Federal Budget 2025-26 Unveiled by Finance Minister Aurangzeb

Finance Minister Muhammad Aurangzeb presented Pakistan’s federal budget for 2025-26 on Tuesday, setting a growth target of 4.2% for the upcoming fiscal year. This is a step up from the 2.7% growth anticipated in the current FY25.

The budget announcement faced disruptions from opposition lawmakers of Pakistan Tehreek-e-Insaf (PTI). The total estimated expenditure is Rs17.6 trillion, which is a 7% decrease, or Rs1.3 trillion less, compared to the Rs18.9 trillion allocated in FY25.

Aurangzeb stated, “Our focus is on achieving economic stability and fostering prosperity. We are aiming for an economy that is both equitable and sustainable.”

Key Highlights from the Finance Minister’s Address

Reflecting on the current fiscal year, the minister noted that the nation attained a surplus of about 2.4% of GDP in FY25, and the CPI rate has reduced to 4.7%.

“We anticipate a current account surplus of approximately $1.5 billion this fiscal year,” he mentioned, further projecting remittance inflows to reach between $37-38 billion in FY25.

Regarding taxation reforms, Aurangzeb announced that the tax filing process will be streamlined starting in July.

This marks Aurangzeb’s second time presenting the federal budget. The coalition government is striving to stimulate the economy, meet the International Monetary Fund (IMF) requirements, and provide some relief to taxpayers.

The Federal Board of Revenue (FBR) has been tasked with collecting Rs14.13 trillion in FY26. This represents a 19% increase compared to the revised estimate of Rs11.9 trillion for FY25.

The FY26 tax collection target includes Rs6.9 trillion from direct taxes and Rs7.2 trillion from indirect taxes.

As mandated by Article 73 of the Constitution, Finance Minister Aurangzeb will also present the Finance Bill 2024 in the Senate on the same day.

Prior to the budget address, the federal cabinet gave its approval to the budget proposals for the upcoming fiscal year (2025-26).

Additional Points of Interest:
  • The budget’s release follows the government’s failure to meet its GDP growth objective of 3.6% in the current fiscal year, with a reported rate of 2.7%, as detailed in the Economic Survey 2024-25.
  • However, during his press briefing on the Pakistan Economic Survey 2023-24, Aurangzeb emphasized a significant 4.8% surge in industrial activity, boosting the economy’s size to $411 billion for the first time and increasing per capita income to $1,824.