Petroleum Levy Revenue Helps Keep Budget Deficit Within FY2025-26 Target

Petroleum levy collections helped Pakistan keep its federal budget deficit under control during the first 11 months of fiscal year 2025-26, according to official financial data.

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The government generated more than Rs1.478 trillion through petroleum and climate levies. As a result, it limited the federal budget deficit to Rs3.34 trillion, or 2.6% of gross domestic product (GDP), during the July-May period.

Meanwhile, under Pakistan’s agreement with the International Monetary Fund (IMF), the provinces recorded a combined budget surplus of Rs1.31 trillion. Consequently, the overall fiscal deficit narrowed to Rs2.03 trillion, or 1.6% of GDP.

For the full fiscal year, the government set a revised fiscal deficit target of 3% of GDP, or Rs3.77 trillion. Earlier, it had targeted a deficit of 3.9% of GDP, equivalent to Rs5.03 trillion.

However, the Ministry of Finance has not yet released the reconciled fiscal operations data for the financial year ending June 30, 2026. Officials expect to compile the final figures in the coming weeks.

Official data for the first 11 months showed the government received Rs4.82 trillion from three major non-tax revenue sources. These included State Bank of Pakistan (SBP) profits, the petroleum levy and the climate support levy. The full-year target for these sources stands at Rs5.14 trillion.

During the period, the government received Rs2.428 trillion in SBP profits. It also collected Rs1.432 trillion through the petroleum levy and Rs45.97 billion under the climate support levy.

In addition, Federal Board of Revenue (FBR) tax collections reached Rs11.228 trillion. At the same time, debt servicing totalled Rs6.163 trillion. The government also stated that it had fully utilised funds allocated under the Public Sector Development Programme (PSDP).