Islamabad: Minister for Finance and Revenue Senator Muhammad Aurangzeb on Tuesday unveiled the Rs17.573 trillion growth-oriented federal budget for the fiscal year 2025-26.
Presenting the federal budget 2025-26 in the National Assembly, the finance minister highlighted that the budget for the upcoming fiscal year was the beginning of the strategy, especially chalked out to promote a competitive economy. “It will help increase foreign exchange reserves, reduce the fiscal payment imbalances, thus promoting the overall economic productivity,” he said.
The minister said the government has fixed the annual economic growth target at 4.2% while the inflation rate will remain 7.5% during the upcoming fiscal year.
Similarly, he said the fiscal deficit is expected to remain at 3.9% of the GDP, while the primary surplus is expected to remain 2.4% of GDP.
The Federal Board of Revenue (FBR) revenues have been targeted at Rs 14,131 billion for the upcoming fiscal year, showing an 18.7% increase as compared to the ongoing FY24. Out of the total federal revenues, provinces will get a share of Rs 8,206 billion, he added.
Aurangzeb further said that the target for the federal non-tax revenues had been set at Rs 5,147 billion. The net revenues of the federal government will be Rs 11,072 billion. Target for federal government total expenditures has been set at
Rs 17,573, out of which Rs 8,207 will be used for the markup payments.
The current federal government expenditures are Rs 16,286 billion, the finance minister said, adding that the government has proposed to allocate Rs 1000 billion for the annual Public Sector Development Programme (PSDP).
The finance minister said that in the budget FY26, the government will provide Rs 2,550 billion, and Rs 971 billion for the defence and civil services, respectively.
For pensions, he said an amount of Rs 1,055 billion has been allocated. Similarly, Rs 1,186 billion have been set aside for the subsidies for power and other sectors. Likewise, the government has set aside Rs 1,928 billion in term of grants for BISP, Azad Jammu and Kashmir, Gilgit Baltistan and newly merged districts of Khyber Pakhtunkhwa.
The finance minister underscored that the government is intended to increase the coverage the flagship initiatives of BISP under which the number of beneficiary families will be increased to 10 million. The government has increased the allocated amount for BISP by 21% to Rs 716 billion.
The finance minister said that the government had introduced several measures, due to which the macroeconomic indicators showed resilience.
He said that the government had achieved 2.4 per cent of primary surplus, the inflation rate went down to 4.7 per cent as it was recorded at 29.2 per cent during the last two years.
As compared to the current account deficit $1.7 billion in the last year, the minister said that a current account surplus of $ 1.5 billion was expected during the current financial year.
Finance Minister Aurangzeb started his budget speech by thanking the coalition leaders. He said this budget was being presented on a very important and historic occasion
“I congratulate Pakistan’s military and political leadership on the victory against India.”
As soon as the session began, opposition members started chanting slogans. They tore apart the copies of the budget and continued protesting.
Presenting the second budget of the incumbent coalition government, Aurangzeb said he was honoured by the trust reposed in him and expressed gratitude to Prime Minister Shehbaz Sharif, PPP Chairman Bilawal Bhutto-Zardari, MQM leader Khalid Maqbool Siddiqui, and other allies for their unwavering support in the budget process.
“This budget is being presented during a historic moment, as the country pressed on through difficult times,” he stated, addressing the National Assembly amid a raucous session.
He praised the political and military leadership for their “successful handling of the recent war-like situation” with India, saying, “The entire nation demonstrated remarkable unity during the recent Pakistan-India conflict.” He congratulated both military and civilian leadership on what he termed a “victorious response,” adding that Pakistan’s global standing had improved as a result.
“This budget comes at a pivotal time for our nation’s future,” Aurangzeb reiterated. “The spirit with which we protected our national sovereignty, we now need to apply to ensure our financial security.”
Emphasising that national unity was critical for economic resilience, he credited the current coalition government with stabilising the economy through sweeping structural reforms. “Several measures have been implemented to improve the economy,” the minister said, noting that inflation had declined sharply, and remittances had reached $36 billion over 10 months.
With a total outlay of Rs17.573 trillion, the proposed budget represents a 6.9% decrease from the previous year. Aurangzeb highlighted key economic markers, including a current account surplus, a strengthened rupee, and $36 billion in remittances. He also noted upgraded ratings from international agencies Moody’s and Fitch, which reflected confidence in Pakistan’s economic trajectory.
