Islamabad, June 10, 2025 — Today, Finance Minister Muhammad Aurangzeb presented Pakistan’s federal budget for the fiscal year 2025–26 in the National Assembly, announcing a total outlay of approximately Rs 17.6 trillion ($62 billion). The budget, slightly below the Rs 18.78 trillion allocated in FY25, reflects a 6.7% reduction amid efforts to impose fiscal discipline under an IMF-supported economic roadmap .
During the session chaired by Speaker Ayaz Sadiq, the budget speech outlined key priorities including boosting defence spending, expanding the tax base, reforming subsidies, and providing modest relief to government servants and pensioners geo.tv.
📊 Budget Highlights
- Total Outlay: Rs 17.6 trillion (6.7% down from FY25’s Rs 18.78 trillion) profit.pakistantoday.com.pk+8geo.tv+8propakistani.pk+8
- Fiscal Deficit: Target set at 4.8% of GDP, down from the previous year’s 5.9% reuters.com
- Tax Revenue Goal: FBR tasked with collecting Rs 14.13 trillion, up from the current fiscal’s revised Rs 12.33 trillion brecorder.com+8geo.tv+824newshd.tv+8
- Non-Tax Revenue: Expected in the range of Rs 4–5.2 trillion, driven by petroleum levies and SBP profits
🛡️ Defence, Debt & Salaries
- Defence Budget: Set at Rs 2.55 trillion, marking an ~18–20% increase following recent regional tensions geo.tv+1reuters.com+1
- Interest Payments: Reduced to about Rs 8.2 trillion, down from Rs 9.7–9.8 trillion last year, thanks to lower policy rates arynews.tv
- Public Sector Salaries: Proposed raise of 7.5–10%; pensions to increase by 5–7.5%, with a Disparity Allowance up to 30% for grades 1–16 geo.tv
🛠️ Development & Subsidy Reforms
- PSDP Allocation: Development outlay remains around Rs 1 trillion profit.pakistantoday.com.pk+3geo.tv+3brecorder.com+3
- Subsidies & Grants: Set at Rs 1.186 trillion and Rs 1.9 trillion respectively geo.tv
- Policy Reforms: Budget envisages stricter enforcement of agricultural and retail tax, rationalisation of GST on petroleum products, ending unnecessary supplementary grants, and broader FBR collection measures pakobserver.net+4reuters.com+4brecorder.com+4
⚖️ Fiscal Outlook & Challenges
- Deficit Financing: With revenues largely allocated to debt servicing and defence, the government faces a fiscal gap of Rs 6–7 trillion, necessitating substantial borrowings geo.tv+1pakobserver.net+1
- IMF Commitments: As part of a $7 billion bailout, the budget aligns with IMF mandates through austerity steps, allied with structural reforms aimed at stabilising the economy
- Economic Forecast: Projected GDP growth is 4.2% for FY26, improved from 2.7% this year, while inflation is expected to stay within a manageable range thanks to reduced interest rates reuters.com+1brecorder.com+1
🏛️ Parliamentary Schedule & Next Steps
The budget debate has begun—general discussion runs until June 21, followed by detailed review of demands for grants, cut motions, and final approval of the Finance Bill by June 26. Supplementary grants are scheduled for June 27 geo.tv+1pakobserver.net+1.
🧭 Analyst Views
Despite fiscal tightening, analysts caution that the ambitious revenue targets and reforms will hinge on the FBR’s performance. Many observers remain skeptical about achieving full projections without meaningful structural change to expand the tax net, particularly within agriculture, retail, and real estate sectors reuters.com+124newshd.tv+1.
Bottom line: The FY26 budget strikes a cautious balance—prioritising defence and debt service while promising modest welfare for public servants and adherence to IMF‑led structural reform. Success will depend on implementation discipline and the FBR’s ability to mobilise revenue in an economy still testing its resilience.