Finance Minister Aurangzeb Unveils Budget 2025–26: Focus on Stability, Growth & Security

Islamabad, June 10, 2025 — Senator Finance Minister Muhammad Aurangzeb presented the federal budget for fiscal year 2025–26 in the National Assembly today, setting a clear agenda for economic resilience, investment in development, and bolstering defense spending.

📌 Macro Targets & Economic Performance

• Budget Size: Rs 17.57 trillion, down about 6.7–7% from last year’s Rs 18.9 trillion reuters.com+6tribune.com.pk+6gnnhd.tv+6.

• Growth Goal: 4.2% GDP growth in FY 2026, up from approximately 2.7% in FY 2025 tribuneindia.com+1thenews.com.pk+1.

• Inflation Forecast: Averaging around 7.5%, compared to 4.7% in the previous fiscal year .

• Fiscal Deficit: Targeted at 3.9% of GDP, with a primary surplus of around 2.4% en.wikipedia.org+3tribune.com.pk+3geo.tv+3.

💰 Revenues & Tax Measures

• Revenue Mobilization: FBR-tax revenue projected at Rs 14.13 trillion (+18.7%), with non‑tax revenues around Rs 5.15 trillion; net federal receipts estimated at Rs 11.07 trillion tribune.com.pk+1thenews.com.pk+1.

• Tax-to-GDP Ratio Goal: Increased ambition to reach roughly 14%, up from a historic 10% tribune.com.pk+1thenews.com.pk+1.

• Digital Reforms: Introduction of AI‑powered audits, e‑invoicing, POS integration, faceless audits, and digital production tracking across sectors like sugar, cement, and fertiliser tribune.com.pk.

🏛️ Expenditures & Development

• Public Sector Development: NEC approved Rs 4.224 trillion for national and provincial development programs (PSDP and ADPs) geo.tv+2tribune.com.pk+2thenews.com.pk+2.

• Sector Highlights:

  • Higher Education: Rs 39.5 billion for HEC initiatives, including scholarships and infrastructure geo.tv+1thenews.com.pk+1.

  • Agriculture: Rs 4.2 billion to support cotton, livestock, training, and Green Pakistan Initiative geo.tv+1thenews.com.pk+1.

  • Health: Rs 14.3 billion allocated for hospitals, disease surveillance, cancer care, and hepatitis eradication .

🛡️ Defense & Security

• Defense Allocation: Rs 2.55 trillion — a substantive ~17–20% increase tied to recent border tensions with India tribuneindia.com+4reuters.com+4apnews.com+4.

• Debt Servicing: Roughly Rs 8.21 trillion set aside for interest payments, consuming approximately 46–47% of total federal outlay .

🧾 Reliefs & Subsidy Reforms

• No New Taxes: Clarified during the speech — no fresh taxes introduced, debunking mini-budget rumours tribune.com.pk.

• Salaried Class: Tax relief on incomes between Rs 600,000–1.2 million, reducing the rate from 5% to 1% arabnews.com

• Electricity Subsidies: Tariffs decreased by over 31% for protected consumers, while subsidies to DISCOs uplifted by over Rs 140 billion through reforms tribune.com.pk.

🌐 Structural & Fiscal Reforms

• Privatization Moves: Plans to transfer three distribution companies (Faisalabad, Gujranwala, Islamabad), move forward with PIA and Roosevelt Hotel, and pursue GENCO/DISCO privatization tribune.com.pk.

• Debt Management: Government aims to lower debt-to-GDP below 70%, introduce Sukuk on PSX, and issue Panda bonds through China tribune.com.pk.

• EV Policy: Incentives for two- and three-wheel electric vehicles with levies on petrol/diesel ones to curb emissions and reduce fossil fuel imports geo.tv.

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🔍 Analyst Takeaway

This budget marks a calculated step towards strengthening economic stability, grown under IMF program constraints, and safeguarding national security. While the defense spending hike reflects geopolitical realities, the authorities aim to offset it with strong tax growth, subsidy rationalization, and a disciplined deficit strategy.