A key target of the budget is a tax-to-GDP ratio of 14%, which Aurangzeb termed “unavoidable.” To achieve this, the government has set an ambitious Rs14,131 billion tax collection goal for the Federal Board of Revenue (FBR), up by nearly 9% from the previous year.
Detailing the transformation within the FBR, the finance minister announced a range of digital and structural reforms — including B2B e-invoicing, AI-powered audit systems, e-billing, and faceless audits. A central control unit for real-time data collection is also in the pipeline.
He revealed that 390,000 high-value non-filers were identified through integrated databases, resulting in a recovery of Rs300 million. “The number of tax filers has doubled, and revenues have climbed to Rs105 billion,” he said, noting that for the first time, the IMF had acknowledged Rs389 billion collected via enforcement.
Taking a jab at critics, he brushed off rumours of a mini-budget: “No such move has been taken by the government.”
On the energy front, Aurangzeb announced a 31% reduction in electricity prices and a 50% cut for protected consumers. He emphasised the government’s strategy to procure cheaper energy and phase out costly power plants, inviting foreign investment — particularly from Turkish firms — in Pakistan’s power sector.
Privatisation also featured prominently, with distribution company boards being “cleared of political corruption.” He confirmed plans to privatise state entities like Pakistan International Airlines (PIA) and the Roosevelt Hotel in New York within the year.
The minister touted the Reko Diq gold and copper mining project as a “game changer,” highlighting a $5 billion investment pledge, expected cash flows of $71 billion, and projected tax and royalty revenues of $15 billion. “The feasibility study was completed in January,” he said, underlining its central role in the nation’s economic future.
On fiscal discipline, Aurangzeb said the government was targeting a reduced budget deficit of 3.9% of GDP (Rs5,037 billion), down from last year’s 5.9%.
Announcing wide-ranging tariff reforms, he said additional customs duties would be phased out in four years, and regulatory duties in five. The Customs Act’s Schedule 5 will also be eliminated, and duties will be structured into slabs — capped at 15%. These reforms, he said, would help bring Pakistan’s tariffs in line with Vietnam and Indonesia.
“Our economy has been stuck in debt for two decades,” he said, noting that Pakistan’s debt-to-GDP ratio had dropped from 74% to under 70%, with plans to reduce it further. New debt instruments, including Sukuk bonds, were being introduced to diversify the portfolio.
The minister confirmed that pension reforms had now been linked to the Consumer Price Index (CPI) to ensure sustainability.
Turning to climate change — which he described as an existential threat to Pakistan — Aurangzeb acknowledged the IMF’s $1.3 billion climate resilience fund and called for increased foreign assistance for mitigation efforts.
In terms of social welfare, he reiterated support through the Benazir Income Support Programme (BISP), which helped over 11 million children attend school, provided aid to 1.5 million pregnant women and children, and trained 250,000 individuals in financial literacy.
Highlighting growth in the digital economy, Aurangzeb noted a 21.2% increase in IT exports, which reached Rs3.1 billion in the first ten months of the fiscal year. He set an ambitious target of $25 billion in IT exports over the next five years.
He also announced a three-year plan by the Small and Medium Enterprise Development Authority (SMEDA) to finance SMEs, with 95,000 businesses receiving Rs300 billion in funding through May 2025 under the SME risk coverage scheme.
Housing for low-income citizens was another priority, with a new scheme in the pipeline to enable access to affordable homes.
Addressing the contributions of overseas Pakistanis, Aurangzeb reported a 31% surge in remittances — totaling $31.2 billion. He outlined upcoming measures for the diaspora, including an online grievance system, legal reforms to prevent fraud, quotas in chartered medical schools, and civil awards for top remittance senders.
On the agriculture front — which makes up 34% of the national economy — the minister said earnings for FY24-25 stood at Rs2.64 billion. He also announced that the National Seed Policy 2025 and National Agri-Technology Policy 2025 were close to final approval.
Announcing the government’s plan to create a “competitive economy”, Aurangzeb said that economic growth in the upcoming fiscal year was expected to remain 4.2pc.
The budget deficit is aimed at 3.9pc of the GDP, while the primary surplus would be 2.4pc of the GDP.
