ISLAMABAD: Pakistan’s federal cabinet on Tuesday approved the budgetary proposals for the fiscal year 2025-26.
Prime Minister Shehbaz Sharif the special meeting of the federal cabinet. The cabinet deliberated on the budget proposals and accorded its approval to the Finance Bill.
The cabinet meeting also okayed the budgetary proposals to be presented before the National Assembly for its onward consideration.
Finance Minister Muhammad Aurangzeb briefed the cabinet on the upcoming budget.
According to media reports, the federal government has set a GDP growth target at 4.2 percent in the budget 2025-26.
According to media reports, the current account deficit for the next fiscal year is projected at 2.1 billion dollars, which equals -0.5% of GDP.
The revised National Development Plan allocates over Rs4,223 billion for various development initiatives across the country.
Of this amount, Rs2,869 billion is earmarked for the PSDP, while federal ministries and divisions will receive over Rs682 billion for their respective development projects.
The National Highway Authority is expected to receive Rs 226.98 billion. The Power Division will be allocated Rs90.22 billion under the Public Sector Development Programme (PSDP), and the Water Resources Division will receive Rs133.42 billion, local media reported citing the budget document.
Cabinet approves 10% increase in salaries
According to media reports, the federal cabinet has approved a 10 percent increase in salary for government employees and a 7 percent hike in pensions.
Speaking at the cabinet meeting, Prime Minister Shehbaz Sharif questioned the contributions made to the national exchequer by the country’s elite class.
on 10 June 2025. Photo from PID
PM Sharif said: “Today, the federal cabinet will discuss the budget and give its approval. In the previous quarter year, the entire nation has faced these challenges. This is in no way an ordinary achievement.
“The sacrifices the common man has made, the burden the salaried class has borne in the previous budget. They say ‘we are salaried [class] but still gave Rs400bn to the treasury […] what have the elite and the wealthy groups contributed compared to us?’,” he added.
“This is a question that the elite, including me, have to answer,” the premier noted.
Finance Minister Muhammad Aurangzeb, in a press conference yesterday, launched the Pakistan Economic Survey 2024-2025, a pre-budget document that contains details of major socio-economic achievements during the outgoing fiscal year.
According to media reports, the government is likely to present a Rs17.6 trillion budget for the fiscal year beginning July 1, down 6.7 percent from this fiscal year. It has projected a fiscal deficit of 4.8 percent of GDP, against a targeted 5.9 percent deficit in 2024-25, the reports say.
The budget for FY26 is expected to prioritise expanding the tax base, enforcing agriculture income tax laws, and reducing government subsidies to industry, to meet the terms of a $7 billion IMF bailout.
The IMF has urged Pakistan to widen the tax base through reforms, which include taxing agriculture, retail, and real estate.
