ISLAMABAD: Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, held a meeting with the British High Commissioner to Pakistan, Ms. Jane Marriott CMG OBE, who called on him at the Finance Division today. The meeting focused on Pakistan’s macroeconomic outlook, the Government’s ongoing reform agenda, and avenues for further strengthening Pakistan-United Kingdom economic and development cooperation.

The finance minister appreciated the United Kingdom’s continued support for Pakistan’s economic reforms and acknowledged the longstanding partnership between the two countries across a range of sectors, including economic governance, fiscal reforms, climate resilience, public finance, health, and social development.

The meeting reviewed Pakistan’s recent macroeconomic progress, including the successful passage of the Federal Budget 2026-27, ongoing fiscal consolidation efforts, and measures aimed at promoting sustainable economic growth while maintaining macroeconomic stability.

READ MORE: Aurangzeb discusses economic cooperation, reform agenda with British envoy

Senator Muhammad Aurangzeb highlighted the Government’s commitment to implementing structural reforms, broadening the tax base, improving public financial management, and strengthening investor confidence.

The two sides also exchanged views on Pakistan’s population management and public health initiatives. The finance minister appreciated the United Kingdom’s continued technical support in these areas, particularly its collaboration on population stabilisation interventions. He emphasised the importance of institutionalising population planning through a coordinated national framework with measurable outcomes, while drawing on international best practices to promote women’s education, workforce participation, and greater public awareness. He underscored that sustained collaboration in these areas would be critical to improving long-term human development outcomes and supporting Pakistan’s sustainable economic growth.

The finance minister highlighted the government’s strategy to deepen access to international capital markets and diversify financing sources. He noted ongoing work on sovereign financing initiatives, including international bond issuances, Sukuk, Panda Bonds, and innovative financing instruments such as the tokenisation of sovereign debt, as part of the Government’s Medium-Term Debt Management Strategy. He emphasised that continued engagement with international investors and financial institutions would remain central to Pakistan’s efforts to strengthen its external financing profile.

The meeting also reviewed ongoing reforms within the Federal Board of Revenue. The finance minister highlighted the government’s efforts to modernise tax administration through technology-driven, faceless, AI-enabled, and risk-based systems aimed at improving transparency, reducing discretionary intervention, facilitating compliant taxpayers, and enhancing revenue mobilisation.

Discussions further covered progress on the Government’s broader structural reform agenda, including energy sector reforms, privatisation of selected state-owned enterprises, and measures to improve governance, efficiency, and service delivery across public institutions. Senator Muhammad Aurangzeb reaffirmed that these reforms are essential to strengthening Pakistan’s long-term economic resilience and improving the ease of doing business.

The High Commissioner welcomed Pakistan’s progress in restoring macroeconomic stability and reiterated the United Kingdom’s continued support for Pakistan’s reform agenda. Both sides also discussed strengthening cooperation in trade, investment, financial markets, and climate resilience, while underscoring the importance of maintaining close engagement between the two countries’ public and private sectors.

The finance minister reaffirmed the Government’s commitment to further strengthening Pakistan-United Kingdom economic cooperation through sustained reforms, enhanced investment facilitation, and continued engagement with international development partners and investors. Both sides agreed to maintain close coordination to advance areas of mutual interest and further deepen the longstanding bilateral partnership.

Copyright Business Recorder, 2026

ISLAMABAD: The Federal Board of Revenue (FBR) has issued a strict procedure for heads of field formations (Inland Revenue/Customs) seeking release of funds for recurrent budget and expenditures for 2026-27.

According to the FBR’s Admin Wing instructions to the field formations on Monday, the FBR has referred to Budget Orders (BO) signed by the chief finance and accounts officer (CFAO) and deputy secretary (Expenditure), Finance Division for the Financial Year 2026-27 in respect of recurrent budget of the field offices of FBR.

The FBR also quoted strategy for Release of Funds for Financial Year 2026-27 issued by the Finance Division OM dated July 1, 2026 and Austerity measures OM dated 2nd July, 2025 for strict compliance.

READ ALSO: Senate, NA finance committees raise concerns over ‘ambitious’ revenue target for FY27

All the heads of the departments/field offices of FBR are personally responsible for monitoring, execution and achievements of the objectives of the approved budget along with strict adherence to the prescribed statutory framework including provisions of Public Finance Management Act-2019, General Financial Rules, Financial Regulations, Treasury rules, directives of all the regulatory bodies and FBR headquarters, the FBR said.

The FBR’s directive stated that an analysis of SAP/Budget Execution report of FY 2025-26 revealed that a few offices incurred inadmissible expenditure resulting in over-draft (O.D) against budgetary allocation under various heads of accounts.

The concerned plead of the department/office, controlling officer and DDO shall be held personally responsible for any violation of the legal framework and may be proceeded under E&D Rules.

Consequently, no request of those office(s) for re-appropriation or additional funds will be considered till the adjustment/recovery of such overpayments.

For monitoring and reconciliation of expenditure, the FBR directed that an effective system for monitoring of monthly expenditure along with the budget appropriations may be established.

The focus of reconciliation should not only be on the recording of expenditure but the original budget, re-appropriations approved by the board, surrenders, supplementary grants, expenditure for the month/up to the month and balance of available budget must also be reconciled before reporting tothe Board, the FBR added.

Copyright Business Recorder, 2026

LAHORE: The Punjab University Syndicate on Thursday recommended a Rs20.87 billion budget for the financial year 2026-27, including Rs10 billion for student subsidies and scholarships, during its 1761st meeting chaired by Vice Chancellor Prof Dr Muhammad Ali.

The proposed budget has been forwarded to the university Senate for final approval. According to university officials, the budget will be financed through government grants, the university’s own resources and other funding sources to expand access to higher education.

On the directions of the vice chancellor, allocations for scholarships have been increased. The university has earmarked Rs341 million from its own resources for scholarships, while students will also continue to benefit from the Honhaar Programme, Higher Education Commission (HEC) schemes and the Punjab Educational Endowment Fund (PEEF).

The Syndicate was informed that financial reforms had reduced the budget deficit to Rs1.6 billion from Rs2.2 billion in the previous fiscal year. Members welcomed the improvement and also approved Rs284 million in research grants to strengthen the university’s research culture and improve its academic rankings.

Speaking on the occasion, Vice Chancellor Prof Dr Muhammad Ali expressed confidence that the remaining budget deficit would be eliminated in the coming years through increased revenue generation rather than borrowing. He added that the university expected to receive Rs786 million from the Punjab government.

Copyright Business Recorder, 2026

Moreover, a statement in Punjab’s ‘white paper’ that ‘Strategic investments continue to be prioritised in sectors critical to economic growth and social progress, including human development, infrastructure, climate resilience, urban services, and social protection.

The focus has shifted from the scale of expenditure alone to the quality, effectiveness, and sustainability of outcomes’ does not indicate specific orientation of governance, and incentive structures, including allocating adequate level of finances, and ways in which bank will be engaged in terms of fostering partnerships with them in ways that incentivize borrowing to agriculture sector, and industry – for instance, especially for small-and-medium enterprise level – in particular, overall, in high priority sectors in terms of economic, environmental, and epidemiological aspects climate change, energy sustainability, education, and health, to meet concrete targets in these directions.

READ MORE: Reflections on provincial budgets FY27—I

Overall, the ‘white papers’ of provinces lack clarity on whether provincial governments see a limited role of government, that is, does it prescribe to the neoliberal model? Moreover, they do not reflect whether the provincial governments have a learning curve with regard to the misgivings of the over-board austerity policies that have been pursued at the federal, and provincial levels, and whether the provincial governments understand that both neoliberal, and austerity policies have not lent any sustainability to macroeconomic stability and growth, and not helped enhance inclusivity and resilience, and, in turn, policy orientation needs to change in favour of a more balanced aggregate demand squeeze, and aggregate supply enhancement policies; where the latter focus is all the more important due to rising level of aggregate supply shocks over the years due to fast-unfolding of climate change crisis, and elevated level of conflict.

Here, it needs to be mentioned that neither the federal nor provincial budgets—at least in terms of reflecting this in their budget proposals—pay special attention to the ongoing Middle East (ME) conflict. There are no specific changes with regard to expenditure and revenue planning to better prepare for conflict situations.

Moreover, the statement that ‘This budget reflects the Government of Punjab’s commitment to the principles of fiscal federalism and its contribution towards meeting the country’s strategic national requirements’ does not reflect any specific discussion, especially from the level of the finance minister, as to what discussion has gone on between the federal government and the province with regard to, for instance, education, health, and social protection, including that on BISP – whose budgetary estimate in federal budget for FY27 stood at Rs.844.8 billion – whereby expenditures are better rationalized in the spirit of 18th Constitutional Amendment, and which would likely entail lesser need for provision of provincial surplus from all provinces to the tune of around Rs. 1.8 trillion.

Here, it needs to be mentioned that the author in his same BR published article has pointed out ‘…in an overall budgetary estimate of current expenditure for the ongoing fiscal year at Rs.17.5 trillion, a little more than Rs.1 trillion goes to these three concerns – ‘Education Affairs and Services’ allocated at Rs.117.1 billion, ‘Health Affairs & Services’ at Rs.37.4 billion, and ‘Social Protection’ at Rs.867.0 billion; where this saving could mean less primary surplus target, and overall greater fiscal space for enhancing development spending – where PSDP from this saving in federal budget could in fact around doubled – along with lesser need for seeking provincial surplus, which has been budgeted at Rs.1.8 trillion!’

In the ‘white paper’ of the Sindh Government the underlying message is sadly much more celebratory than it perhaps should be, given an overall depressed economic growth, and rising level of inequality, and poverty in the country overall, in particular, during the last few years in the wake of over-board practice of austerity, and a general neoliberal approach to economic management. Hence, the claim ‘Over the past few years, Sindh has made remarkable progress in recovering from the devastating floods of 2022’ stands unsubstantiated in terms of mention of any broad indicators in the message.

Moreover, no specific governance, and incentive structures are highlighted through expenditure allocation, and revenue measures that in turn, reflect the claim ‘Our focus now is on accelerating development through strategic investments in infrastructure, agriculture, education, healthcare, and social protection.

We are committed to creating an enabling environment for investment, generating employment opportunities for our youth, and ensuring that the benefits of economic growth reach every region and segment of society. This budget reflects our vision of a prosperous, inclusive, and resilient Sindh.’ Here, there is no mention of specific proposals that may have been reached after discussion with the Centre with regard to improving fiscal federalism. In addition, specific proposals with regard to reaching an effective local government system, both in terms of responsibilities and financial allocations are also missing.

For instance, it would make sense for the Centre, and the federating units in terms of both policy in general, and also in terms of budget proposal with regard to taxation and expenditures, to learn from China where local governments play an important role in supporting and monitoring state-owned enterprises (SOEs), and in over-seeing infrastructural work, including contributing resources from off-budget sources in a quasi-fiscal way. For example, as adopted by China, local governments arrange part of the financing of SOEs through off-budget sources, and are responsible for paying it as far as possible, having, in turn, a stake in the operational aspects of its functioning with the benefit of a localized focus, while the Centre directs the overall policy and implementation. Hence, this underlines the high importance of having well-empowered, and effectively financed local governance system not only with regard to playing an important role in managing local SOEs, but to also oversee infrastructural development at the local level.

In this regard, once again, China’s experience of employing local government financing vehicles (LGFVs) can be a very useful example to learn from. Here, it needs to be indicated that LGFVs are entities, which are quasi-fiscal in nature. Among other benefits that a localized supervision brings, this also allows members of legislative assembly at the provincial level to focus on their primary role of policymaking, and play their role in holding accountable those who do not follow policies in the policy implementation domain through the effective functioning of the committee system in respective provincial legislative assemblies; not to mention improving local government functioning overall, and in the shape of their employment in terms of implementing LGFVs, will also likely enhance space for focussing all the more on policy formulation and in performing accountability function in a much more effective way at the level of Centre.

Looking at the ‘white paper’ of Khyber Pakhtunkhwa (KPK) province, relative to the messages/statements in ‘White Papers’ of other provinces, there are more specifics given with regard to the performance of the province in terms of tax collection, and in certain interventions; for example, with regard to disaster management, among others. The message in the ‘white paper’ lacks a wholesome vision for the provincial economy – and also for the Centre, given the political presence leading the province is different from all other three provincial governments, given they are in the opposition domain in the National Assembly – in terms of the extent of role of public sector, regulation, or overall whether economic policy is being pursued under neoliberal, or that the provincial government sees a greater role in co-creating markets, and in establishing a symbiotic relationship with the private sector in terms of safeguarding the interest of the demos through forging contracts; for instance, ask in return for support by government in any sector to private sector making tangible real sector investments, and not spend their profits in share buy-backs for example.

Moreover, it is not indicated in terms of specific incentive structures with regard to tax and expenditure proposals, and in terms of some appropriate level of detailed layout of outcomes-based budgeting, which reflected the effective level of focus the provincial government needed to provide to important challenges like climate change catastrophes, given the province hold high level of risk in this regard, and suffered considerably from flash flooding last year. Here, the message in the ‘White Paper’ does not reflect the needed ambition in terms of tax and expenditure proposals in this regard, in particular supporting alternate sources of energy and building stock piles of essential agricultural commodities for instance. In addition, there is no indication that the direction of taxation that the provincial government wishes to take to enhance the equitability aspect by indicating some sort of timeline to shift from consumption-based, regressive, indirect taxation to direct taxation.

Here, something that is lacking in the message in the ‘white paper’ of KPK, and which makes sense, given the majority members in power in KPK, unlike parties in power in other provinces, has a political base that is in opposition at the federal level, and in that regard, it would have made sense to have some comment on the economic philosophical underpinning of economic policy being followed at the level of Centre and which, in turn, also has consequences for the provinces, including KPK. Also, it would have made sense, as an extension to reflect on the monetary policy of State Bank of Pakistan, which also has a strong bearing on the fiscal space of the provinces. The reason for including this possible reflection, once again, has to do with greater say of Centre on SBP policy than provinces, especially KPK, whose power base is in opposition at the level of Centre.

Hence, the KPK government through the ‘white paper’ could perhaps indicate whether the over-board monetary, and fiscal austerity policies – that is high level of policy rate and targeting primary surplus which, in turn, squeeze aggregate demand, while little focus on enhancing aggregate supply, which otherwise has a significantly positive role in controlling inflation, and providing needed sustainability to overall macroeconomic stability, and economic growth – being adopted made sense in the light of unnecessarily high economic growth sacrifice these policies have entailed, for a very short-lived macroeconomic stability at best, while also enhancing interest payments related expenditure for both public and private sectors – at the level of both Centre, and federating units – and overall hurting revenue prospects due to lower investment and growth levels that austerity policies contribute towards. This, in turn, has likely hurt fiscal space of both the Centre and the federating units, both in terms of transfers from divisible pool, and own resources; not to mention the negative impact of low level of both investment and growth on inequality, poverty, social sector, and resilience-related expenditure.

(To be continued)

Copyright Business Recorder, 2026

KARACHI: The Pakistan Business Council (PBC) on Monday has presented a private-sector-led export growth agenda to Federal Minister for Finance Muhammad Aurangzeb aimed at strengthening Pakistan’s competitiveness and accelerating foreign exchange earnings.

Finance Minister welcomed the engagement, saying the visit marked the start of consultations for next year’s budget. “This visit to the PBC is a discussion invitation for starting the medium-term tax and budget policy,” he said.

The PBC delegation led by Chairperson Dr Zeelaf Munir and CEO Javed Kureishi, presented sector-specific proposals covering textiles, processed food and FMCG, pharmaceuticals, IT and ICT, mobile phone manufacturing, rubber products and other export-oriented industries.

READ ALSO: ‘Overvalued’ rupee renders exports uncompetitive: PBC

During the meeting, the PBC shared a time-bound export acceleration plan under which the private sector could help generate an estimated USD1.1 billion to USD1.9 billion in incremental exports over 12 months, with USD450 million to USD700 million realizable during July-December 2026, subject to timely government action on key policy enablers.

As part of the discussion, Dr Zeelaf Munir presented “Building Brand Pakistan: Unlocking Processed Food Export Potential,” which highlighted how Pakistan can move from commodity-led exports to higher-value, brand-led exports. She said that Pakistan must now build a broader export model based on value, trust and competitiveness.

“Brand Pakistan is not limited to one sector; it is a national export strategy. With policy stability, institutional support and public-private partnership, Pakistan can move from exporting volume to exporting value,” she added.

Javed Kureishi, CEO of the PBC, said, “PBC believes in export-led growth and is ready to support the government in developing practical, private-sector-driven solutions that can help Pakistan build scale in global markets.”

The wider proposals focused on policy stability, market access, cost competitiveness, regulatory facilitation and export financing to help Pakistani businesses move from low-value trade to higher-value exports.

The PBC delegation included senior members and business leaders representing a cross-section of key sectors of the economy, including Musadiq Zulqarnain, Yaqoob Ahmed, Muzaffar Piracha, Abrar Hasan, Khalid Mehmood, Asif Peer, Omar Saeed, Rizwan Diwan, Bashir Ali Mohammad, Muhammad Faisal and Syed Haider Ali.

The Finance Minister welcomed the PBC’s proactive approach and its commitment to working with the government on export-led growth. Both sides agreed on the importance of a time-bound action plan to address structural barriers, unlock sectoral export potential and help Pakistani businesses compete more effectively in global markets.

Copyright Business Recorder, 2026

PESHAWAR: The Tobacco Dealers Association has announced an indefinite sit-in in front of the Parliament House in Islamabad starting July 20, protesting against the “cruel” taxes imposed on tobacco in the recent budget.

Addressing a joint emergency meeting of growers in Sheikha Dheri, Iqbal Khan of Shewa, the central president of the Tobacco Dealers Association warned that the federal government’s adverse policies and the Federal Board of Revenue’s (FBR) misrepresentation of facts are rendering thousands of people unemployed, which could ultimately lead to law and order issues.

Appealing to state institutions for intervention, he pointed out that flawed policies have already caused the government’s own excise duty revenue from tobacco to drop by half, while exports have plummeted by 40%.

He concluded by saying that the patience of tobacco growers, laborers, and local company owners has finally run out. On July 20, tobacco growers and dealers from across the province will launch a decisive march toward Islamabad and stage a sit-in outside the Parliament House, which will continue until their demands are met.

Copyright Business Recorder, 2026

EDITORIAL: The Finance Division released May and June Economic Update and Outlook on the last day of the fiscal year 2025-26.

It is hoped that one-month delay in uploading the May report, attributed to the focus of the Division on the budget for next fiscal year, was available to the domestic (the Finance Ministry and those under its administrative control including the Federal Board of Revenue) and foreign stakeholders (International Monetary Fund fielded a mission in the country from 13 to 20 May and noted in its press release dated 20 May that “discussions on the FY2027 budget will continue in the coming days.”) Be that as it may, most of the data uploaded by the Finance Division is, as is the norm, with a two-month lag though some data is more current, for example PSX index, market capitalization, which reveal remarkable performance, and bafflingly even tax revenue, which is normally up to date and available with the FBR.

The obvious question is: what are the macroeconomic changes that the country experienced from May to June, given that the Middle East conflict has not yet restored the oil flows to pre-28 February levels with a persisting concern over fiscal space remaining narrow, thereby necessitating higher target collections by the FBR on the one hand and, in case of a shortfall, to raise the petroleum levy that has no upper limit as per an Ordinance (credited under other taxes so that it is not part of the federal divisible pool) to levels that would minimize the fiscal deficit.

The June data improved over May on three major counts. First, remittance inflows rose from 33.9 billion dollars (July-March) to 38.1 billion dollars (July-April), an inflow that has done much to ease the pressure on the current account.

While economists are warning that remittances may actually decline due to geopolitics; however, the Middle East regional order is in transition and one would be well advised to wait before making a definite prediction in this regard. Thus the current account was negative 252 million dollars July-April and positive 255 million dollars July-May.

Second, there was an uptick in the non-tax revenue in the June data – from 4426.9 billion rupees July-March to 4621.8 billion rupees July-April. This can be attributed to the presidential ordinance dated 14 April that removed the upper limit and empowered the government to raise the levy at will. This is an easy to collect sales tax and, needless to add, impacts negatively on the pocket book of households regressively as its incidence on the lower income levels is higher than on the rich.

And finally, June also witnessed a lower negative portfolio investment – from negative 1.377 billion dollars July-April to negative 1.145 billion dollars July-May and a slight uptick in foreign direct investment – from 1.409 billion dollars July-April to 1.623 billion dollars July–May.

And credit to the private sector declined slightly from 880.6 billion rupees July to 15 May to 873.3 billion rupees July-12 June, which raises questions as to why and how did credit decline in June; however, it may have been used to justify the decline in Large Scale Manufacturing sector growth by 0.1 percent – from 6.5 percent July-March to 6.4 percent July-April.

The introduction of the two updates is over-optimistic with the May report noting that “in the outgoing fiscal year, Pakistan’s economy continued to improve and rebuild confidence despite regional geopolitical tensions and energy-related shocks,” with the June Update claiming that “Pakistan’s economy is concluding FY2026 on a stronger footing, with improved macroeconomic stability and sustained recovery in economic activity.”

The conclusions of the two reports also do not vary with the May Update, stating that “activity in Pakistan’s major export markets remains broadly in line with the trend, suggesting that external demand may remain supportive, subject to geopolitical risks and the June,” while the June Update maintained that “activity in Pakistan’s major export markets…..remains broadly in line with their long-term potential, suggesting supportive external demand.”

Sadly, no mention is made of the rise in unemployment levels – cited at 22 percent by independent economists, drawing data from the Labour Force Survey by the Pakistan Bureau of Statistics and neither is there any mention of the rise in poverty levels estimated by the World Bank at a high of 44 percent based on a calorific measure.

It is hoped that the Updates will start reporting, if not highlighting, poverty levels and unemployment data as well in order to better assess the impact of the ongoing severely contractionary monetary and fiscal policies (Including administrative measures to raise utility rates) as dictated and agreed with the IMF under the ongoing programme on the general public, instead of being a treatise on achievements that are simply not being felt at the grass root level.

Copyright Business Recorder, 2026

The heavy reliance on indirect taxes in the budget for 2026-27, regressive taxes whose incidence on the poor is greater than on the rich, raises serious concerns about the International Monetary Fund’s (IMF’s) programme design in general that included review of the budget documents in detail prior to its presentation to parliament and the administration’s economic strategy in particular.

Total tax collections by the Federal Board of Revenue (FBR) for 2026-27 has been budgeted at 15.264 trillion rupees against the downward revised target of 12.983 trillion rupees in the outgoing fiscal year from the budgeted 14.131 trillion rupees. Two factors need to be highlighted.

