Non-interest current spending rises 18.8pc in 9MFY26

ISLAMABAD: Pakistan’s current expenditure excluding interest payments increased by 18.8 per cent during the first nine months of the current fiscal year, even as overall expenditure fell and national savings as well as energy output declined, according to a Planning Commission report presented to the Annual Plan Coordination Committee.

The commission said non-interest current expenditures rose mainly because of higher spending on defence, grants and provincial current expenditure. It reported total expenditure of Rs15.656 trillion during July-March FY26, down 4.2pc from the same period last year. Overall current expenditure decreased by 2.2pc, while development spending rose by 26.8pc.

Domestic debt servicing dropped by 25.9pc, whereas foreign debt servicing increased by 0.6pc. Lower interest payments helped contain the fiscal deficit and described the country’s overall fiscal performance up to the third quarter of 2025-26 as having improved considerably.

Revenue and savings

Total revenue reached Rs14.799tr in July-March FY26, up 10.7pc from Rs13.367tr a year earlier, the Planning Commission said. It attributed the increase to an 11.3pc rise in tax revenue, supported largely by a 10.1pc increase in Federal Board of Revenue collections. Direct taxes increased by 12.4pc and indirect taxes by 7.9pc, while non-tax revenue rose 9.5pc.

Federal non-tax revenue went up 8.2pc, driven mainly by a one-off transfer of State Bank of Pakistan profits, petroleum levy receipts, investment dividends and oil and gas royalties. Provincial non-tax revenue climbed to Rs277.5 billion, marking growth of 36.7pc, primarily because of a sharp increase in hydroelectricity profits.

The commission said national savings stood at 14.1pc of GDP, down from 14.9pc in the previous year and below the current fiscal year target of 14.3pc. Domestic savings were recorded at 7pc compared to 7.9pc last year. The Planning Commission said the decline reflected stronger consumption pressures in a recovering economy. It also reported that foreign savings moved from negative 0.5pc to 0.2pc, which supported the overall resource envelope.

Total investment remained unchanged at 14.4pc of GDP in 2025-26 despite internal and external shocks, but this too remained below the 14.7pc target.

Energy sector contraction

The Planning Commission reported a 10.6pc contraction in energy output during the current fiscal year, saying the decline was spread across electricity, gas and water supply. It attributed the fall to a high base effect after exceptional growth of 29.6pc last year.

Natural gas supply fell by 2.6pc and crude oil production by 0.3pc, while the sector continued to face problems in mineral extraction and exploration. It also linked weaker performance to a cut in budgeted subsidies to Rs893 billion from Rs1.19tr in the previous year.

According to the commission, modest output growth by Wapda and related companies, along with a relatively low sectoral deflator, also weighed on nominal growth in the sector.