ISLAMABAD (Urdu Times) People-friendly budget today; the Federal government to present

ISLAMABAD (Urdu Times) A people-friendly budget government will be presented in the National Assembly today. Federal Finance Minister Muhammad Aurangzeb is going to present a federal budget of Rs 17.1 trillion, about $ 61 billion, in the National Assembly on Friday, June 12, 2026.
Prepared under the pressure of meeting the strict conditions and targets of the IMF,
The most important proposals and estimates of the budget are as follows:
Key targets and figures of the new federal budget 2026-27. Total volume: Rs 17.1 trillion. Tax revenue target The FBR’s tax target for the next fiscal year has been proposed at Rs 15,267 billion (15.26 trillion). Non-tax revenue: Rs 2,768 billion is expected.
Interest payments on loans: The largest portion of the budget, i.e., Rs 7,824 billion, is proposed to be allocated solely for interest payments on external and internal loans.
Defense Budget: It is proposed to keep Rs 2,665 billion for the defense sector expenditure.
Federal Development Budget: The volume of the federal development program is expected to be Rs 1.126 trillion.
Petroleum Levy Target: The target is to collect Rs 1,727 billion through the levy on petrol and diesel.
Economic Growth and Inflation Estimates Economic Growth Rate: It is proposed to set the growth target for the new fiscal year at 4.1 percent.
Average Inflation: The average inflation in the country is estimated at 8.4 percent for the fiscal year 2026-27.
Impact on the public and the middle class. According to reports, the tax burden on the registered business sector and the middle class is likely to increase due to the conditions of the IMF program, while efforts will be made to provide relief to the poorest class through social security, such as the Benazir Income Support Program. Government employees’ organizations have demanded a large increase in salaries in line with inflation. According to the Pakistan Economic Survey 2025-26 by the Finance Minister, the overall growth rate of the country’s economy (GDP Growth) has been recorded at 3.7 percent, which is the highest in the last four years.
However, this was lower than the set target of 4.2 percent. The most important figures of the Economic Survey for the financial year 2025-26 and the performance of the sectors are as follows:
Overall economic indicators: For the first time in the history of Pakistan, the size of the country’s economy has reached a record level of 126.9 trillion rupees ($452.1 billion).
Per capita income: Increased to US$1,901 from US$1,751 last year.
Inflation rate: Average inflation rate recorded at 6.2% during July-April.
Remittances: Remittances sent by overseas Pakistanis touched a historic high of US$38.1 billion.
Growth rates of key sectors
Economic sector growth rates achieved (FY 2025-26) Key drivers and details Services sector (4.09%) was the biggest driver of economic growth, which is the highest level in the last 4 years.
Industry sector (3.51%) Large-scale manufacturing (LSM) improved by 6.1% due to recovery.
Agriculture sector (Agriculture) 2.89% Despite the floods of 2025, agriculture showed resilience thanks to livestock.
The overall poverty rate in the country has increased to 28.9 percent, which means that about 29 percent of the citizens are living below the poverty line. Poverty was recorded as highest in Balochistan (47 percent), while the lowest was in Punjab (23.3 percent). IT Exports: The country’s information technology (IT) exports exceeded $3.8 billion. According to the survey, more than 700,000 Pakistanis left the country for employment and other opportunities during the year 2025. The growth rate of the livestock sector was 3.75 percent. The number of donkeys in the country has increased by 1.9 percent to 6.16 million. Finance Minister Muhammad Aurangzeb will present a budget of 17.1 trillion rupees ($61 billion) for the fiscal year. The budget will focus on increasing revenues and reducing expenditures, while seeking to protect the country’s poorest. According to experts, the increasing burden of fuel, electricity, and taxes in Pakistan will mostly affect registered businesses and the salaried class, as politically influential sectors such as agriculture, retail, and real estate remain difficult to tax. To achieve the goals, the government will have to crack down on non-filers, farmers, and traders. However, the political will to deepen the tax net rather than widen it is lacking. Policymakers not only have to contend with the terms of the recent IMF bailout package but also deal with the wider impact of the US-Israeli war on Iran, a dispute in which Islamabad has tried to mediate. The sudden increase in oil prices due to the war has pushed Pakistan’s inflation back into double digits, at a time when the economy seemed to be getting back on its feet. Pakistan is one of the major economies in the Asia-Pacific region that is most vulnerable to the prolonged conflict in the Middle East, given its reliance on energy imports from the Gulf, remittances from there, and financial aid from the region. The government is targeting 4.1 percent economic growth for the fiscal year 2026-27, higher than the 3.7 percent expected this year and the IMF’s 3.5 percent forecast, while the inflation target for the full year is being set at 8.2 percent, significantly lower than the 11.7 percent inflation reported in May. However, business confidence in May hit its lowest level since S&P started its manufacturing survey last year. Meanwhile, production costs hit a 21-month high while employment fell for a second straight month. The central bank raised interest rates by 1 percentage point in April, the first increase in nearly three years. The government is pressuring the Federal Board of Revenue to raise its tax collection target for next year to 37 percent above this year’s target, while the agency appears to be failing to meet its own target for this year. A vast, undocumented economy keeps a large part of Pakistan’s capital out of the