First, the revised estimates noted in the budget documents are no longer credible estimates, given that well-informed sources in the FBR, on condition of anonymity, informed Business Recorder that nearly a trillion-rupee shortfall is expected from the downward revised total taxes or, in other words, the revised estimates may well be in the range of around 12 trillion rupees.

And second, the higher the growth rate for the economy the higher the tax collections and for the outgoing year the government projected Gross Domestic Product (GDP) growth at 3.7 percent against the budgeted 4.2 percent – a rate that independent economists maintain overstates.

Muhammad Aurangzeb, the federal finance minister, in a spirited defence on the floor of the House insisted that GDP growth figures are calculated according to international standards – a statement that disturbingly indicates that he did not bother to peruse the detailed IMF’s 10 October documents that approved the Extended Fund Facility programme and which stated the following: “there are weaknesses in the National Accounts (NA) and Government Finance Statistics (GFS) that somewhat hamper surveillance…..important shortcomings remain in the source data available for sectors accounting for around a third of GDP, while there are issues with the granularity and reliability of the GFS.

The authorities are prioritizing addressing these weaknesses supported by Fund TA on the GFS and a new Producer Price index, and the Pakistan Bureau of Statistics will soon begin fieldwork for four major surveys ahead of the upcoming NA rebasing to FY26.” The TA’s scheduled completion has been postponed from 30 June 2026 till October after the IMF team suggested some appropriate recommendations. It is precisely for this reason that independent economists maintain that next year’s growth rate is an over-estimation based on the downward revisions expected after the TA recommendations are implemented – a downward revision premised on a very tight monetary and fiscal policy.

Direct taxes, based on the ability to pay principle, as per the budget documents is estimated at 7.613 trillion rupees for 2026-27, against a downward revised collection of 6.431 trillion rupees for 2025-26 as opposed to the budgeted 6.9 trillion rupees – a revision that is indicative of the unrealistic target set in last year’s budget.

Total budgeted collection under income tax, by far the largest component, for next fiscal year is 7480.5 billion rupees against the revised estimate of 6331.4 million rupees for 2025-26 with the budgeted amount of 6811.2 million rupees.

Income tax consists of 75 to 80 percent withholding taxes that are levied in the sales tax mode – a revenue source which should, in all honesty, be credited to sales tax rather than to income tax – noted and recommended by the Auditor General of Pakistan to the FBR but to no avail.

In other words, around 5610 billion rupees out of the total income tax collections are really sales tax, which is a regressive tax whose incidence on the poor is greater than on the rich.

Sales tax collections have been budgeted at 4.8 trillion rupees which together with the withholding tax in the sales tax mode shows reliance on indirect taxes to the tune of 10.4 trillion rupees.

Customs revenue budgeted at 1.6 trillion rupees and federal excise at 1.073 trillion rupees, both indirect taxes, brings total reliance on indirect taxes to 13 trillion rupees out of a total collection of 15.264 trillion rupees – or 83 percent. It is little wonder that poverty levels are rising and if calculated at the calorific value are estimated at an extremely disturbing 44 percent.

In line with the claim by the IMF that the GST compliance efficiency rate has declined from 27 percent to 22 percent the government in the Finance Bill 2026 envisages levy of sales tax on 21 additional items on the basis of their printed retail prices, including vegetable and cooking oil, sugar confectionary, insecticides, pesticides, milk, fat filled milk and infant preparations – items that would further erode the value of each rupee earned.

FBR has claimed that it will generate 400 billion rupees from enforcement measures in 2026-27, an achievable target as it generated 389 billion rupees from these measures in the outgoing year though in 2024-25 enforcement measures netted the Treasury 874 billion rupees.

However, the source of these measures is as follows: sugar 76 billion rupees, cement 102 billion rupees – indirect taxes passed on to consumers and reflected in the rise in the price of these two commodities. Another 255 billion rupees was generated through Dispute Resolution and 218 billion rupees under tax liability.

And, if these measures were not anti-poor the government has extended 360 billion-rupee worth of tax relief measures, including 115 billion rupees for the property sector–m withholding tax for purchasers reduced from 2.5 to 1.5 percent and on sellers from 5.5 to 2.7 percent (a sector known for whitening black money), income tax 52 billion rupees abolishment of super tax for those with income from 15 to 50 crore rupees; however, those with incomes above 50 crores would pay the reduced super tax of 8 percent from 10 percent, CVT would no longer be levied on overseas assets, zero tax on business class and first class tickets.

The pro-poor measure consists of subsidies mainly as tariff differential subsidy for electricity (a policy that favours the inefficient and is untargeted top boot) and the Benazir Income Support Programme that is grossly inadequate to meet the growing number of the poor.

To conclude, it is absolutely baffling as to why there was no debate on the lack of pro-poor policies in the finance bill and yet it was passed with relative ease.

Copyright Business Recorder, 2026

ISLAMABAD: The Federal Board of Revenue (FBR) has applied the buoyancy-based forecasting framework to estimate the tax collections for 2026-27.

According to a FBR report on tax estimates for 2026-27 issued on Thursday, to enhance the robustness and reliability of the projections, buoyancy coefficients have been recalibrated using the latest available FBR revenue data in conjunction with National Accounts statistics.

The macroeconomic dataset incorporates key indicators-GDP, Large-Scale Manufacturing (LSM), and imports-covering a comprehensive 20-year period from FY2005-06 to FY2024.

The use of a long time series strengthens the statistical validity of the estimates by capturing multiple economic cycles, structural shifts, and policy phases, it said.

Buoyancy for each major tax head has been estimated through a log-linear regression framework implemented in Excel.

READ MORE: FBR projects Rs14.5trn revenue excluding impact of any new taxation steps

This methodological approach quantifies the elasticity of tax revenues with respect to changes in their underlying macroeconomic bases, enabling an empirical assessment of how strongly each tax responds to economic expansion.

While relatively simple, this technique provides transparency, replicability, and operational practicality for institutional forecasting purposes.

The report highlighted that once the buoyancy coefficients were estimated, projected growth rates of macroeconomic variables-GDP, large scale manufacturing (LSM) and imports were applied to their corresponding tax-specific buoyancy parameters. This step yields the autonomous growth rate for each tax category, representing the increase in revenue attributable solely to economic activity under unchanged policy conditions. By isolating autonomous growth, the model clearly distinguishes structural revenue expansion from discretionary policy measures.

The calculated autonomous growth rates were then applied to the projected base year collections for FY2025-26 to estimate incremental revenue for FY2026-27.

The additional revenue derived from this process was added to the base year collections to arrive at the final projections. These figures therefore represent baseline revenue expectations, excluding the impact of any new taxation measures, rate adjustments, or policy reforms that may be introduced during the 2026-27 budget process, FBR maintained.

Analytically, this approach ensures methodological consistency and policy neutrality in baseline forecasting.

Copyright Business Recorder, 2026

ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb held a meeting Thursday with a delegation from S&P Global Ratings comprising Yee Farn PHUA, Director, Sovereign Ratings, and Giulia Filocca, Associate Director, Sovereign Ratings, to discuss Pakistan’s sovereign credit profile, macroeconomic outlook, and progress under the Government’s comprehensive economic reform agenda.

During the meeting, the Finance Minister highlighted the significant improvement in Pakistan’s macroeconomic fundamentals, emphasizing stronger economic growth, sustained fiscal consolidation, improved debt sustainability, and enhanced external sector resilience underpinned by a pro-growth and fiscally responsible Federal Budget FY2026-27.

He noted that prudent economic management, disciplined policy implementation, and continued structural reforms have strengthened macroeconomic stability, resulting in lower inflation, higher foreign exchange reserves, a stronger external position, renewed investor confidence, and continued progress across key fiscal and external indicators despite a challenging regional and global environment.

READ MORE: Budget, Mideast peace deal to support FY27 growth, says Aurangzeb

The minister also underscored Pakistan’s improving public debt profile, highlighting the sustained decline in the debt-to-GDP ratio, the slowest pace of central government debt growth in around 15 years, active debt management through liability management operations and debt buybacks, extension in the maturity profile of domestic debt, historically lower fiscal deficits, and record primary surpluses.

He emphasized that these improvements, supported by stronger revenue mobilization and prudent expenditure management, are reinforcing fiscal sustainability and strengthening Pakistan’s sovereign credit fundamentals.

That every Finance Act tells two stories is a fact. One is written in statutory language through new sections, substituted clauses and amended schedules. The other is written in silence—through debates that never took place, questions that were never asked and constitutional responsibilities that were never discharged. The Finance Act, 2026 belongs overwhelmingly to the second category. It is less a story of taxation than of Parliament’s continuing retreat from one of its most fundamental constitutional obligations.

Fourteen years ago, while examining the Finance Act, 2012 in these columns [‘Finance Act 2012: Where is Parliament?’ Business Recorder, June 29, 2012], we observed that the National Assembly had reduced itself to little more than a rubber stamp. The Finance Bill was adopted in haste, important amendments were introduced at the last minute, almost no meaningful debate took place on taxation and the constitutional scheme envisaged under Articles 73 and 82 was reduced to a procedural ritual.

It was hoped that parliamentary democracy, still recovering from years of authoritarian interruption, would gradually mature. Experience has proved otherwise. If anything, the Finance Act, 2026 demonstrates is nothing but the erosion of parliamentary control over taxation, which has become even more pronounced.

The annual Finance Bill is not an ordinary piece of legislation. It determines how wealth will be raised, how resources will be distributed and what burdens citizens will bear during the ensuing financial year. In every constitutional democracy, taxation lies at the heart of representative government because the power to tax is inseparable from the consent of those who are taxed.

This principle was established centuries ago through the historic struggle against arbitrary taxation and became the constitutional foundation of parliamentary government across the democratic world. Pakistan’s Constitution embodies the same philosophy by assigning Parliament the responsibility of examining, debating and approving fiscal measures before they become law. Unfortunately, our annual budget process has evolved in precisely the opposite direction.

Budget speeches have become political spectacles, while the actual Finance Bill is treated as an administrative document prepared almost entirely by officials of the Ministry of Finance and the Federal Board of Revenue (FBR)—role of standing committees of both Houses is also limited.

Members of Parliament rarely scrutinise individual clauses. Even more disturbing, the public seldom learns how many legislators have actually studied the legislation they ultimately vote to approve.

The events surrounding the Finance Act, 2026 expose this institutional failure with unusual clarity. The Senate Standing Committee on Finance examined the Finance Bill and submitted recommendations after hearing stakeholders, professional bodies and government officials.

Significant changes found their way into the legislation after the Senate had completed its constitutional advisory role. Those provisions naturally escaped Senate scrutiny because these did not exist when the Bill was placed before it. The National Assembly nevertheless approved the revised Bill in haste without reopening meaningful debate. This raises a constitutional question that has received surprisingly little attention. If substantial amendments are inserted after the Senate completes its examination, what purpose does the Senate’s advisory jurisdiction under Article 73 (1) actually serve? Constitutional procedures are not intended to be ceremonial exercises.

The Senate cannot meaningfully advise on legislative provisions that were never placed before it. By permitting substantial post-Senate alterations, successive governments have transformed an important constitutional safeguard into a procedural formality. The problem, however, extends far beyond legislative procedure. The Finance Act, 2026 significantly expands obligations imposed upon taxpayers, withholding tax agents, banks, businesses and other intermediaries.

Additional compliance requirements, broader reporting duties, deeper digital integration with FBR databases, greater reliance on automated systems and enhanced enforcement powers all increase the responsibilities of citizens. Yet Parliament devoted remarkably little attention to the equally important question of reciprocity.

Constitutional taxation has never been based solely upon the citizen’s duty to pay taxes. It is founded upon reciprocal obligations between the State and the taxpayer. Citizens surrender part of their earnings to finance public institutions.

In return, the State guarantees legal certainty, due process, protection of confidential information, efficient dispute resolution, timely refunds and impartial administration.

Taxation without reciprocity gradually ceases to resemble constitutional government and begins to resemble administrative extraction. That is precisely the direction in which Pakistan’s fiscal system is moving. Businesses are required to integrate their systems electronically with tax authorities, yet Pakistan still lacks comprehensive personal data protection legislation.

Vast quantities of commercial and financial information are expected to flow into government databases without Parliament first establishing robust legal safeguards against misuse, cyber intrusion or unauthorised disclosure. Taxpayers are expected to trust digital infrastructure that itself operates within an incomplete legal framework. Parliament, astonishingly, scarcely discussed this contradiction.

Similarly, artificial intelligence and faceless assessments are presented as symbols of modern tax administration. Technology undoubtedly has an important role to play in reducing discretion and improving efficiency. Yet algorithms cannot compensate for a fundamentally undocumented economy. They merely enable tax authorities to examine already documented persons with greater sophistication while leaving the cash economy, informal transactions and concealed wealth largely untouched.

Technology has become a more efficient instrument for monitoring compliant taxpayers rather than a strategy for documenting the undocumented economy. Parliament accepted this transition without demanding evidence that the underlying structural weaknesses had first been addressed.

The same pattern appears throughout the Finance Act. Withholding agents are assigned new responsibilities, businesses are burdened with additional compliance costs, financial institutions are required to share increasing volumes of information and documented taxpayers face expanding regulatory obligations.

The Parliament did not insist upon statutory protection of taxpayer rights, independent oversight of automated decision-making, accountability for wrongful assessments, legally enforceable refund timelines or meaningful reform of tax administration itself. Obligations multiplied but not corresponding rights.

However, the greatest irony lies elsewhere. The Finance Act, 2026 contains numerous provisions aimed at strengthening enforcement against those already visible to the tax administration. At the same time, Parliament once again failed to confront the much larger questions that continue to define Pakistan’s fiscal crisis. Tax expenditures running into trillions of rupees remain largely beyond parliamentary scrutiny. Large segments of wealth continue to escape effective taxation.

The informal economy remains overwhelmingly undocumented. Fiscal federalism continues to weaken as tax policy becomes increasingly centralised despite provinces receiving the constitutionally protected majority share of divisible revenues. None of these structural questions received the sustained parliamentary attention they deserved.

This pattern is neither accidental nor new. Successive governments have found it politically easier to impose additional obligations upon those already within the tax system than to challenge entrenched centres of economic privilege. Every Finance Act promises reform. Every Finance Act expands compliance. Yet genuine structural reform remains perpetually postponed because it threatens existing concentrations of power, influence and administrative convenience.

The tragedy therefore extends beyond defective tax policy. It concerns the gradual weakening of Parliament itself. When elected representatives cease to scrutinise taxation seriously, they surrender one of the oldest and most important functions of representative government.

Parliament becomes an institution that formally approves executive fiscal decisions instead of shaping them. The constitutional balance shifts quietly but decisively towards executive supremacy.

The Finance Act, 2026 should be remembered not simply for the taxes it imposed but for the constitutional precedent it reinforced. It demonstrated once again that the annual budget process has become increasingly detached from meaningful parliamentary deliberation.

The Senate’s advisory role is weakened by post-report amendments. The National Assembly frequently approves highly technical legislation without exhaustive clause-by-clause examination. Fundamental questions of taxpayer rights, fiscal federalism, administrative accountability and constitutional reciprocity remain largely absent from parliamentary discourse.

Fourteen years after we warned that Parliament was disappearing from Pakistan’s tax laws-making process, the evidence suggests that the disappearance is now almost complete. The constitutional promise that taxation shall be imposed through informed legislative deliberation has gradually yielded to a system in which executive proposals receive parliamentary endorsement with minimal scrutiny.

The real issue is no longer whether particular taxes are good or bad. The more fundamental question is whether Parliament still exercises meaningful control over taxation at all. Until that question is honestly confronted, every Finance Act will continue to expand the powers of the State while diminishing the constitutional role of the institution that alone possesses democratic legitimacy to authorise those powers. That is not merely a weakness of fiscal policy. It is a continuing constitutional failure whose consequences extend far beyond taxation itself.

Copyright Business Recorder, 2026

In the wake of the 18th Constitutional Amend ment, the role of the provincial spending, and revenue decisions have become all the more important both for the provinces, but also for better rationalizing such decisions at the level of the Centre. For reaching these rationalized budgetary outcomes, especially in terms of sustainably sharing revenue, and expenditure related responsibilities, federal and federating units’ budgets need to reflect policy decisions that better cater to the overall economic needs, including much improved level of fiscal federalism as per the 18th Constitutional Amendment.

Having said that, such relationship needs to be rationalized much better than reflected in the federal budget FY2026-27, where there is not only duplication with regard to, for instance, education, health, and social protection. For instance, the social welfare BISP (Benazir Income Support Programme) still remains an expenditure item for the Centre, when otherwise it falls under the social welfare responsibility.

Moreover, the Centre needs to set better rationalized direction-changing concerns like shifting from pro-cyclical to counter-cyclical policy in terms of the overall approach of the federal budget, along with putting the tax burden in an equitable way by laying out a mission-oriented plan to move away from practicing consumption-based, regressive, indirect taxation to direct taxation for reaching overall stability, growth, distribution, resilience, enhancing consequences, and in a sustainable way at the level of the Centre, and setting the same tone for provinces so that there is a unified policy response, including through the budgetary process.

In doing so, expenditure and revenue decisions are taken so as to incentivize a non-neoliberal and non-austerity policy response which, given the serious misgivings of the neoliberal, austerity and pro-cyclical policy response over the years, including the highly successful experience of China, for instance, in not following ‘shock therapy’ policies, and instead adopted greater-role of the public sector – through introducing, for example, ‘dual track’ pricing mechanism, and large-scale role of the state-owned enterprises (SOEs) – and overall counter-cyclical policies used especially in terms of greening the economy and pro-actively, but duly cautiously, adopting artificial intelligence- (AI-) induced solutions for modernizing the economy should be emphasized in terms of policy focus.

Once again, just like the author reflected on the budget with regard to first of all whether federal budget’s approach is outcome-based or not, and whether priorities reflect major issues facing the country – like as pointed out in author’s recent article titled ‘Policy philosophy correction budget – I’ in Business Recorder (BR), which pointed out in this regard, ‘…water resource management, and security, energy sustainability, poverty, unemployment, and high interest payments… fiscal federalism needs to be fixed to better match responsibilities with regard to subjects shifted under the 18th Constitutional Amendment to the federating units, with the expenditure responsibilities they should incur from the transferred resources under the National Finance Commission (NFC) award for those devolved responsibilities. That would better rationalize expenditure side, and revenue raising needs of the centre, and federating units’ the same is reflected in the provincial budgets. It needs to be mentioned here that provinces after the 18th Constitutional Amendment hold all the more importance in terms of all these issues, except from interest-related expenditure since it is mainly a consequence of monetary policy orientation – which has wrongly adopted over-board monetary austerity policy in general since inflation has significant aggregate supply-side determination, and requires a more balanced aggregate demand- and supply-side policy emphasis –and extent of borrowing – external, and domestic – at the federal level.

In analysing provincial budgets, ‘white papers’ – which reflect the general direction of a particular budget regarding development priorities, revenue, and expenditure decisions – are generally generic in nature, failing to reflect the outcomes-based, prioritized directions that the budget intends to take. The general message is more focused on fiscal discipline rather than bringing growth enhancing measures that will also likely bring much-needed greater aggregate supply support to macroeconomic stability, which would, in turn, allow reaching much more sustainability to both stability and growth. Even after posting sub-optimal economic growth rate around the medium term or so, and given during this time austerity – aggregate demand squeezing – policies and procyclical policies called for reversal of such policies to adopt non-austerity, counter-cyclical policies. Yet, this is missing in general in provincial budgets in terms of enhancement of provincial revenues that broader tax base, lower tax rates in general, and overall improve the equitability aspect of taxes.

Moreover, provincial governments need to adopt a much more non-neoliberal role, which includes rolling out effective local governments through timely elections and carrying out provincial finance awards to adequately fund them.

Hence, the messages/statements in the ‘white papers’ of provinces lack specific objectives the provincial government has pursued in terms of concrete targets, indicating, in turn, that these were the main steps in terms of fiscal consolidation and this is how the budget intends to move in the direction of enhancing growth, inclusivity and lowering poverty, which together with inequality has seen a sharp rise over the medium-term due to practice of steep austerity policies. Moreover, the strategy must indicate how the public sector will co-create partnerships with the private sector and markets. Key gaps in governance and incentive structures—particularly concerning tax proposals and expenditure allocation—must be addressed to improve overall productive and allocative efficiencies. This improvement should be reflected in the prioritization of social spending and infrastructure enhancement, particularly regarding water management. Ultimately, this will build greater resilience against economic shocks while facilitating the transition to a greener economy.

Messages in the ‘white paper’ on Punjab’s budget for FY27, for instance, remain unable to indicate how revenue base of the province was enhanced, including why implementation of agricultural income tax – already agreed with International Monetary Fund (IMF) – has fared, and which expenditures were curtailed in terms of big ticket items, how the governance, and incentive structures were improved for better allocation and effective spending, and which areas of the provincial economy were prioritized, especially in terms of agriculture, water, industry, social sectors, and infrastructure, and how they overall gels to provide sustainable growth, and resilience. This is important given that the province has experienced two major floods in recent years, including one during the last fiscal year. Furthermore, water management requires special attention to better handle floods, especially in light of water-related threats from India.

It is strange that provincial revenue base, for instance, remains so much limited in terms of breadth and depth on one hand, while under the National Finance Commission (NFC) award, provinces receive close to sixty percent of the resources from federal divisible pool, and have tremendous potential for enhancing provinces’ own tax base, and increasing revenues through greater economic growth effort at the provincial level as well, yet there is surprisingly a general tone in ‘white papers’ virtually across the board highlighting difficult revenue situation and presenting it as a basis for keeping development expenditures at lower levels. In Punjab’s ‘white paper’, for instance, it is indicated that ‘While development expenditures have been drastically reduced in line with available fiscal resources, the Government remains fully committed to advancing Punjab’s long-term development agenda’, yet what is not made to understand – and that is a theme found in the ‘white papers’ across all provinces – as to why it should be so in the presence of high level of resources transferred to provinces from the divisible pool, and immense level of revenue potential lying virtually untapped at the level of provinces.

(To be continued)

Copyright Business Recorder, 2026

LAHORE: The Punjab Small Industries Corporation (PSIC) Board in it’s 136th meeting, chaired by Provincial Minister Ch Shafay Hussain, approved the Rs14.285 billion budget estimates for the new financial year.

The Board also approved the revised PC-I for the Mandi Bahauddin Small Industrial Estate and the revised rates for booking industrial plots. The PC-I for the upgradation of the handicraft shop at PSIC House was also approved.

