Debt Servicing Costs Exceed Defence and Development Spending in First Half of Fiscal Year
Islamabad — Pakistan’s economy remains under severe pressure amid strict conditions of the International Monetary Fund (IMF) programme, as debt servicing costs during the first half of the current fiscal year far exceeded spending on defence and development.
According to official figures, the government spent Rs3,563 billion on servicing accumulated public debt, an amount more than double the combined expenditure on defence (Rs1,044 billion) and the Public Sector Development Programme (PSDP), which stood at Rs238 billion.
The fiscal imbalance persisted during the first half of the fiscal year, with the gap recorded at Rs413.3 billion, compared to Rs439.7 billion in the same period last year. At the provincial level, Punjab accounted for the largest share, with a gap of Rs144.4 billion out of the total provincial imbalance of Rs342 billion.
Under close IMF monitoring, the country recorded a fiscal surplus of Rs542 billion during July–December of the current fiscal year, a sharp turnaround from a deficit of Rs1,537 billion in the corresponding period last year.
The primary balance — a key indicator closely watched by the IMF — posted a surplus of Rs4,105 billion, equivalent to 3.2 percent of GDP, compared to a surplus of Rs3,600 billion (3.1 percent of GDP) in the same period last year.
The IMF’s next review mission is expected to arrive in Islamabad by the end of this month or early next month to conduct the third review under the $7 billion Extended Fund Facility (EFF) programme. The mission is also expected to finalize the broad contours of the 2026–27 budget, particularly tax measures proposed by the Federal Board of Revenue (FBR).
According to the fiscal report released by the Ministry of Finance on Friday, Pakistan’s total revenue during the first six months of the current fiscal year stood at Rs10,683 billion. This included Rs6,160 billion in FBR tax revenues and Rs3,954 billion in non-tax revenues.
Within non-tax revenues, petroleum levy contributed Rs823 billion, while profit from the State Bank of Pakistan — paid during the first quarter — emerged as the largest source at Rs2,428 billion. Other revenue streams included Rs8.8 billion from the captive power plants levy, Rs25.485 billion from carbon levy, Rs24.8 billion in Pakistan Telecommunication Authority profits, Rs61.14 billion in oil and gas royalties, Rs26.7 billion in passport fees, Rs32.3 billion in natural gas development surcharge, Rs17 billion from Islamabad Capital Territory administration, and other miscellaneous sources.
The federal government’s gross revenue amounted to Rs10,008 billion, while net federal revenue during July–December stood at Rs6,392 billion.
