Budget deficit drops to 5.4% in FY25 from 6.8% in previous fiscal

ISLAMABAD: Pakistan’s total budget deficit stood at Rs 6.16 trillion, equivalent to 5.4 percent of Gross Domestic Product (GDP) in the last fiscal year ending on June 2025. However, statistical discrepancy went up to Rs0.32 trillion in FY25 against Rs 0.17 trillion in the previous fiscal year FY24.

A statistical discrepancy refers to the difference between the income and expenditure approaches. This discrepancy arises because data collected through different sources and methods may not perfectly align, leading to a difference between the total income earned and the total expenditure incurred that is not fully reconciled.

According to the fiscal operation released by the Ministry of Finance showed that the gross revenue receipts in the form of total revenues and non-tax revenues fetched Rs16.8 trillion, and after transfer to the provinces of Rs6.85 trillion the net revenue receipts stood at Rs9.94 trillion.

On expenditure heads, only one expenditure component in shape of debt servicing consumed Rs8.887 trillion in FY25 so only Rs1.1 trillion was left into the national kitty of the federal government.

The domestic debt servicing bill stood at Rs7.8 trillion and external debt servicing at Rs0.89 trillion. Out of remaining Rs1.1 trillion left in the national kitty, alone the defence expenditure stood at Rs2.193 trillion indicating that the federal government had to borrow almost 50 percent amount to finance the defence spending.

All remaining expenditures such as pension, running of the civil government, subsidies and grants to the provinces were provided with the help of borrowed money to the tune of Rs4 trillion.

The Public Sector Development Programme (PSDP) related expenditures stood at Rs1.048 trillion were materialised with borrowed money. The federal government’s budget deficit stood at Rs7.08 trillion with statistical discrepancy of Rs 0.19 trillion.

The official data shows that the country’s total revenues stood at Rs17.997 trillion, including total revenues of Rs12.722 trillion and non-tax revenues of Rs5.27 trillion. In the total revenues, the FBR fetched Rs11.744 trillion while the provinces’ collection stood at Rs0.97 trillion in FY25. Total booked expenditures stood at Rs24.16 trillion out of which the current expenditure consumed the major chunk of Rs21.52 trillion.

In the current expenditure, the major head is the payment of mark-up and principal amount on debt which consumed Rs8.88 trillion. The second major expenditure head is defence requirement which consumed Rs2.193 trillion.

The overall budget deficit stood at Rs6.168 trillion or 5.4 percent of GDP in FY25 against Rs7.2 trillion or 6.8 percent of GDP in FY24. The primary balance stood at Rs2.7 trillion in FY25 equivalent to 2.4 percent of GDP.