The board approved an increase in the medical allowance for retired PSIC employees. For this purpose, the corporation will contribute Rs400 million from its own resources to the pension fund. Approval was also granted for a housing scheme for PSIC employees under the Prime Minister’s Apna Ghar Programme.

The board further approved increasing the honorarium of PSIC Board members from Rs 25,000 to Rs 40,000. Several other administrative and financial matters were also approved. The meeting reviewed various proposals aimed at enhancing PSIC’s revenue and took important decisions to improve facilities and infrastructure in Punjab’s 23 Small Industrial Estates.

Addressing the meeting, Provincial Minister for Industries and Commerce Chaudhry Shafay Hussain said that the interest-free loan schemes launched on the directions of the chief minister had played a pivotal role in promoting economic activity across the province. He said traders and industrialists had greatly benefited from the Asaan Karobar Card and Asaan Karobar Finance schemes.

He further stated that the Punjab government is launching a major programme for industrial development and export promotion. Under this initiative, the Bank of Punjab will provide Rs300 billion in business financing to stimulate economic and commercial activities.

The programme is scheduled to be launched in October this year. Under the first category, businesses will be able to obtain interest-free loans of up to Rs100 million. Under the second category, loans of up to Rs1 billion will be available at a 3 percent markup, while under the third category, businesses will be eligible for loans of up to Rs5 billion at a 5 percent markup.

The minister also announced that work on upgrading infrastructure in Punjab’s 23 Small Industrial Estates will commence this year.

He further said that a new Small Industrial Estate in Mandi Bahauddin is being developed where industrial plots will be available on easy installment plans. Managing Director Mubeen Elahi informed the Board that the PSIC had generated approximately Rs2 billion during the last six months through the sale of surplus plots in Small Industrial Estates.

Copyright Business Recorder, 2026

June is the time of the year when the Ministry of Finance reflects on the past performance through the Pakistan Economic Survey and presents a forward-looking plan through the Federal Budget. Taken together, a complete picture of the economy emerges; the journey over the past year and the horizon over the immediate future.

The economic performance over the past year was marked by stability - stability without any spectacular growth. There was promise of growth but not without difficult reforms. Economic growth is moderate, reserves are steady and inflation is tempered. Remittances were the highlight and at a record high, but exports have remained stagnant. Glass half full or half empty; it depends on where one chooses to look.

The banking industry has been a partner in the government’s reform journey for decades. The sector has emerged as a strong pillar of the economy, an industry on which the government has relied countless times for its agenda on development and growth.

It is against this backdrop that the second annual Pakistan Banking Summit will take place. The Summit comes at a time when the economy is relatively stable but needs a well-planned concerted push towards a growth trajectory. Discussions at the summit will range from traditional areas such as SME finance, housing and agriculture to emerging themes including digital payments, priority sectors, digital currencies and climate finance. Taken together, these discussions reflect a broader question: how can the banking sector support Pakistan’s next phase of economic growth?

The summit should not be mistaken for another conference that produces more speeches than outcomes. Since the inaugural summit last year, measurable progress has been recorded across several priority sectors.

SME finance, which remained stagnant for years, has grown 54 percent in terms of borrowers and 46 percent in outstanding finance. SME lending now accounts for 7.63 percent of total private sector lending, an improvement from approximately 6 percent a year ago.

Overall, agricultural finance grew 14 percent year-on-year to Rs 995 billion. This area has seen momentum through the digital lending programme – Zarkhez-e. The programme has completed one lending cycle with recoveries underway. Over Rs 6.43 billion has been approved to 14,800 farmers. If scaled properly, this programme can reach millions of unserved farmers across the country.

Remittances in general, and specifically under the Roshan Digital Account, merit separate mention. Remittances for FY26 (up to May) reached USD 38.1 billion, with RDA contributing approximately USD 2.9 billion. With the introduction of RDA 2.0, business entities and non-Pakistani origin investors are now eligible. Recently, the government also announced that deposits can be held in Saudi riyals and UAE dirhams. The programme is still growing with nearly a million accounts to date. As of May, 84 percent of RDA funds remain in Pakistan with 64 percent utilized locally, spurring economic activity.

Housing finance faces a structural challenge at scale. Pakistan has a 10-million-unit housing shortfall, with 350,000 units needed annually but only 150,000 delivered. Housing accounts for 25 percent of core inflation, yet formal housing finance remains only 3–5 percent of GDP compared to 10–12 percent in India. The recently launched Apni Chhat Apna Ghar is showing good results with over Rs 200 billion disbursed and 99 percent recovery. The banking sector faces two structural constraints. First, in the absence of pension and insurance funds that can provide long-term capital through mortgage securitization, banks continue to face asset-liability mismatches with short-term deposits funding long-tenure housing loans. Creative solutions, including directing a portion of long-term RDA deposits towards housing finance, deserve consideration. Second, on the policy side, the absence of stronger foreclosure laws and digitization of land titling will continue to hamper the market despite the banking industry’s willingness to lend.

Climate finance presents a similar challenge. While the State Bank’s Green Banking Guidelines (2017) and Pakistan Green Taxonomy (2025) provide the governance and classification framework, embedding ESG into end-to-end banking processes (not just restricted to compliance and risk) remains elusive. For banks to deploy capital at scale for climate finance, green lending must remain commercially viable while enabling the state to access much-needed funding for adaptation and mitigation. Creative models in blended finance and de-risking instruments will need to be looked at carefully for meaningful headway to be made.

Pakistan has never been more financially included, reaching 69 percent of adults, with 6.8 million new unique accounts added during CY25. Digital transactions are also happening at a scale that has never been seen. However, the uncomfortable question of whether that is impacting currency in circulation and shrinking the cash economy is something that remains to be answered.

For this reason, and for such questions, the Banking Summit is more than just a conference. It is a platform that provides an important space to examine the banking sector’s priorities as it navigates the challenges and opportunities that lie ahead. Last year’s summit showed that outcome-based progress is possible. The challenge this year is to identify the foundations that will enable this progress to scale.

Copyright Business Recorder, 2026

ISLAMABAD: The Finance Division unveiled the strategy for release of funds for development and recurrent budget for fiscal year 2026-27, adding that all releases shall be subject to availability of fiscal space.

The division issued an office memorandum which stated that in pursuance of the provisions of the Public Finance Management Act, 2019 and Financial Management & Powers of Principal Accounting Officers (PAOs) Regulations, 2021, the funds release strategy for Development Budget for FY 2026-27 is being issued for implementation with immediate effect and till further orders.

Funds for Development Budget shall be authorised by the Planning, Development & Special Initiatives (PD&SI) Division out of the Public Sector Development Programme (PSDP) allocation for FY 2026-27 for approved projects at 15 percent for Quarter 1, 20 percent for Quarter 2, 25 percent for Quarter 3, and 40 percent for Quarter 4.

READ MORE: Requirements total Rs4.097trn: Rs1.126trn set aside for FY27 PSDP: Ahsan

While executing development projects, PD&SI Division and PAOs concerned shall ensure adherence to provisions of the Public Finance Management Act, 2019.

PD&SI Division shall devise a quarterly sector/project/division-wise strategy for release of PSDP funds within the approved appropriation.

Any proposal for change to the quarterly limits shall be considered by Budget Wing, Finance Division on case-to-case basis and shall require prior approval of Finance Secretary.

Release of funds for approved projects in the Demand for Grants and Appropriations shall be made by PAOs in each quarter as authorised by the PD&SI Division within the above limits. PAOs shall ensure availability of sufficient funds for employee related expenses for each project.

PAOs/Heads of Attached Departments/Heads of Sub-ordinate Offices/Project Directors shall not re-appropriate funds from employee related expenditures to non-employee related expenditures (heads of account) except with prior concurrence of PD&SI Division.

Adequate budgetary allocations on account of foreign exchange component (rupee cover) shall be ensured by all PAOs and conveyed to PD&SI Division, Economic Affairs Division and Finance Division.

Funds for foreign exchange payments shall require prior approval of External Finance Wing, Finance Division.

All payments shall be made through the pre-audit system or through the Assignment Account Procedure, or any other procedure issued by Finance Division from time to time.

A separate Assignment Account shall be opened for each project.

Copyright Business Recorder, 2026

EDITORIAL: The Federal Board of Revenue (FBR) collected 12.957 trillion rupees last fiscal year (1 July 2025 to 30 June 2026) – an amount that is lower than the 12.983 trillion rupees projected in the 2026-27 budget documents by 26 billion rupees.

The budgeted FBR collection target was revised downward twice during last year – a trend that has been evident in previous fiscal years as well, requiring adjustments in other key macroeconomic data, including the budgeted deficit as well as the share of the provinces in the divisible pool.

Gross collection for 2025-26 is estimated at over 13 trillion rupees but given that FBR released refunds to the tune of over 40 billion rupees, a long-standing legitimate demand of the business community, particularly exporters, net collections were appropriately adjusted and at the end of the fiscal year were 92 percent of the total (14.131 trillion rupees) budgeted for the year – a shortfall that indicates the over-ambitious target set jointly by the government and the International Monetary Fund (IMF), given that the latter’s approval of the budget is a condition of the ongoing programme loan.

The budgeted tax target for the current year is set at 15.2643 trillion rupees – a target which envisages a rise of nearly 18 percent from what was actually achieved last year that, additionally, requires a 4 percent projected growth rate and the implementation of all aspects of the Finance Bill 2026 – conditions that are challenging, given the severely contractionary monetary and fiscal policies in place today as agreed with the IMF.

Independent economists and tax consultants have already expressed their reservations about the ability of FBR to meet this target on the grounds that the continuation of severely contractionary monetary and fiscal policies would certainly act as a major impediment in the new fiscal year.

Pakistani budgets have typically set unrealistic FBR targets to show a budget deficit that is sustainable and as and when these over ambitious targets are not met adjustments are typically made through: (i) slashing the Public Sector Development Programme (PSDP) – a trend that is all the more prevalent in years when the country is on an IMF programme as, unfortunately, it has been for most of its seventy-nine year-long history. Currently, Pakistan is on its twenty-fourth IMF programme with the average duration of three years; (ii) compelling the FBR to take punitive measures that have raised litigation costs of the Board as those with grievances seek legal remedies and in time also fuel capital flight; and (iii) borrowing more than was budgeted – a highly inflationary policy that accounts for the ever rising mark-up component in our budgets.

The budgeted mark-up in the current year is a whopping 46 percent of the entire current expenditure – the same percentage as in the revised estimates of last year even though the mark-up declined significantly as the policy rate was reduced.

To conclude, realistic revenue targets are critical for the achievement of key macroeconomic targets, which the country has consistently failed to meet.

Copyright Business Recorder, 2026

ISLAMABAD: The Federal Board of Revenue (FBR) has estimated to collect Rs 14,500 billion during 2026-27 excluding the impact of any new taxation or budgetary measures for new fiscal year.

According to the FBR’s Evidence-Based Revenue Forecasting (EBRF) report (2026-27) issued on Wednesday, for FY2026–27, revenue collection-excluding the impact of any new taxation or budgetary measures—is projected at Rs. 14,500 billion.

This represents a 11.7 percent increase over the expected collection of Rs. 12,983 billion for FY2025-26, as reported in Table 1.

In absolute terms, the projected increment amounts to Rs. 1,517 billion.

READ MORE: Rs650bn in enforcement & tax policy steps introduced

This increase has been estimated by applying tax-specific buoyancy coefficients to projected macroeconomic indicators, thereby capturing autonomous revenue growth under existing policy parameters.

In other words, the forecast isolates the structural responsiveness of the tax system to economic expansion, without incorporating discretionary policy interventions such as rate changes, new levies, or withdrawal of exemptions.

Analytically, a 11.7 percent projected growth rate indicates moderate yet stable revenue expansion, broadly aligned with expected improvements in GDP growth, industrial output, and trade activity.

Copyright Business Recorder, 2026

ISLAMABAD: The World Bank has warned that Pakistan’s current fiscal federalism system has created a persistent structural imbalance in public finances, urging a comprehensive overhaul of the National Finance Commission (NFC) award to align spending responsibilities with revenue generation, strengthen provincial tax collection and empower local governments.

In its report titled “Strengthening Fiscal Federalism in Pakistan” released by the World Bank during media briefing on Wednesday, stated that while the 18th Constitutional Amendment and the 7th NFC Award marked a historic shift towards decentralisation by transferring key service delivery responsibilities to the provinces, financing and institutional arrangements.

However, structural weaknesses in the system continue to disturb fiscal discipline, constrain revenue mobilisation, and affect the quality of services for citizens.

READ ALSO: No consensus yet on provinces’ shares under NFC Award

The bank stated that reverse grants included in the fiscal year 2027 federal budget could help partially address the current vertical fiscal imbalance, but emphasised that broader institutional reforms would still be required to place Pakistan’s fiscal federalism framework on a sustainable footing.

The Bank noted reverse grants from Punjab at over Rs546 billion and Rs260 billion from Sindh, but no amount was shown from Khyber Pakhtunkhwa and Balochistan provinces.

When asked about this, the Bank official said that no such amount was mentioned in the two provinces’ budget documents. The federal government estimated grants/receipts from provinces under Article 164 at Rs1035 billion for 2026-27.

Copyright Business Recorder, 2026

Pakistan’s cement industry is ending FY26 on a firmer footing. Total dispatches are estimated to reach just over 50 million tons for the year, growing 7 percent from FY25 and marking the second consecutive year of recovery after a prolonged downturn. This is driven almost entirely by domestic demand, with local dispatches up 9 percent, even as exports contract by 3 percent.

The broader picture is that Pakistan’s construction cycle has been slowly stabilizing with easing inflation, reduced interest rates and better business confidence that revived private construction activity. This allowed domestic cement demand to recover from the depressed levels witnessed between FY22 and FY25.

At the same time, total dispatches remain well below the levels producers had envisioned when they embarked on an aggressive expansion drive several years ago.

Installed capacity has continued to grow while consumption has struggled to keep pace, leaving the industry with one of the largest excess-capacity overhangs in its history.

Capacity utilization is expected to improve to around 59 percent this year from 56 percent last year, but still below reasonable thresholds of 65 percent. This imbalance has been years in the making.

During the construction boom that accompanied the CPEC investment cycle and the FY21 housing incentives under Naya Pakistan Housing Program, cement manufacturers raced to expand production lines in anticipation of sustained growth in infrastructure and residential demand. Instead, macroeconomic instability, political uncertainty and repeated stabilization programmes sharply slowed construction activity before the new capacity could be absorbed.

For several years exports were helping cushion the blow. Overseas shipments took their contribution up by easing some of weakness in domestic demand but that cushion is thinner.

Export dispatches are expected to decline this year as regional competition intensifies and freight economics become less favorable, particularly for southern manufacturers shipping through sea routes.

June data suggests that sea-based exports from the south remain considerably weaker than a year ago despite an overall monthly increase in export dispatches.

The shift back toward domestic sales is commercially better for producers. Local markets generally offer stronger pricing power and significantly lower logistics costs than exports. But it also leaves the industry’s fortunes increasingly tied to Pakistan’s own construction sector, where demand remains heavily dependent on government development spending and housing activity.

In the budget 2027, the government has announced a series of tax measures aimed at stimulating the construction and real estate sectors, while a subsidized housing finance scheme is expected to support home ownership.

Lower financing costs should gradually encourage private developers to restart projects that had become financially unviable during the high-interest-rate period.

Whether these initiatives are sufficient to trigger another construction boom remains uncertain.

Housing affordability continues to deteriorate as household incomes struggle to keep pace with rising living costs and taxation. Public sector development spending also remains constrained by fiscal consolidation requirements, limiting the government’s ability to generate the kind of infrastructure-led demand that historically lifted cement consumption.

The pace of domestic demand growth is unlikely to be strong enough to absorb Pakistan’s substantial surplus production capacity anytime soon. Without a sustained increase in large-scale infrastructure investment, a meaningful housing boom or a revival in export competitiveness, utilization rates are expected to improve only incrementally over the next few years.

But for producers, that may not be a bad outcome. The country’s larger cement manufacturers have spent the past several years strengthening balance sheets, reducing costs and diversifying export markets where possible.

Perhaps they no longer require another FY21-style demand surge to remain profitable. What they do need is a stable domestic economy that steadily adds a few million tons of annual demand rather than another short-lived construction frenzy. That may ultimately prove to be a healthier foundation for the industryven if it means much of Pakistan’s cement capacity continues to cast a long shadow over the market.

Copyright Business Recorder, 2026

KARACHI: Sindh Senior Minister Sharjeel Inam Memon on Monday said that the development and prosperity of Karachi, along with the provision of essential civic amenities, remained the foremost priority of Sindh government, and more than Rs100 billion had been allocated for the metropolis in the provincial budget for the fiscal year 2026-27.

In a statement, the senior minister said the allocated funds would be utilized for improving water supply and drainage systems, constructing and rehabilitating roads, and upgrading public infrastructure and other civic facilities across Karachi.

He said instead of making false promises, the Pakistan Peoples Party (PPP) believed in delivering public service, and resolving the issues faced by Karachiites was both the government’s responsibility and commitment.

Sharjeel Memon said modern, safe and reliable public transport remained one of the city’s most pressing needs.

The Sindh government was taking historic measures to transform Karachi’s transport network.

He said that 500 modern electric buses, along with double-decker buses, would soon begin operating on the city’s roads, significantly improving public transportation.

Highlighting employment generation as a key component of the government’s economic agenda, the minister said the 2026-27 budget placed special emphasis on creating opportunities for young people.

He said thousands of jobs would be generated through industrial zones, development projects, transport initiatives and major infrastructure schemes.

He further said the PPP had consistently focused its politics on the welfare of the common man, including workers, farmers, youth and the middle class.

The Sindh government, he continued, was utilizing all available resources to improve people’s quality of life by expanding employment opportunities and strengthening education, healthcare and modern civic infrastructure.

He said certain elements were attempting to portray Karachi and other areas of Sindh negatively for political purposes.

However, he maintained that the people themselves were witnessing ongoing development projects, improvements in public transport, infrastructure expansion and various public welfare initiatives.

Sharjeel Memon said the people were fully aware that despite financial and other challenges, the Sindh government continued giving priority to public welfare and sustainable development.

He described the 2026-27 provincial budget as more than a financial document, flagging it as a comprehensive roadmap for practical progress, enhanced employment opportunities and a more prosperous future for Sindh, including Karachi.

Copyright Business Recorder, 2026

EDITORIAL: The Finance Division has yet to upload its May 2026 Economic Update and Outlook, a document that would have provided current statistics critical for an assessment of the state of the economy for use in the formulation of the budget 2026-27. This newspaper requested a copy of the document a fortnight ago and was inexplicably informed that the Division was busy with the budget and would upload it on the website in ‘due course’. It is relevant to note that tomorrow, on 1 July, the June monthly update and outlook would also be due together with the May report.

Pakistan Bureau of Statistics (PBS) and the State Bank of Pakistan (SBP) did continue to upload data pertaining to limited aspects of the economy; notably, the trade balance (exports and imports), remittance inflows, foreign exchange reserves held by the SBP and commercial banks, foreign direct investment, portfolio investment, and Consumer Price Index.

However, what has led many to argue that the failure to upload the May outlook may have been deliberate is the fact that these two sources of data have not yet uploaded key data for May 2026, including large-scale manufacturing (LSM) sector, credit to private sector, agriculture credit and non-tax revenue.

In addition, Federal Board of Revenue’s (FBR’s) actual collections for the month of May, with a reported projected shortfall of around one trillion rupees by 30 June 2026 from what was targeted at 13.979 trillion rupees - a downward revision from the budgeted 14.307 trillion rupees - has perhaps not been taken into account on the primary and fiscal balance claims for the outgoing year with obvious implications on the projections in the budget for 2026-27. This could have been a vital element in the government’s recent decision to keep oil prices stable in spite of a decline in the international price that necessitated raising the petroleum levy with the objective of raising non-tax revenue to meet the International Monetary Fund’s (IMF’s) upfront harsh conditions for the outgoing fiscal year.

There is, therefore, a serious concern that the budget was based on dated statistics, dated back to April, when the country’s economic performance had not yet absorbed or begun to show increased fragility due to the negative impact of the US-Israel attack on Iran which began on 28 February.

The Finance Ministry has, under its administrative control, numerous departments and divisions, whose terms of reference are not specific to one task at any one period of time.

In other words, the excuse that the Division was unable to write and upload the report because it was engaged in the budget formulation is not tenable and should not be accepted by the Cabinet. There is, therefore, an urgent need for the Cabinet to take cognizance of this serious lapse and take appropriate mitigating measures.

What has become a tradition, however, is for an administration to sanction special reward, over and above the due salary, to those engaged in budget making, a reward that is baffling for the simple reason that it is in the terms of reference of those engaged in this exercise.

And what makes the grant of a monetary reward even more unfathomable is the fact that the budget was reviewed in great detail by the IMF staff, a condition of the ongoing programme loan, and the domestic formulators input was even more severely limited than in years gone by when the country was not on a programme.

It is hoped that monetary rewards for undertaking or proposing measures that are the responsibility of any individual or individuals must not be a part of a policy and merit-based pay raises must be a function of their unbiased performance evaluation.

Copyright Business Recorder, 2026

MUZAFFARABAD: The Azad Jammu and Kashmir government on Monday unveiled its budget with a total outlay of Rs286 billion, allocating a total of Rs250 billion for non-development expenditure while development expenditure is estimated at Rs36 billion.

Salaries and pensions have been raised by seven percent.

Finance Minister Chaudhry QasimMajeed presented the budget in the legislative assembly.

For development expenditure, Rs900 million will be allocated for agriculture and livestock, Rs100 million for civil defence disaster management, Rs190 million for development institutions, and Rs3 billion for education.

Also, Rs3 billion will be allocated for the local government and rural development, and Rs1 billion for physical planning and housing, Rs3 billion for energy and water resources, and Rs14 billion for communication and construction.

The budget proposes 31 percent for social, 12 percent for productive and 57 percent for infrastructure sectors.

Education package 2026 has also been made part of the budget.

KARACHI: Jamaat-i-Islami’s opposition bloc in the Karachi Metropolitan Corporation (KMC) on Saturday unveiled a Rs300 billion shadow budget for 2026-27, saying the city’s proposed Rs60 billion outlay fell far short of its actual needs.

Addressing a press conference at Faran Club, KMC Opposition Leader Saifuddin Advocate said Karachi’s budget was negligible compared to those of major regional cities. He said Delhi, with a population of around 15 million, had an annual budget of Rs520 billion, while Mumbai’s stood at Rs2.2 trillion. Even a Rs300 billion budget for Karachi, he added, would be seven times smaller than Mumbai’s.

