Pakistan's non-interest spending rises 18.8% to ₨15.7 trillion as national savings fall to 14.1% of GDP

Pakistan's non-interest current expenditure increased 18.8% during the first nine months of FY26, while national savings declined to 14.1% of GDP and energy sector output contracted 10.6%, according to a Planning Commission report presented to the Annual Plan Coordination Committee (APCC).

Total expenditure stood at ₨15.656 trillion during July-March FY26, down 4.2% from a year earlier. Overall, current expenditure declined 2.2%, while development expenditure increased 26.8%.

The Planning Commission said higher spending on defence, grants and provincial current expenditures drove the rise in non-interest current expenditure.

Lower debt servicing helped improve fiscal performance, with domestic debt servicing declining 25.9% and foreign debt servicing increasing 0.6% during the period.

Total revenue rose 10.7% to ₨14.799 trillion from ₨13.367 trillion a year earlier. Tax revenue increased 11.3%, supported by a 10.1% rise in Federal Board of Revenue collections. Direct taxes grew 12.4%, while indirect taxes increased 7.9%.

Non-tax revenue increased 9.5%. Federal non-tax receipts rose 8.2% due to State Bank of Pakistan profit transfers, petroleum levy collections, dividends and oil and gas royalties. Provincial non-tax revenues grew 36.7% to ₨277.5 billion, mainly due to higher hydroelectricity profits.

National savings declined to 14.1% of GDP from 14.9% last year, missing the annual target of 14.3%. Domestic savings fell to 7% of GDP from 7.9%, while foreign savings improved from negative 0.5% to positive 0.2% of GDP.

Total investment remained stable at 14.4% of GDP, but fell short of the 14.7% target.

The energy sector recorded a 10.6% contraction during FY26, with declines across electricity, gas and water supply segments. Natural gas supply fell 2.6%, while crude oil production declined 0.3%.

The Planning Commission also noted that budgeted energy subsidies were reduced to ₨893 billion from ₨1.19 trillion a year earlier, while modest growth in the output of Wapda and related entities also weighed on sector performance.