ISLAMABAD: Pakistan’s government is set to present its federal budget on Friday, which is expected to place a heavier financial burden on the middle class and registered businesses as part of efforts to boost revenue and reduce public spending under International Monetary Fund (IMF) conditions.
According to reports, Finance Minister Muhammad Aurangzeb will present a delayed 17.1-trillion-rupee ($61 billion) budget for the fiscal year 2026-27. The government aims to balance fiscal consolidation with limited economic growth while protecting low-income groups through targeted subsidies and cash transfers.
The Pakistan budget 2026 comes at a time when the country is under pressure to meet IMF austerity targets, requiring strict financial discipline. Analysts say the burden of higher fuel prices, electricity tariffs, and taxation will mainly fall on salaried individuals and formal businesses, while sectors like agriculture, retail, and real estate remain largely under-taxed due to political constraints.
Experts warn that Pakistan’s economy is facing structural challenges, including low tax compliance and a large informal sector. Only a small percentage of the population files income tax returns, limiting the government’s ability to broaden the tax base. The Federal Board of Revenue (FBR) has been directed to significantly increase tax collection targets for the upcoming fiscal year.
Economic analysts believe that without expanding taxation to under-taxed sectors, Pakistan may struggle to reduce its fiscal deficit sustainably. At the same time, rising global oil prices due to geopolitical tensions have added inflationary pressure, pushing inflation back into double digits.
The government has set an ambitious growth target of 4.1% for fiscal year 2026-27, compared to the IMF forecast of 3.5%. However, business confidence remains weak due to high input costs, rising interest rates, and declining employment trends in the manufacturing sector.
Planning officials have also indicated that development spending may be restricted, with priority given to defence and essential government operations. Despite economic challenges, the budget is expected to maintain social protection programs for vulnerable segments of society.
The Pakistan budget 2026 is being closely watched by investors, economists, and international lenders as it reflects the country’s ongoing struggle between economic stability, IMF compliance, and domestic political pressures.