The government aims to collect Rs1.413tr in FBR revenues, which would be 18.5pc higher than the outgoing year.
He further said the provinces’ share in the federal revenues would be Rs8.246tr.
The minister also praised the Strategic Investment and Facilitation Council (SIFC) for taking forward “strategic brownfield and greenfield projects”.
“Interprovincial and interfederal connection improved,” he added.
Referring again to the recent Pakistan-India conflict, Aurangzeb stressed the need for the country to increase its water reservoirs and ensure water security.
Under the 2018 National Water Policy, he mentioned the goals of 10m-acre increase in water storage, 35pc reduction in water waste and 30pc increase in water-use efficiency.
He detailed that Rs133bn would be allocated for projects, Rs34bn for investment and Rs2bn for 15 key schemes, detailing the breakdown for various dams.
Regarding the energy sector, the minister said that the government needed to ensure the provision of cheap energy.
He said that 47 schemes and Rs90.2bn were allocated to the energy sector, including Rs840m for the Tarbela 5th Extension, Rs10.9bn for the Dasu hydel project, Rs3.5bn for the 884MW Suki-Kinari Hydropower Project, and Rs35.7bn for the Momand hydel dam.
The allocations for other power projects included Rs4.4bn for the Allama Iqbal Industrial City grid station, Rs1.1bn for the Quaid-i-Azam Business Park, Rs1.6bn for the 100KVA and 200KVA transformers asset performance management system, Rs2.9bn for the Islamabad Electric Supply Company (IESCO) advanced metering infrastructure, Rs1.8bn for the Multan Electric Power Company (MEPCO) getting, Rs1.9bn for the Hyderabad getting, Rs2.4bn for the Peshawar getting, Rs67.2bn for the Water and Power Development Authority (Wapda) clean electricity scheme, Rs3bn for five energy schemes of Azad Jammu and Kashmir and Gilgit Baltistan, and 1.2bn for GB grids.
He also mentioned the Matiari-Moro-Rahim Yar Khan Transmission Line project to strengthen transmission.
The finance minister once again shed light on the agricultural sector, saying that fields were being revived under the Green Pakistan Initiative.
“Genetic improvement and post-harvest processes will be focused on,” he said, adding that a total of 1,000 agriculture graduates had been sent to China on government-funded programmes. He also announced five new livestock schemes.
Aurangzeb said the Higher Education Commission (HEC) would be receiving Rs39.5bn for 170 projects, of which Rs38.5bn would be set aside for the provinces.
He added that electric wheelchairs, laptops and other audiovisual aids would be distributed under the programme.
For the IT sector, he said the government had proposed Rs4.8bn for ongoing projects under the Uraan Pakistan plan. The schemes included TV modules, a Pakistan-Korea testing facility, and a printed circuit board facility.
To bridge the illiteracy gap, the minister said Rs9.8bn will be allocated for 11 new Danish schools — four in Balochistan, three in Azad Jammu and Kashmir, three in GB and one in Islamabad.
To bridge the illiteracy gap, the minister said Rs9.8bn will be allocated for 11 new Danish schools — four in Balochistan, three in Azad Jammu and Kashmir, three in GB and one in Islamabad.
Speaking about the Public Sector Development Programmes (PSDP), the minister said a total of Rs18.5bn had been earmarked for those, of which Rs3bn were for the prime minister’s scheme to rebuild flood-damaged schools in Sindh.
“A total of Rs4.3bn [have been allocated] for the PM’s Youth Skill Dev programme, under which 165,100 young people receive skills training,” he added.
On the health side, Rs14.3bn had been allocated for 21 schemes under the PSDP.
“Jinnah Medical Complex and Research Centre will get Rs4bn for a flagship teaching and treatment facility in the capital […] Rs1bn will be given to eradicate hepatitis,” he highlighted.
The minister added that Rs800m of these would be allocated for controlling and preventing diabetes, while Rs900m would be earmarked for a stroke centre at Pims Hospital in Islamabad.
Aurangzeb also detailed planned budget shares for AJK, GB and the merged districts of Khyber Pakhtunkhwa. “Out of a total of Rs164bn allocated for development projects, Rs48bn each would be set aside for AJK and GB, while Rs68bn would be for KP’s merged districts,” he said.
