ISLAMABAD: Finance Minister Muhammad Aurangzeb has defended the federal budget for fiscal year 2026-27, describing it as a pro-growth and relief-oriented budget designed to accelerate economic activity, support exports, and strengthen Pakistan’s economic recovery.
Addressing a post-budget press conference on Saturday, Aurangzeb said the government had utilized available fiscal space to introduce measures aimed at achieving sustainable and export-led growth.
The finance minister emphasized that the budget includes several initiatives to encourage investment, improve business confidence, and promote industrial expansion. Among the key measures are reductions in income tax rates for various salaried income groups and the gradual abolition of the super tax across multiple income slabs. According to the government, these steps are intended to provide relief to taxpayers while stimulating economic growth.
Aurangzeb highlighted that Pakistan remains in continuous consultation with the International Monetary Fund (IMF) as part of its ongoing economic reform programme. He stressed that the government is focused on improving tax compliance, strengthening enforcement mechanisms, and reducing leakages within the revenue collection system to meet ambitious fiscal targets.
Responding to concerns regarding renewable energy taxation, the finance minister clarified that no proposal to impose taxes on solar panels was ever under consideration. He also reiterated the government's commitment to supporting the private sector and enhancing employment opportunities through economic reforms.
Discussing trade and exports, Aurangzeb said the government is implementing a five-year tariff rationalization plan aimed at reducing costs for raw materials and intermediate goods. He noted that while reducing the trade deficit remains a priority, the services sector, particularly the rapidly growing IT sector, will play an increasingly important role in Pakistan’s future economic development.
The federal budget for FY2026-27 totals Rs18.77 trillion and includes tax incentives for exporters, the construction industry, and the real estate sector. The government has set a revenue target of Rs15.264 trillion, reflecting a significant increase from the revised estimates of the outgoing fiscal year.
Aurangzeb further announced plans to modernize Pakistan’s taxation system through automation and artificial intelligence, reducing human intervention and enhancing transparency.
The government projects economic growth of 4 percent during the next fiscal year, while average inflation is expected to remain around 8.2 percent. Officials believe the budget will provide a roadmap for economic stability, investment growth, and long-term fiscal sustainability while maintaining compliance with IMF-backed fiscal discipline targets.
