Pakistan to unveil Rs17.5 trillion budget today with Rs15.27 trillion tax target, 4.1% growth goal

The Pakistan government is set to present a Rs17.5 trillion consolidated budget for the fiscal year 2026-27 in the National Assembly today [Friday], with a Federal Board of Revenue (FBR) tax collection target of Rs15.267 trillion and an economic growth goal of 4.1%.

Finance Minister Muhammad Aurangzeb will unveil the budget after a one-week delay, with the spending plan shaped by commitments under Pakistan's International Monetary Fund (IMF) programme and growing economic pressures stemming from regional developments.

The budget framework targets inflation of 8.2% for the next fiscal year, compared with 11.7% recorded in May, while aiming to raise GDP growth from this year's projected 3.7% to 4.1%. The IMF has forecast Pakistan's growth at 3.5%.

According to officials, the budget will focus on fiscal consolidation, revenue mobilisation, economic stabilisation, job creation and measures aimed at supporting low-income households. Cash transfer programmes are expected to remain a key component of social protection efforts.

The government is also expected to propose a mix of revenue-enhancing and expenditure-control measures to meet IMF targets while maintaining support for vulnerable segments of society. Modest salary increases for government employees are also anticipated.

Pakistan's fiscal plans come amid rising economic uncertainty linked to the Iran-US conflict, which has pushed global oil prices higher and added pressure on domestic inflation.

The government is seeking a significant increase in tax revenues next year, with the FBR target set about 37% higher than the current year's goal, which tax authorities are expected to miss.

Economists note that a large informal economy continues to limit tax collection. Official data shows only 1.3% of Pakistanis filed tax returns showing taxable income last year, while just 7.7% of adults hold a debit or credit card.

Business sentiment has also weakened. S&P Global's manufacturing survey showed business confidence in May at its lowest level since the survey began last year, while input costs reached a 21-month high and employment declined for a second consecutive month.

The State Bank of Pakistan raised its policy rate by 100 basis points in April, marking its first increase in nearly three years.

Meanwhile, development spending is expected to remain constrained. Planning Minister Ahsan Iqbal has indicated that no new development projects will be launched during the next fiscal year, except those related to defence and internal security.

Analysts say the burden of higher taxes and energy costs is likely to fall primarily on documented businesses and salaried individuals, while broader efforts to bring untaxed sectors into the formal economy remain a key challenge for policymakers.