Debt servicing takes 69% of revenue as fiscal consolidation limits development spending and reforms stay gradual.
Image: Sarmayaa.pk
Pakistan’s FY 2026–27 federal budget focuses on stability rather than growth. It reflects macroeconomic improvement but weak economic momentum.
The government projects GDP growth of 4%, inflation of 8.2%, and a fiscal deficit of 2.9%. These targets align with IMF requirements but rely on strong assumptions.
Revenue collection is central. The Federal Board of Revenue target is Rs15.264 trillion, a 17.5% rise, despite past shortfalls.
Tax policy continues to rely heavily on indirect taxes and withholding mechanisms. This places a larger burden on consumers and formal businesses.
Some relief measures include removal of the income tax surcharge and lower corporate super tax. Customs duty rationalisation and targeted exemptions aim to support exports and industry.
Debt servicing dominates spending. Interest payments reach Rs8.054 trillion, consuming about 69% of net federal revenue.
This limits fiscal space for development and social investment. The Public Sector Development Programme remains around Rs1 trillion.
Provincial transfers are projected at Rs8.848 trillion, with the budget assuming a large provincial surplus. Any shortfall could widen the deficit.
Social protection remains focused on the Benazir Income Support Programme, allocated about Rs845 billion.
Overall, the budget prioritises consolidation and IMF compliance over expansion. It stabilises finances but does not significantly boost growth or productivity.
