In a significant structural shift, Finance Minister Muhammad Aurangzeb has confirmed that the formulation of Pakistan’s federal budget will no longer be the responsibility of the Federal Board of Revenue (FBR). Instead, the authority has now been transferred to the Finance Division, marking a major institutional change in how the country’s fiscal policies will be developed.
Speaking at a workshop titled “Unlocking Capital Market Potential for Banks,” organized by the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Banks Association (PBA), Aurangzeb stated that the “tax policy office is now moved into the Finance Division. FBR has nothing to do with the policy. The next year’s budget to be presented in 2026 (for FY27) will be led by the finance and tax policy office and not by FBR.”
The move is being viewed as part of the government’s broader agenda to separate tax policy from tax administration, a long-debated reform aimed at increasing efficiency, improving transparency, and ensuring consistency in fiscal planning. While the FBR will continue to focus on tax collection, the Finance Division will take ownership of policy design and execution.
Beyond budgetary reforms, the finance minister highlighted the government’s focus on introducing an industrial policy aimed at creating an enabling environment for businesses and accelerating industrialization. He credited Haroon Akhtar, Special Assistant to the Prime Minister, for working intensively to finalize the draft policy and secure cabinet approval. According to Aurangzeb, the new framework will play a critical role in shifting Pakistan’s economy from short-term stability to sustainable growth.
The finance minister further pointed out that the government has already rolled out policies in several areas, including tariffs, electric vehicles, digital transformation, and the development of a cashless economy. These efforts, he said, reflect the government’s ambition to build a strong and future-oriented economic foundation.
On the subject of tariff reforms, Aurangzeb explained that reducing customs duties, additional customs duties, and regulatory duties over the next four to five years is essential to improving export competitiveness. He emphasized that this reform is home-grown and not linked to the International Monetary Fund (IMF), though institutions like the World Bank have supported the government’s efforts.
“There has been resistance from both the finance ministry and FBR, with concerns that revenue collection will decline if duties are reduced. But we have to get out of short-term thinking and focus on what is right for the economy in the next four to five years,” Aurangzeb remarked. He stressed that protectionist policies had limited industrial competitiveness for too long, and lowering trade barriers is necessary to open new growth opportunities.
The minister also expressed concern that the corporate sector was notably absent from the workshop, despite its critical role in capital market development. He proposed forming a capital market development council comprising SECP, the State Bank of Pakistan, PBA, corporations, insurers, and provincial representatives. Such a body, he said, could help mobilize funds through domestic capital markets, particularly via the Pakistan Stock Exchange (PSX), to support sustainable economic growth.
Aurangzeb’s remarks highlight a broader strategy: shifting Pakistan’s financial system towards efficiency, competitiveness, and integration. With budgetary responsibility now in the hands of the Finance Division and reforms underway in tariffs and industrial policy, the government appears intent on rethinking the country’s fiscal and economic direction.