Pakistan Unveils Rs 17.573 Trillion Budget for FY 2025–26 Amid Opposition Protests
ISLAMABAD: Finance Minister Muhammad Aurangzeb presented the federal budget for 2025–26, amounting to Rs 17.573 trillion, in the National Assembly on Wednesday. The announcement was marked by strong opposition protests but introduced major reforms aimed at economic stability, fiscal responsibility, and investment facilitation, in compliance with journalistic ethics and the Prevention of Electronic Crimes Act (PECA) 2016.
Key Announcements and Reforms Presenting the coalition government’s second budget, Aurangzeb praised the country’s military and political leadership for ensuring national security, highlighting a primary budget surplus of 2.4% of GDP and a sharp drop in inflation to 4.7%. He also confirmed a shift in the current account from a $1.7 billion deficit to a $1.5 billion surplus.
To modernize customs procedures, the budget proposes phasing out additional customs duties in four years, eliminating regulatory duties in five years, and reducing maximum customs duty from 20% to 15%. The government plans to abolish the Fifth Schedule of the Customs Act, 1969, and simplify duty slabs to promote competitiveness in industries like IT and pharmaceuticals.
Infrastructure, Energy, and Privatization Strategic infrastructure saw major allocations, with Rs 100 billion for the N-25 highway, Rs 15 billion for the Karachi-Hyderabad-Sukkur motorway, and Rs 19 billion for Gadani Ship-Breaking Yard. The government aims to expand water storage infrastructure and finalize Panda Bonds to attract Chinese investment.
The privatization drive continues, with PIA, the Roosevelt Hotel, and multiple power firms set for divestment. The downsizing of 10 ministries and the classification of all state-owned enterprises aim to cut over Rs 800 billion in annual losses.
Taxation and Revenue Reforms
New tax measures include:
- 5% tax on pensions over Rs 1 crore
- 1% tax on cash withdrawals by non-filers (up from 0.6%)
- Elimination of filer/non-filer distinctions; wealth statements mandatory for all financial transactions
- 18% sales tax on imported solar panels, promoting local production
Income tax relief for salaried individuals:
- Rs 600,000–1.2 million: tax reduced from 5% to 2.5%
- Rs 1.2–2.2 million: tax lowered from 15% to 11%
- Higher brackets also saw moderate reductions
Social Welfare and Regional Support
The Benazir Income Support Programme received Rs 716 billion, with additional funding for:
- AJK: Rs 140 billion
- Merged KP districts and GB: Rs 80 billion each
- Balochistan: Rs 18 billion for expenditures
The government will launch affordable housing loan schemes and new mortgage relief for homes up to 10 marla and 2,000 sq. ft. Stamp duty and withholding tax on property in Islamabad were also reduced to boost the housing market.
IT and SME Sector Boost
To boost IT exports to $25 billion, Rs 100 billion in SME financing will be provided by 2028. Easy loan access for small-scale businesses is aimed at stimulating economic activity and entrepreneurship.
Judicial and Expat Reforms
Special courts for overseas Pakistanis and an online case registration system will be launched to streamline legal access and resolution for expatriate citizens.
Opposition Reaction and Session Disruption
Opposition lawmakers from PTI and the Sunni Ittehad Council rejected the budget, labelling it “IMF-backed” and illegitimate. Protesters tore budget documents and chanted slogans, though the government emphasized there was no IMF pressure on budget finalization. The session continued with PML-N leaders gathered around PM Shehbaz Sharif amid the commotion.
