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In a recent briefing to the National Assembly Standing Committee on Finance, Finance Minister Muhammad Aurangzeb revealed that the government is working to secure a $2 billion commercial loan to raise Pakistan’s foreign exchange reserves to $14 billion by the end of June. Currently, reserves are between $11 and $ 12 billion.
The Finance Minister also expressed optimism regarding monetary policy, saying he expects the policy rate to fall into single digits by the end of this calendar year.
As part of the upcoming budget, the government has proposed a special relief allowance of 50% for armed forces officers and 20% for JCOs and soldiers, signaling increased support for defense personnel.
The government is aiming to cut the fiscal deficit to 3.9% of GDP, or Rs. 5,037 billion, down from 5.9% in the current year. A primary surplus target of 2.4% of GDP has been set.
The Federal Board of Revenue (FBR) has been given a tax collection target of Rs. 14,131 billion, which represents a 19% increase from the revised estimate of Rs. 11,900 billion for the current year. Non-tax revenues are expected to reach Rs. 5,147 billion, compared to Rs. 4,845 billion this year.
Lower Deficit Financing Planned
The financing of the federal deficit for FY 2025–26 is budgeted at Rs. 6,501 billion, significantly down from Rs. 8,500 billion this fiscal year. Net external financing is projected at Rs. 106 billion, while domestic financing is expected to decline from Rs. 7,804 billion to Rs. 6,308 billion.
Aurangzeb clarified that the budget includes only Rs. 312 billion in new taxes and rejected claims of a mini-budget.
He also stated, “a proposed tax on fertilisers and pesticides was dropped after negotiations with the IMF on the prime minister’s direction.”
Committee members voiced concerns over Rs. 550 billion in petroleum smuggling, which leads to an estimated Rs. 145 billion loss in petroleum levy. In response, the committee chair directed the Finance Ministry to provide a comprehensive report on structural and tariff reforms.
