Total Revenue (Rs. Trillion) 13.

37

25.8%
Tax Revenues Rs 9.14 tr

Non-Tax 68.0%
Revenues Rs 4.23 tr
Total Expenditure (Rs. Trillion) 16.34

Current 18.3%
Expenditure Rs 14.59 tr
Development 32.6%
Expenditure Rs 1.54 tr
Fiscal Deficit 2.6%
(% of GDP) (Lower than last year)

Primary Surplus Rs
(% of GDP) 3.0%
 Chapter 4

The fiscal consolidation efforts initiated in FY revenue mobilization, improving expenditure

2024 remained on track in FY 2025 for a second efficiency, strengthening fiscal institutions, and
consecutive year, thus reinforcing fiscal improving debt sustainability. These efforts
discipline. Effective consolidation measures would not only ensure long-term fiscal and debt
helped in reducing the fiscal deficit to 2.6 sustainability but also create ample space for
percent of GDP during July-March FY 2025 public sector investments in growth-enhancing
from 3.7 percent last year. Similarly, the primary projects, thus steering the economy towards
surplus improved to Rs 3,468.7 billion (3.0 % of higher, inclusive, and sustainable economic
GDP) from Rs 1,615.4 billion (1.5% of GDP) growth.
due to contained non-markup expenditures.
Provinces also played a major role in supporting 4.1 Global Fiscal Performance
the fiscal consolidation efforts of the federal The global fiscal situation worsened in 2024, due
government by posting a significantly higher to the lingering effects of high subsidies, social
cumulative surplus of Rs 1,053.3 billion during benefits, other current spending from the
July-March FY 2025 against the surplus of Rs COVID-19 pandemic, and higher interest
435.4 billion last year. The current performance payments. Consequently, the global fiscal deficit
of fiscal accounts is paving the way to create increased by 0.1 percentage points to an average
ample space for social and development of 5.0 percent of GDP in 2024, while the global
spending, going forward. public debt increased by 1 percentage point to
92.3 percent of GDP in the same period.2
Recent improvement in fiscal accounts despite a
challenging economic environment is a The global fiscal deficit is projected to rise
testament to the fact that the fiscal challenges are further to 5.1 percent of GDP in 2025, while
being managed effectively, and structural government debt is expected to reach 95.1
reforms are progressing. However, certain fiscal percent of GDP. This deterioration has been
side risks persist as outlined in the Fiscal Risk driven by escalating uncertainty due to trade
Statement 20251, which can pose significant tensions, policy ambiguity and financial
challenges for expenditure management and conditions. The increase in debt is primarily led
enhancing revenues. Additionally, emerging by major economies such as Brazil, China,
global and domestic challenges may expose the France, South Africa, the UK and the US. Gross
economy to potential shocks, posing risks to financing needs are also anticipated to remain
both economic and fiscal sustainability. high in most countries. Risks of further higher
debt have increased as a result of tighter, more
However, to cope with the potential risks and
unstable financial conditions and increased
safeguard fiscal sustainability, the government is
uncertainty.3
advancing comprehensive fiscal reforms in
coordination with provinces aimed at optimizing

1
Potential risks to economic growth, revenues, expenditure, debt, SOEs and climate change etc
2
Fiscal Monitor (IMF) April 2025.
3
Fiscal Monitor (IMF) April 2025

63
Pakistan Economic Survey 2024-25

Fig-1(a): Global Fiscal Deficit % of GDP Fig-1(b): General Govt Debt % of GDP

98.9
95.1
94.0
92.3
-3.5 91.3
-3.7 89.9
-4.9 -5.0 -5.1
83.8
-6.3

-9.5

2019 2020 2021 2022 2023 2024 2025 (P)

2019 2020 2021 2022 2023 2024 2025(P)

….
Source: Fiscal Monitor, April 2025. IMF Source: Fiscal Monitor, April 2025. IMF

The recent tariff announcements have fuelled fiscal management.

uncertainty and tightened more volatile financial
conditions, raising borrowing costs. While The fiscal deficit reduced to 6.9 percent of GDP
higher tariffs can raise revenue in the short term, in FY 2024 from a persistently higher level of
this gain is probably short-lived as increased 7.8 and 7.9 percent of GDP in the preceding two
prices lower imports and production. Fiscal years, i.e FY 2023 and FY2 022, respectively.
deficits and debt in the U.S and China, the two Similarly, the primary deficit that was on a
largest world economies, continue to propel declining trajectory since FY 2022 turned into a
global fiscal trends. surplus of 0.9 percent of GDP in FY 2024, well
above the target of 0.4 percent. Additionally,
Pakistan's economic and fiscal outlook is also revenue deficit reduced to 5.0 percent of GDP in
vulnerable to the rising global uncertainties and FY 2024 from 5.7 percent in FY 2023, reflecting
can impede the government’s efforts to reduce higher growth in total revenue relative to current
fiscal vulnerabilities. However, with gradual expenditure.
fiscal adjustment, the government is committed
to creating fiscal buffers, enhancing resilience to Although measures for fiscal consolidation
future shocks, and creating the necessary space contributed to strong revenue growth, the
to support sustainable long-term growth. persistently higher interest rate environment put
significant strain on spending. To address this
4.2 Overview of Pakistan’s Fiscal challenge, the government continued its efforts
Performance (FY 2024) to control expenditures through austerity
A cursory look into the major fiscal indicators measures. Consequently, total expenditures in
reveals notable improvement in FY 2024, driven terms of GDP slightly increased from 19.3
by effective consolidation measures and prudent percent in FY 2023 to 19.5 percent in FY 2024.

Fig-2: Fiscal Indicators % GDP Fig-3: Expenditure % of GDP

Fiscal Balance Primary Balance Revenue Balance
0.9

20.3 19.9
19.1 19.3 19.5
18.5
2.4 2.4 1.9
2.3
2.7 2.2
-1.0
-1.2
-1.6
-3.1

17.9
-3.1

16.2 16.3 17.3 17.3 17.7

-3.9
-4.8

-5.0
-5.0

-5.2

-5.7
-6.1

-6.9
-7.1

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

-7.8
-7.9

-7.9

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

Current Development Total
Source: Budget Wing & EA Wing's calculations
…. Source; Budget Wing & EA Wing's calculations

64
 Fiscal Development

The growth in current spending reached 28.5 spending reduced from 79.0 percent in FY 2023
percent in FY 2024 from 25.4 percent in the to 43.3 percent in FY 2024. The markup
preceding year. The increase in current payments on domestic and foreign debt surged
expenditure was largely attributed to higher 45.1 percent and 31.1 percent, respectively, in
growth in markup spending due to elevated FY 2024, increasing the share of markup
interest rates at both the domestic and global payments in current expenditure to 44 percent in
levels. However, the pace of growth in mark up FY 2024 from 39 percent in FY 2023.

Fig-4: Growth in Current Expenditure (%) Fig-5: Primary Balance % of GDP

79.0
0.9 0.9
Mark up

Non-Markup
43.3
39.4

31.6
25.3

19.0
17.9

15.7
15.1

7.1
5.0

5.0

FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
FY2023
FY2024
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Source: Budget Wing & EA Wing's calculations Source: Pakistan Fiscal Operations and EA wing calculations

Contrary to a sharp rise in markup spending, the measures for prudent expenditure management
non-markup current expenditure grew contained the non-interest spending, leading to a
moderately, though still higher, recorded at 19.0 primary surplus for FY 2024, first time in 20
percent compared to 5.0 percent in FY 2023. years (Figure 5).
Since FY 2023, the markup spending grew at a
faster pace than non-markup current spending, The trend in component-wise spending is
resulting in constrained fiscal space for priority presented in Table 4.1.
areas. Nevertheless, the government's stringent

Table 4.1: Trends in Components of Expenditure (% of GDP)

