ISLAMABAD: The federal government of Pakistan is expected to announce the budget for the fiscal year 2025-26, estimated at Rs17.68 trillion, on June 10. This budget is anticipated to reflect significant fiscal adjustments, with a major reduction in loan and interest expenditures due to an expected drop in the policy rate. Sources indicate that this could cut interest-related expenses by around Rs1,300 billion.
Compared to the current fiscal year's budget of Rs18.7 trillion, the new budget will be approximately Rs900 billion lower, signaling a shift towards greater financial discipline. The upcoming fiscal plan is expected to prioritize strict austerity measures, with several cost-cutting initiatives likely to be enforced.
One of the key measures under consideration includes a complete ban on the purchase of new vehicles for all federal ministries and departments. Additionally, ministries will be directed to curtail their utility expenses, including electricity and gas usage, to reduce operational costs.
In line with conditions set by the International Monetary Fund (IMF), the issuance of supplementary grants will be heavily restricted. Emergency funds will only be considered in cases of natural disasters or other unforeseen calamities.
An estimated Rs8,685 billion is expected to be allocated for servicing debt, with Rs7,503 billion set aside for domestic debt and Rs1,119 billion for foreign obligations. Furthermore, the government plans to allocate Rs1,367 billion for subsidies and Rs1,619 billion for grants.
The budget deficit is projected to reach Rs6,632 billion. To help mitigate this, the federal government is counting on a provincial surplus of Rs1,220 billion. Social protection initiatives remain a priority, with the Benazir Income Support Programme (BISP) likely to receive Rs716 billion. Moreover, the quarterly stipend under BISP is projected to rise from Rs13,500 to Rs14,500 by January 2026.
These measures reflect the government's attempt to balance economic stabilization with targeted welfare spending amid ongoing fiscal challenges.