Presenting the shadow budget, Saifuddin demanded that KMC receive a minimum allocation of Rs300 billion for the new fiscal year. He called for revenues generated through the motor vehicle tax, infrastructure cess and betterment charges to be transferred to local government institutions.

He recalled that former Karachi mayor Abdul Sattar Afghani had led a historic campaign for the transfer of motor vehicle tax revenues to the city government and urged the provincial government to act on that demand.

Saifuddin said Karachi generated around Rs180 billion annually through infrastructure cess and argued these funds, along with betterment charges, should accrue to local governments. He also demanded that Octroi Zila Tax, other grants and Provincial Finance Commission transfers — amounting to roughly Rs100 billion — be provided to KMC.

He said KMC currently raised only around Rs6 billion from its own sources and urged the civic body to grow that figure to Rs10 billion. Combined with the proposed transfers, he said, the total budget could reach Rs300 billion.

Saifuddin also called for fiscal decentralisation, saying funds should flow down to town administrations and union committees, with each union committee receiving at least Rs100 million annually.

Turning to Mayor Murtaza Wahab, the opposition leader rejected the mayor’s claim of making KMC financially self-reliant, saying own-source revenues accounted for only about 20 percent of the civic body’s budget.

He referred to former city nazim Naimatullah Khan, saying that after adjusting for the dollar exchange rate, the budget presented in 2005 was nearly three times larger than the current KMC budget.

Saifuddin said Murtaza Wahab had spent Rs201 billion since 2021 — including his tenure as administrator before becoming mayor — yet Karachi’s civic conditions had continued to deteriorate. He blamed the provincial government and KMC for widespread corruption and mismanagement, saying most public funds were lost before reaching citizens.

He also criticised the provincial government’s control over key municipal institutions, including the water utility and solid waste management system, arguing they should function under the elected city government in line with the Constitution and Supreme Court directives.

He further noted that the budgets of the Karachi Water and Sewerage Corporation and the Sindh Solid Waste Management Board were not reflected in the KMC budget, even though funds meant for towns and union committees were being used for their operations.

A short documentary on the struggle for local government elections and devolution of powers was screened ahead of the press conference. KMC Deputy Parliamentary Leader Junaid Makati, Fazal Ahad, Taimur Ahmed, and several union committee chairmen and vice-chairmen also attended.

Copyright Business Recorder, 2026

LAHORE: The Punjab Assembly on Saturday approved the FY2026–27 provincial budget amid strong protests from the opposition. The House also passed the Finance Bill and approved 131 demands for grants.

At the outset of the session, Deputy Speaker Malik Zaheer Iqbal Channar, who chaired the proceedings, commended the Punjab government, police, Rangers, the Counter Terrorism Department (CTD), and other relevant institutions for maintaining peace and security during Muharram.

The House witnessed heated exchanges between the treasury and opposition benches during the approval of budgetary grants. Senior Minister Marriyum Aurangzeb strongly defended the government’s performance, arrangements for Ashura, and ongoing development initiatives, while opposition members staged protests, raised slogans, and criticised the government’s conduct.

READ MORE: Punjab Assembly approves Rs270.53bn in demands for grants

Opposition lawmakers walked out of the House after alleging they were not given an opportunity to speak. Following the walkout, the Assembly approved all 131 demands for grants and the Finance Bill.

Addressing the House, Senior Minister Marriyum Aurangzeb said the arrangements for Ashura should not be politicised. She stated that 124,000 security personnel were deployed across the province, while thermal drones, QR code monitoring, Safe City surveillance cameras, and other advanced technologies were used for the first time to ensure comprehensive security.

She further said the government had launched 437 development schemes, of which more than 340 have already been approved. Work is progressing rapidly on projects related to infrastructure development, environmental protection, climate change, smog control, forestry, clean drinking water, South Punjab, and public welfare. She also criticised the opposition, claiming its members had neither read the budget nor examined the facts.

During her speech, opposition members stood from their seats and continuously chanted slogans, creating a tense atmosphere in the House.

Treasury lawmakers responded with counter-slogans, while Special Assistant to the Chief Minister Zeeshan Malik, Education Minister Rana Sikandar Hayat, and other government members waved wristwatches and chanted slogans against the opposition.

Minister for Parliamentary Affairs Mujtaba Shuja-ur-Rehman urged the Deputy Speaker to suspend opposition members who, he alleged, had used inappropriate language and raised slogans against the government leadership. He said the Business Advisory Committee had previously agreed that no remarks would be made against parliamentary leadership.

The opposition first protested, then pointed out a lack of quorum, and eventually boycotted the proceedings by walking out during the approval of the budgetary grants. The government, however, continued with the proceedings and completed the passage of the budget.

The Punjab Assembly ultimately approved all 131 demands for grants along with the Finance Bill, formally passing the FY2026–27 provincial budget. After completing the agenda, the session was adjourned until Monday at 11:00am.

Copyright Business Recorder, 2026

KARACHI: The Sindh Assembly’s fiscal year 2026-27 budget debate turned politically charged on Saturday as the treasury claimed sharp drops in crime, announced a landmark minimum wage, and signaled legislation to classify gutka and mawa as narcotics, while the opposition hit back over unresolved civic failures.

Presided over by Speaker Awais Qadir Shah, the session spanned law and order, katcha operations, narcotics, local government, workers’ welfare, and the Sindhi-Muhajir political divide, with the atmosphere turning emotional and combative on multiple occasions.

READ MORE: Fourth budget debate sitting: Sindh Assembly sees heated exchanges

Home Minister Zia ul Hassan Lanjar told the house that street crime and violent crime fell 40 percent year-on-year, the overall crime rate dropped 10 percent, and terrorism incidents declined 80 percent across the province. He said no major terrorist attack struck Karachi this year. The CTD conducted 642 intelligence-based operations and arrested 66 terror-linked individuals.

A foiled plot involving 200 kilograms of explosives recovered from a Mazda vehicle was cited as a major success. MQM Deputy Parliamentary Leader Taha Ahmed, however, demanded that debate not descend into political point-scoring, saying progress in Sindh and Karachi requires cooperation on equal footing rather than contested statistics.

In the katcha region, the Nijat-e-Mehran Operation killed 48 bandits, secured the surrender of 539 others, and reclaimed 115,000 acres from criminal control, with police now maintaining effective authority over areas long considered ungovernable. On mobile snatching, still a raw nerve for residents, incidents fell 7 percent.

The CPLC is launching a dedicated app to register phone transactions and track stolen devices, having already returned 2,458 snatched phones to their owners. Jameel Soomro, Political Secretary to PPP Chairman Bilawal Bhutto Zardari, countered by raising unresolved waiting lists for teachers, early childhood educators, science teachers, and police constables as delivery gaps the government could not talk its way past.

The narcotics discussion produced the session’s most striking moments. Lanjar acknowledged a serious drug crisis among Karachi’s youth, with cocaine, ice, and hashish use rising and reports of minors consuming drugs. He called for drug testing legislation, adding pointedly that cocaine is entering Pakistan not through Karachi Airport but Lahore and Peshawar airports.

His claim that drew immediate attention on the floor. Taha Ahmed objected to the tone of such assertions, insisting mutual respect must hold even amid sharp disagreement, and that public issues must take precedence over political point-scoring.

PPP’s lady legislator, Faryal Talpur urged the house to amend existing law to bring gutka and mawa under the Narcotics Act, describing their spread from coastal districts to Shaheed Benazirabad as a public health emergency requiring urgent legislative action.

Labour Minister Saeed Ghani delivered one of the session’s most combative addresses, announcing that Sindh will become the first province to enforce a minimum wage of Rs43,000 from July 1, approved through the minimum wage board with representation from both employers and workers. Income tax deductions on workers’ welfare funds have been eliminated, with the exemption set to extend to other provinces.

The Social Security department met its Rs13.5 billion collection target after contributions moved online, while 2.5 million workers and their families received free medical treatment this year — up 150,000 from the previous two years.

Ghani methodically dismantled media allegations of fraudulent recruitments, clarifying that 291 — not 300 — paramedical posts were filled through a legitimate 2022 advertisement, with only 112 candidates joining. On the SESSI dual-salary scandal, 31 employees were dismissed and recovery proceedings initiated, while 40 others were found on legitimate deputation. He said corruption in the Workers Welfare Board predated his tenure and that court stay orders have repeatedly blocked accountability efforts — a frustration he voiced without restraint.

Local Government Minister Nasir Hussain Shah defended the uplift record — hundreds of completed schemes, over 150 small roads rehabilitated, and 15,000 tons of waste collected daily. He said the Provincial Finance Commission, formed in 2023, will now hold regular meetings for fairer resource distribution to local bodies, and argued that Sindh alone is genuinely implementing Article 140-A of the Constitution.

The session’s most charged moment came from Ghani, who declared flatly that the PPP is now the largest party in Karachi — a direct challenge to the MQM on its traditional stronghold and warned that opposition numbers will shrink further after the next elections. The debate was under way at the time of this story filing.

Copyright Business Recorder, 2026

LAHORE: The federal government and the Punjab government have unveiled their budgets for fiscal year 2026-27, raising total outlays at both levels even as economists caution that higher spending has yet to translate into visible improvements in education, health, agriculture, and industry.

The two budgets have been presented at a time when Pakistan’s economy appears to have regained a degree of stability after several turbulent years, with inflation declining, foreign exchange reserves improving, and concerns regarding an immediate balance-of-payments crisis easing.

At the federal level, the government has presented a budget of approximately Rs18.77 trillion compared with Rs17.57 trillion in FY2025-26, with revenue targets increased to Rs15.26 trillion. Debt servicing continues to consume more than Rs8 trillion annually, while defence expenditure has increased to approximately Rs3 trillion.

Commenting on the budget, prominent economist and Advisor on political and economic affairs to President Pakistan Peoples Party Central Punjab Raja Pervez Ashraf, Rao Babar Jamil said the continuation of programmes such as the Benazir Income Support Programme, with allocations approaching Rs845 billion, reflects the government’s recognition that many households continue to face significant economic hardship. He observed that while inflation has slowed, prices have not actually fallen, meaning the relief felt by ordinary citizens remains limited.

Punjab, meanwhile, has announced a budget of approximately Rs5.9 trillion compared with roughly Rs5.3 trillion in FY2025-26. Notably, the province’s Annual Development Programme has fallen from approximately Rs1.24 trillion to around Rs752 billion, a decline that has raised questions regarding the government’s development priorities going forward.

In this context, the question Punjab’s citizens are entitled to ask is a simple one: where is the performance? If education spending continues to increase every year, it remains unclear why millions of children are still out of school, why parents increasingly rely on private schools despite the existence of a vast public education system, and why employers continue to complain about the quality of graduates entering the labour market.

Similarly, despite substantial healthcare allocations, government hospitals remain overcrowded, and many citizens continue to rely on costly private healthcare out of necessity rather than choice.

Babar said agriculture and industry are also areas that observers believe deserve far greater attention than they have received. Punjab’s farmers continue to face rising input costs, uncertain crop prices, water shortages, and increasing climate-related risks, and the budget could have done more to support farmer productivity through water-efficient irrigation, wider adoption of agricultural technology, crop insurance, and stronger income protection mechanisms for growers.

Punjab remains Pakistan’s largest industrial province, yet businesses operating there continue to grapple with high energy costs, regulatory complexity, limited access to finance, infrastructure bottlenecks, and weakening international competitiveness.

Copyright Business Recorder, 2026

KARACHI: The Institute of Chartered Accountants of Pakistan (ICAP) successfully hosted its Post-Budget Conference 2026 across Karachi, Lahore, and Islamabad, providing a strategic platform for policymakers, business leaders, and finance professionals to analyze the Federal Budget 2026–27 and its implications for economic growth, fiscal sustainability, and the business environment.

Khurram Schehzad, Advisor to the Federal Minister of Finance and Revenue, attended as Chief Guest and outlined the government’s fiscal priorities, reform agenda, and measures aimed at economic stabilization. He appreciated ICAP’s continued contributions toward strengthening policy dialogue and financial transparency.

Muhammad Samiullah Siddiqui, President ICAP, underscored the importance of structural reforms, prudent fiscal management, and broadening the tax base, reaffirming ICAP’s commitment to providing technical support and policy input.

Zeeshan Ijaz, Council Member and representative of ICAP’s Economic Advisory & Fiscal Laws Committee, presented a detailed technical review of the budget, focusing on taxation measures and reform recommendations.

A key highlight was session on economy, where leading experts discussed the macroeconomic outlook, fiscal challenges, and structural reforms required for long-term economic resilience. Session featured Khaqan Hassan Najeeb, Public Policy Advisor & former Advisor to the Ministry of Finance, as keynote speaker. The session was moderated by Sadia Khan, Head of Finance – Asia Pacific, Adam Smith International, and included panelists Mr. Ashfaq Yousuf Tola, former President ICAP & former Minister of State, and Syed Ali Ehsan, Program Director, PRIME Institute.

Session on Industry highlighted the insights on the budget’s impact on industrial growth, investment climate, and competitiveness, while emphasizing policy consistency and ease of doing business.

The session brought together leading corporate voices including Sarfaraz Ahmed Rehman (Unilever Foods Pakistan), Irfan Amanullah (Attock Cement), Muhammad Faisal (Lucky Motor Corporation), and Javed Ahmedjee (Hascol Petroleum), with moderation by Aman Ghanchi (Unilever).

In Lahore and Islamabad, notable participants included Haroon Khalid (MCB Islamic Bank), Harris Mahmood (Dawn Foods), Nadeem Khan (PTCL Group), Sohail Altaf (Suzuki Central Motors), and Mr. Touseef Alam Khan (National Logistics Corporation).

Session on indirect taxation examined changes in sales tax and customs duties, stressing the need for simplification, transparency, and improved compliance mechanisms. Session featured leading tax professionals including Asif Kasbati (Kasbati & Co.), Adnan Mufti (Moore Shekha Mufti), Haris Tufail (KPMG), Muhammad Zeeshan Merchant (M. Merchant & Co.), and Tazeen Fatima (Unilever). Additional prominent speakers included Naeem Akhtar Sheikh, Faisal Iqbal Khawaja, Ahmad Jabbar, Imran Afzal, Syed Ali Adnan, Waqar Zafar, Muhammad Mansoor Saeed, Sufiyan Habib, and Fareeha Hassan.

Session on direct taxation provided in-depth analysis of income tax measures, focusing on clarity in tax laws, reducing litigation, and creating a fair and predictable tax environment. Session included renowned experts such as Muhammad Raza, Khalid Mahmood, Muhammad Mehmood Bikiya, Imran Ali Memon, M. Muzammil Hemani, and Asif Zafar. In Lahore and Islamabad, key speakers included Asim Zulfiqar, Mohsin Nusurullah, Kamran Iqbal Butt, Shafaqat Ali (ATIR), Rashid Ibrahim, Masood Shahid, Muddassar Khalid, and Sheikh Moeen Ahmad.

Copyright Business Recorder, 2026

Here, it needs to be pointed out that it is highly strange to see that the government has apparently not pursued enhanced special drawing rights (SDR) allocation from International Monetary Fund (IMF) on the same lines it received in August 2022, as part of the overall enhanced SDR allocation received globally to countries.

Given the highly significant impact of commodity shock, especially in terms of oil prices during the conflict, especially to net oil importing countries like Pakistan, while it was expected that IMF will announce such an enhanced allocation at the global level, or at least for net oil importing countries, nevertheless it would have made sense that the country budgeted some amount to highlight to IMF its intent in this regard. If an effort has already been made with IMF to convince them to release such an amount, and the response has been in the negative, that should have been shared with the public at large so as to make clear that this otherwise important step that the government should take has in fact been taken.

READ MORE: Reflections on federal budget FY27—I

So, while it is important to make fiscal deficit sustainable, it is important to understand the positive consequences of sustainable primary deficit, especially in the context of high level of development needs of a developing country. This may be done through rationalizing non-development (current) expenditure, reducing interest payment-related expenditure, enhancing tax base, applying creative taxation – for instance, meaningful wealth tax, and taxing windfall profits of energy companies – lowering losses of SOEs through restructuring, meeting their financing needs through creative solution, and as earlier indicted, better rationalizing expenditure responsibilities of Centre and federating units as per the 18th Constitutional Amendment. In the absence of significant progress made on above aspects, for instance, among possible others, reaching primary surplus has meant a reduction in development expenditure.

Having said that, as per budget estimates for the upcoming fiscal year, primary surplus (fiscal austerity) is still being targeted at Rs.2.8 trillion (2 percent of GDP), which is slightly less than the revised estimates for the ongoing fiscal year at Rs 3.2 trillion (2.5 percent of GDP). Moreover, fiscal deficit still is budgeted at an increase of Rs 1.9 trillion for the next fiscal year, from the revised estimates of the ongoing fiscal year to stand at around Rs 7.0 trillion. Here, even after receiving a provincial surplus as per budgetary estimates for the upcoming fiscal year at Rs 1.8 trillion, stood at a higher level by Rs 1.5trillion over the revised estimates for FY2025-26 to stand at Rs 5.2 trillion for FY2026-27. It needs to be pointed out that receiving provincial surplus means lesser fiscal space to make overall spending, including development spending for the provinces.

Moreover, this means that the government does not appear to reverse its heavy borrowing trend, along with not rebalancing monetary austerity in favour of more balanced approach, which is playing a significant role in enhancing fiscal deficit, even when the government intends to target primary surplus. This, in turn, means less fiscal space overall, and less development spending; where federal public sector development programme (PSDP) was kept at the same Rs 1 trillion for the upcoming fiscal year, which is the same as budgeted for the ongoing fiscal year, while provincial PSDP being budgeted at Rs 2.2 trillion for FY2026-27, is lower than that budgeted for FY2025-26 by around Rs 645 billion!

Hence, with regard to interest payment on borrowing, the budget estimates for FY2026-27 stood at Rs 8.1 trillion, which is around half of the total current expenditure estimate for the upcoming fiscal year at Rs 17.1 trillion. Imagine the fiscal space if this were halved, under a much-more effective balanced aggregate demand- and supply-side policy emphasis with regard to reining in inflation – which means not employing over-board monetary- and fiscal austerity policies – and will allow significantly contributing towards an otherwise much-needed counter-cyclical boost to economic growth.

As expected, therefore, federal PSDP is far less than primary surplus being targeted as per budget estimates for FY2026-27, and the high level of interest payments budgeted for the upcoming fiscal year.

Overall, practice of procyclical policy, which has been going on over a number of years now, has been continued, instead of adopting counter-cyclical policy for reaching much-needed higher level of economic growth. Moreover, high level of interest payments related expenditure at the back of monetary austerity, and lack of enhancement of tax base, including no tax on windfall profits of energy companies, as much-needed creative tax measures to better share the burden of increase in oil prices, will likely to continue to keep borrowing for private sector at a low level. Hence, practice of monetary- and fiscal austerity, and higher level of interest payments, all indicate towards continuation of practice of pro-cyclical policy.

In terms of priorities, while water resource management is an exceedingly important budgetary objective, only Rs103.1 billion – composed of ‘Development expenditure of water resource division’ at Rs 55.3 billion, and ‘External development loans and advances of water resource division’ at Rs.47.8 billion – have been indicated as budgetary estimate for FY2026-27, and is only around one-tenth of the federal PSDP budgetary estimate for FY2026-27 at Rs1 trillion.

Also, while there is emphasis in the budget speech to reduce subsidies for removing distortion in prices – although subsidies being price distortionary, but hold the potential to positively impact growth and welfare – a similar approach of removing distortion from prices by significantly reducing indirect taxes has not been adopted, including continuation of application of petroleum levy (PL), which also distort prices. PL, in fact, saw an increase from revised estimate for FY2025-26 by Rs 178.5 billion to stand at budgetary estimate of Rs 1.7 trillion for FY2026-27; where it needs to be pointed out that the budgeted estimate for PL for the ongoing fiscal year was less than the revised estimate by Rs 29.6 billion.

Having said that, the budgetary estimate for FY2026-27 stood at Rs 1.1 trillion, which is less than budgetary estimate of price distorting, regressive, consumption (indirect) tax for the ongoing fiscal year by Rs.6.6 trillion to stand at Rs.7.7 trillion, which means a much-higher price distortionary impact coming from indirect taxes than from subsidies. It is strange that while nominal GDP budgetary estimate for the upcoming fiscal year stands at Rs 143.6 trillion, budgetary estimate for direct taxes for FY2026-27 only make up 5.3 percent of nominal GDP or Rs 7.6 trillion. Enhancement in direct taxes along with expenditure rationalization, and overall adopting counter-cyclical policy will lead to lesser need for indirect taxes, which are not only regressive, and also negatively impact domestic production, exports, poverty and inequality – not to mention similar negative consequence on political voice – but also likely negatively affect productive and allocative efficiencies.

Here, indirect taxation in electricity bills, and that too at a significantlyhigh rate, together with PL, increased energy prices significantly, which, in turn, enhances overall inflation through the channel of cost-push inflation; not to mention creating hardship for the people, where at least around one-third of the population is below the poverty line, as per official statistics, and around 45 percent of the population as per World Bank.

Moreover, it is quite shocking that government calls PL in ‘Table - 20’ of the ‘budget in brief’ documentas holding ‘climate relevance’ for all practical purposes is likely to produce little disincentivizing impact in terms of shifting people from fossil-fuel based transportation, given a serious lack of public transportation, especially in terms of EVs as public transport, and lack of incentives on solar energy also make it difficult for people to shift to EV bikes, for instance, given the affordability issue of solar energy and high prices of electricity from the grid being a significant hurdle in charging EVs.

Hence, putting PL to discourage use of fossil-fuel based transportation is an unproductive measure, and mostly brings hardship as people have little choice in terms of shifting to more environment-friendly modes of transportation in the shape of public or individual transport, especially electricity-based transportation.

(Concluded)

Copyright Business Recorder, 2026

Pakistan’s Federal Budget FY2026–27 should not be read only as an annual statement of taxes and expenditures. The budget comes at a time when fiscal space is extremely constrained.

Total federal expenditure is estimated at Rs18.771 trillion, of which current expenditure alone accounts for Rs17.495 trillion. Interest payments are budgeted at Rs8.054 trillion, defence at Rs3 trillion, while the Federal Public Sector Development Programme stands at Rs1 trillion.

In simple terms, the budget is dominated by debt servicing, defence, pensions, subsidies and transfers, leaving limited room for development and transformation.

This fiscal constraint is real. However, constraint should not become an excuse for weak prioritisation. In fact, when fiscal space is narrow, the quality of public investment becomes even more important.

