Average inflation expected to be 8.2 percent; finance minister says most of the budget expenditure to be allocated for payment.
Finance Minister Muhammad Aurangzeb presented the FY2026-27 budget in the National Assembly addressing a session that started two hours late and was marked by protests from the opposition.
The budget has an outlay of Rs18.8 trillion with Rs8,045 billion set aside for markup payment. The economy is expected to grow by 4 percent in FY2026-27 and average inflation is expected to be 8.2 percent.
The finance minister said the fiscal deficit would be 3.6 percent of GDP while the primary surplus would be 2 percent. Tax revenue is estimated at Rs15,264 billion which’s 17.6 percent more than the previous year.
The provinces will contribute Rs8,848 billion to the revenue. The federal and provincial governments have agreed on a mechanism to meet demands.
The mechanism will ensure that provinces share in the divisible pool remains in accordance with the 7th National Finance Commission award.
The finance minister said tax revenue for the coming year is estimated at Rs15,264 billion with Rs13,250 billion available for distribution between the federal and provincial governments.
The federal non-tax revenue is budgeted at Rs5,336 billion. Net federal revenue is budgeted at Rs11,751 billion. Rs1,000 billion has been set aside for the Public Sector Development Programme.
The finance minister said defence is the governments priority with Rs3,000 billion allocated for defence and Rs1,071 billion for civil administration expenditures.
He also announced a 7 percent increase in government employees salaries and pensions. The minimum wage will be increased by 10 percent.
The finance minister proposed a reduction in income tax for four slabs. Abolished the surcharge on the salaried class. The super tax will be abolished for businesses earning between Rs150 million and Rs500 million annually.
Aurangzeb thanked allies, including PPP Chairperson Bilawal Bhutto-Zardari. He said the budget is being presented at a time when the world’s interested in Pakistans friendship.
Pakistans defence sector has become a source of foreign exchange earnings. The country has support from China in its efforts for peace in the region.
The finance minister said the government has given people relief through subsidies of Rs128 billion on oil prices. The current dispensation will be presenting its budget.
The size of the countrys economy has increased to $452 billion. Per capita income has increased to $1,901 from years $1,751.
The minister said the countrys foreign exchange reserves have increased to $17 billion from $4 billion three years ago. Remittances have reached $38 billion in the 11 months of the outgoing fiscal year.
The tax-to-GDP ratio has increased to 10.3 percent rising by 2 percent over a period of three years. The Pakistan Stock Exchange saw a record increase of 173,000 investors over the past year.
Reforms are underway in the Federal Bureau of Revenue. The government has introduced loan schemes, for farmers and businesses.
Bilawal Bhutto-Zardari attended the session. Earlier the PPP said its chairperson would not attend the session. Later clarified that the party was not boycotting the session.
PPP members staged a protest before the budget presentation demanding that the government provide Sindh its share of water.
PPP leader Shazia Marri talked to Geo News. Said that her party will only slightly take part in the budget meeting. She said this because her party thinks that the PML-N, their ally is being unreasonable.
The PPP had a meeting with its parliament members. Some important things were discussed. These included how the PML-N is running the country, elections in Gilgit-Baltistan, the situation in Azad Jammu and Kashmir and water shortages in Sindh and Balochistan.
Marri said that PPP always helps out when its good for the country.. Pml-N only thinks about itself. PPP can’t ignore its supporters for PML-N.
PPP wants to be given its fair share of power. Marri said that wherever PPP has the votes it should be respected. She reminded everyone that PPP helped PML-N form the government.
She warned them not to try to take PPPs power. PPP wants what is rightfully theirs.
The federal cabinet had a meeting, at the Parliament House. They approved the budget for the year.
Earlier Prime Minister Shehbaz Sharif met with MQM-P. They talked about the budget. He said that MQM-P is an important partner. He praised them for helping the country.
