Pakistan’s FY26 fiscal figures point to a major improvement in public finances, with a sharply lower deficit and a record primary surplus.
Pakistan has recorded its strongest fiscal performance in more than two decades, with the fiscal deficit falling to 2.6% of GDP in FY26 and the primary surplus rising to 2.9%, according to figures highlighted by the government.
The fiscal deficit has declined significantly from 7.9% of GDP in FY22, marking a 5.2-percentage-point improvement over three years. The country has also recorded primary surpluses for three consecutive years.
The latest figures indicate a substantial shift in Pakistan’s fiscal position, as debt growth reportedly reached its lowest level in two decades, while the debt-to-GDP ratio and interest burden also declined.
The improvement comes as Pakistan continues efforts to strengthen fiscal discipline, increase revenues and manage public spending. Stronger public finances could provide greater room for development spending and economic reforms.
The fiscal progress has also received international recognition. S&P Global Ratings upgraded Pakistan to B with a Stable outlook, citing improved fiscal consolidation and strengthening sovereign fundamentals.
The latest performance could help improve investor confidence and provide greater stability, although maintaining fiscal discipline and ensuring sustainable economic growth remain key challenges.
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