Pakistan FY27 budget: fiscal deficit seen at 3.6% of GDP (drops minus sign)

Pakistan’s fiscal deficit is projected to stand at 3.6% of GDP in the fiscal year 2027, according to the FY27 budget, marking a significant reduction compared to previous years. This improvement reflects ongoing fiscal consolidation efforts by the government, which have been supported by increased revenues and controlled expenditure. In the previous fiscal year, FY2026, Pakistan achieved a record primary surplus of 3.2% of GDP, with the fiscal deficit narrowing to 0.7% of GDP from 2.6% a year earlier, driven by higher tax collections and reduced debt servicing costs. The government has also increased development spending by 18.7%, indicating a focus on long-term economic growth. These developments align with broader efforts to meet IMF requirements and stabilize public finances. Fitch Ratings has previously noted that Pakistan’s budgetary strategy supports deficit reduction and strengthens the country’s prospects for continued international financial support. The FY27 budget continues this trajectory, signaling progress in fiscal discipline and economic reform.