Fuel levy yields lowest fiscal deficit in nearly three decades

According to official fiscal operations data released by the Ministry of Finance for July-March, the historically low fiscal deficit was achieved after a gradual reversal of the Rs2.1 trillion surplus, equivalent to 1.6pc of GDP, recorded in the first quarter (July-September) of the current fiscal year. The budget surplus had narrowed to Rs542 billion (0.4pc of GDP) by the end of the first half and eventually turned into a fiscal deficit of Rs857bn by the end of the third quarter. The data showed that petroleum levy remained the government’s largest revenue source, surging by 45pc to Rs1.205tr despite mounting public suffering caused by higher fuel prices amid the US-Israel war on Iran. The collection appears set to surpass the annual target of Rs1.468tr by a wide margin. During the same period last year, petroleum levy collection stood at less than Rs835bn. The State Bank of Pakistan (SBP) also continued to post healthy profits thanks to a lagged impact of historically high interest rates. However, the largest contribution came from the provinces, which exceeded their annual target by a big margin under the IMF’s $7bn Extended Fund Facility (EFF). The four provinces collectively posted a cash surplus of Rs1.636tr during the first nine months of the fiscal year, surpassing the full-year target of Rs1.464tr by Rs172bn. With its larger fiscal muscle, Punjab contributed the highe