The Pakistan budget for the fiscal year 2025–26 is being shaped as a reform-heavy and IMF-guided financial plan. Its goal is to stabilize Pakistan’s economy through strict fiscal discipline while also offering targeted relief to certain sectors. The Shehbaz Sharif government is expected to present this crucial budget on June 10, 2025, unless further delays occur. The Federal Budget 2025–26 Pakistan comes at a critical time for Pakistan. It focuses on tough reforms, increasing tax collection, and reducing unnecessary spending. Though businesses and industries may face higher costs, the steps taken could ensure long-term economic stability and improve global investor confidence.
The government is trying to walk a fine line between IMF commitments and the public’s economic needs. If implemented properly, this budget could help control debt, stabilize inflation, and support sustainable growth in the years ahead.
Federal Budget 2025–26 Pakistan Presentation Timeline
Initially planned for June 2, the budget announcement was delayed due to incomplete discussions with the International Monetary Fund (IMF), especially over tax relief policies. Now, Finance Minister Muhammad Aurangzeb will present the final budget to the National Assembly on June 10.
Main Focus of the Federal Budget 2025–26 Pakistan
This year’s budget is designed with the following key goals in mind:
- Economic Stability
- Widening the Tax Base
- Improving the Primary Balance
- Targeted Relief for Low-Income Groups
- Reforms in Taxation and Spending
The budget tries to strike a balance between IMF demands and local public needs.
Key Economic Goals for FY 2025–26
Experts from Topline Securities and Arif Habib Limited (AHL) shared these major economic targets:
| Indicator | Target Value |
|---|---|
| GDP Growth | 3.6% – 4.0% |
| Inflation (Average) | 5.77% |
| Primary Budget Surplus | 1.4% – 1.6% of GDP |
| Fiscal Deficit | Rs6.5 trillion (5.1% of GDP) |
These goals reflect efforts to manage debt and inflation while pushing for modest economic growth.
Revenue Collection Plans
To meet the above targets, the Federal Board of Revenue (FBR) aims to collect Rs13.9–14.3 trillion, marking a 16–18% increase from last year. However, this would be the slowest tax growth in six years.
This rise is expected through:
- Natural inflation (7.7%)
- GDP growth (up to 4%)
- New taxes worth Rs500–600 billion
Key Tax Measures Proposed
The government is expected to introduce a series of new taxes and remove old exemptions. Here are the major proposed tax measures:
1. General Sales Tax (GST) on Petroleum
- A 3–5% GST could raise petrol prices by Rs8–13 per litre.
2. Petroleum Development Levy (PDL)
- A higher PDL could generate Rs1.3–1.4 trillion, adding Rs5/litre to petrol.
3. Pension Tax
- A 2.5–5% tax may apply to pensions above Rs400,000 per month.
4. Digital Income Tax
- Freelancers, vloggers, and social media influencers may face a 3.5% tax, potentially earning the government Rs52.5 billion.
5. Federal Excise Duties (FED)
FED will likely be increased for several product categories:
- Cigarettes (as per WHO pressure)
- Sugary drinks (from 20% to 40%)
- Ultra-processed foods (5% on 50+ products)
- Fertilizers and pesticides (additional 5%)
6. Tax Removal for FATA/PATA
- Long-standing sales tax exemptions in tribal regions may be removed.
7. Retailer Tax
- Target of Rs295 billion as advised by the IMF.
Relief Measures for the Public
While the budget introduces many taxes, there are some relief measures for specific groups:
1. Salaried Class Relief
- Exemption threshold increased from Rs600,000 to Rs800,000.
- A possible 2.5% tax rate cut in various brackets.
2. Minimum Wage and BISP
- Adjustments in minimum wage and Benazir Income Support Programme (BISP) linked to inflation.
3. Housing Finance Subsidy
- Government to offer loans with interest subsidies for 200,000 homes.
Sector-Specific Highlights
The budget also includes targeted actions for major economic sectors:
Oil, Gas & Energy
- GST and carbon taxes on petroleum products.
- Extra levies on coal and natural gas.
Fertilizer Sector
- FED may rise from 5% to 10%, increasing urea prices by Rs200–225 per bag.
- 5% sales tax on pesticides.
Technology & IT
- Continuation of 0.25% Final Tax Regime.
- No equal taxation policy yet for freelancers vs salaried IT workers.
Cement Sector
- Expected allocation of Rs900–950 billion in Public Sector Development Programme (PSDP).
- Housing loan subsidy could boost cement demand by 1.5–2 million tons.
Steel Industry
- Gradual removal of tax exemptions in FATA/PATA expected.
Automobile Sector
- Proposal to allow import of used cars up to 5 years old.
- Possible gradual reduction in tariffs on imported vehicles.
Stock Market
- No changes expected in Capital Gains Tax (CGT) on shares.
- Pakistan Stock Exchange’s (PSX) proposals (like tax relief on bonus shares) may not be accepted.
IMF’s Role and Influence
The IMF’s presence in shaping this budget is very clear. Its main demands include:
- No amnesty schemes
- Wider tax net
- Strict action against non-filers
- Better documentation of all sectors
While the budget may appear neutral for short-term investments, experts believe it can improve investor confidence in the medium term.
What to Expect Next
This Federal Budget 2025–26 Pakistan is especially important as Pakistan faces its next IMF review in September 2025. Whether the country passes that review will depend on how successfully the government sticks to these fiscal plans.
