By Ayesha Saba
A rare fiscal triumph has caught the country’s attention. Pakistan posted a surplus during the first quarter of FY2026 as government revenues surged while spending stayed within limits, showing stronger fiscal management and alignment with IMF program targets. This fiscal update 2025 highlights the government’s improved revenue collection and spending discipline.
Revenue Growth Surges in FY2026
Revenue growth is striking. According to the Finance Division’s Monthly Economic Update & Outlook (October 2025), net federal revenues jumped 231.4 percent to Rs3,269.8 billion in July–August FY2026, up from Rs986.7 billion in the same period last year.
Non-Tax Receipts Lead the Way
Non-tax receipts lead the way. The massive rise was mainly driven by a 721.1 percent increase in non-tax revenues, alongside a 14.1 percent rise in tax collections by the Federal Board of Revenue (FBR). Non-tax inflows came from higher profit transfers from the State Bank of Pakistan, dividends, defense receipts, petroleum levy, Gas Infrastructure Development Cess, and the Windfall Levy on crude oil.
Tax Collections Show Strong Improvement
Tax collections also improved. From July to September FY2026, total FBR collections climbed to Rs2,884.4 billion, marking a 12.5 percent year-on-year increase. The government controlled spending growth at 7.6 percent, reaching Rs1,760.6 billion compared with Rs1,636 billion last year.
Fiscal Balance Swings to Surplus
Fiscal balance swings to surplus. The federal fiscal balance recorded a surplus of Rs1,509.2 billion, a dramatic turnaround from a Rs648.8 billion deficit in the same period last year. The primary balance also improved sharply, reaching Rs2,938.9 billion compared with Rs49.4 billion previously.
Fiscal Discipline and Future Stability
Discipline and planning show results. The report noted that this improvement reflects the government’s commitment to fiscal discipline while funding post-flood rehabilitation within existing budget limits. It aligns with IMF targets and highlights a focus on sustainable revenue generation.
Reduced borrowing supports growth. The Finance Division credited the performance to higher non-tax receipts, better FBR enforcement, and limited borrowing from banks. Net budgetary borrowing remained contained, allowing banks to lend more to the private sector.
Experts see stability but warn of future pressures. Fiscal specialists said the improved primary balance and controlled spending indicate growing fiscal stability. However, they cautioned that future risks could come from rising energy subsidies and public-sector liabilities if reforms are delayed.
Long-term discipline is key. The report emphasized that continued fiscal discipline and reform implementation will be critical for debt sustainability. With external account stability and declining inflation, investor confidence is expected to strengthen.
Government commitment remains firm. “The government remains firmly committed to prudent fiscal management and will continue to meet program targets under the IMF arrangement,” the Finance Division stated.
Fiscal outlook improves. The update also highlighted that stronger tax collection and robust non-tax inflows have boosted Pakistan’s fiscal sustainability. Buffers are being rebuilt, creating room for targeted social spending and development investment.
Author Profile
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Ayesha Saba is an economic journalist advocating for Pakistan's shift from unstable farming to high-value sectors.
Her sharp analysis of the central bank's report spotlights tourism and technology as vital engines for job creation and resilience, urging urgent policy pivots toward a **diverse and sustainable future.
