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Pakistan Posts Midyear Primary Surplus as Debt Service Overwhelms Development Spending

Heavy interest costs are squeezing development outlays despite a reported midyear primary surplus.

Overview

  • Finance Division data show a primary surplus of Rs 4,105 billion (3.2% of GDP) and an overall fiscal surplus of Rs 542 billion in the first half of FY26.
  • Debt servicing reached Rs 3,563 billion in H1, exceeding combined defence spending of Rs 1,044 billion and Public Sector Development Programme outlays of Rs 238 billion.
  • Domestic interest payments totaled Rs 3,089 billion, with foreign debt servicing reported at Rs 474.314 billion over the six months.
  • Total revenues were Rs 10,683 billion, including Rs 3,954 billion in non-tax receipts led by a Rs 2,428 billion State Bank profit transfer and Rs 823 billion from the petroleum levy.
  • Official policy statements confirm public debt at 70.7% of GDP, breaching the 56% legal ceiling, with the federal fiscal deficit also reported above its statutory limit by 2.7 percentage points.