Growth pegged at 4.1% as IMF oversight tightens and employees push back on salary proposals
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The federal government has proposed a Rs17.1 trillion budget for fiscal year 2026-27, with inflation projected at 8.4%. Budget sessions of the National Assembly and Senate are scheduled for June 5, preceded by a special federal cabinet meeting. The National Economic Council convenes June 3 to approve the Public Sector Development Programme, while the Economic Survey drops a day earlier on June 4.
The proposed budget sets a tax revenue target of Rs15,267 billion and allocates Rs7,824 billion for debt interest payments. Defence spending stands at Rs2,665 billion, non-tax revenue is projected at Rs2,768 billion, the federal PSDP is capped at Rs1.1 trillion, and the petroleum levy target is Rs1,727 billion.
Government employees are likely to receive a 7–10% salary and pension increase. Unions, however, are demanding up to 100% raises to keep pace with inflation. Representatives have threatened protests outside the Finance Ministry before budget day and outside Parliament on June 5 itself, warning of nationwide agitation if demands go unmet.
PM Adviser Rana Sanaullah described the upcoming budget as public-friendly, promising broad relief for salaried workers and inflation-hit segments of society. Prime Minister Shehbaz Sharif is expected to formally announce the relief package soon.
Despite the promises, analysts caution that meaningful relief remains limited. Research from Topline Research and JS Global Capital indicates the budget leans toward fiscal discipline rather than populist measures. A fourth consecutive primary surplus is anticipated in FY27, with the FBR tasked with collecting Rs15.3 trillion — requiring revenue growth of 14–20%. The IMF has upgraded FBR benchmarks to binding performance criteria, leaving the government little room to offer exemptions or discretionary relief without risking programme compliance.