Total Current Markup Defence Development Non-Interest Non-
Year
Expenditure Expenditure Payments Expenditure* Defence Exp
FY 2016 17.7 14.3 3.9 2.3 4.0 11.5
FY 2017 19.1 14.6 3.8 2.5 4.8 12.8
FY 2018 19.1 14.9 3.8 2.6 4.0 12.7
FY 2019 19.1 16.2 4.8 2.6 2.7 11.7
FY 2020 20.3 17.9 5.5 2.6 2.4 12.2
FY 2021 18.5 16.3 4.9 2.4 2.2 11.2
FY 2022 19.9 17.3 4.8 2.1 2.4 13.1
FY 2023 19.3 17.3 6.8 1.9 2.3 10.6
FY 2024 19.5 17.7 7.8 1.8 1.9 9.9
FY 2025 B.E 21.1 18.4 7.9 1.7 2.5 11.5
* Excluding net lending
Source: Budget Wing, Finance Division and EA Wing's Calculations

Development expenditures witnessed a provinces) reduced by 1.5 percent in FY 2024,

moderate growth of 7.1 percent in FY 2024 as after witnessing a sharp increase of 33.1 percent
against 17.1 percent recorded in FY 2023. The in the preceding year. In contrast, provincial
federal PSDP (including development grants to development spending accelerated by 12.1

65
Pakistan Economic Survey 2024-25

percent in FY 2024 compared to 2.0 percent However, the government prioritized important
growth recorded in FY 2023. Overall, the slow national projects that were nearing completion.
pace in development spending was aligned with In this regard, the focus was on infrastructure
fiscal consolidation amid limited fiscal space. projects, followed by the social sector.

Fig-6: Revenue Growth (%) Fig-7: Revenues % of GDP

37.7
Tax Revenue Non-Tax Revenue Total Revenue

28.0

3.9 2.9 1.9 3.0

19.9 1.5 2.2
16.4

10.1

9.7 9.3 9.4 10.1 9.3 9.6

-6.3

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

….
Source: Budget Wing & EA Wing's calculations Source: Budget Wing & EA Wing's calculations

Encouragingly, the revenues maintained an FY 2024. All four provinces posted a cumulative
upward trajectory during the second consecutive provincial surplus of Rs.518.2 billion (0.5% of
year. In FY 2024, it posted a robust growth of GDP) in FY 2024, up from Rs 154.6 billion
37.7 percent (12.6 % of GDP), up from 19.9 (0.2% of GDP) in FY 2023. Punjab, Sindh,
percent (11.5 % of GDP) in FY 2023. Khyber Pakhtunkhwa and Balochistan generated
a surplus of Rs 212.2 billion, Rs 137.6 billion,
While both tax and non-tax collection supported Rs 56.2 billion, and Rs 112.3 billion in FY 2024.
this growth, the primary driver was a sharp
acceleration in non-tax collection. During FY Fig-8: Provincial Balance (Rs Billion)
2024, non-tax revenues grew by 75.4 percent 600
from 41.8 percent growth in FY 2023. Higher Punjab Sindh

receipts from the petroleum levy, SBP’s profits, 500 KP Balochistan

Overall Balance
and markup of Public Sector Enterprises (PSEs) 400
& others were the main contributors to this 300
substantial growth in non-tax collection.
Similarly, improved tax collection both at the 200

federal and provincial levels triggered a 100

significant rise in overall tax collection in FY
2024, which grew 29 percent (9.6% of GDP) 0

from 15.7 percent (9.3% of GDP) in FY 2023. -100

Notably, federal tax collection witnessed a FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

substantial increase of 30 percent in FY2024 Source; Pakistan Fiscal Operations

from 16.7 percent in FY 2023, driven by

During FY2024, the strong execution of fiscal
effective policy and administrative measures.
consolidation measures with a strategic focus on
Provincial tax collection also increased
revenue generation improved the fiscal accounts.
significantly by 19.2 percent in FY 2024 from
The government contained non-essential
6.1 percent recorded in the preceding year. The
expenditures with the effective implementation
overall performance in tax collection indicates a
of austerity measures. Consequently, these
broad-based improvement in the country’s tax
measures yielded significant gains in terms of
mobilization.
narrowing the gap between revenues and
Provinces also contributed significantly to expenditures. Further, it has laid the foundation
improving the overall fiscal performance during for sound fiscal management to ensure

66
 Fiscal Development

sustainable and inclusive growth over the At the federal level, more than 90 percent of
medium term. taxes are collected by FBR; however, in terms of
GDP, the contribution is lower and hovering
4.3 Structure of Tax Revenues between 8.4-9.2 percent between FY 2019 and
Taxation is not only a primary source of FY 2024. Over the years, various
domestic resource mobilization but also an exemptions/concessions, low compliance, weak
effective tool for promoting a more equitable enforcement, narrow tax base, tax evasion, and
income distribution. A significant and fragmentation across provinces have severely
sustainable boost in tax revenue enables the affected tax collection. Particularly, a narrow tax
government to finance domestic investment and base highlights the misalignment between
social programmes, which is crucial for sectoral contribution to tax and their contribution
inclusive and sustainable economic growth. to GDP.
Pakistan has been struggling with a low tax-to-
GDP ratio over the years due to various More recently, the performance of FBR has
economic and structural factors. Resultantly, it improved. During FY 2024, FBR revenue
constricted the resources available for priority collection improved significantly by 30 percent
investments, including human capital. Overall, to reach Rs 9,299.1 billion, up from Rs 7,163.8
the tax-to-GDP ratio (federal and provincial) is billion in FY 2023. The tax collection witnessed
stagnant within a narrow range of 9.3-10.1 a broad-based growth. Revenues from federal
percent between FY 2019 and FY 2024 (Fig:9). excise duty surged by 56.2 percent, followed by
direct taxes 38.5 percent, sales tax 19.5 percent,
Fig-9: Tax Revenues % of GDP
and customs duty 18.1 percent. Similarly, FBR
Federal Provinces Tax Revenue remained committed to the timely processing of
9.7
10.1 refunds and rebates to strengthen the cash flow
9.6
to businesses. In FY 2024, FBR issued a
9.3 9.4 9.3
0.9
substantial amount of refunds and rebates,
0.9 0.9 0.8 0.7
0.9

amounting to Rs 482.4 billion, showing a growth

of 30 per cent over the preceding year.
9.2
In the wake of various challenges both at the
8.7 8.4 8.5 8.6 8.9

domestic and global level, the FBR tax

performance signifies a remarkable effort of the
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 government to improve the tax collection
Source: Budget wing & EA wing's calculations
through various tax policies and administrative
reforms initiated in the Budget FY 2024.

Fig-10: FBR Tax Collection (Rs Billion) FY2024 Fig-11: Share in Total FBR Tax (%)

Direct Sales 70
FED Customs
60 Indirect Taxes
1,104
577 50

931 40
3,087 370 Direct Taxes

2,593 30

20
4,531
3,270 10

0
FY2024 FY2023 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Source: FBR & EA wing's calculations Source: FBR & EA wing's calculations

67
Pakistan Economic Survey 2024-25

Pakistan’s tax system is heavily reliant on contribution of withholding taxes from 61.4
indirect taxes. However, various efforts aimed at percent to 60.5 percent in FY 2024.4
improving the share of direct taxes are underway
and have started to yield significant results. In contrast, the contribution of indirect taxes
Since FY 2021, the share of direct tax in total reduced from 63.5 percent in FY 2021 to 51.3
FBR revenues has consistently risen from 36.5 percent in FY 2024. The increase in direct taxes
percent to 48.7 percent in FY 2024. In FY 2024, relative to indirect taxes reflects the
the increase in the share is primarily due to a 56.9 government’s commitment to make taxation
percent growth in advance taxes, followed by a progressive and equitable. The component-wise
36.5 percent increase in withholding taxes, and a share indicates that sales tax accounted for 37.9
35.8 percent growth in collections with returns. percent, FED 7.3 percent, and customs 12.3
Direct tax has also witnessed a significant shift percent in total FBR tax collection during FY
in its composition as the share of advance taxes 2024. The structure of FBR tax revenues is given
increased from 29.8 percent to 33.8 percent, in Table 4.2:
while there was a marginal decline in the

