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ISLAMABAD: Pakistan&rsquo;s fiscal deficit is projected to reach its lowest level in 21 years by the end of the 2025-26 financial year, while the country&rsquo;s trade deficit shrank by 39% in May 2026, signaling improved fiscal and external sector indicators ahead of the upcoming federal budget. According to estimates by Topline Securities, Pakistan is likely to post a fiscal deficit, or budget deficit, of 3.6% of its GDP in the financial year, the lowest level in more than two decades.&nbsp; The brokerage house attributed the improvement to the government&rsquo;s restrictive fiscal policy under the International Monetary Fund program, which has helped contain expenditure growth while supporting stronger tax and non-tax revenue collection.&nbsp; It noted that the IMF expects the fiscal year 2026-27 budget deficit to be even lower at 3.2% of GDP. <div class="fr-embed"><div class="twitter-tweet twitter-tweet-rendered" style="display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;"><iframe id="twitter-widget-0" scrolling="no" frameborder="0" allowfullscreen="true" style="position: static; visibility: visible; width: 550px; height: 873px; display: block; flex-grow: 1;" title="X Post" src="https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-0&features=eyJ0ZndfdGltZWxpbmVfbGlzdCI6eyJidWNrZXQiOltdLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X2ZvbGxvd2VyX2NvdW50X3N1bnNldCI6eyJidWNrZXQiOnRydWUsInZlcnNpb24iOm51bGx9LCJ0ZndfdHdlZXRfZWRpdF9iYWNrZW5kIjp7ImJ1Y2tldCI6Im9uIiwidmVyc2lvbiI6bnVsbH0sInRmd19yZWZzcmNfc2Vzc2lvbiI6eyJidWNrZXQiOiJvbiIsInZlcnNpb24iOm51bGx9LCJ0ZndfZm9zbnJfc29mdF9pbnRlcnZlbnRpb25zX2VuYWJsZWQiOnsiYnVja2V0Ijoib24iLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X21peGVkX21lZGlhXzE1ODk3Ijp7ImJ1Y2tldCI6InRyZWF0bWVudCIsInZlcnNpb24iOm51bGx9LCJ0ZndfZXhwZXJpbWVudHNfY29va2llX2V4cGlyYXRpb24iOnsiYnVja2V0IjoxMjA5NjAwLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X3Nob3dfYmlyZHdhdGNoX3Bpdm90c19lbmFibGVkIjp7ImJ1Y2tldCI6Im9uIiwidmVyc2lvbiI6bnVsbH0sInRmd19kdXBsaWNhdGVfc2NyaWJlc190b19zZXR0aW5ncyI6eyJidWNrZXQiOiJvbiIsInZlcnNpb24iOm51bGx9LCJ0ZndfdXNlX3Byb2ZpbGVfaW1hZ2Vfc2hhcGVfZW5hYmxlZCI6eyJidWNrZXQiOiJvbiIsInZlcnNpb24iOm51bGx9LCJ0ZndfdmlkZW9faGxzX2R5bmFtaWNfbWFuaWZlc3RzXzE1MDgyIjp7ImJ1Y2tldCI6InRydWVfYml0cmF0ZSIsInZlcnNpb24iOm51bGx9LCJ0ZndfbGVnYWN5X3RpbWVsaW5lX3N1bnNldCI6eyJidWNrZXQiOnRydWUsInZlcnNpb24iOm51bGx9LCJ0ZndfdHdlZXRfZWRpdF9mcm9udGVuZCI6eyJidWNrZXQiOiJvbiIsInZlcnNpb24iOm51bGx9fQ%3D%3D&frame=false&hideCard=false&hideThread=false&id=2062104290664362358&lang=en&origin=https%3A%2F%2Fmain.d1wrm1qseko1cp.amplifyapp.com%2Farticles%2F&sessionId=1b778a9a6857ea9843f3887e49ed13bd5b948e77&theme=light&widgetsVersion=6a3ad42b224df%3A1778106238597&width=550px" spellcheck="false">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</iframe></div></div> The projected decline marks a significant turnaround from the large fiscal imbalances that have weighed on the economy in recent years and is being viewed as a key sign of macroeconomic stabilization. Experts believe that controlled government spending helped reduce the deficit, and tax and non-tax inflows supported fiscal consolidation.&nbsp; In addition, transfers of Rs2.4 trillion from the State Bank of Pakistan&#39;s profits helped boost federal finances and achieve the projected fiscal deficit target. According to the Ministry of Finance, the country&rsquo;s fiscal deficit narrowed by 0.7% points of GDP during the first nine months ending March 31, 2026. The primary surplus, which excludes interest payments on debt, stood at 3.2% of GDP during this period. The ministry&#39;s fiscal report showed that higher central bank profits, a 45% increase in Petroleum Development Levy collections of ₨1.2 trillion in the first nine months of the financial year 2026, and lower debt-servicing costs contributed to the government&#39;s fiscal performance. The report showed that savings of ₨1.495 trillion in domestic debt servicing were achieved compared with the corresponding period of FY25 due to cash management measures and the early retirement of ₨1.9 trillion in domestic debt. Reduced trade deficit&nbsp;Pakistan&rsquo;s trade deficit narrowed by 39% month-on-month in May, driven by a 10% increase in exports and a 22% decline in imports.<div class="fr-embed"><div class="twitter-tweet twitter-tweet-rendered" style="display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;"><iframe id="twitter-widget-2" scrolling="no" frameborder="0" allowfullscreen="true" style="position: static; visibility: visible; width: 550px; height: 698px; display: block; flex-grow: 1;" title="X Post" src="https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-2&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=2062238705331687470&lang=en&origin=https%3A%2F%2Fmain.d1wrm1qseko1cp.amplifyapp.com%2Farticles%2F&sessionId=1b778a9a6857ea9843f3887e49ed13bd5b948e77&theme=light&widgetsVersion=6a3ad42b224df%3A1778106238597&width=550px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</iframe></div></div> Commenting on the latest trade figures, Prime Minister&rsquo;s Coordinator on Economy Khurram Schehzad described the development as &ldquo;a massive 39% reduction in trade deficit,&rdquo; noting that rising exports and falling imports had significantly reduced the trade gap.&nbsp; &ldquo;The national economy is moving toward sustainability and stability,&rdquo; he said in a statement on Thursday. Businessman and investor Adeel Afzal said that exports in May 2026 increased by 1.3% year-on-year and 9.6% month-on-month to $2.71 billion, while imports declined by 6.6% year-on-year and 21.5% month-on-month to $5.29 billion.&nbsp; &quot;As a result, the monthly trade deficit narrowed sharply by 39.4% to $2.58 billion from $4.26 billion a year earlier,&quot; said the businessman in a post on X. Economist Yousuf Nazar, in a post on X, noted that strong remittance inflows are expected to offset much of the gap. The latest figures suggest Pakistan&rsquo;s economy is gaining stability, though analysts say sustaining the progress will require continued fiscal discipline, export growth, and structural reforms.

Economy

Pakistan is likely to post a fiscal deficit of 3.6% of its GDP in the current financial year, the lowest level in more than two decades. 

Articles tagged with "Import Export"

Pakistan’s fiscal deficit set for 21-year low as trade deficit shrinks 39% in May

Pakistan’s fiscal deficit set for 21-year low as trade deficit shrinks 39% in May