Pakistan’s federal Budget 2025‑26

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Table Of Contents

1 Pakistan’s federal Budget 2025‑26
2 💡 Major Sectoral & Policy Measures
3 ✏️ Summary Table
4 ✅ Key Takeaways
5 🔍 FAQs

Total Outlay
— Reduced to ₹17.57 trillion (~$62 billion), down ~7% from FY 2024–25’s ₹18.9 trillion (reuters.com).
Defense Spending
— Increased by ~~20%, from ₹2.12 trillion to ₹2.55 trillion (~~$9 billion), following recent India‑Pakistan tensions (apnews.com).
GDP Growth Target
— 4.2% growth projected for FY 2025–26 (up from estimated 2.7% in FY 2024–25) (brecorder.com).
Fiscal Deficit & Primary Surplus
— Fiscal deficit targeted at ~3.9% of GDP; primary surplus projected at 2.4% (brecorder.com).
Inflation Forecast
— CPI inflation expected around 7.5%, down from prior highs (~29%) .
Revenue & Tax Collections
— Gross revenue target: ₹19.28 trillion; tax revenue: ₹14.1 trillion (english.news.cn, arabnews.com).
— Ambitious tax‑to‑GDP ratio target: 14%; aggressive tax‑evader crackdown and digitization of FBR systems (tribune.com.pk).
Debt Servicing & Interest Payments
— Interest payments budgeted at ~₹8.21 trillion (≈47% of total outlays) (finance.gov.pk, english.news.cn).
Development Spending (PSDP)
— Public Sector Development Program allocated ~₹1 trillion, focused on transport, water, and energy projects (dawn.com).

💡 Major Sectoral & Policy Measures

1. Defense & Internal Security

Emerging as the top priority, with spending up ~20%, partly to fund acquisitions like J‑35 fighter jets from China, amid recent military tensions (ft.com).

2. Tax Reforms & Digitization

FBR pushing digital tax compliance: e‑invoicing, faceless audits, AI‑driven fraud detection, e‑way billing (tribune.com.pk).
Simplified income tax for salaried class: 2.5% on incomes ₹600k–1.2m; other brackets reduced (english.news.cn).
Aims to increase tax base, counter non-filers via stricter enforcement (reuters.com).

3. Macroeconomic Stabilization

Debt-to-GDP ratio decreased (~74% → 70%), aiming lower (arynews.tv).
Foreign exchange reserves expected to hit $14 billion; remittances at $37–38 billion (english.news.cn).
Current account surplus targeted at $1.5 billion (english.news.cn).

4. Subsidies & Interest Relief

Subsidy cuts (~~14%) and reduced interest outlays (~~₹2.26 trillion savings) (dawn.com).
Electricity and fuel levy increases included (dawn.com).

5. Pro‑Growth Initiatives

Incentives for construction and real estate sectors (dawn.com).
Emphasis on boosting exports, green energy, gen‑up farmers, and agriculture tech under “Green Pakistan Initiative” (english.news.cn).
Promotion of digital economy, including Pakistan Crypto Council and blockchain strategy (en.wikipedia.org).

6. IMF Compliance & Structural Reform

Budget shaped by conditions of a $7 billion IMF programme (ft.com).
Focus on widening tax net (agriculture, retail, real estate), subsidy rationalization, and tariff reforms (reuters.com).

✏️ Summary Table

Indicator	2025–26 Budget Estimate
Total Outlay	₹17.57 trillion (~–7%)
Defense Spending	₹2.55 trillion (+20%)
GDP Growth	4.2%
Inflation (CPI)	~7.5%
Fiscal Deficit	3.9% of GDP
Primary Surplus	2.4% of GDP
Tax Revenue	₹14.1 trillion
Interest Payments	₹8.21 trillion
PSDP	₹1 trillion

✅ Key Takeaways

Austerity with Prioritisation
Budget cuts across the board, but defense and debt servicing receive priority.
Structural Reforms Ahead
Major push for digitization in tax administration and expanding the tax base.
Growth-Driven Yet Restrained
Growth projected at 4.2%, inflation curbed to 7.5%, with macro stability central.
IMF-Aligned Measures
Budget reflects conditional structural reforms tied to IMF financing.

🔍 FAQs

Q1: What is Pakistan’s fiscal deficit target for FY 2025–26?
~~The fiscal deficit is targeted at 3.9% of GDP, down from around 5.9% in FY 2024–25~~ (apnews.com, reuters.com, brecorder.com, arabnews.com, dawn.com, reuters.com).

Q2: How much is allocated for defense in this budget?
Defense spending has been raised to ₹2.55 trillion (~$9 billion), a 20% increase (apnews.com).

Q3: Are there tax reliefs for salaried individuals?
Yes—income brackets of ₹600k–1.2 m now taxed at 2.5%, down from 5%; other concessions across slabs (english.news.cn).

Q4: What reforms are being introduced in taxation?
The FBR is digitizing tax systems with e‑invoicing, AI audits, faceless filings, and stronger anti-evasion measures (tribune.com.pk).

Q5: Does the budget support agriculture and green energy?
Yes—focus on the “Green Pakistan Initiative,” funding for agri-tech, livestock schemes, and renewable energy investments (english.news.cn).