Pakistan Posts Fiscal Surplus For the First Time in 21 Years

Pakistan has reported a fiscal surplus of Rs. 1.7 trillion or 1.4 percent of GDP and a primary surplus of Rs. 3 trillion or 2.4 percent of GDP in 1QFY25 based on the last 2 decades’ data. According to Arif Habib Limited, this is the first budget surplus since 2QFY04. Also, the primary surplus of Rs. 3 trillion is the largest primary surplus recorded to date. Markup payments in 1QFY25 saw a 5 percent YoY decline, largely due to a 13 percent reduction in domestic markup servicing, attributed to declining interest rates. Total revenue of Rs. 5,827 billion included tax revenue of Rs. 2,775 billion and non-tax revenue of Rs. 3,051 billion. Tax revenue included federal tax of Rs. 2,562 billion and provincial revenue of Rs. 212 billion. In federal tax revenue, direct taxes stood at Rs. 1,230 billion, taxes on international trade (Customs) Rs. 276 billion, sales tax Rs. 904 billion, and federal excise Rs. 151 billion. Provincial tax Rs. 212 billion including sales tax on services Rs. 122 billion, excise duty Rs. 2.7 billion, stamp duties Rs. 14 billion, motor vehicles tax Rs. 13.8 billion, and others Rs. 59 billion. Non-tax revenue stood at Rs. 3,051 billion with federal Rs2997 billion and provincial Rs. 53.9 billion. Federal non-tax revenue included mark-up (PSEs and others) Rs. 36 billion, dividends Rs. 25 billion, profit PTA and others Rs. 20 billion, surplus profit of State Bank of Pakistan Rs. 2,500 billion, defense receipts Rs. 6.06 billion, passport fee Rs. 19 billion, discount retained on crude oil Rs. 6.2 billion, royalties on oil, and gas Rs. 48 billion, windfall levy against crude oil Rs. 7.7 billion, petroleum levy on LPG Rs. 806 million, gas infrastructure development Cess Rs. 121 million, natural gas development surcharge Rs. 11 billion, petroleum levy Rs. 261 billion, and others Rs. 52 billion. The current expenditure is Rs. 3,537 billion including mark-up payments of Rs. 1306 billion (domestic Rs1085 billion and foreign Rs220 billion), defense expenditure of Rs. 410 billion, pension of Rs. 222 billion, running of civil government Rs. 142 billion, subsidies Rs. 20 billion, and grants to others Rs. 239 billion. Development expenditure and net lending Rs. 276 billion. Total development expenditure (PSDP) Rs. 278 billion – federal Rs. 22 billion and provincial Rs. 255 billion. The overall budget deficit was recorded at Rs. 1,696 billion while the primary balance remained surplus at Rs. 3,002 billion. Financing of the budget deficit of Rs. 1696 billion was met by external (net) borrowing of Rs. 156 billion and domestic (net) borrowing of Rs. 1,539 billion which included non-bank borrowing of negative Rs. 335 billion and bank borrowing of Rs -1,874 billion.