Pakistan’s Debt servicing exceeds spending on defence and development by a wide margin in the first half of the current fiscal year, further tightening pressure on the economy under the International Monetary Fund programme. Official figures show that rising debt obligations continue to dominate government expenditure.
Markup payments on accumulated public debt consumed more than twice the combined allocations for defence and the Public Sector Development Programme during the first six months of CFY26. This highlights the growing challenge of managing public finances while maintaining development priorities.
Total debt servicing reached Rs3,563 billion in the July to December period. In comparison, defence spending stood at Rs1,044 billion, while allocations for the Public Sector Development Programme remained limited at Rs238 billion. The imbalance underscores the limited fiscal space available for growth-oriented projects.
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Fiscal data also shows that statistical discrepancies persist. In the first half of the current fiscal year, the discrepancy amounted to Rs 413.3 billion, slightly lower than in the same period last year. Punjab recorded Rs144.4 billion out of the total provincial discrepancy of Rs342 billion.
Despite these pressures, fiscal performance improved under the IMF programme. The country recorded a fiscal surplus of Rs542 billion in the first half of the current fiscal year, compared to a deficit of Rs1,537 billion during the same period of the previous year.
The primary balance, a key benchmark under the IMF framework, posted a surplus of Rs4,105 billion, equivalent to 3.2 percent of GDP. This marked an improvement from the surplus recorded in the same period of the last financial year.
The IMF’s review mission is expected to visit Islamabad by the end of the ongoing month or early next month. The mission will conduct the third review under the seven billion dollar Extended Fund Facility programme and help shape the broad contours of the 2026–27 federal budget, particularly taxation measures.
According to fiscal operations released by the Ministry of Finance, total revenues amounted to Rs10,683 billion in the first six months of CFY26. The Federal Board of Revenue collected Rs6,160 billion, while non-tax revenues contributed Rs3,954 billion.
Within non-tax revenues, the petroleum levy generated Rs823 billion. The largest single contribution came from the State Bank of Pakistan’s profit payout, which stood at Rs2,428 billion and was paid during the first quarter.
Other non-tax revenue sources included the Captive Power Plants levy, the carbon levy, profits from the Pakistan Telecommunication Authority, royalties on oil and gas, passport fees, natural gas development surcharge, and receipts from the ICT Administration.
