ISLAMABAD: Finance Minister Muhammad Aurangzeb presented Pakistan’s federal budget for the fiscal year 2025–26, with a total outlay of Rs. 17.6 trillion. The budget, presented in the National Assembly amid loud opposition protests, lays out an ambitious plan focused on economic revival, social uplift, and structural reforms—while promising no new taxes.
Aurangzeb projected an economic growth rate of 4.2%, with inflation and interest rates estimated at 7.5%. He emphasized the government’s success in stabilizing key indicators, with remittances reaching $31.2 billion and forecasted to rise to $37–38 billion by year-end. Inflation, he claimed, has fallen to 4.7%, while the current growth rate is 2.7%.
The finance minister dismissed rumors about a mini-budget, assuring the public that no new taxes were introduced. He highlighted a 3.9% fiscal deficit, a 2.4% primary surplus, and a Rs. 14.1 trillion revenue target for the Federal Board of Revenue—18.7% higher than the current year. Out of total federal revenues, Rs. 8.2 trillion will go to the provinces.
On the expenditure side, Rs. 17.57 trillion is allocated, with Rs. 8.2 trillion set aside for debt servicing, Rs. 2.55 trillion for defense, and Rs. 1.18 trillion in subsidies. Notably, Rs. 4.22 trillion has been allocated for national development programs, including Rs. 1 trillion for the Public Sector Development Programme (PSDP).
Key Reforms and Highlights:
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Major digital transformation of the tax system, including AI-based fraud detection, e-invoicing, and faceless audits.
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Reforms to simplify tax returns for salaried individuals starting July 2025.
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Significant legal victories helped the FBR recover over Rs. 155 billion.
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Debt management success: Rs. 1,000 billion worth of debt bought back under the new programme, with debt-to-GDP reduced below 70%.
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Overseas Pakistanis contributed $31.2 billion in remittances, strengthening reserves and current account health.
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Rs. 716 billion allocated to BISP, a 21% increase, with plans to expand support to 10 million households and 10 million students.
The government is also targeting improvements in energy efficiency and power sector governance. Political interference in power distribution has been curtailed, losses reduced by Rs. 140 billion, and three DISCOs are now ready for privatization. Electricity prices for protected consumers have increased, while the overall power price has decreased by over 31%.
With support from global institutions, including a $40 billion commitment from the World Bank and IMF over the next decade, the government plans major reforms in climate policy, digital infrastructure, and export competitiveness. Legislative action to establish a competitive electricity market is also in progress.
Agricultural lending rose to Rs. 2.06 trillion in ten months, with reforms targeting seed quality, biotechnology, and small farmer support. SME financing reached Rs. 471 billion, and a goal has been set to expand this to Rs. 1.1 trillion by 2028.
The Reko Diq project, expected to generate over $75 billion in revenue over 37 years, is being hailed as a cornerstone of long-term economic transformation. Infrastructure development through ports and railways will help unlock its full potential.
Tariff reforms have also been introduced to promote exports, aiming to remove all regulatory duties and rationalize the customs duty structure over the next four to five years.
In conclusion, Finance Minister Aurangzeb painted an optimistic yet grounded picture of Pakistan’s economic future, grounded in digital transformation, tax reforms, privatization, and social inclusion.