FBR’s reach: Last year, only 1.3 percent of Pakistanis filed returns declaring taxable income, and only 7.7 percent of adults have a debit or credit card. The number of tax filers has increased, but revenue has not grown at the same pace. Corporate tax rates are already high by global standards, while a further increase in income tax would completely crush the purchasing power of the people, who are already struggling to cope with the effects of two years of severe inflation. Without taxes on agriculture, real estate, and retail, the fiscal deficit may be reduced, but the trust deficit between citizens and the state will deepen. Spending on economic growth is under severe pressure. Apart from defense and domestic policies, no new projects will be launched next year. However, it is hoped that the budget will provide cash transfers to the poorest citizens to protect them. The government is trying to resolve some issues with the IMF, including the issue of funds being withdrawn by provinces for federal spending. The IMF had said last month that Pakistan has agreed to a budget surplus target of 2 percent for the coming fiscal year, excluding debt payments. According to the Economic Survey 2025-26, Pakistan’s economy grew at a rate of 3.7 percent in the fiscal year 2025-26, which was lower than the 4.2 percent target set in the previous budget. Federal Finance Minister Senator Muhammad Aurangzeb released the Economic Survey ahead of the federal budget on Thursday. When asked about the agreement with the International Monetary Fund (IMF) on budget targets, the finance minister said that talks are ongoing. He said that we are in talks with them and the talks are progressing positively. Talking to reporters, Muhammad Aurangzeb said that when we started this fiscal year, there was global trade uncertainty related to tariffs. By the end of July, we were able to achieve a competitive position in terms of our exports, especially exports to the United States.
He said that Pakistan faced floods, and then the regional conflict started in March. All these three factors were external in nature, which affected the economy.
According to the Economic Survey, Pakistan’s economy continued to make progress towards stabilization under the IMF program, but the performance of key sectors remained mixed. Pakistan’s per capita income increased by 9 percent to $1,901 in the fiscal year 2025-26. The report said that the process of income recovery has resumed with economic growth. While the size of Pakistan’s economy increased to Rs126.9 trillion ($452.1 billion) in the fiscal year 2025-26. According to the Economic Survey, this is the largest size of the economy recorded in Pakistan’s history. According to interim data, the growth rate of the agriculture sector in the fiscal year 2025-26 was 2.9 percent. The Finance Minister said that this performance was achieved despite the floods. Government measures and timely relief measures helped the crop sub-sector recover in the wake of the 2025 floods, due to which the sector performed better than expected. The livestock sector grew by 3.75 percent in the fiscal year 2026, compared to 2.95 percent in the fiscal year 2024-25. Industrial production grew by 3.5 percent during the fiscal year, mainly due to the better performance of the manufacturing and construction sectors, while the services sector achieved a growth rate of 4.1 percent, the highest in the last four years. Muhammad Aurangzeb said that the services sector remains a strong pillar of Pakistan’s economic growth as it contributes about 58 percent to the Gross Domestic Product (GDP). Large Scale Industries (LSM) recorded a growth of 6.1 percent, reflecting broad-based growth. According to him, growth was seen in 16 out of 22 manufacturing sectors, including food, textiles, and apparel, among others. Pakistan’s fiscal deficit in the fiscal year 2025-26 (July-March) was limited to 0.7 percent of GDP, while it was 2.6 percent last year. At the same time, the primary surplus reached 3.2 percent of GDP. According to the report, fiscal discipline is transforming into strong economic fundamentals. The Federal Finance Minister said that Pakistan needs to increase both its exports and remittances. Remittances increased by 9 percent to $33.9 billion during July-April of the current fiscal year. Remittances are part of the structural economy of the countries of our region. They will continue to play a very important role in our external balance position in the future. He appreciated the role of Pakistanis living abroad. Muhammad Aurangzeb also shared the details that the government expects the volume of remittances to reach $41 to $42 billion by the end of the current fiscal year. Talking about trade indicators, the Finance Minister admitted that Pakistan’s exports have declined and there are two major reasons for this. He said that rice exports have decreased by $1.1 billion, while sugar exports, which were a one-time issue, have decreased by $400 million. Thus, the total food sector exports have decreased by $1.5 billion. There has been an improvement in textile exports during the fiscal year. Pakistan’s exports of goods during July-March 2026 were $22.7 billion, while this volume was recorded at $24.7 billion in the same period last year. The Finance Minister said that people and industry need to rethink their business models and production capacity.
He also highlighted the increase in exports of sports goods, which were $319 million during July-March 2026, and mentioned that the football to be used in the upcoming FIFA World Cup has been manufactured in Pakistan. IT exports exceeded $3.8 billion during the July-April period of the current fiscal year and are expected to exceed $4.5 billion by the end of the fiscal year. According to the report, the annual income of freelancers increased from $642 million in fiscal year 2025 to $959 million in fiscal year 2026. Imports during July-March of fiscal year 2026 increased by 6.9 percent to $50.7 billion, compared to $47.4 billion in the same period last year.