Table 4.2: Structure of Federal Tax Revenue Rs billion

Tax Rev Indirect Taxes
Total Direct
Year as % of
(FBR) Taxes Customs Sales Excise Total
GDP
1,217.3 404.6 1,302.7 188.1 1,895.4
FY2016 3,112.7 9.5
[39.1] {21.3} {68.8} {9.9} [60.9]
1,344.2 496.8 1,329.0 197.9 2,023.7
FY2017 3,367.9 9.5
[39.9] {24.5} {65.7} {9.8} [60.1]
1,536.6 608.4 1,485.3 213.5 2,307.2
FY2018 3,843.8 9.8
[39.7] {26.4} {64.4} {9.3} [60.0]
1,445.5 685.6 1,459.2 238.2 2,383.0
FY2019 3,828.5 8.7
[37.8] {28.8} {61.2} {10.0} [62.2]
1,523.4 626.6 1,596.9 250.5 2,474.0
FY2020 3,997.4 8.4
[38.1] {25.3} {64.5} {10.1} [61.9]
1,731.3 748.4 1,988.3 277.0 3,013.7
FY2021 4,745.0 8.5
[36.5] {24.8} {66.0} {9.2} [63.5]
2,284.9 1,010.7 2,532.2 320.7 3,863.6
FY2022 6,148.5 9.2
[37.2] {26.2} {65.5} {8.3} [62.8]
3,269.8 930.9 2,593.3 369.8 3894.043
FY2023 7,163.8 8.6
[45.6] {23.9} {66.6} {9.5} [54.4]
4,530.7 1,104.1 3,086.8 577.5 4,768.3
FY2024 9,299.1* 8.8
[48.7] {23.2} {64.7} {12.1} [51.3]
5,512.0 1,591.0 4,919.0 948 7,458.0
FY2025B.E 12,970.0 10.4
[42.5] {21.3} {66.0} {12.7} [57.5]
* Revised numbers
Source: Federal Board of Revenue

4.4 Fiscal Performance (July-March FY 2025) Encouragingly, the fiscal indicators are on an
improving trajectory for the last three years and
Fiscal consolidation efforts continue to reinforce
further strengthened during the current fiscal
the fiscal discipline during the current fiscal
year (Fig-12). Notably, the government achieved
year. They were supported by a significant rise
a fiscal surplus of 1.7 percent of GDP in the first
in revenues owing to various tax policies,
quarter of FY 2025, the first in 24 years.
administrative measures, and efficient
expenditure management. Consequently, the Furthermore, the effective consolidation efforts
primary surplus improved significantly, and the contributed to ensuring macroeconomic
overall fiscal deficit remained on the lower side. stability, thus restoring investors’ and

4
FBR Revenue Division Year Book 2023-24

68
 Fiscal Development

multilateral agencies' confidence, evident by Fig-12: Fiscal Indicators % of GDP (Jul-Mar)

continued disbursements under the IMF program
and improved sovereign credit ratings. Fiscal Balance

According to the consolidated revenue and Primary Balance

expenditure accounts, the substantial rise in Revenue Balance

3.0

revenues outpaced the growth in expenditures, 1.5

reflecting the effectiveness of ongoing 0.8
consolidation efforts. Consequently, during 0.4 0.6

July-March FY 2025, the fiscal deficit narrowed -0.7

down by 23.9 percent to 2.6 percent of GDP, -1.1 -1.1

down from 3.7 percent recorded in the same
period last year. Notable primary surplus -1.9 -2.0
-2.3 -2.4

increased to Rs 3,468.7 billion (3.0% of GDP) -2.8 -2.8

during July-March FY 2025, more than double -3.0

-2.6

the level observed in FY 2024, i.e Rs 1,615.4 -3.5

billion (1.5% of GDP). Similarly, the revenue -3.8 -3.7 -3.7
-4.4

deficit improved to 1.1 percent of GDP in July- FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
March FY 2025 from 2.4 percent of GDP last
year. Source:Budget wing & EA wing's calculations

Table 4.3: Consolidated Revenue & Expenditure of the Government

FY2025 July-March (Rs billion)
Growth
B.E FY2025 FY2024
A. Total Revenue 18,883.1 13,367.0 9,780.4 36.7
% of GDP 15.2 11.7 9.3
a) Tax Revenue 13,888.0 9,137.3 7,262.5 25.8
% of GDP 11.2 8.0 6.9
Federal (FBR Taxes) 12,970.0 8,453.1 6,711.5 25.9
% of GDP 10.4 7.4 6.4
Provincial Tax Revenue 918.0 684.3 551.0 24.2
b) Non-Tax Revenue 4,995.1 4,229.7 2,517.9 68.0
% of GDP 4.0 3.7 2.4
B. Total Expenditure 26,166.0 16,337.0 13,682.8 19.4
% of GDP 21.1 14.2 13.0
a) Current Expenditure 22,876.0 14,588.2 12,333.3 18.3
% of GDP 18.4 12.7 11.7
Federal 17,090.4 10,581.9 9,123.7 16.0
Markup Payments 9,775.0 6,438.8 5,517.8 16.7
% of GDP 7.9 5.6 5.2
Defence 2,122.0 1,424.0 1,222.4 16.5
% of GDP 1.7 1.2 1.2
Provincial 5,785.6 4,006.3 3,209.6 24.8
b) Development Expenditure & net lending 3,290.0 1,543.2 1,142.8 35.0
% of GDP 2.7 1.3 1.1
PSDP 3,153.0 1,535.6 1,158.1 32.6
c) Net Lending 137.0 7.5 46 -83.8
e) Statistical discrepancy 0.0 205.7 206.8 -0.5
C. Overall Fiscal Balance -7,283.0 -2,970.0 -3,902.4 -23.9
As % of GDP -5.9 -2.6* -3.7
D. Primary Balance 2,492.0 3,468.7 1,615.4
% of GDP 2.0 3.0* 1.5
Financing 7,283.0 2,970.0 3,902.4 -23.9
i) External Sources 666.3 19.5 493.8
ii) Domestic 6,616.6 2,950.5 3,408.6 -13.4
- Bank 3,924.0 1,331.5 3,786.6
- Non-Bank 2,662.6 1,619.0 -378.0
Privatization Proceeds 0.0 0.0 0.0
GDP at Market Prices 124,150 114,692 105,143 9.1
*Based on revised GDP
Source: Budget Wing, Finance Division

69
Pakistan Economic Survey 2024-25

4.4-a Expenditure Current expenditure increased by 18.3 percent to

Rs 14,588.2 billion in July-March FY 2025, up
Total expenditure grew by 19.4 percent,
from Rs 12,333.3 billion last year. Within
reaching Rs 16,337.0 billion (14.2 % of GDP)
current spending, the markup payments grew by
during July-March FY 2025, from Rs 13,682.8
16.7 percent to Rs 6,438.8 billion during July-
billion (13.0 % of GDP) last year. The rise in
March FY 2025 compared to Rs 5,517.8 billion
expenditure is primarily attributed to a
last year. Notably, during the last two years, the
significant increase in development spending
markup payments grew sharply; however,
compared to current expenditures, which
during the current fiscal year, the reduced policy
remained relatively moderate.
rate provided some relief to fiscal accounts.

Fig-13: Growth in Expenditure Fig-14: Growth in Current Expenditures

(July-March) (July-March)
60

69.1
40 Mark up

Non Mark up

54.0
20

32.1
0

28.8
24.4

20.4

19.6
16.7
Current
15.0

-20

11.9
11.8
Development Expenditure and Net lending

7.7
6.7
Total

0.7
-40
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
Source: Budget wing & EA wing's calculations
…. Source: Budget wing & EA wing's calculations

The growth in non-markup spending reduced to various austerity (Box item: 1) and reform
19.6 percent in July-March FY 2025 from 20.4 measures.
percent last year. Except for grants, the growth
across all other components remained lower than Fig-15: Non Markup Expenditure (%)
the level observed last year, reflecting improved July-March
expenditure control. During July-March FY 200 Defence Affairs and Services

2025, grants to others grew by 31.0 percent to Rs Pension

1,021.5 billion from Rs 779.9 billion last year. 150

Running of Civil Govt.

