Pakistan posts provincial budget surplus of PKR 360 billion, exceeding IMF target

The provinces of Pakistan have recorded a combined budget surplus of PKR 360 billion for the first quarter ending September 30, which is 5.2% higher than the International Monetary Fund's (IMF) target of PKR 342 billion.

The Ministry of Finance, with concurrence from the IMF, released the revised figures.

Punjab posted a surplus of PKR 40 billion, Sindh recorded PKR 131 billion, Khyber Pakhtunkhwa had PKR 104 billion, and Balochistan reported a surplus of PKR 85 billion.

During the same period last year, provinces had a cumulative surplus of only PKR 50 billion. Punjab and KP posted deficits of PKR 28 billion and PKR 10 billion respectively, while Sindh and Balochistan had surpluses of PKR 19 billion and PKR 71 billion.

Fiscal year 2023-24 ended with a budget deficit of 6.8% of GDP, equivalent to PKR 7.21 trillion, despite a provincial budget surplus of PKR 518.2 billion.

Provinces spent about PKR 1.56 trillion on current expenditures, a 28% increase from PKR 1.32 trillion the previous year.

The FY25 budget targets an underlying primary surplus of 1.0% of GDP, bolstered by permanent tax measures and efforts to improve revenue collection.

The primary surplus will gradually increase to 2% by the end of the IMF Extended Fund Facility (EFF), underpinned by a net three percentage point increase in the tax-to-GDP ratio, which will strengthen debt sustainability while creating room for increased priority social and development spending.

As of the end of September, the central government debt decreased to PKR 69.6 trillion, down from PKR 70.4 trillion in August. Pakistan's debt-to-GDP ratio has fallen to 65.7%, the lowest since June 2018. The domestic debt-to-GDP ratio stands at 43.1%, while the external debt-to-GDP ratio is 22.7%.

An IMF delegation, headed by mission chief Nathan Porter, is currently visiting Pakistan to review recent developments and assess the performance of the EFF program.