ISLAMABAD: Pakistan recorded a fiscal surplus of Rs1.274 trillion ($4.55 billion) in the first quarter of the 2026-27 fiscal year, marking its third consecutive first-quarter surplus following 23 years of first-quarter deficits, a government finance adviser said on Friday.

Pakistan is in the middle of a $7 billion International Monetary Fund program, approved in September 2024, which requires it to strengthen public finances and keep spending under control as it recovers from a prolonged economic crisis. Islamabad has pointed to its fiscal figures as evidence that the reforms are working and to build investor confidence.

“Pakistan continues its fiscal turnaround, reflecting sustained fiscal prudence, expenditure discipline and macroeconomic stability,” Khurram Schehzad, adviser to the finance minister, said in a post on X.

The surplus for the July-September quarter was equal to 0.9 percent of gross domestic product, he said. The primary surplus, which excludes interest payments, reached Rs2.974 trillion ($10.62 billion), or 2.1 percent of GDP, beating the budget target by Rs239 billion ($853.6 million).

Pakistan recorded first-quarter fiscal deficits for 23 consecutive fiscal years, from 2001-02 through 2023-24, Schehzad said. It has since recorded first-quarter surpluses of Rs1.896 trillion ($6.77 billion) in 2024-25 and Rs2.119 trillion ($7.57 billion) in 2025-26. This year’s surplus is smaller than in either of those years.

The past three years have also produced the three highest first-quarter primary surpluses in 26 years, each above Rs2.9 trillion ($10.36 billion), he said.

“Despite tax relief measures in Budget FY27, Q1 tax collections exceeded target, while expenditure remained rationalised,” Schehzad said.

The adviser said Pakistan's overall fiscal deficit had narrowed to a 22-year low of 2.6 percent of GDP in 2025-26, while the annual primary surplus reached 2.9 percent of GDP, its highest level since at least 2000-01.

The World Bank said last month that Pakistan’s economic growth rose to 3.7 percent in 2025-26 from 3.2 percent a year earlier, and that faster structural reforms could help the country triple per capita incomes by 2050.