The fragility behind the fiscal gains
EDITORIAL: The finance ministry’s summary of fiscal operations for 2025-26, published on August 13, offers welcome evidence of an improvement in Pakistan’s financial position, with the fiscal deficit falling to a 22-year low of 2.6 percent of GDP, or Rs3.3 trillion. The progress rests on a combined provincial surplus of Rs1.449 trillion, Rs1.967 trillion in savings on domestic debt servicing and…
The finance ministry's 2025-26 fiscal operations summary reveals a 22-year low fiscal deficit of 2.6 percent of GDP, amounting to Rs3.3 trillion, primarily driven by provincial surpluses, debt servicing savings, and petroleum levy collections. Despite this improvement, the fiscal deficit remains substantial in the context of Pakistan's massive accumulated debt and narrow revenue base.
Public debt continues to burden the economy, leaving limited room for economic shock absorption and crowding out private sector credit and investment. The government's credit rating upgrade to 'B' by S&P Global Ratings reflects some confidence in macroeconomic stabilization but remains below investment grade, potentially limiting access to institutional investment.
Brief written by urgent.news from Business Recorder's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
