ISLAMABAD: Pakistan Finance Minister Muhammad Aurangzeb on Friday presented the Federal Budget 2026-27 in the National Assembly, announcing a total outlay of Rs18.77 trillion aimed at supporting economic growth, infrastructure development, social welfare, and tax relief measures.
While opening his budget speech, the finance minister paid tribute to Pakistan’s armed forces for their role in safeguarding national interests during regional tensions in May 2025. He also acknowledged the efforts of the country’s civil and military leadership, highlighting Pakistan’s growing diplomatic importance during the ongoing Iran conflict, where both the United States and Iran reportedly expressed confidence in Pakistan’s mediation efforts.
Aurangzeb noted that the closure of the Strait of Hormuz and rising global oil prices had affected economies worldwide, including Pakistan. However, he emphasized that the government had absorbed much of the burden instead of transferring it directly to consumers. He assured citizens that petroleum prices would be reduced once international oil prices declined.
The finance minister highlighted key economic achievements, stating that remittances reached $38 billion during the first 11 months of the fiscal year. He added that inflation had risen in recent months but was expected to remain around 7.5 percent. Tax collection is projected to reach Rs13 trillion by the end of the current fiscal year, compared to Rs7.2 trillion in 2022-23.
He also pointed to the success of the Digital Pakistan Program, revealing that over 1.6 million traders have adopted digital payment systems, while digital banking users increased to 133 million from 95 million a year earlier. More than 200 international companies have invested in government-backed technology parks, reflecting growing investor confidence in Pakistan’s economy.
Among the major budget allocations, the government set aside Rs1,000 billion for the Public Sector Development Programme (PSDP). Sustainable urban development projects will receive Rs54.6 billion, while Rs103.1 billion has been allocated for water availability initiatives. Key water projects include Rs14 billion for Diamer Bhasha Dam, Rs22 billion for Dasu Dam, and Rs10 billion for Karachi’s K-4 water project.
The education sector received significant attention, with Rs46 billion allocated for higher education, Rs22 billion for the Danish Schools Program, and Rs26.3 billion for school and college education initiatives. The health sector will receive Rs25.1 billion, while Rs144.9 billion has been earmarked for Azad Jammu and Kashmir and Gilgit-Baltistan.
Social welfare spending remains a priority, with Rs838 billion allocated for the Benazir Income Support Programme (BISP). The government also announced Rs71 billion for the Prime Minister’s Apna Ghar housing scheme and Rs128 billion in petroleum subsidies to protect consumers from global oil price fluctuations.
Infrastructure development received major funding, including Rs365 billion for transport and communication projects. The N-25 Pakistan Expressway was allocated Rs100 billion, while the M-6 Sukkur-Hyderabad Motorway will receive Rs30 billion. Gwadar Port infrastructure and provincial transport projects secured Rs93 billion.
The budget also offers substantial tax relief for salaried individuals. Income tax rates have been reduced across four salary brackets, while the 10 percent surcharge on salaried employees has been completely abolished. Government employees and pensioners will receive a 7 percent increase in salaries and pensions, while the minimum monthly wage has been raised by 10 percent.
For businesses, the government proposed abolishing Super Tax for companies earning between Rs150 million and Rs500 million annually. For firms earning above Rs500 million, the Super Tax rate will be reduced from 10 percent to 8 percent. However, existing tax structures will remain unchanged for banks, oil and gas exploration companies, and fertilizer manufacturers.
The Federal Budget 2026-27 reflects the government’s focus on economic stability, investment promotion, infrastructure expansion, social protection, and tax relief, while maintaining a strong emphasis on development and national security.