The increase has been realized largely due to

Subsidies

increased grants for the Benazir Income Support

Grants to Others

100
Programme. Other contributing factors are
grants for Railways, AJK, Bait-ul-mal, 50
contingent liability, and reimbursement of T.T
charges for remittances. 0

The containment in non-markup spending has

been realized on the back of an efficient -50
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
expenditure management strategy through

Box-1: Austerity Measures

During the current fiscal year, the government issued guidelines for austerity measures to all government
entities as part of a broader expenditure rationalization strategy. These measures aim at rationalizing the
current expenditure by discouraging the procurements of durables such as new vehicles except for those
needed for essential services, i.e., ambulances, firefighting vehicles, buses for educational institutions, waste
management and motorbikes; machinery & equipment's excluding those for health, agriculture, schools, etc.

70
 Fiscal Development

The government also imposed a moratorium on the creation of new positions, including contingent paid
staff/temporary posts. In addition to this, the government also stopped funding medical treatments abroad and
banned unnecessary / non-obligatory official foreign trips at the expense of the federal government.
However, keeping in view the absolute operational need, the government formed a committee headed by the
Finance Secretary to relax the ban where the procurement is unavoidable, but on a case-by-case basis after
due consideration.
The dedicated Austerity Committee ensures regular review of spending on items seeking relaxation, and due
diligence is exercised before the exemption is accorded. Case-by-case assessment enables the committee to
maintain a tight grip on exceptions, ensuring that only essential expenditures proceed.
Source: Expenditure Wing. Finance Division

In addition to austerity measures, the The priority has been assigned to the
government has initiated various reforms to infrastructure sector, being the primary
ensure long-term fiscal and debt sustainability. responsibility of the Federal Government, with
The reform strategy aims to rationalize the over 59 percent of allocations, followed by the
federal government's footprint, introduce Social Sector, having 18 percent, and balanced
parametric reforms to contain rising pension regional development (AJ&K, GB, and Merged
liabilities, enhance efficiency in the energy Districts of Khyber Pakhtunkhwa) with 13
sector through cost recovery and reduction percent of allocations for FY 2025. About 10
measures, eliminate cross-subsidies, ensure percent of resources are earmarked for other
timely adjustments to gas and electricity tariffs, sectors like IT& Telecom, S&T, Governance,
and improve the performance of state-owned and Production sectors. Similarly, importance
enterprises (SOEs) through restructuring, has also been given to the development projects
privatization, governance enhancements, and relating to 5Es, i.e., Exports, Equity,
greater transparency. Empowerment, Environment and Energy
Framework, CPEC, as well as 4RF, i.e.,
Overall, the expenditure management strategy Resilient, Recovery, Rehabilitation and
will ensure that a proportion of unspent Reconstruction Framework.
budgetary resources is diverted to essential
developmental or debt reduction initiatives. The allocation of PSDP spending reflects the
These measures would minimize the need for government’s commitment to advancing its
borrowing or reallocation of funds from other infrastructure and addressing key challenges in
critical sectors, thus supporting fiscal discipline transportation, energy, and water resource
that aligns with broader economic stability management to support economic growth and
goals. improve the quality of life for its citizens.

The contained growth in current spending has 4.4-b Revenues

created some space for increased development The impact of broad-based policy reforms and
expenditures during the current fiscal year. macroeconomic stability has been translated into
Particularly, the federal PSDP grew significantly substantial growth in total revenues. Total
by 28.6 percent to reach Rs 413.6 billion during revenues grew 36.7 percent to reach Rs 13,367.0
July-March FY 2025, up from Rs 321.6 billion billion (11.7 % of GDP) during July-March, FY
last year. 2025, against Rs 9,780.4 billion (9.3 % of GDP)
last year. The impressive performance, both in
Under PSDP, the completion of ongoing projects tax and non-tax revenues, led this significant rise
has been accorded top priority in FY 2025, with in total revenues.
almost 94 percent of resources allocated to the
ongoing project, while only 6 percent of the Non-tax collection witnessed a remarkable
resources have been earmarked for new projects. growth of 68 percent, reaching Rs 4,229.7 billion
during July-March FY 2025 against Rs 2,517.9

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Pakistan Economic Survey 2024-25

billion last year. Higher receipts from SBP profit dividends, PTA profit, royalties on oil/gas, and
and petroleum levy remained the major natural gas development surcharge also played a
contributors, while improved collection from significant role in boosting non-tax collection.

Fig-16: Growth in Non Tax collection (%) Fig-17: Major Components Of Non Tax
Revenues (Rs billion)
123.9
Dividend

2,500 SBP Profit

90.7 Royalties on Oil\ Gas
Natural Gas Development Surcharge
68.0 Petroleum Levy

25.5
972
834
720

-7.3
-12.3 -14.3 117 140 64 128
36 19

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2025 FY2024

Source: Budget wing & EA wing's calculation Source: Budget wing & EA wing's calculation

The performance of tax collection also remained approved the updated legislation on Agriculture
impressive, as it grew by 25.8 percent in July- Income Tax (AIT), aligning AIT to personal and
March FY 2025 to reach Rs 9,137.3 billion from corporate income tax.
Rs 7,262.5 billion last year. In terms of GDP, tax
collection increased to 7.4 percent of GDP As an important step towards shared fiscal
during July-March FY 2025 from 6.9 percent responsibility in line with the 18th Constitutional
last year. Amendment, the Federal and Provincial
Governments have signed a National Fiscal Pact
Fig-18: Growth in Tax Collection (%) (NFP) to enhance revenue generation and
40
July-March balance expenditure & revenue responsibilities.
According to the agreement, the federal
government shall devolve some spending
Federal

responsibilities to provinces in education, health,

Provincial
30

social protection, and regional public

20 infrastructure investment, subjects covered
under the 18th Amendment. The provinces will
take administrative as well as legal measures to
increase their own tax collection, including sales
10

tax on services, property tax, and agriculture

0 income tax. For the latter purpose the National
Tax Council, its Executive Committee, and
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025

Subcommittees are working on the relevant tax

Source: Budget wing & EA wing's calculation

Tax collection from both federal and provincial measures, including the necessary legal and
levels witnessed a considerable improvement administrative changes, and implementing them
owing to various tax-enhancing measures so that the provinces may increase their tax
implemented under the Finance Act 2024. The collection.
collection under federal tax increased by 25.9 4.5 FBR Tax Performance (July-April
percent, while from provincial taxes, it grew by FY 2025)
24.2 percent. The government is taking proactive
measures to unlock provincial tax potential, FBR demonstrated a strong performance in
particularly in undertaxed sectors such as revenue collection during the first ten months of
agriculture. In this regard, all provinces have FY 2025, driven by various tax measures

72
 Fiscal Development

introduced in the Budget 2024-25. Furthermore, to Rs 4820.9 billion during July-April FY2025
strict enforcement measures and compliance, from Rs 3,848.6 billion last year. In total, the net
along with the removal of various exemptions, collection from sales tax grew by 27 percent. In
also helped in improving tax collection. absolute terms, the collection increased to Rs
Similarly, the government has taken 3,174.0 billion during July-April FY 2025 from
revolutionary steps to equip the revenue Rs 2,498.5 billion last year. Around 59.5 percent
organization with modern tools and technologies of total sales tax was contributed by the sales tax
to make it a highly efficient organization. (Box on imports during July-April, FY 2025, while
item-2). the rest was contributed by the domestic sector.
Tax-wise details are presented in the Table 4.4:
Collectively, the impact of these measures has
been realized in terms of improved tax collection Table-4.4: FBR Tax Collection
that grew by 26.3 percent during July-April FY Revenue FY2024
July-April
%
(Rs Million)
2025. In absolute terms, the net provisional Heads Change
collection increased to Rs 9,300.2 billion during Actual FY2024 FY2025*

July-April FY 2025 as compared to Rs 7,361.9 Income Tax

billion last year. The domestic tax collection Gross 3,561,456 4,531,587 27.2

increased by 27.7 percent to Rs 8,256.8 billion Refund/Rebate 48,232 52,290 8.4

Net 4,530,731 3,513,224 4,479,297 27.5
during July-April FY 2025 from Rs 6,464.3
billion last year. An amount of Rs 427.5 billion Indirect Tax

has been paid back as refunds during July-April Gross 4,211,527 5,196,091 23.4
Refund/Rebate 362,895 375,204 3.4
FY 2025 against Rs 411.1 billion last year.
Net 4,768,348 3,848,632 4,820,887 25.3
Sales Tax
Fig-19: FBR Tax Collection (Jul-Apr) Rs billion
Gross 2,836,909 3,521,092 24.1
Refund/Rebate 338,443 347,051 2.5
4,479.3

