rise in collections under the sub-head ‘Other’ is an unimpressive 36,018 million rupees — the July-December 2026 total under this head was 153,988 million rupees against 117,970 million rupees in the same period of 2024.
The consolidated fiscal operations show one figure for development expenditure and net lending which in the country’s fiscal framework include Public Sector Development Programme (PSDP), provincial Annual Development Programme (ADP) and net lending to autonomous bodies. Federal PSDP for the first half of 2024-25 was 132,907 million rupees against 155,528 million rupees in the first half of the current fiscal year or a rise of 17 percent while the provincial ADP accounted for 639,145 million rupees July-December 2024 against 950,358 million rupees – a rise of nearly 47 percent.
Two observations are critical: (i) PSDP’s total budgeted amount for 2024-25 was 833,146 million rupees as per 2025-26 budget documents (though the budget documents for 2024-25 earmarked 1400 billion rupees) with the Finance Division in its consolidated fiscal operations noting total PSDP of 785,6836 million rupees last fiscal year – data that confirms the administration overstating the budget allocation for PSDP at the start of the year, a common practice likely to continue in the current year, while this is trimmed drastically by the end especially during an ongoing IMF programme; and (ii) PSDP was budgeted at one trillion rupees for the current year and so far 155,528 billion rupees have been released way below what was budgeted that may well presage an even lower disbursement under this head by the end of the fiscal year.
ADP for provinces for the first six months of 2024 was estimated at 639,145 million rupees against 950,358 million rupees for the same period in the current year. The amount budgeted for 2024 was 2,095,380 million rupees while the actual disbursed amount as per the Finance Division was 2,197,566 million rupees – a rise of slightly less than 5 percent. Or, in other words, provinces did adhere to their budgeted ADPs unlike the federal government.
The net lending to Public Sector Entities however was negative 142,017 million rupees July–December 2025 against negative 28,369 million rupees in the comparable period 2024.
Mark-up payments July-December 2024 were estimated at 5,141,582 million rupees July-December 2024 as opposed to 3,563,635 million rupees in the same period this year — a decline of 40 percent. This is attributable to a decline in the discount rate in 2024 – from 10 June 2024 rate of 20.5 percent to 13 percent by 16 December 2024 as opposed to 11 percent on 16 June 2025 down to 10-.5 percent by 15 December 2025. However, the jury is out as to whether the decline of 0.5 percent in the discount rate would be sufficient to meet the reduced budgeted mark-up target for the current year of 8,206,6567 million rupees from last year’s revised total of 8,945,334 million rupees. To conclude, reforms underway, as claimed by the government team, are not reflected in the data released by the Finance Division. Or, as the Americans put it so succinctly, it’s same-o, same-o.
Copyright Business Recorder, 2026
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