For the energy and climate policy community, it should also be assessed as a test of whether Pakistan is beginning to align its fiscal policy with its climate vulnerability, energy transition needs, and long-term green development ambitions.

The most interesting feature of the FY2026–27 budget is the introduction and reporting of green-linked fiscal flows. The Budget in Brief identifies roughly Rs2.026 trillion under the green component of revenues. This includes Rs1.676 trillion from the petroleum levy, Rs50 billion from the Climate Support Levy, Rs22.481 billion from the EV Adoption Levy, along with gas development surcharge, oil and gas royalties, GIDC, petroleum levy on LPG, windfall levies and other receipts.

This figure is significant. But it also needs careful interpretation. The petroleum levy, which constitutes almost 83 per cent of this green-linked revenue pool, is not automatically climate finance. It is primarily a general fiscal revenue instrument imposed on fossil fuel consumption and used to finance the broader budget. Calling the entire amount “climate revenue” would therefore be misleading unless the proceeds are earmarked, tracked or reinvested in climate-related outcomes.

Yet this is exactly where the policy question begins. If the state classifies such revenues as green or climate-relevant, then citizens and investors have the right to ask: how much of this revenue is being converted into resilience, energy transition and environmental protection?

The answer, so far, is not reassuring. Climate-tagged allocations, excluding subsidies, stand at around Rs214 billion in FY2026–27. This includes Rs70.462 billion for adaptation, Rs124.067 billion for mitigation and Rs19.490 billion for supporting areas. Compared with FY2025–26, adaptation has declined from Rs85.435 billion, mitigation from Rs603 billion, and supporting areas from Rs28.331 billion. Total direct climate-tagged allocations have fallen sharply.

At the same time, disaster-related allocations have increased from Rs50.2 billion to Rs116.2 billion. This increase is understandable, given Pakistan’s exposure to floods, heatwaves, droughts, GLOFs and other climate-induced hazards. But it also reveals a deeper pattern: Pakistan continues to budget more visibly for recovery than for resilience.

The 2025 floods should have changed this approach. According to the Economic Survey, the floods caused damages of Rs822 billion, resulted in over 1,039 fatalities, displaced more than four million people and affected around 6.5 million people across 70 districts. The agriculture sector alone suffered damages of Rs430 billion, while infrastructure-related damages were estimated at Rs307 billion. The floods also contributed to a downward revision of real GDP growth for FY2026 from the initial target of 4.2 per cent to an estimated range of 3.5–3.9 per cent.

These numbers make one point clear: climate change is not only an environmental concern; it is a macroeconomic risk. Floods damage roads, homes, crops, irrigation systems and public finances. Heatwaves reduce labour productivity, increase health costs and raise cooling demand. Water stress affects agriculture, exports, food prices and urban supply. Air pollution damages human capital and productivity. A climate budget, therefore, should not be treated as a welfare add-on. It should be viewed as economic risk management.

This is where CPEC 2.0 becomes relevant. The development budget reportedly carries an overall national development outlay of Rs3.675 trillion, including Rs1 trillion Federal PSDP, Rs2.224 trillion provincial ADPs and Rs451 billion development spending by state-owned enterprises. CPEC-II appears as one of the few new initiatives, with an initial allocation of Rs1 billion.

This amount should not be criticised in isolation. CPEC is not a normal PSDP scheme; it is a bilateral, investment-driven and project-based cooperation framework. Its financing depends on G2G coordination, Chinese investment, private capital, joint ventures, SEZs, project preparation and commercial viability. Therefore, Rs1 billion should not be read as the full financing envelope of CPEC 2.0.

However, it can be read as a signal. It suggests that CPEC 2.0 is still at a preparatory budgetary stage. The real question is whether Pakistan is creating the domestic fiscal architecture needed to translate CPEC 2.0’s Green Corridor into bankable projects.

CPEC Phase II is framed around five corridors: Growth, Innovation, Green, Openness, and Livelihood. The Green Corridor has been associated with renewable energy manufacturing, electric mobility, climate-smart agriculture, water and climate resilience. These priorities overlap strongly with Uraan Pakistan’s 5Es, especially Energy, Environment, Exports and E-Pakistan.

Budget FY2026–27 already contains some relevant pieces. There are allocations for electricity, renewable energy, solar and wind projects, grid expansion, water projects, sustainable urban development and climate-resistant housing. But these remain scattered unless they are integrated into a coherent Green Corridor investment pipeline.

Pakistan’s policy challenge is to build a fiscal bridge between green-linked revenues and CPEC 2.0’s Green Corridor. This does not mean earmarking the entire petroleum levy for climate action, which is fiscally unrealistic. But it does mean ring-fencing selected instruments such as the Climate Support Levy and EV Adoption Levy for project preparation, resilience-building and energy transition investments.

A practical step would be to establish a Green Corridor Project Preparation Facility. This facility could finance feasibility studies, climate-risk screening, grid integration studies, environmental safeguards, bankability assessments and provincial project pipelines. Without such preparation, Pakistan will continue to announce large visions but struggle to attract implementation finance.

The priority areas are clear: renewable energy manufacturing, battery storage, smart grids, EV and battery value chains, green SEZs, energy-efficient industry, climate-smart agriculture, water resilience, wastewater treatment, resilient housing and urban flood management. These are not only climate projects; they are productivity, export and competitiveness projects.

Pakistan has made progress in climate budget tagging by mapping more than 5,000 cost centres and expanding climate tagging to subsidies, grants and climate-relevant revenues. This is a useful public financial management reform. But tagging is not transformation. Existing projects can be tagged as climate-relevant without necessarily becoming climate-resilient.

The next reform should be climate investment discipline: every major PSDP and CPEC-linked project should be screened for future heat, flood, water, emissions and disaster risks. The government should also publish an annual climate revenue-to-expenditure statement showing what was collected, what was allocated, what was released, what was spent and what outcomes were achieved.

Budget FY2026–27 has made green revenues visible and has given CPEC 2.0 a symbolic budgetary entry. The missing link is a fiscal corridor that connects the two. Without such a mechanism, green-linked revenues will continue to flow into the general treasury, while the Green Corridor will remain a corridor of intent.

Pakistan does not need more climate labels. It needs green revenues to become green investments.

Copyright Business Recorder, 2026

EDITORIAL: The Finance Bill 2026 was passed by the National Assembly with 35 amendments, including extending sales tax exemptions on lease and import of aircraft and parts that the original bill extended only to Pakistan International Airlines (PIA).

The parliamentary committee members had pointed out that this inclusion is as per the law with officials from the Federal Board of Revenue (FBR) maintaining that they would need to get clearance from the International Monetary Fund (IMF).

In December 2024, the IMF had approved the 15 year sales tax and duty exemption on lease or purchase of aircraft, spare parts and aviation equipment as part of the Sales Purchase Agreement – an exemption that government sources at the time claimed would raise PIA’s sale price to around 350 billion rupees.

In December 2025, PIA was sold for 135 billion rupees to a consortium of leading local investors with a 75 percent controlling share with the remaining 25 percent of government shares acquired for 45 billion rupees though the government received only 10.1 billion rupees.

While climate support levy, another IMF condition under the Resilience and Sustainability Facility (RSF), remains yet provisions relating to late payment surcharge and recovery have been dropped, zero excise on electric cars and SUVs imported in CBU condition having value as determined under section 25 of the Customs Act 1969 not exceeding 75,000 US dollars, the manufacturer apart from any other liability be liable to pay 3 percent value-addition tax of imports on an ad valorem basis along with default surcharge in case the imported goods are supplied in the same state whether in the same packing, repacked or in bulk. And income tax exemption will be available on any income derived from a private equity or venture capital fund registered under private funds regulations 2015 if not less than 90 percent its accounting income for that year as reduced by accumulated losses and unrealized capital gains is distributed by the private equity or venture capital fund to its unit or certificate holders or shareholders.

All 35 amendments with major revenue implications would have to be run past the IMF staff to ensure that the staff level agreement on the pending fourth review of the ongoing Extended Fund Facility programme and the third review of RSF would be reached, triggering the tranche releases. In case of Fund insistence that the revenue loss be met the government can walk back some of these amendments, which is a challenging task at best. What is more likely is a mini-budget based on the contingency measures already agreed, measures that envisage higher sales tax on some items – a tax whose incidence on the poor is greater than on the rich– or slash expenditure.

It is disturbing that yet again the discussion during the parliamentary (Senate and National Assembly) committee meetings on the budget focused on individual tax measures rather than challenging expenditure in general and current expenditure in particular. The mark-up component of current expenditure is budgeted to rise to 8.05 trillion rupees (based on the assumption that the policy rate would not rise), pension outlay rising to 1.16 trillion rupees indicating that, as expected, reforms are not likely to kick in till those recruited in the last two years reach retirement age, and a 7 percent raise in salaries.

The current expenditure is budgeted at a high of 17.49 trillion rupees against the revised estimates of last year at 15 trillion rupees – a rise of 16.5 percent well above inflation, which is difficult to justify at a time when fiscal space remains extremely narrow.

Copyright Business Recorder, 2026

LAHORE: Punjab Assembly Speaker Malik Muhammad Ahmad Khan strongly criticized provincial ministers and bureaucrats during the budget session, saying many of them were unfamiliar with assembly rules and procedures and would need to be educated on parliamentary regulations.

During the budget debate, heated exchanges took place between treasury and opposition members, while detailed discussions were held on the Suthra Punjab Programme, parliamentary supremacy, farmers’ issues, and ongoing development projects. The house also unanimously passed a resolution appreciating Pakistan’s diplomatic efforts and supporting peace initiatives between Iran and the United States.

Provincial Minister for Local Government Zeeshan Rafiq defended the Suthra Punjab Programme, stating that the government had introduced a modern and transparent waste management system across the province. He said the programme was being monitored through a digital tracking mechanism and invited the speaker and opposition members to Suthra Punjab headquarters to review the system firsthand.

Responding sharply, Speaker Malik Muhammad Ahmad Khan reminded the minister that government was accountable to the assembly and constitutionally bound to answer questions raised by elected representatives. He emphasized that parliamentary oversight must be respected, warning that he would not hesitate to step down if he failed to uphold the supremacy of the legislature. The speaker also urged ministers and officials to familiarize themselves with assembly rules, stressing that while governments have multiple forums available, the assembly remains the primary platform for public representatives.

Later, Provincial Minister for Minerals Sardar Sher Ali Gorchani praised the performance of the Maryam Nawaz-led government, highlighting rapid progress on roads, Danish Schools, green bus projects, and other development initiatives in South Punjab. He claimed that transparency had been improved within the Mines and Minerals Department, contributing to increased provincial mineral revenues.

Opposition lawmakers, however, strongly criticized the budget, describing it as anti-people. Javed Niaz Manj argued that farmers had been pushed to the brink, with wheat, sugarcane, and rice growers unable to recover their production costs. He also accused the government of neglecting the education and health sectors. Khayal Castro blamed the administration for rising inflation and failing to provide meaningful relief to the public, while Owais Warraich said that despite a surplus budget, key issues such as employment, healthcare, and education remained unresolved.

The house also unanimously adopted a resolution commending Pakistan’s role in efforts aimed at securing a peace agreement between Iran and the United States.

Following the completion of speeches by all participating members, Panel of Chairpersons Rana Muhammad Arshad adjourned the session until 11:00 a.m. on Wednesday.

Copyright Business Recorder, 2026

ISLAMABAD: Moments after the National Assembly passed the Finance Bill 2026-27, opposition Pakistan Tehreek-e-Insaf (PTI) rejected it on Tuesday, calling the budget “anti-people” and accusing the government of masking worsening economic conditions with hollow claims of stability.

At a meeting of the PTI’s joint parliamentary panel, co-chaired by opposition leader in National Assembly Mehmood Achakzai and acting party chairman Barrister Gohar Ali Khan, the party reviewed the budget session as well as the broader political and economic situation, while further sharpening its criticism of the government’s performance.

The party argued that inflation, unemployment and the cost of living continue to rise unchecked, dismissing official claims of macroeconomic “stability” as political messaging detached from the realities faced by ordinary households.

Despite their criticism, PTI lawmakers praised their own performance on the floor of the House, insisting they had robustly highlighted fiscal strain and what they termed economic mismanagement throughout the budget debate.

The meeting also adopted a resolution condemning National Assembly Speaker Ayaz Sadiq, alleging partisan conduct during the budget session.

The party strongly objected to remarks made about opposition leadership, particularly those directed at Achakzai, which it described as inappropriate and politically charged.

PTI reiterated its position that the Speaker’s office must remain strictly neutral, warning that this standard was being steadily eroded.

Beyond procedural concerns, the opposition also alleged it was being systematically sidelined in parliamentary speaking opportunities and in the visibility of its contributions within media coverage of House proceedings.

The meeting further revived long-standing political demands, including calls for the release of former prime minister Imran Khan, along with appeals for improved medical access and family visitation.

PTI also reiterated demands for the release of Bushra Bibi and other detained party workers, including those linked to the May 9 unrest, which it continues to describe as politically motivated.

Separately, during the National Assembly session earlier in the day, PTI lawmakers turned their attention to the Federal Board of Revenue’s (FBR) proposed AI-assisted “faceless” audit system, warning it could undermine trust in the tax process.

Barrister Gohar argued that removing human interaction from audits risks weakening grievance redress mechanisms and eroding taxpayer confidence.

He also proposed a significant structural shift in tax policy, suggesting the income tax threshold be raised to an annual Rs3.6 million in line with what he described as international norms.

Former National Assembly Speaker Asad Qaiser, speaking on a point of order, broadened the criticism beyond taxation, pointing to economic hardship in the former tribal areas.

He cited disrupted trade routes, constrained economic activity, delays in National Finance Commission transfers, and reduced allocations for merged districts, urging targeted relief measures.

Another PTI lawmaker, Amir Dogar, warned that inflation and rising utility costs were intensifying pressure on lower-income households, while also criticising tax measures affecting public sector employees and calling for a more equitable distribution of the fiscal burden.

Copyright Business Recorder, 2026

ISLAMABAD: The government has made over 35 major changes in the Finance Bill 2026 and amended Finance Bill to allow all Pakistani airlines to avail sales tax exemption on the import or lease of aircrafts and its parts from July 1, 2027.

According to the amendments approved in the Finance Bill 2026 on Tuesday, a new entry in sales tax exemption schedule said, “Import or lease of aircrafts and parts thereof by any airline company registered in Pakistan. This will be effective from July 1, 2027”.

Some amendments relating to the Climate Support Levy in the original Finance Bill 2026 have been dropped through amendments in the Finance Bill.

READ ALSO: PIA aircraft, parts imports: NA panel defers ST relief proposal

The amendments were proposed in the Petroleum Products (Petroleum Levy and Climate Support Levy Ordinance).

The amended Bill revealed that the excise duty on imported electric cars would be calculated based on their values to be calculated US dollars. Zero percent Federal Excise Duty will be applicable on electric cars and electric SUVs, imported in CBU condition having value as determined under section 25 of the Customs Act, 1969, not exceeding USD 75,000.

Excise duty of 30 percent would be applicable on electric cars and electric SUVs, imported in CBU condition having value as determined under section 25 of the Customs Act, 1969, exceeding USD 75,000 and up to USD one hundred and ten thousand.

Excise duty at the rate of 40 percent would be applicable on electric cars and electric SUVs, imported in CBU condition having value as determined under section 25 of the Customs Act, 1969, exceeding USD one hundred and ten thousand.

The amended Finance Bill 2026 revealed that the persons having turnover up to two hundred million may also opt out of fixed tax regime subject to a final and irrevocable certificate filed to the Commissioner before filing of return for tax year 2027.

About installment facility on imported mobile phones, the amended Bill said that an individual liable to pay tax on imported mobile phone device through Device Identification, Registration and Blocking System of Pakistan Telecommunication Authority, may be allowed to pay tax in installments as may be prescribed, subject to the condition that all the installments shall be paid before the end of the financial year in which the import is made.

The manufacturer shall, apart from any other liability that he may incur, be liable to pay 3 percent value addition tax of imports on an ad valorem basis, along with default surcharge, in case the imported goods are supplied in the same state whether in the same packing, repacked, or in bulk.

As per amended Bill 2026, the rate of minimum value addition tax shall be one percent in the case of import of coal, subject to the conditions that such imported coal is exclusively and directly supplied to Independent Power Producers.

If any person is found to be involved or abetting in the removal, substitution, damage or otherwise tempering with any goods, whether or not confiscated, at any such place as authorised by the Collector, it added.

Under the amended Bill, the income tax exemption would be available on any income derived by a Private Equity and Venture Capital Fund registered under Private Funds Regulations, 2015, if not less than ninety percent of its accounting income of that year, as reduced by accumulated losses and unrealised capital gains, is distributed by the Private Equity and Venture Capital Fund to its unit or certificate holders or shareholders. Provided that this exemption shall not be available if the Private Equity and Venture Capital Fund is established to acquire a public listed company, whose status has not been changed to the private limited company on the acquisition.

As per amended Bill, in the case of steel melters, steel re-rollers and composite units, the tax shall be collected on the basis of per unit electricity consumption including use of electricity produced by a captive power plant or through any other alternative source of energy at the rate or rates as prescribed by the Board, through notification in the official Gazette. The tax so collected shall be an adjustable input tax, to be claimed in the return of the month in which such payment is made:

Provided also that the Board may prescribe a lower per unit rate or rates of electricity consumption on the basis of input tax paid on imports or other invoices issued through electronic invoicing system digitally issued invoices for compliant and digitally integrated steel melters, re-rollers and composite units to minimise creation of refunds:

The per unit sales tax shall be determined by the Board on the basis of minimum notified price and the industrial benchmarks of consumption of electricity against per ton production of steel products, amended Finance Bill added.

Copyright Business Recorder, 2026

ISLAMABAD: The National Assembly is set to approve Rs 17.378 trillion in regular and technical supplementary grants for the financial years 2024-25 and 2025-26.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb will present regular and technical supplementary grants for the financial years 2024-25 and 2025-26 in the Lower House of the Parliament for approval on Wednesday (today).

According to the order of the day of the National Assembly for today (Wednesday), a total of Rs12.65 trillion of demands for supplementary grants for the financial year 2025-26.

In detail, repayment of Domestic Debt — Rs 12.643 trillion, Election — Rs 455.984 million, and Federal Constitutional Court of Pakistan — Rs 2.25 billion.

READ MORE: Budget: National Assembly likely to pass Finance Bill on June 23

The Finance Minister would also present a total of Rs 2.644 trillion demands for supplementary grants for financial year 2024-25 in the house for approval.

In details; Staff Household and Allowances of the President (Personal) — Rs 208 million, Repayment of Short-Term Foreign Credits — Rs 40.350 billion, Audit — Rs 63 million, Repayment of Domestic Debt — Rs 2.604 trillion (Rs 2 trillion 603.865 billion)

About excess demands, the Finance Minister would present a total of Rs 2.088 trillion (Rs 2 trillion 87.572 billion) excess demands for grants for financial year 2024-25.

In details; Superannuation Allowances and Pensions — Rs 662.850 million, Foreign Loans Repayment — Rs 1.548 billion, Repayment of Short-Term Foreign Credits — Rs 32.810 million, Servicing of Domestic Debt — Rs 169.322 billion, Repayment of Domestic Debt — Rs 1.916 trillion (Rs 1 trillion 915.924 billion), Federal Ombudsman Secretariat for Protection against Harassment of Women at Workplace — Rs 48.668 thousand and Federal Tax Ombudsman — Rs 81.522 million.

Copyright Business Recorder, 2026

ISLAMABAD: The National Assembly on Tuesday passed ‘the Finance Bill, 2026’ despite criticism from the opposition, which ultimately staged a walkout, paving the way for the implementation of the 2026-27 budget.

The House adopted government-backed amendments and rejected all amendments moved by the opposition.

The Lower House had passed the federal budget for the next fiscal year 2026-27, with a total outlay of Rs18.771 trillion, focusing on accelerating the country’s economic growth.

Members of the Jamiat Ulema-e-Islam-Fazl (JUI-F) did not join the walkout staged by Pakistan Tehreek-e-Insaf (PTI). The three female members of JUI-F — Aliya Kamran, Naeema Kishwar Khan, and Shahida Begum — participated in the legislative process and other business of the House.

The House rejected a total of 63 proposed amendments, mostly moved by the three female members of JUI-F in “The Finance Bill, 2026”. The House adopted two amendments — one in clause six and the insertion of a new clause 6A — and two amendments in clause five of the bill. These amendments were moved by the Finance Minister in the House. The House approved the amendments.

In the Budget-2026-27, the revenue collection target for the Federal Board of Revenue (FBR) is set at Rs15.264 trillion, while the non-tax revenue target is estimated at Rs5.336 trillion for the next fiscal year. A total of Rs1 trillion has been allocated for the federal PSDP 2026-27. The House has approved the largest allocation for the Benazir Income Support Programme (BISP), Rs844.78 billion, to continue its social protection and cash transfer initiatives for low-income households across the country.

While discussing the bill, MNA Aalia Kamran questioned whether the government had adequately consulted traders, salaried individuals, small businesses, tax experts, and civil society before finalising the budget. She proposed capping the Petroleum Development Levy at Rs50 per litre, reducing the carbon levy to Rs2.5, lowering taxes on telephone cards and air tickets, and fixing the sales tax rate at 10 percent.

Naeema Kishwar Khan opposed the increase in token tax on 1,000cc vehicles from Rs 4,000 to Rs 20,000 and called for avoiding additional taxes on household goods, plastic products, stationery, and hygiene items. She also urged relief for salaried classes and economy-class air passengers.

Former National Assembly Speaker Asad Qaiser demanded an extension in tax exemptions for the former FATA and Provincially Administered Tribal Areas (PATA). He said the federal government should return net hydel profit arrears and the remaining share of NFC to Khyber Pakhtunkhwa.

Amir Dogar urged the government to extend tax concessions to all airlines operating in Pakistan following the privatisation of Pakistan International Airlines (PIA). He said that on the one hand, the government is paying billions of rupees in capacity payments to IPPs, while on the other, it is imposing taxes on solar systems that provide low-cost electricity.

Rana Atif highlighted the growing circular debt burden, which he said had reached Rs2.8 trillion, and pointed to mounting losses of power distribution companies (DISCOs).

Muhammad Mubeen Arif stressed that fiscal legislation falls within Parliament’s constitutional domain and raised concerns over the proposed faceless tax system, arguing that while tax officials’ identities would remain confidential, taxpayers were not offered similar protection. He also criticised higher withholding taxes, increased penalties, and the creation of another compliance directorate.