Net 3,086,831 2,498,466 3,174,041 27.0

Federal Excise
3,513.2
3,174.0

Gross 453,092 603,477 33.2

Refund/Rebate 513 0 -100.0
2,498.5

Net 577,451 452,579 603,477 33.3

Customs
1,043.4

Gross 921,526 1,071,522 16.3

897.6

Refund/Rebate 23,939 28,153 17.6

603.5

452.6

Net 1,104,066 897,587 1,043,369 16.2

Total Tax Collection
FY2025 FY2024
Gross 0 7,772,983 9,727,678 25.1
Source: FBR Direct tax Sales tax Federal excise Customs duty
Refund/Rebate 0 411,127 427,494 4.0
Net 9,299,079 7,361,856 9,300,184 26.3
The net revenue collection from direct tax grew
*: Provisional.
by 27.5 percent during the first ten months of FY
2025 to reach Rs 4,479.3 billion from Rs 3,513.2 Source: FBR

billion last year. The bulk of the direct taxes is

realized from income tax. The major income tax During July-April FY2025, net collection from
contributions have come from contracts, the federal excise duties (FED) grew by 33.3
imports, and profit payout. The tax payments percent to Rs. 603.5 billion against Rs. 452.6
with tax declaration and collection on demand billion last year. The major revenue spinners of
have also shown high growth. FED are cigarettes, cement, concentrates used in
beverages/food, motor cars, air travel, etc.
On the other hand, the net collection from the
Customs duty has registered a growth of 16.2
indirect tax registered a growth of 25.3 percent
percent during July-April FY 2025. The net

73
Pakistan Economic Survey 2024-25

collection has increased to Rs 1,043.4 billion customs duty have been mineral fuels, vehicles,
during July-April, FY 2025, from Rs 897.6 edible oil, and machinery.
billion last year. The major revenue spinners of

Box-2: Major Tax reform and initiatives

1. Transformation Plan (TP)
 A transformation plan for FBR was approved by the Prime Minister in September 2024. It has around
eight work streams, including value chain digitalization, internal system digitalization, policy changes,
faceless and digital key, BPR implementation, anti-smuggling and enhancing human resources.
Tax Digitalization and Transformation Program focuses on four key pillars:
 Digitalization: Improving economic linkages, digitizing processes, and strengthening digital delivery.
 Capacity building and digital adoption of the workforce: Building institutional capacity through
expert oversight, performance incentives, and training
 Digitally enabled Anti-smuggling initiatives: Deploying digital solutions to curtail smuggling through
digitally enabled enforcement stations across critical chokepoints
 Policy reforms: Linking transactions to tax returns with stricter KYC and penalties to curb evasion
 A detailed implementation roadmap has been developed with the following key areas/ interventions based
on potential impact and relevance to FBR’s operations:
 HR / Capacity Enhancement: Hiring of 3rd party audits, deployment of audit mentors and sectoral
experts, hiring of law firms. Set up of the model tax office for improved oversight
 Value Chain Digitalization: Production tracking and enforcement across priority sectors, digital
invoicing for B2B sales, and POS integration across provinces
 Internal Systems Digitalization: AI-based audit selection, Digital workflows and taxpayer journeys,
chatbot for taxpayer facilitation, data integration
 Policy Changes: Required policy changes incl. external bodies, e.g., SBP, ICAP, SECP
 Anti-smuggling: Digital Enforcement Stations (Indus & Baluchistan), restructuring of the Directorate of
Intelligence, Customs Enforcement, National Targeting Center, scoring system for Clearing Agent, Cargo
Tracking System. Anonymous and automated clearing systems for goods
 BPR Implementation / RMS Scanners: Improvement of Risk Management System, deployment of
scanners, redesign of customs workflows and taxpayer journeys, AI model for post clearance audit
 PRAL Transformation: Overall reform of governance structure and working model, set-up of Advanced
Analytics Hub and Procurement Cell
 Short Term Revenue: Performance management routines against revenue collection targets
Early Impact and Progress
 Implementation of initiatives is currently underway, yielding tangible results.
 Production counting solution has been deployed across all sugar mills, increasing tax collection by 47
percent (PKR 12.4 billion) between December 24 to February 25 compared to the previous year.
Furthermore, PKR 9.8 billion in fraudulent sales tax claims were blocked through advanced analytics.
 Faceless assessment, rolled out to eliminate collusion between importers and tax officers, has reduced
average clearing time by approximately 80 percent and increased revenue collection by 13 percent.
 Integration of POS systems for restaurants with FBR across all four provinces has been completed.
 An AI-driven audit selection tool for corporate sales and income tax has been deployed, identifying over
200 cases worth PKR 13.3 billion during its initial roll-out.

74
 Fiscal Development

 Operational efficiency has been significantly improved through the restructuring of the Directorate of
Intelligence, reducing its officer structure from 563 to just 100. A new, empowered PRAL Board (the
digital arm of FBR) has been established to enhance the delivery of digital interventions.
2. Inland Revenue Service – Legal Measures
 The Finance Act, 2024, has revised income tax rates on salaries for individuals, particularly increasing
the tax on high-salaried persons. New tax slabs have been introduced, lowering the taxable income
threshold and raising rates for high-income earners, with the highest rate reaching 35 percent.
 The rate of tax on dividends received from a mutual fund and the rate of tax to be deducted on dividends
received from a mutual fund, which derives 50 percent or more of its income from profit on debt, has
been enhanced to 25 percent.
 Sections 236G and 236H of the Income Tax Ordinance, 2001, previously applied to specific sectors, have
now been extended to cover all sectors through the Finance Act, 2024. Under Section 236G,
manufacturers and commercial importers are required to collect advance tax on sales to distributors,
dealers, and wholesalers, while Section 236H applies to sales to retailers by manufacturers, distributors,
wholesalers, and importers. The removal of sector-specific applicability aims to broaden the tax base and
document the supply chain.
 Additionally, tax rates for non-filers have been significantly increased—up to 2 percent under Section
236G and 2.5 percent under Section 236H—serving as a strong incentive for registration and compliance.
 The rates of withholding tax (WHT) under sections 236C and 236K have been revised with a progressive
slab structure based on the value of the property.
 For individuals on the Active Taxpayers List (ATL), the applicable rates are 3 percent for properties
valued up to Rs 50 million, 3.5 percent for properties valued between Rs 50 million and Rs. 100 million,
and 4 percent for properties exceeding Rs. 100 million. However, for late filers included in the ATL,
higher rates apply—6 percent, 7 percent, and 8 percent, respectively, for the same property value slabs.
 For non-ATL individuals, the rates are significantly higher: 10 percent under section 236C, and 12
percent, 16 percent, and 20 percent under section 236K for the respective property value categories.
 The government introduced a Federal Excise Duty (FED) on the first sale or transfer of immovable
properties, including residential and commercial units. The rates were set at 3 percent for Active
Taxpayers (filers), 5 percent for late filers, and 7 percent for non-filers.
 FED on cement in Pakistan was increased from Rs 2 per kilogram to Rs 4 per kilogram, effective from
July 1, 2024. This 100 percent hike aims to boost government revenue, with projections estimating an
additional Rs. 60 billion in the fiscal year 2024–25.
 The government imposed a FED of Rs. 15 per kilogram on the supply of white crystalline sugar by any
person to manufacturing, processing, or packaging entities. This measure, effective from July 1, 2024,
aims to enhance revenue collection from the sugar industry.
 FBR increased the FED on international air travel effective July 1, 2024, to boost revenue. However,
there is a rebate of Rs. 7,500 for travelers to GCC countries holding labor visa printed on their passports,
duly verified by the Protector of Emigrants (Bureau of Emigration & Overseas Employment).
3. Customs-Related Measures
 Faceless Customs Assessment (FCA) - Faceless Customs Assessment (FCA) system has been introduced
to check revenue leakages and speedy assessments. It is operating through its Centralized Appraising Unit
at South Asia Pakistan Terminal (SAPT), Karachi, and it is handling the clearance of imports made
through four Customs Appraisement Collectorates of Karachi. It is expected to drastically reduce
additional documentation and physical examinations. Since its inception on 15.12.2024, FCA has resulted
in a 62 percent decrease in physical examinations and a 75 percent reduction in documents called for
assessment purposes. FCA has resulted in an 83 percent reduction in Average Clearance Time from 107
hours to 18 hours.
 Development of Digital Enforcement Stations (DES) - This is a major anti-smuggling intervention under
FBR’s Transformation Plan to curb smuggling, which will positively impact revenue collection. Under

