Finance Minister Muhammad Aurangzeb is unveiling the annual federal budget on Tuesday, expected to balance growth, austerity, and taxation, during a National Assembly session chaired by Speaker Sardar Ayaz Sadiq.
As soon as the session began, opposition members started chanting anti-government slogans.
At the beginning of his speech, the finance minister said: “This budget is being presented at a historic time when the nation showed unity [and] determination,” he said, mentioning the recent Pak-India conflict.
“The spirit with which we protected our national sovereignty, we need to ensure our financial security in the same way,” he stressed.
He continued through the noisy session: “Pakistan has now achieved economic stability and is moving towards a Pakistan that is prosperous”.
The minister highlighted the current account surplus, remittances and the stability of the rupee while also mentioning the positive reports from international credit rating agencies Moody’s and Fitch that upgraded Pakistan’s rating.
The federal budget for fiscal year 2026 has a total outlay — the sum of expenditures and net lending of funds — of Rs17.573 trillion, representing a 6.9 per cent decrease from the previous year’s budget.
Aurangzeb said that it was unavoidable to aim for a 14pc tax-to-GDP ratio and added that achieving the national targets was “impossible without the transformation of the Federal Board of Revenue (FBR).”
The government has set an ambitious tax collection target for the FBR at Rs14,131 billion, an 8.95pc increase from last year’s goal.
Detailing that transformation, the minister listed B2B e-voicing, AI-based audit selection systems for sales and income tax, e-billing and faceless audits, and a new central control unit to centralise data collection, among other steps.
Expanding upon the results, he said 390,000 high-value non-filers of tax were identified through data integration, with Rs300m recovered. The minister further highlighted that there was a 100pc increase in the number of tax filers, taking the revenues to Rs105bn.
“For the first time, the IMF (International Monetary Fund) has acknowledged Rs389bn revenues through law enforcement,” he said.
He also took a jibe at those “who were raising alarm about a mini-budget”, adding that no such move had been taken by the government.
The finance czar said that there was a 31pc reduction in electricity prices, as well as 50pc reduction in prices for protected consumers.
Mentioning the privatisation of distribution companies, he said: “Professional boards have been cleared of political corruption.”
The minister went on to announce that the government had made plans to “procure cheap energy”. Noting the closure of costly power plants and reforms in the oil and gas sector, he said Turkish and other international companies were willing to invest in Pakistan.
He mentioned the $5bn investment pledge by Reko Diq and pointed out fuel price deregulation aimed to promote competition.
“Gold mines in Reko Diq are a key part of our future. The plan’s feasibility study was completed in January,” he noted.
“We expect $71bn in cash flows [as well as] $7bn in tax and $8bn in royalties,” he said, terming the project a “game changer”.
Regarding the fiscal deficit, the government aims for a lower target of 3.9pc of the GDP — or Rs5,037bn — from last fiscal year’s target of 5.9pc.
Detailing the steps to be taken under the National Tariff Policy, Aurangzeb said additional customs duties will come to an end in four years, regulatory duties will end in five years, Customs Act’s Schedule 5 will also be eliminated in five years, and customs duty will be structured in slabs, with the maximum being 15pc.
“Tariff reforms will be applied step by step so that businesses can adjust and challenges are reduced. This will apply to all economic areas, including pharma, IT, telecom, textile and engineering.”
Quoting the World Bank, Aurangzeb informed the NA that these instruments would lower the tariffs, bringing them to the same level as Vietnam and Indonesia.
He then spoke about improving debt management and said: “Our economy has been stuck in debt for two decades, paying back loans. Our debt-to-GDP ratio was 74pc two years ago. But now, it is below 70pc. We will lower it further.
“We are diversifying debt products, the Sukuk bond has been started and launching products is being considered.”
The minister stressed that reforms in loss-making state-owned enterprises were underway, along with steps being taken to reduce fiscal strain and invite investment.
“We will complete PIA (Pakistan International Airlines) and Roosevelt Hotel transactions this year,” he asserted.
On pension reforms, the minister highlighted that the increase in pensions had been “linked” to the Consumer Price Index (CPI).
Pointing out that Pakistan was one of the most vulnerable countries to climate change, the minister underscored the need for foreign assistance in mitigation, noting the IMF’s $1.3bn climate fund.
On social protection, the minister reaffirmed the government’s commitment to helping the underprivileged, stating that Benazir Income Support Programme helped over 11m children go to school.
He added that 1.5m pregnant mothers and children were given funds, while 250,000 were granted training on financial literacy.
Speaking about the digital sector, Aurangzeb noted that Pakistan’s cybersecurity ranking was rising. “There has been Rs3.1bn in IT exports in the year’s 10 months, which is 21.2pc more than the previous year,” he said.
The minister proposed raising IT exports to $25bn in the next five years.
Aurangzeb informed the parliament that the Small and Medium Enterprise Development Authority had launched a three-year plan for financing small and medium enterprises.
He said that under the SME risk coverage scheme, 95,000 SMEs had received Rs300bn in funding till May 2025.
The finance minister mentioned that the government’s planned scheme would allow the purchase of cheap houses.
On the topic of overseas Pakistanis, he noted $31.2bn were remitted to Pakistan, recording a 31pc increase of $10bn.
He affirmed that the government was taking steps for overseas Pakistanis, including an online system, civil procedure laws to prevent fraud, a quota in chartered medical schools, and civil awards for the top 15 senders.
Speaking about the agricultural sector, which comprises 34pc of the economy, Aurangzeb said Rs2.64bn were earned in FY24-25, adding that the National Seed Policy 2025 and the National Agri Technology Policy 2025 had been “nearly approved”.
‘What have the elite done?’
Prior to the session, Prime Minister Shehbaz Sharif, following a meeting of the federal cabinet, questioned the contributions made to the national exchequer by the country’s elite economic group, ahead of the presentation of the budget for FY26.
“Today, the federal cabinet will discuss the budget and give its approval. In the previous quarter year, the entire nation has faced these challenges. This is in no way an ordinary achievement.
“The sacrifices the common man has made, the burden the salaried class has borne in the previous budget. They say ‘we are salaried [class] but still gave Rs400bn to the treasury […] what have the elite and the wealthy groups contributed compared to us?’,” he added.
“This is a question that the elite, including me, have to answer,” the premier noted.
He further said, “Pakistan is standing at a point where we have to take off,” adding that the country’s stability indicators were satisfactory.
“Be it the inflation rate, be it the policy rate, your exports increased, your remittances have seen a quantum jump, your IT exports have increased, and they have a lot of potential to increase.”
More to follow.
