Islamabad, Pakistan — For the first time in 24 years, Pakistan has reported a budget surplus, driven by unprecedented profits from the State Bank of Pakistan (SBP) and substantial revenue from petroleum levies. The fiscal surplus reached Rs1.696 trillion, or 1.4% of the country’s GDP, during the first quarter of the current fiscal year, contrasting sharply with a deficit of 0.9% recorded in the same period last year.
Record Profits Fuel Fiscal Changes
According to the latest Fiscal Operations report from the Ministry of Finance, the SBP posted a staggering profit of Rs2.5 trillion, attributed largely to the highest-ever policy rate of 22%. Additionally, the government collected Rs262 billion from petroleum levies, an 18% increase from the previous year.
- SBP Profit: Rs2.5 trillion (up from zero last year)
- Petroleum Levy Revenue: Rs262 billion (up 18%)
- Total Fiscal Surplus: Rs1.696 trillion (1.4% of GDP)
The rise in profits has allowed the country to transform its fiscal position significantly, achieving a primary surplus of more than Rs3 trillion, almost double the annual target set at 1% of GDP.
Strong Revenue Growth
Total revenues surged to Rs5.83 trillion in the first quarter, a remarkable 117% increase from Rs2.686 trillion in the same period last year. This growth was fueled by a more than 550% increase in non-tax revenue, which outpaced tax revenue for the first time.
- Total Revenues: Rs5.83 trillion
- Non-Tax Revenues: Rs3.05 trillion (up 550%)
- Tax Revenues: Rs2.77 trillion (up 25%)
This shift has improved the total revenue-to-GDP ratio, which nearly doubled from 2.5% to 4.7%.
Spending and Expenditure Trends
Despite the revenue surge, total government expenditure rose by about 13% to Rs4.13 trillion. Current expenditures, which include everyday government spending, increased by 11%, while defense spending saw a significant rise of 20%.
- Total Expenditure: Rs4.13 trillion
- Current Expenditure: Rs3.54 trillion
- Defense Expenditure: Rs410 billion (up 20%)
Interest payments on government debt also decreased by 5% to Rs1.3 trillion, benefiting from the high policy rate.
Provincial Fiscal Contributions
The four provinces collectively recorded a cash surplus of Rs160 billion, with Punjab experiencing a fiscal deficit of Rs160 billion. Sindh, Khyber Pakhtunkhwa, and Balochistan provided surpluses of Rs131 billion, Rs104 billion, and Rs85 billion, respectively.
