PM cites economic turnaround ahead of FY27 budget as GDP growth hits 3.7%

Prime Minister Shehbaz Sharif on Friday defended his government's economic management ahead of the presentation of the Federal Budget 2026-27, pointing to lower inflation, reduced borrowing costs and a return to growth after two years of stabilisation measures.

The remarks came as Finance Minister Muhammad Aurangzeb prepared to unveil the government's fiscal plan for FY27 in the National Assembly, setting out revenue proposals, expenditure priorities and broader economic targets for the coming year.

Addressing a federal cabinet meeting, the prime minister said inflation had dropped to single digits from 38% recorded two years ago, describing the decline as a key indicator of economic recovery. He noted that prices had recently come under renewed pressure because of the ongoing conflict in the Middle East.

Shehbaz also said the policy rate had been brought down to 11% from 22.5% during the period, although developments linked to the US-Iran war had subsequently forced an upward adjustment.

Reflecting on the government's fiscal strategy, the premier said additional taxation introduced in the previous two budgets had been unavoidable, arguing that the measures were necessary to meet IMF requirements, restore economic stability and create space for future growth.

"Today, we are presenting the third budget of our government," he told cabinet members, adding that sustainable development was not possible without a strong national security foundation.

Earlier, in a post on social media platform X, the prime minister said the budget had been prepared with "great diligence and sincerity" and that the welfare and prosperity of the Pakistani people remained the government's foremost consideration.

The budget is being presented a day after the release of the Pakistan Economic Survey 2025-26, which showed the economy growing by 3.7% during the outgoing fiscal year.