Prime Minister Shehbaz Sharif has claimed that the government has secured an exemption for Pakistan’s agriculture sector from taxation under negotiations with the International Monetary Fund (IMF), following persistent pressure from the lender.
Speaking at a federal cabinet meeting on Wednesday, the prime minister said the government made it clear to the IMF that it would not tax agricultural inputs such as fertilisers and pesticides. “Despite insistence from the IMF, they have accepted our position,” he stated.
Shehbaz argued that the agriculture sector in Pakistan was already “under pressure” and needed protection rather than additional fiscal burden.
The prime minister also provided a revised income tax estimate for the salaried class, stating that individuals earning between Rs600,000 and Rs1.2 million annually will be subject to just 1% income tax. However, this contradicts the rate of 2.5% announced by Finance Minister Muhammad Aurangzeb during his FY26 budget speech and outlined in the Finance Bill 2025.
Government salaries have also been increased by 10%, he confirmed.
The latest remarks follow the government’s presentation of the FY2025–26 federal budget last week, which targets a GDP growth rate of 4.2% amid a broader narrative of economic stabilisation. The outgoing fiscal year’s growth rate is expected to close at 2.7%.
In reference to regional security developments, the prime minister said the government had expanded its fiscal space to accommodate increased defence expenditure in response to ongoing tensions with India. “It is a dire need of the time,” he said.
Additionally, Rs1 trillion has been earmarked for the Public Sector Development Programme (PSDP), with Shehbaz reiterating the need to “honour commitments made with our partners” in development and infrastructure.
Concluding his address, Shehbaz said Pakistan had averted sovereign default and was now positioned to advance along a “sustainable path” of economic recovery.
