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In a major fiscal turnaround, Pakistan posted a budget surplus of Rs. 2.1 trillion during the first quarter of FY26, equal to 1.6% of GDP, largely due to a record profit payment from the State Bank of Pakistan (SBP).
According to data compiled by Topline Research, this marks a sharp reversal from the deficit seen in the previous fiscal quarter. The primary balance also stayed positive, showing a surplus of 2.7% of GDP, reflecting improved fiscal discipline.
Topline analysts revealed that the SBP contributed Rs. 2.42 trillion in profits, the biggest factor behind the surplus. “Without the central bank’s contribution, fiscal pressure remains visible,” analysts noted, as the adjusted figures would show a small deficit of 0.2% of GDP.
The government reportedly used the surplus to pay off Rs. 2 trillion in domestic debt and Rs. 38 billion in external loans, while development spending under the PSDP rose by 7% year-on-year. Defense spending also increased by 9%, and provincial transfers accounted for over 56% of total tax revenue.
Despite the strong first-quarter performance, economists caution that the full-year deficit could reach 4.6% of GDP, above the government’s 3.9% target, due to rising expenditures and slower economic growth.
