Pakistan Budget 2025–26 Unveiled: Comprehensive Breakdown & Major Announcements
The Pakistan Budget 2025–26, passed on June 10, marks a defining moment for the nation. In the face of economic challenges and growing public concern, this budget speaks to resilience, tough decisions, and a vision for a stronger future. With a focus on fiscal discipline, defense preparedness, and economic revival, this budget reflects both the challenges and strategic priorities of the country. In this article, we’ll break down what the Pakistan Budget 2025–26 really means for the people and the path ahead.
Total Budget Size and Fiscal Goals
The total size of the Pakistan Budget 2025–26 has been set at Rs 17.6 trillion, which is a slight reduction compared to last year’s Rs 18.9 trillion. This cut reflects the government’s focus on reducing the fiscal deficit, which is targeted at 4.8% of GDP, down from 5.9% in the previous year.
The government has committed to strict spending controls and is focusing on domestic revenue mobilization to keep borrowing in check and stay aligned with IMF loan conditions.
Major Boost in Defense Budget Reflects National Priorities
One of the most notable features of the Pakistan Budget 2025–26 is the 20% increase in defence spending, rising to approximately Rs 2.55 trillion. This decision comes amid heightened regional security tensions, and reflects the government’s priority to enhance national defense capabilities.While this move has generated debate, officials emphasize it as necessary for maintaining strategic balance and ensuring security readiness in the current geopolitical climate.
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Tax Collection and Revenue Targets
- In the Pakistan Budget 2025–26 the government aims to meet its financial needs through improved tax collection rather than new taxes.
- Federal Board of Revenue (FBR) Target: Total tax revenue goal: Rs 14.13 trillion , Direct taxes: Rs 6.9 trillion ,Indirect taxes: Rs 7.23 trillion
- Non-Tax Revenue: Expected non-tax revenue: Rs 5.17 trillion ,Major sources include petroleum levies, gas surcharges, and State Bank profit transfers
Relief from New Taxes, but Strict Tax Enforcement Ahead
While the government did not announce any major new taxes in the Pakistan Budget 2025–26, it has emphasized increased enforcement, especially through:
- Digital invoicing systems
- AI-based tax audits
- Tracking of large transactions
- E-commerce monitoring
This reflects the broader goal of raising the tax-to-GDP ratio, currently under 9%, with a medium-term target of 10% or more.
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Development Budget and Public Sector Investments
- The government has allocated Rs 1 trillion for the Public Sector Development Program (PSDP) in Pakistan Budget 2025–26.Major focus areas include Water resources and dams , National highways and roads , Energy and power sector modernization , Education and health infrastructure . Out of the total PSDP allocation, Rs 682 billion will be used by federal ministries and divisions for priority projects.
Debt Servicing and Pension Obligations
- A major chunk of the Pakistan Budget 2025–26 will go toward interest payments and debt servicing, which have been set at Rs 8.2 trillion.
- Additionally: Pensions: Rs 1.05 trillion , Subsidies and grants: Over Rs 3 trillion (combined)
- These figures highlight the significant pressure of non-development expenditures on the national budget, reducing the space available for new investments.
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📈 Economic Prospect for 2025–26
Despite global and regional challenges, the government has projected a GDP growth target of 4.2% for the coming year. The inflation rate is also expected to decline gradually and hover around 4.7%, offering some relief to the public.
Key factors contributing to the positive outlook include:
- Stabilization of the exchange rate
- Improvement in energy availability
- Government’s fiscal tightening measures
- Increase in exports and remittances
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Pakistan Budget 2025–26 Summary
| Category | Amount/Detail |
| Total Budget Size | Rs 17.6 trillion |
| Defense Allocation | Rs 2.55 trillion |
| Fiscal Deficit Target | 4.8% of GDP |
| FBR Tax Revenue Target | Rs 14.13 trillion |
| Non-Tax Revenue | Rs 5.17 trillion |
| PSDP Allocation | Rs 1 trillion |
| Interest Payments | Rs 8.2 trillion |
| Growth Target | 4.2% |
| Inflation Projection | ~4.7% |
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❓Frequently Asked Questions (FAQs) – Pakistan Budget 2025–26
Conclusion
The Pakistan Budget 2025–26 reflects Pakistan’s effort to tighten its financial management while responding to emerging challenges at home and abroad. With a stronger focus on security, revenue generation, and digital reforms, the government aims to balance short-term constraints with long-term goals.
Although development spending has been modest, the drive for improved tax enforcement, targeted subsidies, and national stability offers a foundation for sustainable economic recovery.