Usama Mela criticised the tax structure, saying profitable companies continued to enjoy exemptions while taxes were being imposed on infant milk and solar panels. He also called for promoting non-profit social organisations.

Acting Pakistan Tehreek-e-Insaf (PTI) leader Barrister Gohar Khan opposed provisions allowing the freezing of assets during trial proceedings, arguing that such measures could discourage business activity and investment. He also questioned the legal and constitutional sustainability of the proposed faceless audit system.

Several lawmakers, including Shahida Akhtar Ali, Shandana Gulzar, and Dr Nisar, called for greater tax relief on essential food items, medical equipment, and renewable energy products, while urging measures to protect farmers and the middle class.

They also called for support to small and medium-sized enterprises, greater incentives for local industries, revisions to the federal excise framework, and fulfillment of commitments made to the merged districts of the former Federally Administered Tribal Areas (FATA).

Copyright Business Recorder, 2026

LAHORE: The fourth day of the budget debate in the Punjab Assembly for the fiscal year 2026–27 witnessed another heated exchange between treasury and opposition members.

The opposition strongly criticized the government’s performance on public healthcare, inflation, farmers’ issues, and the law and order situation, while treasury members defended the government’s achievements and development initiatives.

During the budget debate, opposition lawmaker Rana Aftab Ahmad raised concerns over the state of the healthcare sector, stating that some patients at the Punjab Institute of Cardiology (PIC) have to wait years for surgical procedures. He also pointed out that CT scan machines at Children’s Hospital and Allied Hospital were out of order, causing difficulties for patients.

Defending the government’s performance, Sports Minister Faisal Ayub Khokhar said that 188 sports complexes were being constructed across Punjab.

He added that sports grounds would be established in 1,000 schools and province-wide youth games would be organized to promote sporting activities among young people.

Education Minister Rana Sikandar Hayat criticized the opposition and highlighted government initiatives, saying that thousands of scholarships, laptops, and electric bikes had been provided to students in South Punjab. He further stated that millions of children were benefiting from nutritional support under the School Meal Programme.

Law and order situation, particularly the role of the Crime Control Department (CCD), also remained a major focus of the debate. Opposition member Rana Shehbaz alleged that innocent citizens were being affected during CCD operations and called for impartial investigations into recent incidents. Lawmaker Awais Warraich raised the issue of a young man who was allegedly shot by a police officer in his constituency and demanded that the assembly take notice of such incidents. Several members called for investigations into complaints against the CCD and police.

Speaker Malik Muhammad Ahmad Khan directed the law minister to take the House’s concerns seriously. He also indicated that reports would be sought on various incidents, including the Chakwal case. Responding to the concerns, Law Minister Rana Muhammad Iqbal assured the House that the Inspector General of Punjab Police would be consulted and that complaints raised by lawmakers would be reviewed seriously and addressed accordingly.

Following the completion of speeches by all participating members and the conclusion of the day’s agenda, Iftikhar Hussain Chhachhar, a member of the Panel of Chairpersons, adjourned the session until 11:00 a.m. on Tuesday.

Copyright Business Recorder, 2026

The FY26/27 budget deserves credit for easing the disproportionate burden on Pakistan’s formal sector. Relief on selected withholding taxes, rationalisation of certain measures and the shift toward faceless tax administration all point in the right direction. They acknowledge that the formal economy cannot keep absorbing a rising share of taxation while competing with untaxed or under-taxed sectors.

But the budget also exposes an unfinished task: the absence of the mediumterm tax reform framework the Tax Policy Office (TPO) was created to deliver.

The TPO’s mandate goes beyond annual revenue targets. It was meant to design a phased programme that broadens the base, promotes formalisation, supports exports, creates jobs and gradually aligns Pakistan’s tax rates with competing developing economies. It was also intended to coordinate tax policy across ministries and governments, so taxation supports economic objectives rather than undermining them.

Its creation recognised that taxation is too important to be driven by yearly revenue exercises and to separate policy from collection of taxes. Tax policy should shape investment, formalisation, employment, exports and productivity. A country seeking sustained growth cannot redesign its tax system one budget at a time. Because the framework was not completed before the budget, the document offers useful measures but not yet a destination. And what gets measured determines what gets managed.

For decades, Pakistan has judged tax policy through taxtoGDP ratios, gross collections and compliance actions. These metrics are incomplete. A taxtoGDP target can be met by taxing those already in the net more heavily. Gross collections can rise by delaying refunds, hurting documented businesses. Revenue targets can be achieved even as investment stagnates and formal employment declines.

The real question is whether the tax system advances Pakistan’s broader economic goals: formalisation, investment, job creation, exports, foreign investment and productivity. A regime that raises revenue while suppressing activity ultimately defeats itself. It also destroys jobs and prevents reduction in poverty level.

Reform should begin with clarity on where Pakistan wants its tax system to be in five years. Investors need predictability, not annual surprises. A roadmap can be as valuable in restoring investor confidence as an immediate rate cut.

One objective should be gradually aligning tax rates with regional competitors. Pakistan’s corporate burden remains high even without super tax and other levies. Marginal rates on individuals and AOPs are among the region’s highest - more than twice India’s. Numerous withholding, advance and turnover taxes act as taxes on activity rather than on profit, discouraging investment and formalisation.

A mediumterm plan should phase in lower rates accompanied by measurable progress in broadening the base—an approach that has underpinned successful reforms in many emerging economies.

The challenge is not only enforcement. It requires integrated data, digitised transactions, improved land and property records and the political will to tax historically exempt sectors.

Here the TPO’s coordinating role is essential. Many distortions stem from fragmentation between federal and provincial jurisdictions. Property and agricultural taxation lie largely with provinces but directly affect federal revenues, investment and growth. A coherent reform agenda requires a shared framework.

Tax policy must also align with Pakistan’s growth strategy. If exports are the path to sustainable growth, taxation should reward competitiveness. If formal employment is a priority, the cost of hiring formally should not exceed that of informal competitors. If Pakistan seeks exportoriented local and foreign investment, the tax regime must be predictable and competitive. Removing super tax and advance tax on exporters is a good start but regional benchmarking leaves room for further cuts.

Success must be measured intelligently. Alongside taxtoGDP, Pakistan should track growth in active taxpayers, taxes collected from previously untaxed sectors, formal employment, private investment, export growth and refund payment times. These indicators reveal whether the base is broadening or the burden is simply deepening.

Pakistan does not lack taxes; it lacks tax policy. The FY26/27 budget offers useful relief and a more constructive direction. The task now is to complete the work the TPO was created to do: replace annual revenue firefighting with a coherent fiveyear strategy that broadens the base, lowers rates, promotes formalisation and supports investment, employment and exports.

Until then, Pakistan will keep measuring the wrong things—and taxing the wrong people.

Copyright Business Recorder, 2026

EDITORIAL: Khyber Pakhtunkhwa (KPK) budget for 2026-27 presented by Chief Minister Sohail Afridi unveiled a total outlay of 2.17 trillion-rupee - 48 billion-rupee deficit - budget with no budgeted grant for the federal government as that decision rested with the incarcerated former leader of the Pakistan Tehrik-i-Insaaf (PTI).

While this is clearly a political gambit with the purpose of compromising the commitment made by the Centre to the International Monetary Fund under its ongoing programme the allocation for development outlay, the item that other provinces scaled down to create fiscal space fort the Centre, has been reduced from 608.5 billion rupees in the revised estimates of the current year to 524.3 billion rupees budgeted for 2026-27 – a decline of 14 percent though the budget document claims that next fiscal year consists of the largest development programme in the province’s history “to accelerate economic recovery, stimulate employment creation, strengthen infrastructure, improve service delivery outcomes and reduce regional disparities.” The break-up is as follows: Annual Development Plan (ADP) of settled districts 316.8 billion rupees, ADP of devolved settled districts 235 billion rupees, ADP of provincially-merged districts 47 billion rupees and ADP of devolved managed districts 29 billion rupees. And current expenditure has been budgeted to rise from 1433 billion rupees in the revised estimates of last year to 1645.7 billion rupees next fiscal year - a rise of 14.7 percent.

The Sindh budget envisaged a deficit of 36.9 billion rupees, one percent of total budgeted outlay for the year, despite accounting for 14.62 percent of NFC transfers, Khyber Pakhtunkhwa’s budget contributes less to the consolidated provincial surplus assumed in the federal budget than Sindh’s, reflecting its larger fiscal deficit relative to its total outlay (out of the total budget outlay of Rs 2.17 trillion, this 48 billion rupees shortfall translates to a fiscal deficit of approximately 2.2 percent of the total KPK budget size). Be that as it may, the province’s lament for the failure of the Centre to give its due share under the award may echo the same concerning sentiments expressed by other provinces though no doubt shared mostly behind closed doors and quickly resolved. The KPK’s lament focused on three major failures of the Centre: (i) the continued application of horizontal distribution parameters based on pre-merger demographics does not reflect KPK’s concurrent constitutional and administrative responsibilities with 964.158 billion rupees outstanding for 8 years. The dig at the Centre, for failing to proactively engage in the eleventh NFC award is implied in the White Paper. The KPK government has sought 3 percent of share of the divisible pool of the NFC award in line with the national consensus reached at the time of the merger to address the decades of underinvestment and accelerate the merged districts socio-economic convergence with the rest of the country; (ii) the implementation of the KPK Local Government Act 2013 in line with Article 37(i) of the Constitution the provincial government approved an Interim Finance Commission Award covering the period from 1 July to 30 June 2027, which provides the framework for the transfer of allocable resources for the Provincial Consolidated Fund to local governments; and (iii) like the other three provinces the sales tax receipts, as pledged to the IMF, are projected to rise from 57 billion rupees in the revised estimates of the outgoing year to 80- billion rupees for next year – a 40 percent rise however the revenue from agricultural income tax remains insignificant – 3 billion rupees next fiscal year against – or in other words political considerations outweighed economic considerations – in common with the other three provinces.

The heavy reliance on the divisible pool taxes as well as reliance on indirect taxes, whose incidence on the poor is greater than on the rich, as the major source of province’s own revenue continued in the budget for next fiscal year in common with the two other but richer provinces, notably Punjab and Sindh, a reliance that the provinces had pledged to the IMF that they would reduce.

Copyright Business Recorder, 2026

The first article on features of the federal budget of 2026-27 was published last week, with a focus on the more aggregate trends and projections. This article looks at the federal budget in a more disaggregated manner.

We first examine the trends and projections in different sources of revenue. The income tax revenues growth in 2026-27 is expected to almost double from 9.3 percent in 2025-26 to 18.1 percent. This is anticipated despite the significant reduction in the rates of personal income tax and super tax. The expected improvement is in the audit process. However, the amount raised out of demand following audit has hitherto been under 5 percent of total revenues from the income tax.

The second optimistic projection is of revenues from customs duty. It showed a growth of only 6.4 percent in 2025-26, but is projected to rise by as much as 20.9 percent in 2026-27. The exchange rate is expected to depreciate by 4.3 percent. As such, the dollar value of imported goods is projected to increase by as much as 16.3 percent. This is substantially above the projection officially of imports in 2026-27.

The third overstated projection is related to excise duty, with the highest growth rate in revenues among the different taxes, of 26 percent. There is no visible increase in tax rates. Here the expectation is of a big reduction in tax evasion in cigarettes manufacturing.

Overall, the FBR revenue projection is visibly optimistic and we could once again see a shortfall of almost Rs 1,000 billion, as will be the case in 2025-26.

There is, however, a visible slowdown in own non-tax revenues. This is primarily due to the decline in SBP profits of 7.3 percent in 2025-26. They are now expected to fall by as much as 41 percent in 2026-27. This is primarily due to the sharp fall in interest rates from the peak level in 2022-23.

Overall, the level of own non-tax revenues of the federal government is expected to fall by as much as 16 percent in 2026-27. This explains why the provincial governments have been compelled to make a large combined grant for the first time to the federal government of Rs 1,035 billion. If these grants do flow into Islamabad in 2026-27, then the total non-tax revenues, including these grants will still show a positive growth rate of only 4.8 percent.

The petroleum levy yielded an additional 22.7 percent in 2025-26, despite the rise in international POL prices. It is expected to yield another 11.9 percent in 2026-27. The likely fall in international prices should not precipitate an escalation in the levy. The benefit should be passed on entirely to consumers. This will constitute a major source of relief in 2026-27. The big fall in petrol and HSD prices announced recently will provide substantial relief and is fully appreciated.

We turn now to a disaggregated analysis of federal expenditure. The fundamental question is why total expenditure, current plus development, will rise by as much as 20 percent in 2026-27?

Examination of the budgetary provisions for current expenditure reveals that the debt-servicing outlay is projected to rise by 16.1 percent in 2026-27. This highlights the projection of higher interest rates next year. However, the end of war in the Middle East should facilitate constancy, if not a fall, in interest rates.

The defence expenditure allocation implies a growth rate of almost 16 percent in 2026-27. This is probably required, given the tense situation both in the Eastern and Western borders, plus the rise in the incidence of terrorism in the country.

Subsidies are expected to actually decline by almost 6 percent in 2026-27. This includes some containment in the power differential subsidy. Presumably, there will not be a blanket very low tariff rate on small consumers. Instead, eligibility will be determined through a type of survey that was undertaken earlier by the BISP (Benazir Income Support Programme).

An unprecedented massive increase in grants of 36 percent has been included in the federal budget. This is after a relatively large increase of 20.8 percent in 2025-26. One of the major grants is the allocation of funds to the BISP. This has been recognized as an effective programme and the IMF Programme has also provided for an increase in the financial projections.

The grant to the BISP is proposed to be increased by 17.5 percent from Rs 729 billion in 2025-26 to Rs 857 billion in 2026-27. This will enable both an increase in coverage and in the size of a per family cash grant. This is necessary, given the underlying trend of rise in the incidence of poverty due both to rising food prices and higher unemployment.

There is, however, a very unusual item that has been included as a large recipient of grants. This is a lump sum provision of as much as Rs 365 billion in the 2026-27 budget in the form of a grant for National Economic Initiatives. The Finance Minister should have indicated the particular initiatives chosen for 2026-27 and their justification.

The level of development spending is showing a large fluctuation. It was cut back by almost 54.5 percent in 2025-26 to enable achievement of the budget deficit target for the year in the IMF Programme. The 2026-27 federal budget proposes a massive increase to Rs 1275 billion, including Rs 275 billion of lending to State-Owned Enterprises (SOEs).

Top priority ought to have been given to projects in the Water Resources sector in view of India’s plans to reduce the access to water of Pakistan. Unfortunately, this is not reflected in the sectoral development allocations, with no increase in allocations to this sector.

The National Highways Authority continues to receive the largest share of 25 percent in development expenditure. The allocation to investments in Power Transmission and Distribution is also low at Rs 105 billion, despite the high such losses in the power sector.

Finally, we come to the financing of the projected budget deficit of Rs 5,226 billion, equivalent to 3.5 percent of the projected GDP in 2026-27. A primary surplus of 2.5 percent of the GDP is also anticipated.

Within the sources of financing, the primary importance is of external financing. Ambitious targets have also been set here for the gross inflow of external financing in 2026-27. The quantum of such financing is expected to rise by over 29 percent, from USD 18.1 billion to USD 23.4 billion.

However, the really worrying magnitude is the expected quantum jump in repayments of 59.5 percent from USD 12.6 billion to USD 20.1 billion. Consequently, the net inflow is projected at only USD 3.3 billion in 2026-27, compared to USD 5.5 billion in 2025-26. This implies greater pressure on the foreign exchange reserves in 2026-27.

Overall, the 2026-27 budget is a high-risk budget with a high growth anticipated in FBR revenues, reliance for the first time on large grants from provincial grants and continuation of generation of large cash surpluses by these governments despite these grants. There is need for sectoral reallocation of the federal PSDP, with substantially large expenditure on on-going water resource projects next year. Also, non-transparent expenditure like those on unknown National Economic Initiatives must be avoided.

The focus in next week’s article will be on the Provincial budgets of 2026-27 announced recently. An analysis of these budgets reveals that the big grants to the federal government could lead to a shortfall of almost Rs 1,000 billion in the target level of provincial cash surpluses, despite big cuts in development spending. Consequently, the consolidated budget deficit could be higher by Rs 1,000 billion in 2026-27 in relation to the level agreed with the IMF.

Copyright Business Recorder, 2026

EDITORIAL: Balochistan’s latest budget arrives wrapped in the language of fiscal discipline, development and prudent management. A projected surplus of Rs45.66 billion, no new taxes, increased allocations for health and education, investment incentives and claims of record development spending would ordinarily provide reasons for optimism.

Yet the budget season in Pakistan has a way of encouraging caution. The country has seen too many ambitious promises; impressive projections and glowing official statements fail to survive contact with reality.

That does not mean the budget should be dismissed. The provincial government deserves some credit for presenting what appears, on paper, to be a relatively balanced financial plan under difficult circumstances. Provinces are operating under growing fiscal constraints, particularly as the federation seeks larger provincial surpluses to help meet commitments under the IMF programme. The room for manoeuvre is considerably narrower than it once was, making development spending and social sector allocations harder to sustain.

This broader context is important. Provincial budgets can no longer be viewed in isolation from the federal government’s fiscal challenges. Efforts to maintain primary surpluses and satisfy external financing requirements inevitably shape spending decisions across the federation. In that sense, Balochistan is attempting to balance competing pressures: fiscal restraint on one side and immense development needs on the other.

The challenge is that Balochistan’s needs remain extraordinary. It is Pakistan’s largest province by area, yet it continues to lag behind in infrastructure, education, healthcare and economic opportunity. The opposition’s criticism that a development allocation of roughly Rs206 billion remains inadequate for a province of such scale cannot simply be dismissed as routine political point-scoring. The province’s development deficit is real, and addressing it requires resources on a scale that annual budget exercises alone cannot easily provide.

Questions surrounding federal transfers further complicate the picture. Opposition lawmakers have argued that reductions in federal allocations have constrained development spending and limited the province’s ability to address longstanding challenges. Government representatives, meanwhile, contend that negotiations helped prevent even deeper cuts. Regardless of where responsibility ultimately lies, the debate highlights an uncomfortable reality: Balochistan remains heavily dependent on decisions made elsewhere.

That dependency sits uneasily alongside the province’s resource wealth. The recurring argument that Balochistan contributes significantly to the national economy while remaining underdeveloped has become a permanent feature of the province’s political discourse. Whether the issue is natural gas, minerals, fisheries or major infrastructure projects, questions regarding resource ownership, revenue sharing and development outcomes continue to shape relations between the province and the federation.

The budget’s claims also warrant careful scrutiny. The government’s assertion that development utilisation reached 115 percent during the outgoing fiscal year is certainly notable. It is also a figure that demands verification through completed projects, improved services and measurable outcomes. Budget documents are filled with numbers. Yet citizens experience governance through roads that function, schools that teach, hospitals that heal and jobs that materialise.

That distinction is particularly important in Balochistan, where ambitious announcements have often struggled to translate into visible improvements on the ground. Long-delayed projects, incomplete infrastructure and recurring governance concerns have understandably produced a degree of public scepticism. The opposition’s complaints regarding unfinished schemes, recruitment delays and persistent security challenges reflect frustrations that cannot be resolved through accounting presentations alone.

The budget therefore deserves neither uncritical praise nor summary dismissal. It should be judged against the same standard that applies to every provincial and federal budget in Pakistan: IMPLEMENTATION.

The figures may appear encouraging today. The allocations may seem reasonable. The projections may be achievable. But budgets are ultimately promises written in numbers. Their credibility emerges only when those numbers translate into tangible outcomes.

Balochistan has heard ambitious promises before. This time, as always, the proof will be in the spending.

Copyright Business Recorder, 2026

LAHORE: The federal government and the Punjab government have unveiled their budgets for fiscal year 2026-27, raising total outlays at both levels even as economists cautioned that higher spending has yet to translate into visible improvements in education, health, agriculture, and industry.

The two budgets have been presented at a time when Pakistan’s economy appears to have regained a degree of stability after several turbulent years, with inflation declining, foreign exchange reserves improving, and concerns regarding an immediate balance-of-payments crisis easing.

At the federal level, the government has presented a budget of approximately Rs 18.77 trillion compared with Rs 17.57 trillion in FY2025-26, with revenue targets increased to Rs 15.26 trillion. Debt servicing continues to consume more than Rs 8 trillion annually, while defence expenditure has increased to approximately Rs 3 trillion.

Commenting on the budget, prominent economist and Advisor on political and economic affairs to President Pakistan Peoples Party Central Punjab Rao Babar Jamil said the continuation of programmes such as the Benazir Income Support Programme, with allocations approaching Rs 845 billion, reflects the government’s recognition that many households continue to face significant economic hardship. He observed that while inflation has slowed, prices have not actually fallen, meaning the relief felt by ordinary citizens remains limited.

Punjab, meanwhile, has announced a budget of approximately Rs 5.9 trillion compared with roughly Rs5.3 trillion in FY2025-26. Notably, the province’s Annual Development Programme has fallen from approximately Rs 1.24 trillion to around Rs752 billion, a decline that has raised questions regarding the government’s development priorities going forward.

In this context, the question Punjab’s citizens are entitled to ask is a simple one: where is the performance? If education spending continues to increase every year, it remains unclear why millions of children are still out of school, why parents increasingly rely on private schools despite the existence of a vast public education system, and why employers continue to complain about the quality of graduates entering the labour market. Similarly, despite substantial healthcare allocations, government hospitals remain overcrowded, and many citizens continue to rely on costly private healthcare out of necessity rather than choice.

Agriculture and industry are also areas that observers believe deserve far greater attention than they have received. Punjab’s farmers continue to face rising input costs, uncertain crop prices, water shortages, and increasing climate-related risks, and the budget could have done more to support farmer productivity through water-efficient irrigation, wider adoption of agricultural technology, crop insurance, and stronger income protection mechanisms for growers. Punjab remains Pakistan’s largest industrial province, yet businesses operating there continue to grapple with high energy costs, regulatory complexity, limited access to finance, infrastructure bottlenecks, and weakening international competitiveness.

Artificial intelligence and digital transformation represent another area where the Punjab government has yet to demonstrate meaningful progress. Analysts argue that the province should be investing aggressively in AI research centres, technology parks, university-industry partnerships, digital skills training, startup incubation, and innovation-driven entrepreneurship if it hopes to remain competitive in the coming years.

Greater emphasis is also needed on water security, groundwater recharge, wastewater treatment, and the modernisation of irrigation systems across the province. At the same time, local governments should be strengthened so that municipal services can be delivered more effectively to citizens at the grassroots level.

