Finance Minister Muhammad Aurangzeb today addressed a post-budget press briefing, offering an in-depth view of Pakistan’s fiscal direction for the 2025–26 financial year. He elaborated on the recently unveiled Rs17.57 trillion federal budget, defining it as a foundational blueprint for transforming Pakistan into a competitive, export-driven economy.
The session began on a rocky note when journalists briefly walked out in protest over the absence of the customary Federal Board of Revenue (FBR) technical briefing. Despite the initial tension, Aurangzeb took the stage to frame the budget as a transformative agenda, declaring that it seeks to change the “DNA” of Pakistan’s economic structure.
Aurangzeb highlighted several macroeconomic targets: aiming for 4.2% GDP growth, slashing federal expenditures by 7%, reducing the fiscal deficit from 5.9% to 3.9% of GDP (Rs5,037 billion), and containing inflation at 7.5%. He also underscored relief measures for the salaried class as a key feature, reinforcing the budget’s people-centric design.
One of the most significant policy shifts announced was sweeping tariff reform. Customs duties on 4,000 out of 7,000 tariff lines have been removed. The minister emphasized that this reform, the first in over three decades, will streamline trade and bolster industrial output—a move he termed overdue and crucial for export competitiveness.
On tax policy, Aurangzeb stated that Pakistan’s tax-to-GDP ratio stands at 10.3%, with an ambitious target of 10.9% for FY26. Of the Rs2.2 trillion revenue target, only Rs312 billion comprises new taxes; the rest is expected from stronger enforcement—a strategy that has already yielded Rs400 billion this year. A key enforcement measure under review would empower regulators to financially restrict non-filers, effectively barring them from the formal financial system.
Aurangzeb also disclosed sector-specific relief: farmers will have affordable access to fertilizer and pesticide inputs, free from new taxes—a concession secured after discussions with the International Monetary Fund. He said this, along with provincial partnerships, will underpin agriculture and livestock sector growth, including easier credit for small farmers.
Public and private sector salary and pension adjustments will now benchmark against inflation, reflecting international best practices. Aurangzeb described this as necessary to retain purchasing power and maintain living standards, while managing fiscal constraints responsibly.
Acknowledging that the budget relies on borrowing, Aurangzeb was frank: “Our budget starts with a deficit.” He defended the borrowing as essential for public services, while promising tighter controls to curb unsustainable debt growth.
In response to criticism about rising federal expenditures, he stated that spending rose just 1.9% last year, with subsidies and debt servicing curtailed. Non-developmental expenses were frozen to just 2%, demonstrating fiscal discipline.
Aurangzeb also pledged to bring Pakistan’s vast Rs9.4 trillion in cash transactions into the documented economy. He called out weak enforcement of existing tax laws and pledged structural fixes. “We have laws and taxes, but enforcement has been the missing link. That’s what we’re fixing now,” he said, accepting that real results will take time.
The FBR elaborated on amplified oversight for non-profit organizations under Section 42, warning that status would no longer be granted automatically. NGOs must now prove non-commercial operations, as improved classification systems roll out.
On the National Finance Commission Award, Aurangzeb assured provinces that any updates—like decoupling population metrics—would only proceed after full dialogue, not unilateral action.
Highlighting the country’s digital economy breakthroughs, he noted Pakistan’s freelancers earned $400 million last year. Raising their hourly rates from $8–10 to $100 will require investment in tech education and supportive regulation—goals the budget seeks to address.
The minister also tackled energy and green finance. Contract revisions have been finalized to reduce circular debt in the power sector. On solar panels, tax clarity was achieved: imported panels now receive duty exemptions while locally assembled units are taxed at 18%, eliminating pricing distortions.
Sales tax recalibrations were introduced: low-priced electronics under Rs20,000 sold via e-commerce attract just 0.25% tax, while luxury online clothing between Rs15,000–18,000 faces 2% tax, more accurately reflecting profit margins. Grocery items continue under higher rates to reflect their margin structure.
Aurangzeb confirmed Pakistan’s readiness to meet debt obligations, citing a $500 million Eurobond payment due in September and another in March. He announced plans to issue yuan-denominated Panda bonds and pursue credit enhancement support from the Asian Development Bank and AIIB. With improved credit ratings, additional bonds in euros and dollars may follow by late 2026.
Rounding off his briefing, Aurangzeb reiterated the government’s commitment to structural transformation—through digital inclusion, tariff reform, agriculture support, and debt management—to drive sustainable economic momentum into FY26.