Overview
- The federal budget, which Finance Minister Muhammad Aurangzeb presented on Friday, sets an outlay of about Rs18.77–18.8 trillion and targets a fiscal deficit near 3.6% of GDP with 4% growth and inflation around 8.2%.
- The Finance Bill now before the Senate fixes an ambitious FBR tax collection target of roughly Rs15.26–15.3 trillion and relies on planned foreign financing including Eurobonds and Panda bonds to meet financing needs.
- Debt servicing and defence are the largest claims on the budget with roughly Rs8.05 trillion for interest payments and about Rs3 trillion for defence, leaving limited discretionary space for other spending.
- The package offers selective relief: restructured income-tax slabs and a 7% rise in salaries and pensions for the salaried class, lower withholding and sale taxes for property, and an extension of the 0.25% IT export tax regime to 2029 with export advance tax cut to 1.25%.
- The PSDP is set at about Rs3.675 trillion with a split of roughly Rs1 trillion for federal projects and the rest for provinces, and implementation will depend on whether the government meets revenue targets and secures IMF and investor support.