ISLAMABAD: The country’s federal fiscal deficit was contained at 6 percent of gross domestic product (GDP) against a target of 6.8 percent, the National Assembly was informed on Monday, with revenue collection remaining close to budget targets.
The Fiscal Policy Statement for January 2026, presented to the House by Finance Minister Muhammad Aurangzeb, offered a comprehensive review of the country’s macroeconomic indicators, including total expenditures, net revenue receipts, fiscal deficit, public debt, and debt per capita, comparing them with established benchmarks and national economic priorities.
According to the statement, the government demonstrated a strong commitment to fiscal discipline, maintaining a surplus primary balance as part of its strategy to achieve fiscal consolidation.
It said strengthened economic fundamentals, declining inflation, and growing investor confidence position Pakistan for continued growth momentum through 2024-25.
The report noted that current expenditures were effectively managed within allocations, while non-tax revenues outperformed, partially offsetting shortfalls in tax collection.
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It added that broadening the revenue base through comprehensive reforms remains critical to ensuring long-term fiscal sustainability.
Public debt stood at 70.7 percent of GDP, the statement said, highlighting the importance of sustaining fiscal discipline and strengthening debt management frameworks.
It emphasised that the current fiscal policy continues to balance consolidation with growth-oriented measures.
“The government is taking measures to reform the fiscal sector by broadening the tax base, strengthening fiscal institutions, and ensuring long-term debt sustainability,” the report said, adding that a robust primary balance reflects improved fiscal management and reduces reliance on borrowing.
The report said the Medium-Term Budgetary and Fiscal Statement (MTBSP) sets out the government’s roadmap for fiscal sustainability, aiming to enhance transparency and sound fiscal management through revenue mobilisation, expenditure rationalisation and consolidation to stabilise the economy and support sustainable growth.
For the 2025-26 fiscal year, the statement projected that stability in domestic prices and the exchange rate, declining international commodity prices, and reforms supporting private sector-led growth are expected to sustain the disinflationary trend and maintain economic momentum.
According to the report, fiscal consolidation is expected to remain a core driver of macroeconomic stability, supported by expenditure rationalisation, strengthened revenue mobilisation, and structural reforms aimed at promoting sustainable and inclusive growth.
Key initiatives highlighted include improving the business environment, supporting value-added manufacturing and agriculture, widening the tax base, implementing pension and social security reforms, and efficiently managing public spending.
Investments in skills development, digitalisation, innovation, and climate-resilient growth are also being prioritised to ensure long-term economic stability and inclusive development, the report said.
Copyright Business Recorder, 2026
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