The State Bank of Pakistan (SBP) has reported an annual profit of Rs2,500 billion, which has significantly impacted the country’s fiscal landscape by converting its budget from a deficit to a surplus in the first quarter (July-September) of the current fiscal year.
This marks the first time in two decades that Pakistan has recorded a budget surplus in any quarter. The surplus was largely due to the SBP’s profits being realized in the first quarter of the 2024-25 financial year, leading to an overall budget surplus of Rs1.69 trillion, with a primary surplus of Rs3 trillion.
Revenue and Transfers
From total gross revenue receipts of Rs5.5 trillion, the federal government allocated Rs1.56 trillion to the provinces under the National Finance Commission (NFC) Award. Despite this transfer, the provinces reported a surplus of only Rs160 billion in the first quarter, falling short of the targets outlined in the IMF agreement for the current fiscal year.
Fiscal Performance Overview
According to the fiscal operations report by the Ministry of Finance, the SBP’s profits contributed to a fiscal deficit of 0.65% of GDP and a primary surplus of 0.4% of GDP for the first quarter of FY2025. This contrasts with the fiscal deficit of 0.9% of GDP and primary surplus of 0.4% of GDP recorded during the same quarter in FY2024.
Total revenues for the first quarter were recorded at Rs5.28 trillion, with the Federal Board of Revenue (FBR) collecting Rs2.56 trillion and the provinces generating Rs210 billion. Non-tax revenue surged to Rs3.05 trillion in the first quarter, surpassing the total budgetary estimates of Rs3.5 trillion for the entire fiscal year.
Expenditure Breakdown
Total expenditures amounted to Rs4.13 trillion, predominantly driven by current spending, which reached Rs3.53 trillion. Notably, a statistical discrepancy of Rs310 billion was observed in the first quarter of FY2025.
Debt servicing was the largest expenditure item, consuming Rs1.3 trillion, followed by defense expenditures of Rs410 billion. The Public Sector Development Program (PSDP) received minimal attention, with only Rs220 billion utilized at the federal level during the first quarter of FY2025. Additionally, the government collected Rs260 billion in petroleum levies as part of its non-tax revenue in the same period.