75
Pakistan Economic Survey 2024-25

this intervention, 27 DES are being established on key choke points/ crossings on the River Indus & Hub,
besides strengthening 10 existing Customs Check Posts in Baluchistan and upgrading them to the level
of DES. This strategy will significantly reduce the volume of smuggling in the Country.
 Cargo Tracking System – A fully automated tracking of cargo movement under Cargo Tracking System
(CTS) is being established to effectively distinguish the legitimate duty/taxes paid goods from smuggled
goods.
4. Compliance Risk Management System
 FBR has rolled out a Machine Learning (ML) based Compliance Risk Management (CRM) system in its
field formations to detect anomalies, identify, assess, rank and address tax compliance risks based on
diverse data sources. Techniques like clustering and multivariate analysis help identify outliers in group-
specific data, revealing hidden patterns of potential fraud, thus helping flag high-risk cases for auditors.
The system includes targeted campaigns, incentives and behavior change efforts to address non-
compliance, with feedback mechanisms ensuring responsiveness to taxpayers' concerns.
 The system is up and running in all Large, Medium and Corporate tax offices in the country and
anomalous cases with risk rating and profiling are available on the dashboard to all the assessing officers.
This is resulting in optimal utilization of scarce audit resources in the field and providing a decision
support system to officers to focus audit resources on risky cases, leading to FBR's ultimate goal of
revenue enhancement.
 FBR is working to develop the same system for on-corporate cases of Income and Sales Tax, and work
is at an advanced stage.
Source: FBR

4.6 Provincial Budget over the revised estimates last year, reflecting a
strong focus on public investment. Provincial
In FY2025, the size of the provincial budget
revenues are budgeted at Rs 9,528.5 billion in
increased by 45.5 percent to Rs 8,815.6 billion
FY 2025 against the revised estimates of Rs
from the revised estimate of Rs 6,059.9 billion
6,450.1 billion last year, reflecting a growth of
last year. Current expenditures are expected to
47.7 percent. Within total, tax and non-tax
increase by 33.8 percent, while development
collections are expected to grow by 44.4 percent
spending is expected to grow by 85.3 percent
and 88.2 percent, respectively.

Table 4.5: Overview of Provincial Budgets Rs billion

Khyber
Punjab Sindh Balochistan Total
Pakhtunkhwa
Item
FY2024 FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 FY2025 FY2024 FY2025
(R.E) (B.E) (R.E) (B.E) (R.E) (B.E) (R.E) (B.E) (R.E) (B.E)
Total Prov. Own Taxes 326.5 471.9 363.7 619.0 57.7 57.8 30.5 47.6 778.3 1,196.2
Share in Federal Taxes 2,560.4 3,682.7 1,214.8 1,747.4 808.4 1,165.7 481.2 647.0 5,064.8 7,242.8
Total Tax Revenues 2,886.9 4,154.6 1,578.5 2,366.4 866.0 1,223.4 511.6 694.6 5,843.1 8,439.1
Total Non-Tax Revenues 135.6 493.3 174.6 149.2 81.6 86.2 47.1 97.4 438.9 826.1
All Others 7.0 7.9 38.1 92.0 114.2 139.2 8.8 24.4 168.1 263.4
Total Revenue 3,029.5 4,655.8 1,791.2 2,607.6 1,061.8 1,448.8 567.5 816.4 6,450.1 9,528.5
Current Expenditure 1,985.1 2,633.8 1,399.9 1,912.4 905.1 1,166.1 399.9 564.9 4,689.9 6,277.1
Development Expenditure 567.6 842.0 467.1 959.1 162.5 416.3 172.9 321.1 1,370.0 2,538.5
Total Expenditure 2,552.7 3,475.8 1,867.0 2,871.4 1,067.6 1,582.3 572.7 886.0 6,059.9 8,815.6
Source: Provincial Finance Wing. Finance Division

4.7 Provincial Fiscal Operations were budgeted at Rs 7,438 billion in FY 2025.

During July-March FY 2025, federal transfers to
Under the 7th NFC Award, federal transfers to
provinces increased to Rs 5,084.4 billion from
provinces (divisible pool and straight transfers)
Rs 3,815.1 billion last year, an increase of 33.3

76
 Fiscal Development

percent. The province-wise share of provinces Khyber Pakhtunkhwa: Rs 1,221.5 billion,

during FY 2025 is budgeted as follows: Punjab: inclusive of 1 percent war on terror, and
Rs 3,695.1 billion, Sindh: Rs 1,853.8 billion, Balochistan: Rs 667.6 billion.

Table 4.6: Overview of Provincial Fiscal Operations Rs billion

Jul-Mar
FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
FY2025 FY2024
A. Tax Revenue 2,618.8 2,799.6 2,917.6 3,250.3 4,201.4 4,873.0 6,037.8 5,768.6 4,366.1
Provincial Taxes 401.4 401.8 413.6 508.4 612.4 649.6 774.2 684.3 551.0
Share in Federal Taxes 2,217.4 2,397.8 2,504.0 2,741.9 3,589.0 4,223.5 5,263.6 5,084.4 3,815.1
B.Non Tax Revenue 146.7 86.3 102.4 150.3 128.3 165.9 223.1 203.0 158.9
C.All Others 173.0 110.0 221.0 327.5 357.8 260.5 447.1 422.9 277.3
Total Revenue (A+B+C) 2,938.5 2,995.9 3,241.0 3,728.0 4,687.5 5,299.4 6,708.0 6,394.6 4,802.3
a. Current Expenditure 2,080.7 2,350.8 2,541.9 2,844.2 3,200.8 3,859.6 4,690.6 4,079.1 3,267.5
b. Development Expenditure 880.1 506.2 622.0 770.2 1,216.6 1,241.0 1,391.7 1,226.2 887.9
c. Statistical Discrepency -4.8 -51.1 -147.9 -200.0 -80.9 44.2 107.5 35.9 211.5
Total Expenditure (a+b+c) 2,956.0 2,805.9 3,016.1 3,414.4 4,336.5 5,144.8 6,189.8 5,341.2 4,366.9
Overall, Balance -17.5 190.0 224.9 313.6 351.0 154.6 518.2 1,053.3 435.4
Source: Pakistan Fiscal Operations

The provincial fiscal operations provided effective resource mobilization and prudent
significant support to the federal government in expenditure management triggered the higher
improving the overall fiscal accounts. The growth in provincial revenues relative to
dedicated efforts at the provincial level for expenditures.

Fig-20: Growth in Provincial Revenues & Fig-21: Provincial Surplus (Rs.billion)

Expenditures (%) July-March July-March
40 Punjab
Revenues Sindh
Expenditures KP
30 Balochistan
441
395
20

10
156
137
111 106
0 77 65

-10
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2024 FY2025

Source: Pakistan fiscal Operations and EA wing's calculations

…. Source: Pakistan's fiscal operations and EA wing's calculation

Consequently, all four provinces collectively 887.3 billion in July-March FY 2025 from Rs
achieved the highest surplus of Rs 1,053.3 709.9 billion last year. Both provincial tax and
billion during July-March FY 2025 compared to non-tax revenues contributed to this consistent
the surplus of Rs 435.4 billion last year. rise in own revenues during the period under
review. Despite the increase in provincial own-
During July-March FY 2025, provincial source revenue receipts, the federal transfers
revenues witnessed a substantial increase of 33.2 continue to be the main source, contributing
percent to Rs 6,394.6 billion, up from Rs 4,802.3 around an 80 percent share in total provincial
billion last year. The province's own source revenues.
revenue receipts grew by 25.0 percent to Rs

