Pakistan has officially presented its federal budget for the fiscal year 2025-26 in the National Assembly, setting total expenditures at over 17 trillion Pakistani rupees. This budget reflects the government’s efforts to stabilize the economy, prioritize development projects, and enhance public welfare programs amid ongoing financial challenges.

Overview of the Budget

The federal budget estimates total expenditures at approximately 18.9 trillion rupees, with expected revenues around 17.8 trillion rupees. The revenue projection includes approximately 12.97 trillion rupees from the Federal Board of Revenue (FBR) and about 4.8 trillion rupees from non-tax sources. Despite these ambitious targets, the government anticipates a budget deficit equivalent to roughly 5.9% of the country’s GDP.

A significant portion of the funds — around 7.4 trillion rupees — is allocated for provincial governments, emphasizing the federal structure and attempts to address regional developmental needs. The government expects a modest economic growth rate of 3.6% and forecasts inflation to hover around 12% for the fiscal year.

Key Highlights and Allocations

One of the most critical elements of this budget is the substantial increase in government employees’ salaries and pensions. Employees in grades 1 to 16 are slated to receive a 25% raise, while those in grades 17 to 22 will see a 20% increase. Additionally, retired government employees will benefit from a 15% rise in pensions. The minimum wage for workers has also been raised from 32,000 to 37,000 rupees, aiming to alleviate the pressure of rising inflation on low-income earners.

The budget significantly boosts funding for social welfare programs. The flagship Benazir Income Support Program (BISP) has received a 27% budget increase, raising its allocation to 593 billion rupees. Moreover, the number of beneficiaries will be increased from 9.3 million to 10 million, reflecting the government’s commitment to supporting vulnerable populations.

Education has also been a focus area, with the budget allocating funds to extend scholarships to an additional one million students, bringing the total number of beneficiaries to 10.4 million. This move aims to improve educational accessibility and encourage higher enrollment rates.

Development and Infrastructure

Pakistan’s development agenda receives strong support in this budget, with a total allocation of 824 billion rupees for various development projects. The energy sector alone is set to receive 253 billion rupees to enhance power generation and infrastructure. A notable project is the 1,200 megawatt Jamshoro Power Plant, which has been allocated 21 billion rupees to boost energy capacity.

Transport and communication sectors are also prioritized, with 279 billion rupees earmarked for infrastructure improvements, including roads, highways, and communication networks. Water resource projects receive 206 billion rupees, addressing the country’s critical needs in irrigation, flood control, and water conservation.

Science and technology have not been neglected, as the government has dedicated 79 billion rupees to these sectors. This includes 7 billion rupees targeted for the digitization and reform efforts of the Federal Board of Revenue, underscoring the importance of modernizing tax collection and administration.

Defense Budget

The defense sector has seen an increase in its budget allocation, with 2.1 trillion rupees designated for defense expenditures — a 15% rise compared to the previous fiscal year. This increase aligns with Pakistan’s strategic priorities and ongoing security requirements.

Economic Context and IMF Negotiations

This budget comes at a critical juncture for Pakistan, as the country negotiates with the International Monetary Fund (IMF) for financial support. The government’s strategy focuses on achieving economic stability by increasing tax revenues, reducing subsidies, and ensuring efficient use of development funds.

The government’s efforts to broaden the tax base and improve tax compliance are reflected in the ambitious revenue targets for the Federal Board of Revenue. Furthermore, reforms in tax administration and digitization aim to curtail tax evasion and enhance collection efficiency.

The budget also acknowledges the challenges posed by inflation and fiscal deficits, and the government has pledged to adopt prudent fiscal management practices to contain the budget deficit and promote sustainable growth.

Social Welfare and Public Services

The enhanced allocations for social welfare programs, including the BISP and educational scholarships, indicate the government’s focus on addressing poverty and inequality. By expanding these programs, Pakistan aims to improve the living standards of marginalized communities and provide greater opportunities for education and social mobility.

The increase in salaries and pensions for government employees reflects an attempt to boost domestic consumption, stimulate economic activity, and offset the rising cost of living. However, these increases will need to be balanced against fiscal constraints and the broader goal of maintaining macroeconomic stability.

Challenges and Outlook

Despite the comprehensive nature of the budget, Pakistan faces several challenges ahead. The ambitious revenue targets will require effective implementation of tax reforms and improved enforcement. Inflationary pressures, coupled with global economic uncertainties, may also impact economic growth and fiscal stability.

Moreover, the government must carefully manage expenditures to avoid widening the fiscal deficit, which currently stands at a concerning level. Success in securing and complying with IMF conditions will be vital to restoring investor confidence and accessing international financial support.

Conclusion

Pakistan’s new budget for fiscal year 2024-25 represents a delicate balancing act between stimulating growth, supporting vulnerable populations, and maintaining fiscal discipline. With total expenditures exceeding 17 trillion rupees, the government is signaling its commitment to addressing key economic and social challenges.

While the road ahead is fraught with difficulties, including inflation, fiscal deficits, and external debt pressures, the budget lays out a roadmap aimed at economic stabilization, development, and social welfare enhancement. The success of this plan will depend heavily on efficient implementation, sound fiscal management, and continued reforms to boost revenue generation and reduce inefficiencies.

Reference:  نئے مالی سال کا 17 ہزار ارب روپے سے زائد کا بجٹ قومی اسمبلی میں پیش