ISLAMABAD (The Thursday Times) — Pakistan kept a fiscal surplus in the first quarter of the 2026-27 financial year as revenue beat target and subsidies were cut by 90 per cent, but the surplus narrowed as interest payments rose by almost 37 per cent and development spending surged, the Finance Ministry said on Thursday.
The overall fiscal surplus for July to September came to 0.8 per cent of GDP, or Rs1.198 trillion, compared with 1.7 per cent (Rs2.124 trillion) in the same period last year, according to the ministry’s Monthly Economic Update and Outlook. The primary surplus, which excludes interest payments, was 1.6 per cent of GDP (Rs2.3 trillion), down from 2.3 per cent (Rs2.94 trillion).
Spending up, revenue ahead of target
Total expenditure rose 20.7 per cent, driven mainly by a 69.5 per cent jump in development spending, while Federal Board of Revenue collection grew 3.6 per cent and tax revenue came in above target, the report said. The federal government recorded a surplus of 0.5 per cent of GDP for the quarter.
The ministry said fiscal policy would stay focused on preserving stability through stronger revenue collection and careful spending.
Cautious optimism
The ministry said it expected the economic recovery to continue in FY2027, supported by better crop prospects, selected manufacturing industries, domestic construction and rising external earnings, with steady demand in the United States, the United Kingdom and other OECD markets helping exports.
The ministry projected inflation for October in a range of 9.5 to 10.5 per cent.
It named geopolitical tensions, trade disruptions, high commodity prices and uncertainty around technology investment as the main risks to the outlook.
