The federal government has presented a Rs28.8 trillion compulsory expenditure bill for the fiscal year 2025-26, marking a 17% reduction compared to the current fiscal year, mainly due to lower interest rates. Despite this, key state organs have seen significant increases in their budgets.
Finance Minister Muhammad Aurangzeb laid the bill before the National Assembly on Monday, which includes funding for debt servicing and the operating costs of various state organs, such as the Presidency, the Supreme Court, the National Assembly, the Senate, and the Federal Tax Ombudsman.
Under the Constitution, these expenses are considered “charged expenditures,” meaning the National Assembly cannot vote on them.
The bill allocates Rs27.8 trillion for debt repayment and interest costs, a 17.5% reduction compared to last year. The reduced costs are attributed to a reduction in interest rates from 22% to 11%, as well as the government’s preference for long-term debt instruments, which has eased domestic debt repayments. However, foreign debt repayments, especially short-term debt, have increased significantly.
The government has requested Rs8.2 trillion for domestic debt servicing, down 17% or Rs1.5 trillion from the previous fiscal year. For foreign debt servicing, a record Rs5.4 trillion is requested, marking an 11% increase. Interest payments on both domestic and foreign loans are expected to consume 47% of the total proposed budget of Rs17.6 trillion.
The budget for key state organs has also seen increases. The Presidency’s budget has been set at Rs2.7 billion, a 17% increase, while the Supreme Court’s budget has grown by 51%, reaching Rs6.6 billion. The Senate’s budget has risen by 19%, to Rs6.2 billion.
The National Assembly’s budget has been slightly reduced by Rs400 million, totaling Rs6.9 billion. The Islamabad High Court will receive Rs2.2 billion, a 15% increase, and the Election Commission is allocated Rs9.9 billion. Other bodies, such as the Federal Tax Ombudsman, will also see increases in their budgets.
Despite some reductions, the government’s allocation for key institutions raises concerns about the fiscal burden, with critics pointing to the widening gap between state spending and economic challenges, keeping Pakistan reliant on external financial support.