Ultimately, the prevailing view among economic observers is that governments should be judged not by how much they spend but by how effectively they spend it. The debate, they argued, must move from budgets to performance, from announcements to delivery, and from spending to results.

Copyright Business Recorder, 2026

PESHAWAR: The Khyber Pakhtunkhwa government has allocated Rs 334 billion for health in fiscal year 2026-27.

Of the total allocated amount, 82 percent is expected to be spent on ongoing projects, while the remaining 18 percent will go towards new schemes.

Funds have also been proposed for 93 ongoing development projects in the health sector.

Funding for the Sehat Card Plus programme has been increased to Rs 50 billion, while free medicines at public hospitals will receive Rs 14.263 billion.

Allocations for Medical Teaching Institutions (MTIs) have been raised to Rs 80 billion.

The budget includes four projects worth Rs 11 billion to upgrade Basic Health Units (BHUs) and Rural Health Centres (RHCs), while hospital management reforms will be expanded to another 72 hospitals.

The KP government has already initiated the process of recruitment of 2,819 doctors, dental surgeons and nurses.

The government has also allocated Rs 9.9 billion to upgrade Category-D hospitals into teaching hospitals, Rs 4 billion for a new general hospital in Peshawar, Rs200 million for free cancer treatment and Rs 1.355 billion for health sector roadmap initiatives.

The government has planned to strengthen primary healthcare facilities and District Headquarters Hospital to ease load on MTIs.

Budget documents showed that public welfare, education, healthcare, employment generation and sustainable development, were the key priorities with a focus on long-term provincial growth and improved service delivery across all sectors.

Copyright Business Recorder, 2026

KARACHI: The Pakistan Stock Exchange (PSX) witnessed a strong bull run during the outgoing week as easing geopolitical tensions in the Middle East, coupled with investor-friendly fiscal measures announced in the FY27 budget, significantly boosted sentiment and triggered aggressive buying across major sectors.

The benchmark KSE-100 Index surged by 6,522.84 points, or 3.8 percent, on a week-on-week basis to close at 178,922.75 points, compared with 172,399.91 points a week earlier.

The BRIndex100 advanced from 19,067.69 points to 19,844.46 points, registering a gain of 776.77 points during the week. Total turnover in the index stood at 4.32 billion shares, translating into an average daily turnover of approximately 864.81 million shares.

Similarly, the BRIndex30 rose from 69,412.84 points at the beginning of the week to 72,590.00 points at the close, posting a substantial gain of 3,177.16 points. Weekly turnover in the index reached 2.60 billion shares, averaging around 519.48 million shares per trading day, indicating strong participation in blue-chip stocks.

Investors welcomed the landmark Islamabad Memorandum of Understanding (MoU) signed between the United States and Iran, which substantially reduced regional uncertainty and eased concerns over global energy supplies.

The reopening of the Strait of Hormuz and the subsequent decline in international oil prices further supported market sentiment, with Brent crude falling to around $80 per barrel, encouraging investors to rebuild positions in Pakistani equities.

Domestic policy developments also emerged as a key catalyst for the rally. The government unveiled the FY27 Finance Bill, introducing several measures aimed at improving corporate profitability and stimulating economic activity. Among the major announcements was the complete abolition of the Super Tax for companies with annual earnings of up to Rs500 million, alongside a 2 percent reduction in corporate tax rates for higher-income firms, significantly improving earnings prospects for listed companies.

Investor confidence was further reinforced after the State Bank of Pakistan (SBP) kept the benchmark policy rate unchanged at 11.5 percent during its June Monetary Policy Committee meeting. The central bank maintained that recent inflationary pressures were largely driven by external factors, particularly elevated oil prices stemming from earlier geopolitical tensions in the Middle East, rather than excessive domestic demand.

Pakistan’s external sector also continued to improve. The country recorded a current account surplus of USD459 million in May 2026, driven primarily by robust workers’ remittances, taking the cumulative current account surplus during 11MFY26 to USD255 million.

Industrial activity also showed signs of strengthening. Large-Scale Manufacturing (LSM) expanded by 6.1 percent year-on-year in April 2026, while cumulative growth during 10MFY26 reached 6.44 percent, indicating sustained recovery in industrial output.

Meanwhile, the government’s latest Pakistan Investment Bond (PIB) auction attracted strong investor participation, with authorities raising Rs649 billion.

Yields across various tenors declined by 34 to 116 basis points, reflecting improving confidence in the country’s inflation and interest rate outlook.

The robust market rally significantly boosted investor wealth. Total market capitalization increased by 4.6 percent, rising to Rs19.99 trillion from Rs19.12 trillion a week earlier, representing an increase of approximately Rs874.40 billion. In dollar terms, market capitalization climbed to USD71.86 billion from USD68.70 billion.

Trading activity also strengthened considerably during the week, reflecting renewed investor confidence and aggressive accumulation across the broader market. Average daily traded volume (ADTO) in the ready market surged 47.8 percent to 1.15 billion shares, compared with 775.96 million shares a week earlier.

In value terms, average daily traded value more than doubled, rising 118.4 percent to Rs63.01 billion from Rs28.86 billion recorded in the previous week. In dollar terms, average daily turnover similarly jumped 118.4 percent to USD226.44 million, compared with $103.67 million a week earlier, underscoring a sharp improvement in market liquidity and institutional participation.

Market participants said the combination of geopolitical de-escalation, a stable monetary policy stance, improving external account indicators and growth-oriented tax measures provided a strong foundation for the market’s upward trajectory.

Going forward, analysts expect investor focus to remain on the implementation of budgetary measures, progress on structural reforms and developments on the international geopolitical front. Sustained stability in global oil prices and continued improvement in macroeconomic indicators are likely to remain key drivers of market sentiment in the coming weeks.

Copyright Business Recorder, 2026

PESHAWAR: The provincial government of Khyber Pakhtunkhwa presented a supplementary budget of Rs121.74 billion.

The estimated current expenditure for the financial year 2026–27 had been set at Rs1,415 billion.

However, due to additional requirements in various sectors, it increased to Rs1,433 billion, according to budget documents.

The documents said under current expenditures, an additional Rs1.38 billion was earmarked for the Tribal Affairs Department, Rs1.29 billion for the local government, Rs7.5 billion for the local bodies, and Rs7.35 billion for relief activities.

READ MORE: KP unveils Rs2.17trn deficit budget

Similarly, Rs3 billion were earmarked for the merged districts and Rs1.46 billion for the transport sector.

According to the budget document, the development budget was Rs547 billion, but through the supplementary budget it was increased to Rs608 billion. This represents a total increase of Rs71.73 billion in development expenditures.

To further improve the law and order situation, an additional Rs7.1 billion had been allocated for the purchase of armoured vehicles for the police, the budget documents revealed.

The documents said an additional Rs40.43 billion had been released for the Peshawar Revitalization Project to further improve infrastructure and urban facilities in the provincial capital.

Additional funds have also been allocated for education, irrigation, and energy sectors. Rs1.95 billion were to be spent on primary and secondary education, while Rs2.97 billion on irrigation and energy projects.

The Chief Minister of Khyber Pakhtunkhwa, Sohail Afridi, said the purpose of the supplementary budget was to ensure public welfare, timely completion of development projects, improvement of law and order, and provision of basic facilities so that the pace of development in the province could be accelerated.

Copyright Business Recorder, 2026

EDITORIAL: A recent media report has highlighted a view gaining traction within policymaking circles that the NFC Award’s vertical resource-sharing formula between the Centre and the provinces has become unsustainable, and must be revised to reflect the fiscal realities confronting the federal government.

Proponents argue that the current arrangement leaves the Centre with insufficient resources to meet its core obligations, particularly defence and debt-servicing.

The debate centres on the fiscal framework established under the seventh NFC Award following the 18th Amendment’s passage, which raised the provincial share of the divisible tax pool to 57.5 percent and reduced the federal share to 42.5 percent.

Crucially, it also mandated that any future NFC Award cannot reduce the provincial share below its existing level, effectively making any change to the vertical distribution contingent upon a constitutional amendment.

However, given the sensitivity of the issue, the provinces so far haven’t been able to agree to such an amendment.

A workaround was instead devised during recent budget-making sessions, whereby the provinces voluntarily surrendered Rs1.035 trillion to the Centre from their share of the divisible tax pool. Yet influential quarters remain convinced that the underlying imbalance will eventually require a constitutional amendment.

What is often overlooked in this debate, however, is that the existing formula was grounded in specific assumptions: that the economy would grow at a pace sufficient to expand the overall fiscal pie, and that the devolution of subjects such as education and health to the provinces, as mandated by the 18th Amendment, would be matched by the abolition of corresponding federal ministries. Neither expectation materialised.

Growth remained below projections, while many devolved ministries continued to operate at the Centre, forcing the federal government to finance responsibilities that were expected to disappear. Had these assumptions held, the fiscal pressures now cited as evidence of the vertical formula’s unsustainability may have been far less severe.

Yet even as attention focuses on the vertical distribution of resources, far too little is being said about what is arguably an even more unsustainable aspect of the NFC framework: the horizontal formula governing resource distribution among the provinces.

Under this arrangement, population accounts for a massive 82 percent of the weight used to distribute resources among provinces. Such overwhelming reliance on this metric effectively rewards rapid population growth. This is particularly alarming as Pakistan’s population growth rate is perhaps the country’s most pressing existential challenge.

At 2.55 percent annually, the population is expanding at a pace that requires GDP growth of at least six percent every year simply to keep up with the demands generated by a rapidly growing population. And, given Pakistan’s current productive capacity, that is unlikely to happen.

The consequences are already visible. Hundreds of thousands of young people enter the labour force every year, yet the economy lacks the capacity to absorb them. Unemployment remains rampant, social pressures continue to mount and Pakistan contends with an accelerating brain drain, with many of its brightest minds choosing to build their futures elsewhere. When population remains a dominant factor not only in resource allocation but also in federal job quotas and other governance structures, the incentive for effective population control inevitably weakens. If Pakistan is serious about addressing its long-term challenges, reforming the horizontal distribution formula deserves as much attention as the debate over the vertical one. Unlike changes to the federation-province resource split, revising the horizontal formula does not require a constitutional amendment. It requires consensus among the federating units through the NFC process.

Given the political and constitutional hurdles involved in altering the vertical formula, building agreement around a more balanced horizontal formula may be both the more achievable and the more critical reform, and must be urgently pursued.

Copyright Business Recorder, 2026

The Minister of Information and Broadcasting Ataullah Tarar referred to the federal budget 2026-27 as “sagacious” and invited the opposition to sign a charter of the economy – a suggestion that was initially aired by former Finance Minister and current Foreign Minister, Ishaq Dar who drew inspiration for the title from the Charter of Democracy that was signed between Benazir Bhutto and Nawaz Sharif on 14 May 2006.

About 93 percent of the total budget for this country consists of current expenditure – the outlay an amalgam of the rising mark-up on 83.285 trillion rupees (298 billion dollars) domestic debt and another 137.5 billion dollars in external obligations, followed by allocation for influential sectors (inclusive of annual civilian and defence pay raises at the taxpayers’ expense), flawed policies (particularly the over one trillion-rupee allocation for pensions next year though employee contributions became mandatory for those hired in 2024 onwards though the amount is not known – a time period that will take decades before it begins to pay dividends), the applicable National Finance Commission (NFC) Award that provides 42.5 percent of total taxes collected by the Federal Board of Revenue (FBR) for the Centre’s use, and for Benazir Income Support Programme (BISP) allocated under 5 percent of total current expenditure. Development expenditure by the Centre is where serious differences arise, requiring constant adjustment if the Centre is politically weak and not at all if it is strong – a principle that also applies to the economically disastrous policy of allocating funds to members of parliament for projects specific to their constituency.

It is, however, the source of revenue that is probably where the charter of the economy can best be applied. Each administration has its “favourites” – easily gleaned from the grant of tax exemptions extended to specific sectors. The PML-N, for example, favours its support base, the traders, the Khan administration favoured real estate activity, and the PPP has typically favoured its grass-root workers and used state-owned entities as recruitment centres. All these policies are under process of being phased out under the ongoing IMF programme though the process remains painstakingly slow.

There is therefore a need to undertake empirical studies to assess whether the policies that prompted the Charter of Democracy are still applicable today and, more importantly, whether they were ever implemented. The latter query can be easily answered with a resounding ‘no’ though the two parties have since worked in partnership at the Centre.

The common thrust of all the national parties, including the decision makers today, is to attract foreign direct investment (FDI), which has remained elusive to-date. The plea today should no longer be to agree to a charter of the economy dated twenty years ago but instead to understand the massive geopolitical changes in the international world order since and to adjust accordingly.

Three exogenous changes in the international world order are having far-reaching global consequences, including in Pakistan. First, the emergence of a unipolar world subsequent to the collapse of the Soviet Union in 1991 that initially continued the military and financial dominance of Western democratic countries, all with robust economies, with the institutional framework to sanction all those countries with impunity that failed to follow their dictates. But by 2017 a multipolar world had emerged as Russia reaffirmed its superpower credentials as did China though Western countries continue to look towards the US for guidance that is increasingly coming at a high economic cost.

Second, the expansion of North Atlantic Treaty Organisation (NATO) eastward, in spite of Russian warnings that it would be its red line; it is little wonder that when the US and its allies proceeded to announce Ukraine’s imminent inclusion into the security bloc triggered the conflict with Russia that continues to this day. The subsequent sanctions on Russia led to deindustrialisation in European countries, particularly Germany, and by following the US foreign policy dictates the European Union began to procure fuel at more than double the cost of gas from Russia, making it uncompetitive in the international market, especially as it related to China.

The Memorandum of Understanding between Iran and the US signed this week past indicates a change in warfare, asymmetric where the militarily more powerful country is unable to declare victory, as opposed to kinetic – a change that can compel the more powerful country to concede on more than four-decade-long sanctions.

What is increasingly evident is the truth behind Vladimir Putin’s assertion in his interview with Le Figaro on 29 May 2017 published two days later: I have already spoken to three US Presidents. They come and go, but politics stay the same at all times. Do you know why? Because of the powerful bureaucracy. When a person is elected, they may have some ideas. Then people with briefcases arrive, well-dressed, wearing dark suits, just like mine, except for the red tie, since they wear black or dark blue ones. These people start explaining how things are done. And instantly, everything changes. This is what happens with every administration.

Putin’s reference was to the deep state, consisting of unelected officials, including wealthy private individuals, who can and do manipulate policy. The US support for Israel and anti-Russian stance epitomizes the deep state’s control of US policy, and therefore it was a very astute observation that explains why US foreign policy has not adapted to the changing geopolitical considerations.

In Pakistan, the deep state’s existence has long been acknowledged though not openly until very recently with the reference to the hybrid system. This does not make Pakistan the exception but rather the norm.

Third, globalisation, relative ease of movement of capital, led to the US oligarchs investing capital in countries that could produce at cheaper cost enabling them to realise higher profits, while controlling all multilateral donor agencies that led to the formalisation of global rules. The dollar hegemony, dating back to Bretton Woods, 1944, consisted of the dollar as the world’s primary reserve currency, medium of exchange, and unit of account. With the establishment of SWIFT (Society for Worldwide Interbank Financial Telecommunication) in 1973 transfers by any individual or country could be stopped with accounts frozen as happened to Iran in 1979 or to Russia since the start of the war while it provided the US with cheap credit.

Today there is little debate on the emergence of a multipolar world, with the increasing use of yuan as an alternate currency, and the increasing use of real time transfers through the Chinese Cross-Border Interbank Payment System (CIPS) – a system resilient to sanctions as well as cheaper – instead of SWIFT.

In spite of Pakistan’s close and long-standing ties to China our reserves are still held almost entirely in dollars (though they are almost entirely debt based with over 10 billion-dollar rollovers held by Saudi Arabia and China), the bulk of trade is in dollars (except some barter trade), remittances emanate from the Middle East and the West and imports are largely from the West though imports from China are at a high of 18 billion dollars while our exports are no more than 3 billion dollars.

So what can a charter of the economy consist of? All political parties’ have the same objective notably development, low inflation, and high employment though the way forward may vary based on which economic theory the administration may support. But what about a country like Pakistan that is shackled by domestic and international debt and where elite capture continues to prevail in terms of allocations and policy decisions? And with a resurfacing threat to default compelling administration after administration seeking an IMF programme with its associated conditions?

The best option would be to seek a consensus on foreign policy objectives that are linked inextricably to economic objectives, curtail elite capture of the taxpayers’ money, which continues in next year’s budget, and implement pro-poor growth policies across the board instead of limiting them to BISP.

Copyright Business Recorder, 2026

ISLAMABAD: In a pointed yet conciliatory overture to the opposition, Finance Minister Muhammad Aurangzeb on Sunday urged Pakistan Tehreek-e-Insaf (PTI) to return to the standing committees of both National Assembly and Senate, praising their input during last year’s budget cycle as “commendable”.

Winding up the debate on cut motions on the different ministry’s demands for grants, Aurangzeb struck a noticeably inclusive tone on the floor of the House.

Addressing PTI lawmakers Mubeen Arif and Osama Mela – whom he singled out for their command of economic jargon – he said the government valued “constructive opposition” at committee level and would welcome their return “without hesitation”.

“We felt the absence of members Mubeen Arif and Osama Mela this year,” he remarked, adding that their proposals would not merely be heard but actively considered should they rejoin the process.

The minister maintained that ongoing reforms at the Federal Board of Revenue (FBR) would help the government meet next fiscal year’s tax targets.

He insisted the policy direction was shifting away from simply increasing the tax burden towards structural reform – both in taxation and in the energy sector, as highlighted by the Power Ministry – alongside changes in debt servicing and pension systems.

Aurangzeb said economic indicators had improved markedly compared to “two to two-and-a-half years ago”, crediting the direction of the government under Prime Minister Shehbaz Sharif.

He recalled that when the government assumed office in 2022, no allocations had been made for the Public Sector Development Programme (PSDP), with development funding reportedly constrained to the point of quarterly disbursement difficulties.

On macroeconomic indicators, he cited growth at 3.7 per cent, while claiming debt servicing had been reduced progressively from 75 per cent of GDP to 70 per cent and then to 68 per cent.

He further said tax revenues had doubled compared to last year and insisted no new taxes had been imposed on the masses.

Turning to youth employment, Aurangzeb said the government was pursuing an “ecosystem-based” approach and urged provinces to replicate Sindh’s public-private partnership model in development planning.

He expressed confidence that ongoing reforms would enable the government to meet its revenue targets in the coming fiscal year.

On regional developments, he referenced the ceasefire between the US and Iran, saying its early impact was already visible through recent reduction in petroleum prices, and expressed cautious hope that stability would hold. The otherwise technocratic tone of the debate was repeatedly punctured by opposition interventions. PTI’s Zain Qureshi questioned the performance of the FBR’s Point of Sale system and warned that debt had become an increasingly heavy drag on the economy.

Shahida Akhtar Ali of JUI-F called for salary increases for public sector employees in line with inflation, while other lawmakers raised a familiar catalogue of grievances: unpaid salaries for university staff in Balochistan, limited development gains from CPEC projects, concerns over Independent Power Producers, delays in the merged districts, and demands for widening the tax base instead of increasing rates.

Calls also echoed across the House for infrastructure development in under-served regions, including highways, bridges and interchanges, alongside criticism of unemployment, fiscal mismanagement and what several members described as persistent neglect of southern Punjab.

Planning Minister Ahsan Iqbal stepped in to dispel what he called “longstanding confusion” over the Lahore Orange Line Metro Train project, insisting it was fully financed by the Punjab government and did not draw from the federal exchequer.

He categorically stated the project lay outside the China-Pakistan Economic Corridor (CPEC) financing framework, adding: “The federal government did not contribute a single rupee.”

In a brief departure from the chamber’s usual temperature, Power Minister Awais Leghari personally crossed the floor to receive an electricity bill presented by PTI’s Sanaullah Mastikhail, who had highlighted a sharply inflated charge of 1,200 units linked to an overseas acquaintance’s household.

The gesture drew rare appreciation from the opposition lawmaker, with the minister thanking him for raising the issue – a fleeting moment of procedural civility in an otherwise combative sitting.

Earlier, Defence Minister Khawaja Asif delivered one of the day’s most politically charged interventions, warning against what he described as a growing “Vigo Dala culture” around Parliament – a reference to expanding convoy-style security movements using Toyota Hilux vehicles. He cautioned that increasingly elaborate protocol arrangements and security-linked privileges were projecting an image of unchecked authority rather than accountable governance. He also criticised symbolic displays such as flag-laden ministerial convoys, calling for what he termed a “cultural reset” in political conduct.

Asif further raised concerns over parliamentary discipline, alleging lax control over visitor access to sensitive areas and the casual recording of proceedings.

NA Speaker Ayaz Sadiq responded by directing members to strictly observe entry protocols, stressing that parliamentary rules were not optional etiquette but binding procedures requiring full compliance.

In a separate development, the House approved a motion moved by PTI acting chairman Barrister Gohar Ali Khan to restore PTI lawmaker Iqbal Afridi, ending his suspension.

Copyright Business Recorder, 2026

QUETTA: The Balochistan Assembly on Sunday approved the provincial budget for the 2026-27 fiscal year, clearing expenditure proposals worth total of Rs1.089 trillion.

During the session, lawmakers approved 98 demands for grants presented by Provincial Minister Mir Shoaib Nosherwani. The budget was passed after the assembly endorsed both development and non-development spending allocations for the coming financial year.

According to the approved budget, Rs291 billion has been allocated for development projects through 45 demands for grants. Meanwhile, 53 demands for grants amounting to Rs797.88 billion were approved for non-development expenditures.

READ MORE: Balochistan unveils surplus budget

The proceedings moved swiftly, with the assembly approving the high-value budget within approximately one hour of debate and consideration.

Notably, opposition members did not submit any cut motions seeking reductions in the proposed expenditures, allowing the demands for grants to pass without amendment.

The approval marks a significant step in finalising the province’s fiscal framework for the next financial year, with the government expected to focus on both development initiatives and the financing of routine administrative operations.

The Balochistan government on Wednesday unveiled a Rs1.089 trillion surplus budget for fiscal year 2026-27, increasing salaries and pensions of government employees by seven percent, expanding allocations for health and education, and announcing a series of tax relief measures without imposing any new taxes.

Provincial Finance Minister Mir Shoaib Nosherwani presented the budget in the Balochistan Assembly during a session presided over by Speaker Captain Abdul Khaliq Achakzai (retd). He said the budget reflected the government’s commitment to fiscal discipline, development and public welfare despite economic challenges.

The minister also claimed that 115 percent of the allocated development funds had been utilised during the outgoing fiscal year, describing it as the highest utilisation rate in the province’s history.

