Pakistan Budget 2025-26 Austerity Tax Relief & Loan Cost Cuts
According to details, a significant decline in the policy rate is expected to reduce expenditure on loans and interest payments by approximately Rs1,300 billion in budget 2025-26.
Sources suggest that the size of the upcoming federal budget could be around Rs17.8 trillion, which is Rs 900 billion less than the current fiscal year’s budget of Rs18.7 trillion.
The upcoming budget 2025-26 will place strong emphasis on austerity measures in Pakistan, which will be implemented rigorously.
Sources also indicate that the purchase of new vehicles for all federal ministries and departments will be prohibited. Additionally, ministries will be expected to limit their electricity and gas expenses.
The IMF has demanded a ban on the issuance of unnecessary supplementary grants, and any emergency supplementary funds will only be allowed in the event of natural disasters, the sources said.
IMF ‘agrees’ to income tax relief for salaried class in budget 2025-26
According to estimates, Rs8,685 billion will likely be allocated for interest payments on loans. Of this amount, Rs7,503 billion is expected to go towards domestic debt servicing, while Rs1,119 billion will be allocated for servicing foreign debt.
The federal government is also estimating a subsidy allocation of Rs1,367 billion and grants worth Rs1,619 billion.
The budget deficit for the next fiscal year is expected to stand at Rs6,632 billion. The federal government anticipates receiving a surplus of Rs1,220 billion from the provinces to help offset this deficit.
Furthermore, the Benazir Income Support Programme may receive an allocation of Rs716 billion. The quarterly cash stipend under the programme is expected to be increased from Rs 13,500 to Rs 14,500 by January 2026.
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