Business Recorder
ISLAMABAD: Minister for Finance and Revenue Senator Muhammad Aurangzeb on Friday said that during the July-January period of the financial year 2026, fiscal deficit was contained at Rs 64.7 billion (0.05 percent of GDP) against Rs 2070.9 billion (1.8 percent of GDP) in the same period of the last year while primary surplus remained in surplus of 3.2 percent of GDP. The Finance Minister also said that for the March–May 2026 period, the federal government has targeted borrowing of PKR 7.8 trillion against maturities of PKR 5.5 trillion. In a written reply to questions of the members of the National Assembly, the Minister said that in the first quarter of the financial year of 2026, the GDP growth is estimated at 3.71 percent, driven by growth of 2.89 percent in agriculture, 9.38 percent in industry, and 2.35 percent in services. He said Large-Scale Manufacturing (LSM) grew by 5.8 percent during the Jul-Jan FY2026 period. READ MORE: Total debt crosses Rs 81.4trn mark He said that Consumer Price Index (CPI) inflation is recorded at 5.5 percent during the Jul-Feb period of the financial year 2026. He said the overall fiscal deficit reduced to Rs 64.7 billion (0.05 percent of GDP) during the July-January 2026 period. He said the primary surplus continued to improve and reached Rs 4,151.6 billion (3.2 percent of GDP) during the first seven months of the FY2026. Answering another question, the Minister said that on the debt front, public debt stood at 70.7 percent of GDP, with a nominal stock of PKR 80.52 trillion. He said that interest payments for FY2025 amounted to PKR 8.89 trillion, representing 7.8 percent of GDP. He said that prudent fiscal management is reflected in the public debt figure, which stood at Rs 81.3 trillion (62.8 percent of GDP) at the end of December 2025, compared to Rs 74.0 trillion (70.2 percent of GDP) during the same period last year. The Minister said that in the first quarter of the current fiscal year 2026, GDP growth is estimated at 3.71 percent, compared to 1.56 percent in the first quarter of the financial year 2025. He said the agriculture sector grew by 2.9 percent in Q1 FY2026, against 1.0 percent during the same period last year. He said the industrial sector recorded significant growth of 9.4 percent, compared to 0.12 percent in the same period last year. He said the growth momentum was supported by expansion in construction and electricity, gas, and water supply. Moreover, he said the large-scale manufacturing sector also posted growth of 4.1 percent, against a contraction of 0.9 percent during the same period last year. He said the services sector grew by 2.35 percent, slightly higher than 2.24 percent in Q1 FY2025, although growth remained slower in information and communications. He said that LSM registered a growth of 5.8 percent during Jul-Jan FY2026 against the contraction of 1.7 percent last year. Answering a question, the Minister said the public debt-to-GDP ratio stood at 70.7 percent, exceeding the projected figure of 64 percent for FY25. He said that this deviation was primarily due to a lower-than-expected GDP outcome, with nominal GDP recorded at PKR 113.9 trillion compared to the projected PKR 124.1 trillion, owing to lower inflation during FY25. He said that it is pertinent to note that, in nominal terms, public debt amounted to PKR 80.5 trillion, marginally above the projection of PKR 79.7 trillion for FY25. He said the growth rate of public debt remained stable at 13 percent over the last two fiscal years. He said that interest expenditure totalled PKR 8.89 trillion, significantly below the budgeted amount of PKR 9.78 trillion. He said that this reduction was driven by a cumulative 9.5 percentage point decline in the State Bank of Pakistan’s policy rate during FY25, the achievement of a consolidated primary surplus of 2.4 percent of GDP, and the buyback of high-cost debt securities. Answering another question, the Minister said that for the March–May 2026 period, the federal government targets borrowing of PKR 7.8 trillion against maturities of PKR 5.5 trillion. He said that the remaining amount is projected to meet current expenditure cash outflows and maintain cash reserves. He said the actual borrowing amount will be determined on the respective auction dates, depending on the bids placed by the market. Copyright Business Recorder, 2026
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