Pakistan Budget 2026-27 : An Insight Analysis I
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Dr. Syed Mehboob
Senior Research Editor
The News Lark, political and economic analyst
The fiscal budget is the indicator of the priorities of a country’s economic and political planners and policy and decision-makers. It exhibits how resources are enhanced, generated, and how they are allocated. Economic stability is vital for any country’s integrity, solidarity, progress and prosperity. Pakistan is rich in natural and human resources, and it has 60% youth in its population. Its armed forces are the best in the world, and in May 2025, it has proved its worth by giving a humiliating defeat to an enemy having a nine times larger defense budget than Pakistan, six times larger in population, and several times larger in resources. Pakistan has to translate its talent and worth into economic power.
Before we analyze the current budget, let us have a look at some historical economic data.
Budget Outlay in Historical Perspective
Year Budget in Rs billion
2020-21 7,137
2021-22 4,487
2022-23 9,579
2023-24 14,484
2024-25 18,877
2025-26 17,573
2026-27 18,770
The budget layout is Rs. 11,633 billion more than of 2020-21 budget. It is 162. 99 percent more than that of 2020-21. It is Rs 1,197 billion more than the previous year, +6.81 %. In terms of its size it is continuously increasing.
Inflation
Year Target Actual
2021-22 8.2 12.15
2022-23 11.5 29.05
2023-24 21 23.8
2024-25 12 4.6
2025-26 7.5 6.7
2026-27 8.2
Data shows that Pakistan is continuously struggling to control inflation. It was at a peak of 29.05% in 2022-23 and then brought to at lowest 4.6 percent in 2024-25. Inflation is increasing, and it has been targeted at 8.2% for 2026-27.
Defense Expenditure
Year Defence budget Rs. Billion
2020-21 1,295
2021-22 1,480
2022-23 1,587
2023-24 1,854
2024-25 2,181
2025-26 2,596
2026-27 3,011 ( Budgeted)
FBR Tax Collection
Year Defence budget Rs. Billion
2020-21 4,691
2021-22 6,050
2022-23 7,200
2023-24 9,252
2024-25 11,900
2025-26 13,000
2026-27 16,264 ( Budgeted)
Finance Minister Muhammad Aurangzeb presented Pakistan’s Federal Budget 2026-27; the total outlay of the budget is Rs. 18,771 billion. The largest allocation for debt services is Rs. 8,054 billion, accounting for 42.97% of the total budget. This means Pakistan is paying a monthly average of Rs. 671.16 billion in debt and its interest, daily average Rs. 22.37 billion, Rs.932.083 million per hour, Rs. 15.53 million per minute, and Rs.0.258 million per second. This huge amount can be saved if the government takes serious steps by privatizing State-Owned Enterprises ( SOEs), which recorded massive consolidated net losses of approximately Rs. 122.9 billion, with loss-making entities bleeding a staggering Rs. 832 billion in a single fiscal year. These “ White Elephants” ( WE), have collectively accumulated a daunting Rs. 6,500 billion in historical losses and pose key financial burdens. Loss-making SOEs dropped Rs 832.8 billion in red ink, an equity erosion rate of about Rs 3 billion every single day. Even after offsetting profits from the country's revenue-generating entities (like OGDCL and National Bank), the overall net deficit widened dramatically to Rs 122.9 billion. The power and manufacturing sectors are the biggest contributors, operating on outdated business models that heavily drain the national exchequer. Political interference and weak corporate governance. Administrative inefficiencies, theft, and billing failures are other main causes. The government has listed 22 government-owned enterprises which has to be privatized. This process must be expedited.
The second largest allocation after debt servicing is the Defence sector, and the government allocated Rs. 3,000 billion, up 17.6 % from the previous year, which, keeping in mind Indian aggression and the Hindutva programme, is justified. For the Public Sector Development Programme (PSDP), Rs. 1,000 billion has been kept. Tax breaks are offered to support low to middle-income earners and various businesses. Super tax has been abolished for businesses earning between Rs. 150 million and Rs. 500 million, and reduced from 10% to 8% for companies earning over Rs. 500 million. Fixed tax system established for small retailers earning up to Rs. 200 million and 1% tax on sales. Withholding tax slashed and property tax halved for filers to stimulate the real estate market. Regulatory duties and Federal Excise Duty (FED) were altered, with higher duties applied to Electric Vehicles (EVs) priced above Rs 20 million.
Govt has abolished Customs duty on more than 100 raw materials used in the production of medicines for cancer and other ailments. This measure will help reduce the Treatment costs for patients.
It is a healthy sign that digital banking users have grown from 95 million to 133 million, and annual digital transactions have grown from Rs. 6.9 billion to 10.1 billion. 92% of the remittances are now being transacted via banking channels.
Resources Rs. Billion
Tax Revenue ( FBR) Federal Consolidated Fund 15,264
Non-Tax Revenue 5,336
a) Gross Revenue Receipt 20,660
b) Less Provincial Share 8,848
i) Net Revenue Receipt (a-b) 11,751
ii) Non-Banking borrowing (NSS and others) Public Account 2,034
iii) Net External Receipt 813
iv) Bank borrowing ( T bills, PIBs, Sukus) Federal Consolidated Fund 4.012
V)Privatization Proceeds 161
Total ( II+III+IV+V) 7,020
Total Revenue 18,771
• Growth target at 4%
• Inflation expected at 8.2%
• FBR revenue target at Rs15.26 trillion, an increase of over 8% compared to Rs14.13 trillion proposed in outgoing fiscal year
• Rs5.336 trillion from non-tax revenue
• Rs1 trillion for Public Sector Development Programme (PSDP)
• Minimum wage at Rs40,700, 10% increase from Rs37,000 in FY26
• Rs8.054 trillion for interest payments, up 16% from Rs6.937 trillion in FY26 (revised)
• Rs1.169 trillion for pension payments, up 11% from Rs1.055 trillion in FY26
• 7% increase in government employees and pensions
• Rs3 trillion for defence affairs and services, up 15.6% from Rs2.6 trillion (revised) in FY26
• Export development surcharge of 0.25% on export income abolished
• Fiscal budget deficit at 3.6% of GDP
• Primary surplus of 2% of GDP
• Rs838 billion for Benazir Income Support Programme (BISP) ( Continued)
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