By Abdul Ghani

Pakistan’s primary balance recorded further improvement during the current fiscal year, with the government posting a higher surplus compared to the previous year.

According to the “Monthly Economic Update & Outlook April 2026”, released by the Finance Division and available with Wealth Pakistan, the primary surplus stood at 3.3% of GDP (Rs4,319.0 billion) during July-February FY2026, compared to 3.0% of GDP (Rs3,452.1 billion) in the same period last year.

The data shows an increase in the primary surplus both in percentage terms and absolute value, indicating improvement in fiscal performance excluding interest payments.

The rise in the primary surplus reflects a combination of higher revenue collection and controlled expenditure. Net federal revenues increased during the period, supported by growth in both tax and non-tax components.

Tax revenues recorded a growth of 10.6%, while non-tax revenues increased by 7.7%, contributing to the overall increase in government income. The expansion in revenues supported the fiscal balance.

On the expenditure side, total federal expenditure declined by 10.9% during July-February FY2026. This reduction was largely driven by a decrease in current expenditure, which fell by 11.4% compared to the same period last year.

The report highlights that a significant portion of the decline in current expenditure came from a reduction in markup payments, which decreased by 25.0%. This reduction eased the fiscal burden and contributed to the improvement in the primary balance.

At the same time, development expenditure continued to increase. Public Sector Development Programme (PSDP) spending rose by 4% during the period, indicating ongoing investment in development projects.

The combination of increased revenues and reduced current expenditure contributed to the expansion of the primary surplus during FY2026.

The report also indicates that fiscal consolidation efforts remained on track, supported by prudent fiscal management measures. The improvement in the primary balance reflects progress in managing fiscal accounts.

A comparison with the previous year shows that the primary surplus has continued to strengthen, increasing from Rs3,452.1 billion to Rs4,319.0 billion, indicating sustained improvement in fiscal performance.

The data further suggests that improved fiscal discipline has contributed to overall macroeconomic stability during the current fiscal year.

The rise in the primary surplus highlights the impact of fiscal measures aimed at enhancing revenue collection and controlling expenditure, as reflected in the official statistics.

Credit: INP-WealthPk