Pakistan’s fiscal deficit shrinks to 1.7% of GDP in seven months

Pakistan’s fiscal deficit for the first seven months of the current fiscal year stood at approximately 1.7% of GDP, while the primary surplus reached PKR 3,518.7 billion ($12.5 billion), nearly doubling compared to the same period last year.

The Monthly Economic Outlook, released Tuesday, highlighted that fiscal consolidation measures have yielded positive results, leading to improvements in fiscal accounts for the first seven months of FY25.

The fiscal deficit decreased to 1.7% of GDP in the July–January period of FY25, down from 2.6% in the same period last year. Similarly, the primary surplus rose to PKR 3,518.7 billion (2.8% of GDP), compared to PKR 1,938.8 billion (1.8% of GDP) during the same timeframe last year.

Net federal revenues surged by 45.3% to PKR 6,362.5 billion from PKR 4,379.5 billion last year, driven by strong growth in both tax and non-tax collections. Non-tax revenues in particular saw a significant increase of 75.8%.

The Federal Board of Revenue's tax collection climbed by 25.9% to PKR 7,343.9 billion in the July–February period of FY25, compared to PKR 5,831.3 billion last year. Within the total, domestic tax revenues rose by 27.4%, while customs duties expanded by 15.4%.

On the expenditure side, total spending grew by 23.9% to PKR 9,330.1 billion during the July–January period, up from PKR 7,531.5 billion last year. Current expenditures increased by 16.8% to PKR 8,596.7 billion, compared to PKR 7,358.6 billion last year.

Within current expenditures, markup payments rose by 20%, while non-markup spending saw a more modest increase of 11.4%, attributed to a sharp decline in subsidy expenditures. Development spending under the Public Sector Development Program (PSDP) jumped by 27.2% during the review period.

Agriculture

For the 2024–25 Rabi season, wheat production is targeted at 27.9 million tons, supported by government initiatives, including input subsidies, high-yield seed distribution, and interest-free loans under the Kissan Card program.

From July to January FY25, agricultural credit disbursement rose by 16%, reaching PKR 1,483.6 billion, up from PKR 1,279.4 billion during the same period last year. Imports of agricultural machinery and implements jumped by 45.7% to $77.2 million in the July–February period, highlighting an increasing focus on mechanization.

Fertilizer offtake during the Rabi 2024–25 season showed mixed trends. Diammonium phosphate (DAP) offtake grew by 3.8% to 798,000 tons, while urea offtake declined slightly by 2% to 2.796 million tons compared to the Rabi 2023–24 season.