Federal data reveals a structural turnaround as twin deficits improve simultaneously for the first time in decades.
Key Takeaways
• Pakistan’s fiscal deficit fell to 0.7% of GDP in 9MFY26, marking the lowest historical level and a major shift from the 2.6% recorded last year.
• The primary surplus reached 3.2% of GDP, driven by a 31% reduction in interest expenses and disciplined control over federal expenditures.
• Simultaneous improvements in fiscal and current account balances are strengthening sovereign stability and attracting global investor interest.
Karachi, Pakistan – Pakistan’s fiscal landscape is undergoing a fundamental transformation, with the national fiscal deficit dropping to a historic low of 0.7% of GDP during the first nine months of the current fiscal year (9MFY26). This milestone, a sharp decline from the 2.6% recorded in the same period last year, marks the lowest level ever documented in the country’s economic history.
The turnaround is anchored by a record primary surplus, which reached 3.2% of GDP in 9MFY26, building on the 3.0% surplus maintained in the previous year. According to a news story published by Profit by Pakistan Today, this disciplined fiscal management has been driven by a 10% reduction in total expenditures and a 9% increase in revenues. A significant factor in this improvement was a 31% year-on-year reduction in interest expenses, as domestic debt servicing costs fell amid monetary easing.
For the first time, Pakistan is witnessing the simultaneous improvement of its “twin deficits,” with the fiscal deficit at 0.7% and the current account in surplus. This dual stability has bolstered investor sentiment, evidenced by the country’s successful return to international capital markets and a surge in corporate profitability. As revenue-to-GDP ratios continue to improve through digitization and tax reforms, the foundations of long-term macroeconomic stability appear increasingly resilient.
Disclaimer
This report is for informational purposes and does not necessarily reflect the views of ‘Money Matters Pakistan’. We welcome any corrections or alternative viewpoints from our readers to ensure a balanced perspective.
