ISLAMABAD: The federal government on Tuesday unveiled Rs17.573 trillion budget for the fiscal year 2025-26, targeting a sharply lower fiscal deficit of 3.9 percent of GDP, or Rs5.037 trillion, as it seeks to strike a delicate balance between IMF-mandated fiscal discipline and economic relief.
The government aims to maintain momentum under the IMF’s Extended Fund Facility (EFF), offering modest public sector salary hikes, targeted tax relief for salaried classes and capital markets, while expanding levies to broaden the tax base and raise Rs1.16 trillion in additional revenues through the Federal Board of Revenue (FBR).
Finance Minister Muhammad Aurangzeb told the National Assembly while presenting the budget that it was being presented at a “historic moment” marked by national unity and resolve, referring to the recent Pakistan-India standoff.
“The spirit with which we protected our national sovereignty, we need to ensure our financial security the same way,” he maintained, continuing his address through a noisy session of the National Assembly.
“Pakistan has now achieved economic stability and is moving towards a Pakistan that is prosperous,” adding: “This budget marks the beginning of practical wisdom aimed at shaping a competitive economy, which will increase exports, reduce the fiscal deficit, save the country from imbalances in payments, and promote economic productivity. The budget’s practical wisdom is that we bring about fundamental changes in the DNA of our economy,” the finance minister told the National Assembly.
Interestingly, the FY26 budget outlay is 6.9 percent — or Rs1.3 trillion—lower than the outgoing fiscal year’s Rs18.87 trillion, driven largely by a reduced deficit target and restrained expenditure growth. Still, it signals continuity in reform efforts, with real GDP growth projected at 4.2 percent, sectoral growth targets of 4.5 percent in agriculture, 4.3 percent in industry, and 4 percent in services. Inflation is forecast at 7.5 percent, while the current account deficit is estimated at $2.1 billion, or 0.5 percent of GDP.
To stay on track with the IMF’s targets, the government has set a primary surplus of Rs3.17 trillion, or 2.4 percent of GDP, marking the third consecutive year of surplus. The consolidated federal deficit is pegged at 5pc of GDP, down slightly from the revised 5.6pc for FY25.
