Pakistan government proposes Rs17.1 trillion federal budget for FY2026-27

The federal government has proposed a Rs17.1 trillion budget for fiscal year 2026-27, setting a GDP growth target of 4.1%, an average inflation projection of 8.4%, and a tax revenue target of Rs15.267 trillion. The federal budget will be presented in the National Assembly on June 5, 2026. 

According to Ministry of Finance sources, the National Economic Council (NEC) is scheduled to meet on June 3 to approve the Public Sector Development Programme (PSDP) for the next fiscal year. The annual Economic Survey for the current fiscal year will be released on June 4 and a special federal cabinet meeting will be held on June 5 to approve the budget before the parliamentary sessions. 

Finance Ministry sources said the petroleum levy target has been fixed at Rs1.727 trillion for FY27. The federal PSDP is expected to be Rs1.1 trillion, while non-tax revenue has been projected at Rs2.768 trillion.

The government has proposed Rs7.824 trillion for interest payments on debt and Rs2.665 trillion for defence expenditure.

The upcoming budget is being prepared in consultation with the International Monetary Fund (IMF), with most matters already settled. 

As per sources, the government has also prepared proposals for increases in salaries of the salaried class and pensions for pensioners. The budget may include a 7% to 10% increase in salaries and pensions for government employees.

However, government employees have demanded up to a 100% increase in salaries and pensions in line with inflation. Their representatives have announced a protest outside the Ministry of Finance a day before the budget and outside Parliament on budget day if their demands are not accepted.

Research previews by Topline Research and JS Global Capital indicate that the FY27 budget is expected to focus on fiscal discipline and policy continuity rather than major relief measures or policy shifts.

Both brokerage houses expect continued fiscal consolidation and a fourth consecutive primary surplus in FY27. However, they said sustaining that position would require strong revenue mobilisation at a time when economic recovery remains fragile.

According to IMF-linked targets highlighted in the reports, the Federal Board of Revenue (FBR) is expected to collect about Rs15.3 trillion in taxes during FY27. This would require revenue growth of around 14% to 20%, depending on the final FY26 collection base.