In a fiscal conundrum

Pakistan’s fiscal position in FY26 presents a paradox: apparent stability that masks deep-seated fragility. While the overall fiscal deficit narrowed to 1.6 per cent of GDP during the first 11 months (July-May) — with the July-April period falling to 1.1pc — this achievement rests on fragile foundations. Total public debt stood at a staggering Rs83.29 trillion ($298.5 billion) by the end of March 2026, while interest payments consumed Rs6.16tr in just 11 months. The International Monetary Fund (IMF) projects a fiscal deficit of 3.2pc for FY27. With the Federal Board of Revenue missing its IMF tax target by Rs975bn and debt servicing crowding out development spending, the country walks a…