Government to reveal a budget of PKR 17.6 trillion for FY26 in the National Assembly today.
Breaking: Aurangzeb to Unveil Nearly Rs18T Budget Today
Prepare yourself, folks! The much-anticipated budget for the upcoming fiscal year 2025-26 is set to be presented today by our Minister of Finance, Muhammad Aurangzeb. The National Assembly will convene at 5pm, with the budget session presided over by Speaker Ayaz Sadiq.
As we dive into the details, the budget, estimated at approximately Rs17.6 trillion, shows a slight dip compared to last year's Rs18.78 trillion. Despite this diminution, the Federal Board of Revenue (FBR) has been tasked with collecting an impressive Rs14.02 trillion in taxes, smashing last year's revised estimates of Rs12.33 trillion. The challenging goal of Realizing Rs12.33 trillion by June 30, 2025 is, however, a tough nut to crack.
The Ministry of Finance has tabled proposals for increases in pay and pension for public sector employees, with a projected hike in the range of 7.5% to 10%. Additionally, Disparity Allowance, aimed at grade 1 to 16 employees, is expected to be provided, amounting to up to 30%.
Turning to the revenue side, the FBR's target tax collection expectation is projected at a formidable Rs14.2 trillion while the projected non-tax revenue could stand between Rs4 trillion to Rs4.5 trillion.
Providing nearly 60% of the federal divisible pool (FDP) under the National Finance Commission (NFC) Award, the provinces are expected to secure about Rs8 trillion in the upcoming budget. As a result, the Centre will be left with the revenues of Rs6 trillion and non-tax revenues of Rs4 or Rs4.5 trillion.
The government will require budget deficit financing of Rs6 to 7 trillion to keep the deficit within manageable limits. Concurrently, the provinces are expected to generate a revenue surplus to reduce the overall consolidated budget deficit under the International Monetary Fund (IMF) program.
Crucially, the defence budget for 2025-26 is envisaged at a staggering Rs2.55 trillion. Compared to the last budget, the markup payments are set at Rs8.2 trillion, while pension, subsidy, and grants stand at Rs1.05 trillion, Rs1.186 trillion, and Rs1.9 trillion respectively. The Public Sector Development Programme (PSDP) is slated for Rs1 trillion.
While the budget debate will start from the 13th of June, all parliamentary parties in the National Assembly will engage in the discussion in accordance with Assembly rules and procedures. The budget session will continue until the 25th of June, with voting on Demands for Grants and Cut Motions scheduled on the 24th and 25th of June.
Insights: The budget, set at Rs17.6 trillion, targets economic growth of 4.2%, with a significant increase in the defence budget (20% to Rs2.55 trillion) and the PSDP allocated at Rs1 trillion. Public sector employees expect salary hikes, especially in the range of 7.5% to 10%. The tax-to-GDP ratio aims to reach 14%. The FBR faces a tax gap of approximately Rs5.5 trillion. Indirect taxes, such as sales taxes, federal excise duties, and custom duties, show substantial growth, with sales taxes projected to rise by over 19%.
- The upcoming budget, worth nearly Rs18 trillion, is not only a crucial financial event for businesses but also a topic of general news as it will affect the overall economic landscape.
- In finance, the Federal Board of Revenue (FBR) has been given a challenging target to collect Rs14.02 trillion in taxes, which is an increase from last year's revised estimates.
- Politics plays a significant role in the budget process, as parliamentary parties will engage in discussions about the budget in accordance with Assembly rules and procedures.