Nosherwani told the assembly that the total budget outlay for FY2026-27 had been fixed at Rs1,089.26 billion, while total revenues were estimated at Rs1,134.92 billion, creating a surplus of Rs45.66 billion.

He said the province expected to receive Rs800.13 billion through federal transfers, while revenue from provincial resources had been projected at Rs170.09 billion.

The government expects to receive Rs65.34 billion for foreign-funded projects, while project financing and capital receipts are estimated at Rs68.75 billion.

Cash carry-forward balances amounting to Rs30.61 billion will also contribute to provincial revenues. The finance minister said the positive balance between income and expenditure reflected prudent financial management and fiscal discipline.

The minister said Rs797.82 billion had been allocated for current expenditure during the next fiscal year.

Foreign-funded projects will account for Rs40.38 billion in spending, while federal development projects will receive Rs44.56 billion.

The Provincial Public Sector Development Programme (PSDP) has been set at Rs206.61 billion. According to budget documents, the overall development budget stands at Rs291.55 billion, including federal and foreign-funded projects, underscoring the government’s focus on infrastructure and public service delivery.

Providing relief to government employees, the provincial government announced a seven percent increase in salaries and pensions on the pattern of the federal government.

Nosherwani said the increase had been approved despite fiscal pressures and reflected the government’s commitment to supporting public servants amid rising living costs. The finance minister described the budget as a tax-free budget, emphasising that no new taxes were being imposed.

Instead, the government introduced several incentives aimed at encouraging investment and economic activity. Capital value tax and stamp duty on property transfers have been reduced from two percent to one percent. Sales tax on educational services has been reduced to zero percent, while taxes on new electric vehicles have been waived.

The government has also abolished sales tax on public transport and public property insurance. In addition, provincial taxes on foreign investment in export processing zones have been waived to attract industrial investment and stimulate economic growth. Education emerged as one of the largest recipients of public spending in the new budget.

The government has allocated Rs127 billion for school education and Rs31 billion for higher and technical education. Budget documents show that total spending on the education sector will reach Rs157.28 billion during FY2026-27. To support students from disadvantaged backgrounds, the government has earmarked Rs2.82 billion for the Balochistan Education Support Fund and Rs54 million for the Shaheed Benazir Bhutto Scholarship Programme. The finance minister said these initiatives were aimed at improving access to education and reducing barriers faced by deserving students.

The health sector also received a substantial increase in funding. Nosherwani announced an allocation of Rs96 billion for health services, including Rs6 billion for development schemes and Rs90 billion for non-development expenditure. The government has also added Rs1.5 billion to the Balochistan Health Card Programme to improve healthcare access for citizens. The minister said strengthening hospitals, expanding medical facilities and improving healthcare services remained among the government’s priorities for the coming fiscal year.

Maintaining law and order remains a major focus of the provincial government.

The finance minister proposed Rs243 million for development projects in the law and order sector and Rs1.2 billion for operational expenditure. Budget documents show that the broader law and order sector will receive Rs107.92 billion during FY2026-27, highlighting the government’s commitment to security and public safety.

Agriculture and allied sectors received significant allocations in the new budget. The agriculture sector has been allocated Rs23.6 billion overall, including Rs4.4 billion for development projects and Rs19.2 billion for non-development expenditure. The livestock sector will receive Rs1 billion for development activities and Rs8 billion for operational expenditure.

The Irrigation Department has been allocated Rs12.8 billion for development projects and Rs5.79 billion for non-development spending, while the drinking water sector will receive Rs7.6 billion for development projects and Rs12.4 billion for operational expenditure. The government said these allocations would support food security, agricultural productivity and access to water resources across the province.

The government has earmarked substantial resources for infrastructure development.

The Communications and Works Department will receive Rs27 billion for development projects and Rs20 billion for operational expenditure. The Transport Department has been allocated Rs1.5 billion for development schemes and Rs1.29 billion for non-development spending.

PESHAWAR: The Khyber Pakhtunkhwa government has earmarked Rs 524.3 billion under Annual Development Programme for the Fiscal Year 2026-27, including Rs 235 billion for settled areas with an increase of 21 percent.

For the settled tehsil, ADP budget was Rs 47 billion showing an increase of 21 percent and ADP of merged districts is Rs 34.8 billion with an increase of 13 percent.

A significant portion of the budget had been directed towards infrastructure and development initiatives, according to the budget documents.

The education sector had been allocated Rs 468 billion, while health has received Rs 334 billion, underlining continued investment in human capital.

For district governments, Rs 52.8 billion had been proposed, while Rs 29 billion had been allocated for merged tribal districts. Additionally, Rs 52 billion had been set aside under the Accelerated Implementation Programme (AIP), targeting faster execution of development schemes in sensitive regions.

Rs 524 billion had been proposed for the Annual Development Programme (ADP), while Rs 1.64 trillion had been earmarked for current expenditures.

An allocation of Rs 35 billion had been proposed for the merged tribal districts, reflecting continued focus on their development integration.

The government has proposed a 7 percent increase in salaries and pensions of government employees, along with an increase of Rs 5,000 in the minimum monthly wage, raising it to Rs 45,000.

For law and order, Rs 191 billion had been proposed, while Rs 200 million had been allocated for the Good Governance Roadmap initiative.

Sector-wise allocations include Rs 334 billion for health, Rs 468 billion for education, Rs 90 billion for local government, Rs 29 billion for home affairs, Rs 14 billion for transport, Rs 29 billion for agriculture, Rs 42 billion for energy, and Rs 28 billion for the Zakat Fund.

Under social protection initiatives, Rs 15 billion had been proposed for the Ehsaas Mustahiq Programme, Rs 50 billion for the Health Card Programme, Rs 2 billion for the Ehsaas Kisan Programme, and another Rs 2 billion for interest-free loans to facilitate overseas employment seekers.

Additionally, Rs 51 million had been allocated for self-reliance initiatives for minority communities.

For health infrastructure, Rs 80 billion had been proposed for MTI hospitals across the province.

In the development sector, Rs 36 billion had been allocated for the Peshawar Revival Programme, Rs 7.5 billion for the Peshawar Bus Rapid Transit (BRT) project, and Rs 4 billion for the Khushhal Hazara Programme.

The provincial government has also proposed Rs 2.5 billion for electric bikes and rickshaw schemes to promote eco-friendly transport.

The KP chief minister said that revenue performance had shown improvement, with Rs 102 billion collected in the first 10 months of FY2025–26, including Rs 69.7 billion in tax revenue and Rs 32.3 billion in non-tax revenue.

Copyright Business Recorder, 2026

ISLAMABAD: Minister of State for Finance and Revenue Bilal Azhar Kayani announced on Friday that approximately 3.5 million shopkeepers will be brought into the tax net during the fiscal year 2026-27 as part of the government’s efforts to broaden the tax base and enhance revenue collection.

The Minister expressed these views in the National Assembly debate on the federal budget 2026-27. He said the government’s economic policies are focused on strengthening the economy and promoting inclusive growth.

He said a new scheme had been introduced to bring small traders into the formal tax system.

He said that shopkeepers with annual sales of up to Rs20 million will pay a one percent tax through a simplified registration process, adding the government aims at bringing 3.5 million shopkeepers into the tax net.

Highlighting relief for salaried individuals, he said income tax rates had been reduced across several income slabs, adding the tax rate for annual incomes between Rs2.2 million and Rs2.3 million was reduced from 23 percent to 20 percent, while rates for higher income groups were also lowered.

He said that for those earning Rs3.2 to Rs4.1 million, the rate was reduced from 30 percent to 25 percent, while for income between Rs4.1 to Rs5.6 million it was reduced from 35 percent to 29 percent. For those earning Rs5.6 million to Rs7 million, the rate was cut from 35 percent to 32 percent. He also said the super tax had been abolished.

He congratulated Prime Minister Shehbaz Sharif, Field Marshal Syed Asim Munir, and the economic team for improving Pakistan’s economic position and international standing.

Describing the budget as people-friendly, Kayani said it provides relief to various sectors of society. He recalled that when the government assumed office in February 2024, the economy was facing serious challenges and uncertainty. However, under the PM’s leadership, economic stability was restored, inflation was brought down, foreign exchange reserves increased, and the IMF programme was completed, he said.

He said the government achieved all fiscal targets during FY2025 without introducing any supplementary or mini-budget.

Kayani said exporters had been granted tax relief to enhance competitiveness, while tax incentives for the IT sector had been extended for another three years. Measures were also introduced to support the construction sector, including subsidised housing loans under the Apna Ghar Scheme, he said.

He said Rs300 billion had been allocated for agriculture, along with Rs110 billion under the PM’s Agriculture Youth Initiative, adding customs duty on agricultural machinery has also been abolished to support farmers.

Copyright Business Recorder, 2026

ISLAMABAD: The National Assembly erupted into a heated budget debate on Friday as lawmakers tore into the federal budget 2026-27, demanding tougher relief for salaried class and struggling low-income families battered by soaring inflation.

While criticism dominated much of the budget debate, the government stood its ground, describing the financial plan as tightly constrained yet broadly balanced within the country’s difficult macroeconomic environment.

Taking part in the ongoing budget debate, senior Pakistan People’s Party (PPP) leader and former prime minister Raja Pervaiz Ashraf set the tone for the day’s deliberations by declaring the proposed 7 per cent salary increase for government employees “wholly insufficient.”

He argued that, given the current cost-of-living pressures, salaries should have been raised by at least 10 per cent to meaningfully offset inflationary shocks hitting public sector households.

Ashraf drew a comparison with the PPP’s previous tenure, recalling that salaries had once been raised by as much as 50 per cent despite economic strain.

He implied that bold fiscal decisions were still possible if there was political will. Beyond the numbers, he stressed that economic recovery could not be achieved in isolation from political stability, continuity of policy, and national consensus.

Without these, he warned, even well-designed budgets risked falling short of their goals.

Urging restraint in political rhetoric, he cautioned that polarising narratives were undermining economic confidence.

Turning to recent developments in Azad Jammu and Kashmir (AJK), he described the situation as “deeply distressing,” though he noted that negotiations had produced substantial progress following directives from the prime minister.

According to him, nearly 80 per cent of the demands raised had been addressed, including subsidised electricity at Rs3 per unit and relief on flour prices.

However, he acknowledged that sensitive issues – particularly those relating to refugee representation – remained unresolved.

He called for continued dialogue through a newly constituted negotiation committee while emphasising that “state red lines” could not be crossed.

Adding a different dimension to the debate, PPP MNA Nafisa Shah highlighted the country’s recent diplomatic outreach, suggesting that renewed international engagement had helped improve the country’s global standing.

She linked expanding ties with Gulf nations to the long-term vision of former prime minister Zulfikar Ali Bhutto, arguing that such relationships could serve as a stabilising force for the economy.

At the same time, she urged the government to reduce dependence on International Monetary Fund (IMF) programmes, calling instead for a strategic pivot towards domestic productivity.

Under the “Uraan Pakistan” framework, she emphasised agriculture and industry as the twin engines of growth.

Describing agriculture as the backbone of the economy, she called for urgent relief for farmers and the removal of structural bottlenecks hindering exports, warning that such constraints were continuing to strain foreign exchange reserves.

From the opposition benches, Pakistan Tehreek-e-Insaf (PTI) MNA Muhammad Nawaz offered a sharply critical assessment, arguing that the budget provided little tangible relief to ordinary citizens already burdened by inflation.

While advocating for national unity, he pointed to what he described as stagnation in development initiatives in Battagram, citing delays in a grid station project and key road infrastructure schemes.

He urged greater investment in tourism and forest conservation as potential avenues for job creation and local economic development.

Separately, Ejazul Haq of PML-Z questioned the government’s growth assumptions, stating that the projected 4 per cent GDP growth rate was insufficient to address rising unemployment and entrenched poverty.

He argued that the country required sustained growth in the range of 6 to 7 per cent to produce meaningful improvements in living standards.

Responding on behalf of the government, Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry defended the budget, stating that it had been prepared after extensive consultations with stakeholders and reflected prevailing fiscal constraints.

He described it as the “best possible” financial plan under current economic realities, while assuring lawmakers that viable proposals from both treasury and opposition benches would be considered.

He also revealed that the prime minister would soon meet opposition leaders to further address their concerns.

Other legislators who took part in the budget debate included Arshad Abdullah, Nosheen Iftikhar, Nafisa Shah, Naseer Ahmed Abbas, Khurram Manj, Sanjay Perwani, Dr Darshan, Zubair Khan, Hafeez-ur-Rehman Drishak, Muhammad Shahbaz Babar, Fazal Muhammad Khan, Shamsher Ali Mazari, Rana Iradat Sharif, Muhammad Saad Ullah, Malik Asad Sikandar, Zulfiqar Ali Bhatti, Babar Nawaz, Rabia Naseem Farooqi, Muhammad Khan Daha, and Ahmad Raza Maneka.

Meanwhile, official data presented before the House showed that 206 members participated in the six-day budget debate, which stretched across nearly 48 hours of discussion.

Treasury lawmakers spoke for 29 hours and 23 minutes, while the opposition contributed 18 hours and 16 minutes, underscoring the intensity and breadth of the proceedings that marked the budget session.

Copyright Business Recorder, 2026

PESHAWAR: Khyber Pakhtunkhwa government has set a massive revenue collection target Rs182.41 billion for the next fiscal year 2026-27, with 41.4 percent increase as compared to outgoing the financial year.

In the outgoing fiscal year, the revenue collection target was estimated at Rs129,000 million, including Rs83,500 million on tax and Rs45,500 million non-tax revenues, according to a finance bill approved by the provincial cabinet during its meeting, chaired by Chief Minister Muhammad Sohail Afridi here on Friday.

The meeting approved all proposals presented before the provincial cabinet.

The Finance Bill accompanying the budget proposes several new taxes and compliance measures.

Under the proposed legislation, taxes will be imposed on leased properties of Auqaf lands, while a new tax has been introduced on five-marla residential houses.

Amendments to the Motor Vehicles Act, 1958, introduce revised taxation rates for commercially operated vehicles.

Rickshaws will be taxed at Rs1,000 annually, four-seater vehicles at Rs1,500, and six-seater vehicles at Rs2,000.

For larger public transport vehicles, the bill proposes an annual tax of Rs400 per seat for 15-seater vehicles and Rs500 per seat for vehicles with more than 15 seats.

In the hospitality sector, hotels will be required to pay a 5 percent tax based on annual room capacity and actual occupancy.

Hotels without a point-of-sale (POS) system will be assessed on the basis of 50 percent occupancy of residential units and 10 percent of actual room rent.

The Finance Bill also introduces stricter enforcement measures for tax compliance.

Individuals who fail to file tax returns by the prescribed deadline will face penalties and additional surcharges.

A minimum fine of Rs400,000 has been proposed for those who fail to register before providing taxable services.

Those who fail to register within 90 days of providing taxable services could face up to one year in prison, a fine equal to the tax payable, or both.

Additional penalties include a Rs25,000 fine for unauthorised changes to registration details and a daily penalty of Rs300 for late filing of tax returns.

The bill further proposes a Rs500,000 fine, or a penalty equal to 5 percent of the tax amount, for failing to install a restaurant invoice management system.

Copyright Business Recorder, 2026

KARACHI: The Karachi Council on Foreign Relations (KCFR) hosted a seminar at a local hotel, bringing together leading economists, policymakers, and experts for an in-depth discussion of the Federal Budget 2026–2027.

The seminar featured distinguished speakers including Ikram Sehgal Defense Analyst, and Chairperson KCFR Nadira Panjwani, Dr Kaiser Bengali, Dr Khaqan Hassan Najeeb, along with other prominent economists and policy experts.

The session focused on assessing the government’s fiscal priorities, economic challenges, and the broader socio-economic impact of the upcoming budget.

Speakers highlighted key concerns, including persistent inflation, challenges in tax collection, and the need for structural tax reforms to strengthen fiscal sustainability. Discussions also examined the government’s efforts to provide relief to citizens while managing economic stabilization.

A key focus of the seminar was budgetary allocations for education, health, and infrastructure, particularly amid rising debt-servicing obligations and IMF-related fiscal constraints. Participants also evaluated the budget’s impact on middle- and low-income groups, particularly inflation and cost-of-living pressures.

The dialogue further explored revenue-generation measures and whether they promote economic documentation and growth or create challenges for businesses. Opportunities and constraints for entrepreneurs, SMEs, and technological adoption were also discussed.

The seminar concluded that while the budget presents certain avenues for reform and growth, significant challenges remain in ensuring inclusive development and meaningful relief for vulnerable segments of society.

The KCFR reiterated its commitment to fostering informed dialogue on national and international policy issues through such engagements.

Copyright Business Recorder, 2026

PESHAWAR: The government of Khyber Pakhtunkhwa has presented an annual budget of Rs2.17 trillion for financial year 2026-27 with an estimated deficit of Rs48 billion, comprising current expenditure of Rs1.65 trillion and development expenditure of Rs524.3 billion.

Chief Minister Khyber Pakhtunkhwa Muhammad Sohail Afridi who also holds the portfolio of the finance presented the budget 2026-27 in the provincial assembly here on Friday.

Speaker KP Assembly Babar Saleem Swati was presiding the proceeding of the house.

Out of total current budget, Rs1.47 trillion allocated to settled districts whereas Rs179.9 billion to Merged Districts. The salaries will cost an amount of Rs53.8 billion and another amount of Rs684.9 billion allocated for non-salary expenses and while the payment of pension to retired government employees cost Rs207.1 billion.

To strengthen fiscal sustainability and reduce reliance on external resources, Provincial Own Source Revenue (OSR) has been budgeted at Rs182.4 billion for FY 2026-27, up from Rs129 billion for FY 2025-26.

The receipt includes the collection of Rs80 billion through Khyber Pakhtunkhwa Revenue Authority (KPRA), other tax receipts of Rs35.9 billion and Non-tax receipts of Rs66.5 billion.

Federal tax assignments are estimated at Rs1.24 trillion, war on terror receipts Rs149.1 billion, straight transfers Rs53.6 billion, windfall levy Rs24.9 billion and receipts from Net Hydel Profits at Rs116.8 billion.

Under the foreign project assistance (FPA), the province will receive an estimated amount of Rs150 billion.

Health, education, and security continue to receive the largest share of the budget, accounting for nearly 50 percent of total spending, reflecting the Government’s priority on human development, service delivery, and peace and security.

Key flagship allocations include Sehat Card Programme, Medical Teaching Institutions, and Social Safety Net programmes, alongside funding for food security, medicines, public sector universities, public transport, police modernisation, support for Temporarily Displaced Persons, and the Good Governance Roadmap.

To strengthen public finances and build resilience against future shocks, the KP Government introducing reforms including the establishment of a Khyber Pakhtunkhwa Takaful Insurance Company, a Disaster Risk Management Fund, a strengthened Debt Management Fund, and improved cash, investment, and fiscal risk management.

The Merged Districts remain a major priority, with a total allocation of Rs272.8 billion, comprising Rs179.9 billion for current expenditure and Rs92.9 billion for development, to support service delivery, infrastructure, social programmes, and economic opportunities.

Copyright Business Recorder, 2026

ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb is set to present expenditures amounting to Rs40.742 trillion, charged to the Federal Consolidated Fund, in the National Assembly today (Saturday), after his winding-up speech on the Budget 2026–27.

According to the order of the day, the minister will also present the recommendations made by Senate during his winding-up speech on federal budget 2026–27.

The minister will also present the Rs40.742 trillion expenditures charged upon the Federal Consolidated Fund, included in the demands for grants and appropriations for the financial year ending June 30, 2027, before the house for discussion.

The breakdown includes Rs6.983 trillion for servicing of domestic debt – Rs25.992 trillion for repayment of domestic debt, Rs1.071 trillion for servicing of foreign debt, Rs5.836 trillion for repayment of foreign loans, and Rs5 million for Pakistan Post Office Department.

Other allocations include Rs6.936 billion for superannuation allowances and pensions – Rs57 billion for grants, subsidies and miscellaneous expenditure, Rs500 million for foreign missions, Rs539.407 million for the Law and Justice Division, Rs7.969 billion for the National Assembly, and Rs6.453 billion for the Senate.

The breakdown also includes Rs607.309 billion for external development loans and advances by the federal government, Rs963.799 million for staff household and allowances of the President (public), Rs1.837 billion for staff household and allowances of the President (personal), and Rs130.292 billion for repayment of short-term foreign credits.

Additional allocations include Rs9.820 billion for audit, Rs7.441 billion for the Supreme Court, Rs6.048 billion for the Federal Constitutional Court of Pakistan, Rs2.367 billion for the Islamabad High Court, and Rs10.578 billion for election-related expenditure.

Further allocations include Rs258.541 million for the Federal Ombudsman Secretariat for Protection against Harassment of Women at the Workplace, Rs2.124 billion for the Wafaqi Mohtasib, and Rs645.572 million for the Federal Tax Ombudsman.

Copyright Business Recorder, 2026

EDITORIAL: The latest Pakistan Economic Survey 2025-26 presents a disturbing picture of the country’s public health landscape. While the government points to modest improvements in some indicators, a comparison with South Asian averages shows that Pakistan continues to lag behind its regional peers on several critical measures.

More worrying is that these gaps persist despite repeated warnings from health experts and development practitioners about the consequences of chronic under-investment in the health sector.

The survey’s statistics are sobering. Pakistan’s life expectancy at birth stands at 67.8 years, nearly five years below the South Asian average of 72.6 years.

Maternal mortality remains alarmingly high at 155 deaths per 100,000 births, compared to 120 in the region, while the infant mortality rate is more than double the regional average, pointing to serious deficiencies in maternal and child healthcare services.

Equally troubling are the levels of undernutrition and stunting, which continue to affect millions of children and undermine their physical and cognitive development. These challenges are compounded by the country’s comparatively high birth rate.

Rapid population growth places immense pressure on already overstretched health, education and social welfare systems. Without effective family planning services and greater investment in reproductive health, Pakistan risks falling even further behind its neighbours in human development outcomes.

The government’s economic managers frequently cite fiscal constraints to justify limited social-sector spending. Yet the real issue is one of priorities.

Countries that have made significant gains in health outcomes have done so by treating healthcare as an investment rather than expenditure. As a matter of fact, better health produces a more productive workforce, reduces poverty and lowers long-term pressures on public finances.

Pakistan’s health indicators are not merely statistics; they reflect the lived realities of millions of citizens. Unless health — alongside education — is placed at the centre of national development planning and supported by substantially greater public investment, the country will continue to pay a heavy economic and social price for this neglect.

Copyright Business Recorder, 2026