77
Pakistan Economic Survey 2024-25

Fig-22: Provincial Own Revenues and Federal

billion during July-March FY 2025 from Rs
Transfers (Growth %)(Jul-Mar) 887.9 billion last year. The increase is primarily
attributed to higher expenditure on environment
protection, education affairs & service, public
order & safety, General Economic, Commercial
Own Revenue Reciepts

Federal Transfers 33.3

29.2

30.1
& Labour Affairs, Fuel & Energy, Mining &
Manufacturing, public health services,
8.6
recreational & sport services, and religious
2.8
14.3 25.1 25.0 affairs.
17.6
13.5 12.8

4.8 Public Financial Management (PFM)

7.9 6.7

-13.2 Reforms

The Public Finance Management Act 2019

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
serves as a foundational framework, aiming to
improve budget preparation, execution, and
Source: Pakistan's fiscal operations & EA wing's calculation

reporting processes. Effective implementation of

Provincial tax collection improved to Rs 684.3 these reforms is essential to ensure optimal use
billion during July-March FY 2025 from Rs of public finances and reinforce economic
551.0 billion last year, showing a growth of 24.2 stabilization efforts.
percent. In total, the receipts from motor vehicle
tax grew by 58.3 percent, and GST on services In FY 2025, PFM reforms focused on enhancing
increased by 18.1 percent. Similarly, non-tax fiscal discipline, improving transparency, and
revenues grew by 27.8 percent to Rs 203.0 aligning with international financial
billion during July-March FY 2025 against Rs commitments, particularly under the IMF's
158.9 billion last year. The major contribution program. In preparing the Federal Budget,
came from higher receipts from hydroelectricity significant attention is given to setting well-
profit, interest on loans, dividends, and law & informed priorities and targets. Moreover,
order. Pakistan has been progressively integrating
thematic budgeting, particularly around gender,
On the expenditure side, the pace of growth climate change, and the Sustainable
remained moderate at 22.3 percent during July- Development Goals (SDGs), within its broader
March FY 2025, down from 35.6 percent last PFM reforms. The frameworks and directives
year. In absolute terms, provincial expenditures are regularly updated to align with both national
increased to Rs 5,341.2 billion during July- development agendas and international
March FY 2025 from Rs 4,366.9 billion last commitments.
year. Current expenditures grew by 24.8 percent
to Rs 4,079.1 billion during July-March FY 2025 In line with the provisions of the PFM Act 2019,
against Rs 3,267.5 billion last year. Major the Federal Government has undertaken a series
components responsible for this growth are of PFM reforms in FY 2025, which include, but
housing and community development, social are not limited to, the amendment and
protection, recreational, cultural and religious, formulation of various rules, with special focus
fuel & energy, construction & transport, and on bringing these new rules in line with
general public services. development in digital technologies. These are
Special Purpose Fund (General) Rules, 2025,
The effective consolidation efforts enabled the Grant in Aids Rules, 2025, Federal Government
provinces to scale up development spending, Receipts and Payments Rules 2025, and General
which increased by 38.1 percent to reach 1,226.2 Financial Rules, 2025.

78
 Fiscal Development

Concluding Remarks significantly higher combined surpluses by all

The fiscal performance during the first nine the provinces.
months of FY 2025 reaffirms the government’s
commitment to improve fiscal discipline aligned In the wake of prevailing challenges, both at the
with the Budget 2024-25. Improved revenue domestic and global levels, the current
mobilization, particularly through FBR reforms performance of the fiscal sector is encouraging,
and strong revenue collection from non-tax, indicating effective fiscal management. At the
together with efficient management of same time, to cope with emerging challenges, the
expenditures, successfully reduced the fiscal government is progressing on comprehensive
deficit to 2.6 percent of GDP during July-March fiscal reforms in coordination with provinces. In
FY 2025 from 3.7 percent recorded last year. In this regard, the National Fiscal Pact is an
addition, the contained non-markup spending important step to rebalance intergovernmental
triggered a significant rise in primary surplus to relationships. These reforms will ensure long-
3.0 percent of GDP from 1.5 percent last year. term fiscal sustainability, crucial for attaining
Similarly, the contribution of provinces in higher, inclusive, and sustainable economic
effective consolidation is visible through growth.

79
TABLE 4.1

FEDERAL GOVERNMENT OVERALL BUDGETARY POSITION

Rs million

2024-25
Fiscal Year / Item 2023-24
July-March (P)

A. REVENUE
FBR Tax Revenue (1 +2) 9,311,007 * 8,453,051
1 Direct Taxes 4,530,722 4,127,815
2 Indirect Taxes 4,780,285 4,325,236
i. Customs 1,104,063 927,461
ii. Sales Tax 3,098,771 2,860,744
iii. Federal Excise 577,451 537,031
Non-Tax Revenue 3,050,455 4,099,450
Gross Revenue Receipts 12,361,462 12,552,501

B. EXPENDITURE
Current Expenditure 14,073,122 10,668,308
i. Defence 1,858,805 1,423,960
ii. Mark-up payments 8,159,826 6,438,790
iii. Grants 1,395,283 1,108,005
vi. Others** 2,659,208 1,697,553
Development Expenditure and Net Lending 1,030,852 653,395
Statistical Discrepancy -280,997 169,780
Total Expenditure 14,822,977 11,491,483
P : Provisional Source: Budget Wing, Finance Division, Islamabad
* : Revised FBR Tax collection FY2023-24 is Rs 9299.1 billion
** : Includes other categories not shown here

57
TABLE 4.2

SUMMARY OF PUBLIC FINANCE (CONSOLIDATED FEDERAL & PROVINCIAL GOVERNMENTS)

Rs million

2024-25
Fiscal Year / Items 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Jul-Mar (P)

Total Revenues (i+ii) 4,900,724 6,272,168 6,903,370 8,035,383 9,633,505 13,269,037 13,366,986
Federal 4,412,625 5,756,162 6,244,698 7,294,720 8,818,070 12,271,725 12,479,711
Provincial 488,099 516,006 658,672 740,663 815,435 997,312 887,275
i) Tax Revenues 4,231,272 4,411,538 5,272,699 6,755,168 7,818,699 10,085,201 9,137,316
Federal 3,829,469 3,997,921 4,764,302 6,142,802 7,169,140 9,311,007 8,453,051
Provincial 401,803 413,617 508,397 612,366 649,559 774,194 684,265
ii) Non-Tax Revenues 669,452 1,860,630 1,630,671 1,280,215 1,814,806 3,183,836 4,229,670
Federal 583,156 1,758,241 1,480,396 1,151,918 1,648,930 2,960,718 4,026,660
Provincial 86,296 102,389 150,275 128,297 165,876 223,118 203,010
Total Expenditures (a+b+c+d) 8,345,640 9,648,488 10,306,691 13,295,275 16,154,950 20,475,945 16,337,029
a) Current 7,104,030 8,532,020 9,084,010 11,521,375 14,447,833 18,570,942 14,588,163
Federal 4,776,150 6,016,192 6,264,821 8,354,104 10,650,028 13,970,052 10,581,853
Provincial 2,327,880 2,515,828 2,819,189 3,167,271 3,797,805 4,600,890 4,006,310
b) Development 1,178,442 1,155,213 1,238,738 1,617,050 1,892,992 2,026,814 1,535,643
c) Net Lending to PSE's 40,750 48,528 76,938 40,372 59,876 51,670 7,532
d) Statistical Discrepancy 22,418 -87,273 -92,995 116,478 -245,750 -173,481 205,691
Overall Balance -3,444,916 -3,376,320 -3,403,321 -5,259,892 -6,521,445 -7,206,908 -2,970,043
Primary Balance -1,353,790 -756,581 -653,592 -2,077,460 -825,529 952,918 3,468,747
Financing (net) 3,444,916 3,376,320 3,403,321 5,259,892 6,521,445 7,205,570 2,970,043
External (net) 416,706 895,510 1,338,091 1,178,410 -679,848 320,713 19,505
Domestic (i+ii+iii) 3,028,210 2,480,810 2,065,230 4,081,482 7,201,293 6,884,857 2,950,538
i) Non-Bank 764,986 540,250 196,189 980,570 3,672,703 -312,801 1,618,999
ii) Bank 2,263,224 1,940,561 1,869,041 3,100,912 3,528,590 7,197,658 1,331,539
iii) Privatization Proceeds 2,000 - - - - 1338 0
Memorandum Item
GDP (mp) in Rs billion 43,798 47,540 55,836 66,658 83,651 105,143 114,692
(As Percent of GDP at Market Price)
Total Revenue 11.2 13.2 12.4 12.1 11.5 12.6 11.7
Tax Revenue 9.7 9.3 9.4 10.1 9.3 9.6 8.0
Non-Tax Revenue 1.5 3.9 2.9 1.9 2.2 3.0 3.7
Expenditure 19.1 20.3 18.5 19.9 19.3 19.5 14.2
Current 16.2 17.9 16.3 17.3 17.3 17.7 12.7
Development Expenditure & net Lending 2.8 2.5 2.4 2.5 2.3 2.0 1.3
Overall Balance -7.9 -7.1 -6.1 -7.9 -7.8 -6.9 -2.6
Primary Balance -3.1 -1.6 -1.2 -3.1 -1.0 0.9 3.0
P : Provisional Source: Budget Wing, Finance Division, Islamabad

