Pakistan is projected to post its lowest fiscal deficit in more than two decades during fiscal year 2025-26, with the budget gap estimated at 3.6 percent of Gross Domestic Product (GDP), according to estimates released by Topline Securities.gdp
The projected deficit is close to the 3.2 percent of GDP target agreed with the International Monetary Fund (IMF), reflecting a significant improvement in the country’s fiscal position.
Analysts attribute the expected decline in the fiscal deficit to the government’s strict fiscal discipline under the IMF-supported economic reform program. The strategy focused on controlling expenditure growth, improving tax collection, and enhancing non-tax revenues.
According to Topline Securities, fiscal consolidation has remained a central pillar of the IMF program aimed at restoring macroeconomic stability, reducing borrowing requirements, and strengthening public finances.
The improvement has also been supported by stronger revenue performance and tighter management of government spending throughout the fiscal year.
A fiscal deficit occurs when government expenditures exceed total revenues. Lower deficits can help reduce pressure on public debt, improve investor confidence, and create a more stable economic environment.
If achieved, the projected FY2025-26 fiscal deficit would represent Pakistan’s strongest fiscal performance in 21 years and highlight substantial progress toward meeting IMF-backed economic targets.
