Karachi: Pakistan's fiscal deficit reached a historic low in the fiscal year 2026, declining by 46% from the previous year, as the country reported a deficit of PkR3.3 trillion, or 2.6% of GDP, compared to PkR6.2 trillion, or 5.4% of GDP, in FY25. Simultaneously, the primary surplus rose to a record PkR3.6 trillion, marking a 34% year-on-year increase.

According to AKD Securities Limited, total revenues grew by 10% year-on-year, driven largely by a 12% increase in tax revenues. Direct taxes and sales tax collections saw substantial growth, rising by 14% and 9%, respectively. Non-tax revenues also increased by 5%, primarily due to higher petroleum levy collections, which amounted to PkR1.6 trillion, a 28% increase. However, profit transfers from the State Bank of Pakistan saw a moderate decline of 7%, totaling PkR2.4 trillion.

On the expenditure side, total spending fell by 4% year-on-year during FY26. Markup payments dropped significantly by 22% to PkR6.9 trillion, attributed to monetary easing. The domestic sector served as the principal source of financing for the fiscal deficit, although there was a notable increase in financing from external sources, which surged by 90% to PkR1.2 trillion.