Pakistan Federal Budget 2026-27 Approved: Rs 18.77 Trillion Outlay, 4% Growth Target, IMF Discipline

The National Assembly has passed Pakistan’s federal budget for fiscal year 2026-27 by voice vote, approving an outlay of Rs 18. 77 trillion ($67. 5 billion) and setting economic growth and inflation targets of 4% and 8. 2% respectively. The budget — the third under the current IMF-supported reform programme — attempts a delicate balance: fiscal consolidation to keep the Fund happy, plus targeted relief to workers, exporters and the tech sector to preserve political capital. Defence spending climbs 18% following last year’s brief military confrontation with India and continuing tensions along the Afghan border.

The Headline Numbers

IMF Discipline is the Framing

Finance Minister Muhammad Aurangzeb’s budget speech placed the IMF programme at the centre of every fiscal target. The FBR is expected to collect Rs 15.3 trillion — a punishing jump that will require both new tax measures and improved compliance from existing filers. Analysts widely expect the government to announce a mini-budget by October if collections lag through the first quarter.

The primary surplus target of 2% of GDP is one of the strictest ever built into a Pakistani budget, reflecting the Fund’s continued focus on debt sustainability.

Defence Up 18%

The 18% jump in defence spending is the largest year-on-year increase since fiscal year 2013-14. It follows both last year’s brief military standoff with India and continuing counter-terrorism operations along the Afghan border. Defence expenditure will now consume approximately 2.7% of GDP.

The government has committed to keeping non-development current expenditure growth below 6% in aggregate, meaning other current spending items (pensions, subsidies, running costs of civil ministries) will face compression to accommodate the defence increase.

Relief Measures

Despite the fiscal tightening, the budget contains several relief measures:

• Super tax reduction — the corporate surcharge levied on high-earning firms is cut, though not eliminated
• IT sector tax exemptions continued
• Exporter support — refund processing timelines shortened; energy subsidy for export-oriented sectors maintained
• Refinery incentives — reduced duties on capital equipment imports for oil refineries
• Real estate support — reduction in duties plus a targeted housing subsidy scheme

What This Means for Gilgit-Baltistan

For Gilgit-Baltistan, the federal budget matters through three transmission channels:

• PSDP (Public Sector Development Programme): GB-specific allocations for road, hydropower and social-sector projects
• Federal transfers — the constitutional and non-constitutional grants that fund GB’s provincial-equivalent budget
• CPEC allocations — projects on the Karakoram Highway that pass through GB

The GB-specific PSDP allocation figures were expected to be released by the Ministry of Kashmir Affairs and Gilgit-Baltistan in the coming week.

Political Reaction

PTI and JUI-F, both in opposition, criticised the budget’s revenue-side focus and voted against the finance bill. PTI’s Ayaz Sadiq described the FBR target as “a mathematical exercise divorced from ground realities”. Independent economists have been more measured — while acknowledging IMF constraints, several have warned that the 4% growth target requires private-sector credit growth that current interest rates make difficult.

Frequently Asked Questions

How much is Pakistan’s 2026-27 federal budget?

The federal budget for fiscal year 2026-27 has a total outlay of Rs 18.77 trillion, equivalent to approximately $67.5 billion.

What is Pakistan’s growth target for FY2026-27?

The government has set a GDP growth target of 4.0% and an inflation target of 8.2% for fiscal year 2026-27.

How much is the FBR revenue target?

The Federal Board of Revenue has been given a target of Rs 15.3 trillion ($55 billion) — a key condition of the ongoing IMF programme.

Why has defence spending increased 18%?

The increase follows last year’s brief military confrontation with India and continuing counter-terrorism operations along the Afghan border.