Pakistan recorded a fiscal deficit of 2.4% of GDP—amounting to Rs2.97 trillion—during the first nine months of the 2024–25 fiscal year (July 2024 to March 2025),as indicated by brokerage firm Topline Securities. This marks an improvement from the 3.7% deficit recorded during the same period last year. For the January to March 2025 quarter, the deficit was 1.2% of GDP (Rs1.4 trillion), lower than 2.8% in the previous quarter and 1.4% in the same quarter last year.
The reduction in the deficit is mainly due to higher revenues. Tax revenues increased by 26% year-on-year to Rs3.0 trillion during the third quarter, largely due to growth in Federal Board of Revenue collections. However, these collections still fell short of IMF targets. Non-tax revenues saw a 68% rise during the nine-month period, totaling Rs4.23 trillion. A key contributor was a record profit of Rs2.5 trillion transferred by the State Bank of Pakistan, significantly higher than Rs970 billion in the same period last year.
The primary balance—which excludes interest payments—posted a small deficit of 0.1% of GDP in the third quarter. Over the nine-month period, however, the government recorded a primary surplus of 2.8% of GDP, up from 1.5% last year. This increase is attributed mainly to the surge in non-tax revenues.
Interest expenses for the third quarter were Rs1.3 trillion, unchanged from the same quarter last year but 66% lower than the previous quarter. The quarter-on-quarter decline was due to higher repayments in earlier quarters. Although interest rates on six-month treasury bills fell sharply—by 933 basis points—interest expenses remained flat due to a 17% increase in domestic government borrowing since March 2024. The impact of lower rates is expected to show in future quarters as debt is repriced.
Development spending increased slightly to 0.6% of GDP in the third quarter, compared to 0.5% last year. Pension payments rose by 8% to Rs223 billion, while defense spending increased by 11% to Rs534 billion. Transfers to provinces remained stable at 56.8% of tax revenues.
The government has maintained its full-year targets: a budget deficit of 5.5% of GDP and a primary surplus of 2.0%, based on a revised GDP estimate of Rs115 trillion.
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