Islamabad: The Federal Budget for 2025-26 is set to be presented today with an expected deficit of approximately 6,000 billion PKR. After accounting for provincial surpluses, the overall budget deficit is expected to be around 5,000 billion PKR, with the total federal budget exceeding 17,500 billion PKR.
A proposed 20% increase in the defense budget is under consideration, along with the allocation of 1,000 billion PKR for the Federal Development Program and a proposed 1,367 billion PKR for subsidies.
The National Assembly's budget session will be held today at 5 PM, chaired by Speaker Ayaz Sadiq. During this session, Finance Minister Mohammad Aurangzeb will present the federal budget for 2025-26, along with tax documents and the Finance Bill 2025.
Key proposals include a potential 10% increase in the salaries and pensions of government employees, with a suggested rise in the minimum wage as well. Moreover, stricter measures are expected for non-filers, and steps may be introduced to discourage cash purchases of petroleum products, with an additional tax proposed on all types of cash purchases.
The budget also includes proposals to increase the petroleum levy and impose a carbon levy. Additionally, a tax is being considered on digital services. The budget suggests increasing the Federal Excise Duty (FED) on fertilizers from 5% to 10% and imposing a 5% FED on agricultural chemicals.
The budget also proposes changes to the duties on imported vehicles and an increase in withholding tax on income earned from interest. The expenditure on debt servicing is estimated to exceed 8,000 billion PKR, while emergency expenditures may be allocated over 300 billion PKR.
Other proposed measures include imposing a 5% excise duty on frozen foods, chips, cold drinks, noodles, ice cream, biscuits, frozen meat, sauces, and ready-made food items. An 18% sales tax on e-commerce is also being considered.
For the upcoming fiscal year, the economic growth target is set at 4.2%, with a total investment target of 14.7%. The inflation target for the year is set at an average of 7.5%.
In terms of development, the budget proposes allocations for energy projects (144 billion PKR), transport and communications (332 billion PKR), water projects (109 billion PKR), and special areas like Azad Kashmir and Gilgit-Baltistan (63 billion PKR). A climate change development budget of 278.4 million PKR is also proposed.
Key infrastructure projects include the construction and repair of the Kalari feeder (947 million PKR), the Greater Karachi Water Supply Phase I (821 million PKR), the Dauso Hydro Power Project Phase I (2 billion PKR), and the Mangla Dam Power Station upgrade (500 million PKR). Furthermore, 3.5 billion PKR has been earmarked for the Diamer-Bhasha Dam and 3.57 billion PKR for the Munda Dam.
The federal government also plans to establish a Special Economic Zone on the land of Pakistan Steel Mills, with an allocation of 500 million PKR. Additionally, the budget proposes increasing reliance on indirect taxes, with a target of 9,723 billion PKR for indirect taxes. An allocation of 23 million PKR is also suggested for the establishment of an academy named after Pakistani athlete Arshad Nadeem.
This federal budget is crucial in shaping Pakistan’s fiscal policy for the upcoming year, addressing various sectors with a mix of developmental and revenue-generating proposals.