/1: During FY2021, the fiscal accounts have been reclassified in line with the implementation of PFM procedures. According to the
reclassification, federal taxes other than FBR have now been included in non-tax revenue. To make the data comparable, the fiscal
indicators since FY2016 have also been reclassified.

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TABLE 4.3

CONSOLIDATED FEDERAL & PROVINCIAL GOVERNMENT REVENUES

Rs million

2024-25
Fiscal Year/Items 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Jul-Mar (P)

Total Revenue (I+II) 4,900,724 6,272,168 6,903,370 8,035,383 9,633,505 13,267,037 13,366,986
Federal 4,412,625 5,756,162 6,244,698 7,294,720 8,818,070 12,269,725 12,479,711
Provincial 488,099 516,006 658,672 740,663 815,435 997,312 887,275
I. Tax Revenues 4,231,272 4,411,538 5,272,699 6,755,168 7,818,699 10,083,201 9,137,316
Federal (A+B) 3,829,469 3,997,921 4,764,302 6,142,802 7,169,140 9,309,007 8,453,051
A. Direct Taxes 1,445,594 1,524,252 1,731,860 2,280,470 3,272,402 4,530,722 4,127,815
B. Indirect Taxes 2,383,875 2,473,669 3,032,442 3,862,332 3,896,738 4,778,285 4,325,236
i. Excise Duty 233,591 250,470 277,072 320,978 369,779 577,451 537,031
ii. Sales Tax 1,464,887 1,596,821 1,990,186 2,531,856 2,592,136 3,096,771 2,860,744
iii. Customs 685,397 626,378 765,184 1,009,498 934,823 1,104,063 927,461
Provincial 401,803 413,617 508,397 612,366 649,559 774,194 684,265
Sales Tax on services GST 202,881 232,969 293,645 355,720 416,973 504,617 417,318
Excise Duty 9,274 7,643 8,218 8,896 9,619 12,136 9,276
Stamp Duties 70,396 59,148 55,217 70,888 65,191 62,548 49,282
Motor Vehicle Taxes 24,850 17,979 26,779 36,219 31,705 34,112 39,548
Others 94,402 95,878 124,538 140,643 126,071 160,781 168,841
II. Non-Tax Revenues 669,452 1,860,630 1,630,671 1,280,215 1,814,806 3,183,836 4,229,670
Federal 583,156 1,758,241 1,480,396 1,151,918 1,648,930 2,960,718 4,026,660
Provincial 86,296 102,389 150,275 128,297 165,876 223,118 203,010
Surcharges* 211,612 306,037 447,177 147,901 590,582 1,049,733 869,492
i. Gas 5,304 12,356 22,523 20,372 10,672 30,510 35,645
ii. Petroleum 206,308 293,681 424,654 127,529 579,910 1,019,223 833,847
P: Provisional Source: Budget Wing, Finance Division, Islamabad

* : Non-Tax Revenues under these heads are exclusively Federal

Note : According to the re-classification, of data as per PFM procedures, federal taxes other than FBR have now been included
under Non tax revenues

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TABLE 4.4

CONSOLIDATED FEDERAL & PROVINCIAL GOVERNMENT EXPENDITURES

Rs million

2024-25
Fiscal Year/Items 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Jul-Mar (P)

Current Expenditure 7,104,030 8,532,020 9,084,010 11,521,374 14,447,833 18,570,942 14,588,163

Federal 4,776,150 6,016,192 6,264,821 8,354,103 10,650,028 13,970,052 10,581,853
Defence 1,146,793 1,213,281 1,316,189 1,411,646 1,585,502 1,858,805 1,423,960
Mark-up Payments 2,091,126 2,619,739 2,749,729 3,182,432 5,695,916 8,159,826 6,438,790
Subsidies 195,345 359,923 425,023 1,529,609 1,080,262 1,067,360 466,229
Others 1,342,886 1,823,249 1,773,651 2,230,416 2,288,347 2,884,061 2,252,873
Provincial 2,327,880 2,515,828 2,819,189 3,167,271 3,797,805 4,600,890 4,006,310
Development Expenditure 1,178,442 1,155,213 1,238,738 1,617,050 1,892,992 2,026,814 1,535,643
Net Lending to PSEs 40,750 48,528 76,938 40,372 59,876 51,670 7,532
Statistical Discrepancy 22,418 -87,273 -92,995 116,478 -245,750 -173,481 205,691
Expenditure Booked excl discrepancy 8,323,222 9,735,761 10,399,686 13,178,796 16,400,701 20,649,426 16,131,338
Total Expenditure 8,345,640 9,648,488 10,306,691 13,295,274 16,154,951 20,475,945 16,337,029
Memorandum Items: (Percent Growth over preceding period)
Current Expenditure 21.3 20.1 6.5 26.8 25.4 28.5 -
Defence 11.3 5.8 8.5 7.3 12.3 17.2 -
Mark-up Payments 39.4 25.3 5.0 15.7 79.0 43.3 -
Current Subsidies 71.1 84.2 18.1 259.9 -29.4 -1.2 -
Development Expenditure -25.6 -2.0 7.2 30.5 17.1 7.1 -
Expenditure Booked excl discrepancy 11.3 17.0 6.8 26.7 24.4 25.9 -
Total Expenditure 11.4 15.6 6.8 29.0 21.5 26.7 -
As % of total expenditures
Current Expenditure 85.1 88.4 88.1 86.7 89.4 90.7 89.3
Defence 13.7 12.6 12.8 10.6 9.8 9.1 8.7
Mark-up Payments 25.1 27.2 26.7 23.9 35.3 39.9 39.4
Subsidies 2.3 3.7 4.1 11.5 6.7 5.2 2.9
Development Expenditure* 14.6 12.5 12.8 12.5 12.1 8.4 9.4
P: Provisional Source: Budget Wing, Finance Division
* : Include Net Lending

60
TABLE 4.5

DEBT SERVICING

Rs million

2024-25
Fiscal Year / Item 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Jul-Mar (P)

A. Mark-up Payments 2,091,126 2,619,739 2,749,729 3,182,432 5,695,916 8,159,826 6,438,790

Servicing of Domestic Debt 1,820,821 2,313,133 2,523,811 2,828,572 4,936,025 7,163,721 5,782,570
Servicing of Foreign Debt 270,305 306,606 225,918 353,860 759,891 996,105 656,220
B. Repayment/Amortization of Foreign Debt 974,001 1,362,353 940,278 1,681,088 3,087,445 2,438,180 1,228,324
C. Total Debt Servicing (A+B) 3,065,127 3,982,092 3,690,007 4,863,520 8,783,361 10,598,006 7,667,114
MEMORANDUM ITEMS (As Percent of GDP)
Servicing of Domestic Debt 4.2 4.9 4.5 4.2 5.9 6.8 5.0
Servicing of Foreign Debt 0.6 0.6 0.4 0.5 0.9 0.9 0.6
Repayment/Amortization of Foreign Debt 2.2 2.9 1.7 2.5 3.7 2.3 1.1
Total Debt Servicing 7.0 8.4 6.6 7.3 10.5 10.1 6.7
P: Provisional Source: Budget Wing, Finance Division

61