Finance Minister Aurangzeb unveils Rs17.573 trillion federal budget for FY 2025-26

Islamabad (Web Desk): Finance Minister, Senator Muhammad Aurangzeb, presented the Rs17.573 trillion federal budget for the fiscal year 2025-26 in the National Assembly (NA), amidst opposition protests.

The budget aims to promote a competitive economy, increase foreign exchange reserves, and reduce fiscal payment imbalances, thereby boosting overall economic productivity.

He said that the government has set an annual economic growth target of 4.2% and expects the inflation rate to remain at 7.5% during the upcoming fiscal year.

The fiscal deficit is projected to be 3.9% of the GDP, while the primary surplus is expected to be 2.4% of GDP.

The finance minster said that the Federal Board of Revenue (FBR) has been assigned a revenue target of Rs14,131 billion, representing an 18.7% increase compared to the ongoing fiscal year 2024.

Out of the total federal revenues, provinces will receive Rs8,206 billion.

The target for federal non-tax revenues has been set at Rs5,147 billion, while the net revenues of the federal government will be Rs11,072 billion.

Total federal government expenditures are projected at Rs17,573 billion, with Rs8,207 billion allocated for markup payments.

Current federal government expenditures stand at Rs16,286 billion. The government plans to allocate Rs1,000 billion for the annual Public Sector Development Programme (PSDP). Additionally, Rs2,550 billion and Rs971 billion will be allocated for defense and civil services, respectively.

For pensions, Rs1,055 billion has been allocated, while Rs1,186 billion will be used for subsidies in the power and other sectors. The government has also set aside Rs1,928 billion in grants for BISP, Azad Jammu and Kashmir, Gilgit Baltistan, and newly merged districts of Khyber Pakhtunkhwa.

The finance minister emphasized the government's intention to increase coverage under the flagship BISP initiative, raising the number of beneficiary families to 10 million. The allocated amount for BISP has been increased by 21% to Rs716 billion.

Aurangzeb highlighted the government's measures that have led to resilient macroeconomic indicators.

A primary surplus of 2.4% has been achieved, and the inflation rate has decreased to 4.7% from 29.2% in the last two years. The current account deficit has improved from $1.7 billion last year to a projected surplus of $1.5 billion in the current fiscal year.

Foreign exchange reserves held by the State Bank of Pakistan have increased by $2 billion, and are expected to reach $14 billion by the end of the current fiscal year.

The minister attributed this stabilization to difficult decisions taken by the government, which have also been recognized by international rating agencies and national and international surveys.

According to PCW, investor confidence has improved by 49% to 83%. Overseas chambers of commerce and industry have reported a historic improvement in the business confidence index.

He said that a Gallup survey showed a 27.5% improvement in household financial outlook in the last quarter, while an IPSOS survey revealed that local consumer expectations have reached a 6-year high.

The finance minister also noted that credit rating agencies, including Fitch, have improved Pakistan's rating from CCC+ to B-. The Asian Development Bank, World Bank, and International Finance Corporation have expressed confidence in Pakistan's economy and announced significant financing.

“To boost revenue collection, the government has introduced measures to enhance tax-to-GDP ratio, which currently stands at 10%., the minister said, adding that the government aims to increase this ratio to 14% to achieve sustainable growth.

Under the leadership of the prime minister, a transformation plan for the FBR has been initiated, focusing on digital transformation.

Meanwhile, the National Assembly, under the direction of Speaker Sadiq, has approved the schedule for the upcoming sessions focused on the presentation and discussion of the federal budget for the fiscal year 2025-26.

Following today’s budget presentation, the House will observe a recess on June 11 and 12. The budget debate will commence on June 13, with all parliamentary parties being allotted appropriate time to participate, in accordance with the Assembly’s rules and procedures.

The general discussion on the budget is set to continue until June 21. There will be no sitting of the House on June 22. On June 23, the National Assembly will engage in discussions regarding charged expenditures for the fiscal year 2025-26.

This will be followed by debates and voting on Demands for Grants and Cut Motions scheduled for June 24 and 25. The Finance Bill for 2025 is slated for approval on June 26, while Supplementary Grants and other related matters will be discussed and voted on June 27.