As Pakistan braces for the federal budget announcement for the fiscal year 2025-26 on Tuesday, key figures and policy directions have already emerged.
The National Economic Survey will be presented today (Monday), setting the stage for a crucial budget presentation that comes amid high inflation, mounting debt, and ongoing negotiations with the International Monetary Fund (IMF).
According to official sources, the government is set to present a Rs17,600 billion federal budget in parliament. With estimated revenue collection at Rs19,400 billion, the Federal Board of Revenue (FBR) has been given a tax collection target of Rs14,130 billion.
Debt servicing and budget deficit
One of the most significant portions of the budget — Rs6,200 billion — will go towards debt servicing, reflecting Pakistan’s continued struggle with domestic and external borrowing.
Despite these massive expenditures, the budget deficit target has been fixed at the same level, underscoring the government’s tightrope walk between spending and fiscal responsibility.
Relief for govt employees
In a bid to provide some relief amid rising living costs, the government is proposing a 10% salary increase for government employees, while retired public servants may see their pensions rise by 5% to 7.5%.
Major increases in defense, health, education
Pakistan’s defense budget is expected to see an 18% hike, a move likely influenced by regional security challenges and inflationary pressures. On the development front, the federal government is likely to allocate:
- Rs13.58 billion for education,
- Rs14.3 billion for the health sector, and
- Rs16.22 billion for the digital economy and IT sector, reflecting a push toward modernization and youth employment.
What to expect
Finance Minister Muhammad Aurangzeb is expected to deliver the budget speech in the National Assembly on Tuesday, detailing the government’s economic roadmap, development priorities, and taxation reforms for FY2025-26.
The federal budget for the financial year 2025-26 will be presented in the National Assembly on June 10, according to the official schedule approved by Speaker Sardar Ayaz Sadiq.
The speaker has finalised the calendar for the budget session, which outlines key dates for debate, discussion, and voting on the budgetary proposals and finance-related matters.
As per the schedule:
- The budget presentation will take place on June 10.
- The National Assembly will not meet on June 11 and 12.
- The general debate on the federal budget will commence on June 13, with time allocated to all parliamentary parties for discussion.
- The debate will continue until June 21.
- The assembly will observe a break on June 22.
- On June 23, the House will discuss the necessary expenditures for the upcoming fiscal year.
- June 24 and 25 will be dedicated to discussions and voting on demands, grants, and cut motions.
- On June 26, the National Assembly will debate and vote on the Finance Bill, followed by formal approval of the bill on the same day.
- The session will conclude on June 27 with discussions and voting on supplementary grants and other budgetary matters.
The speaker’s office has clarified that any changes to the announced schedule will only be made with the speaker’s approval.
Meanwhile, the federal government has missed several of its economic targets despite improved overall performance compared with the previous year, according to preliminary documents.
Sources said on Sunday that the targeted GDP growth rate of 3.6% was not met, with actual growth recorded at 2.7%. Inflation remained limited to 5%, significantly lower than the set target of 12%.
Per capita income also fell short of expectations, remaining Rs34,794 below the set target. Annual per capita income was recorded at Rs509,174 against the target of Rs543,968. The survey shows that indirect tax revenue reached Rs8,393 billion, surpassing the target of Rs7,799 billion.
Sources reported that the agricultural sector underperformed, with growth recorded at just 0.6% against a target of 2%. The output of major crops declined by 13.5% compared to last year’s 4.5% drop. Cotton production fell by 30.7%, maize by 15.4%, and sugarcane by 3.9%. Paddy (rice) production declined by 1.4%, and wheat by 8.9%.
The yield of minor crops slightly exceeded expectations, reaching 4.8% against a target of 4.3%, while increases were recorded in the production of vegetables, fruits, oilseeds, spices, and fodder.
The industrial sector achieved a growth rate of 4.8% against a target of 4.4%. Output increased in textiles, automobiles, garments, tobacco, and petroleum products. However, declines were noted in food, chemicals, iron, steel, electrical machinery, and furniture.
The services sector fell short of its 4.1% annual target, recording 2.9% growth. The construction sector outperformed, with growth at 6.6% against a target of 5.5%. Large-scale manufacturing contracted by 1.5% compared to its 3.5% target, whereas small-scale industries grew by 8.8%, exceeding the 8.2% target.
In the electricity, gas and water supply sector, growth soared to 28.9%, well above the 2.5% target. The health sector achieved 3.7% growth against a 3.2% target and the education sector grew by 4.4% compared with a 3.5% goal.
Private sector borrowing surged from Rs294 billion to Rs870 billion. Total revenue rose by 36.7% to Rs13,367 billion, and the tax-to-GDP ratio improved from 6% to 8%.
Finance Minister Muhammad Aurangzeb will release the National Economic Survey for the current financial year tomorrow at 2:30pm.
