This study aims to empirically investigate the impact of quasi-fiscal activities in the electricity sector on Pakistan's fiscal deficit, using time series data from 1973 to 2022. The Bound and ARDL tests are employed to analyze the long-run cointegration among the variables. The results indicate that the variables are cointegrated in the long run and that the one-year lagged values of hidden costs and exchange rates significantly impact the fiscal deficit both in the long and short run. Trade openness has a statistically significant impact on the fiscal deficit in the long run but no significant impact in the short run. GDP does not show a statistically significant impact on the fiscal deficit in either the long or short run. The study suggests that the government should encourage the privatization of distribution companies (DISCOs), phase out untargeted subsidies, promote renewable energy, and maintain a stable exchange rate.