Pakistan’s budget deficit reaches Rs6.16 trillion in FY25, represents 5.4% of GDP

Pakistan’s budget deficit for the fiscal year ending June 2025 stood at Rs 6.16 trillion, representing 5.4% of the country’s Gross Domestic Product (GDP), according to the Ministry of Finance’s fiscal operations report. The data also revealed an increase in the statistical discrepancy, which rose to Rs 0.32 trillion from Rs 0.17 trillion in FY24.

The government’s gross revenue receipts for the fiscal year amounted to Rs 16.8 trillion. After transferring Rs 6.85 trillion to the provinces, the net revenue receipts totaled Rs 9.94 trillion. 

However, expenditure, particularly debt servicing, claimed a significant portion of these funds, with Rs 8.887 trillion spent on servicing domestic and external debts. Domestic debt servicing accounted for Rs 7.8 trillion, while external debt servicing stood at Rs 0.89 trillion.

The federal government had just Rs 1.1 trillion left after debt servicing, with defense expenditure alone accounting for Rs 2.193 trillion, forcing the government to borrow nearly 50% of the required funds for defense.

Borrowed funds also supported other expenditure areas, such as pensions, civil government operations, subsidies, grants to provinces, and the Public Sector Development Programme (PSDP), which amounted to Rs 1.048 trillion. 

The total budget deficit, including the statistical discrepancy, reached Rs 7.08 trillion, with the fiscal year 2025 showing an improvement from the previous year’s deficit of Rs 7.2 trillion or 6.8% of GDP.

In terms of revenue, the total income reached Rs 17.997 trillion, comprising Rs 12.722 trillion in tax revenue and Rs 5.27 trillion in non-tax revenue. The Federal Board of Revenue (FBR) contributed Rs 11.744 trillion, while provincial collections stood at Rs 0.97 trillion. Current expenditure, primarily debt servicing, accounted for the largest portion of spending, totaling Rs 21.52 trillion.