By MAJID KHAN Msc Finance
Islamabad – May 2025: The Government of Pakistan is preparing to unveil the Federal Budget 2025–26 in early June, amid growing economic challenges and global uncertainties. As anticipation builds across business circles, investors, and the general public, experts believe the upcoming budget will play a pivotal role in stabilizing the country’s economy and attracting foreign investment.
📊 Economic Backdrop
The budget announcement comes at a time when Pakistan is:
- Recovering from a period of high inflation
- Managing external debt repayments
- Negotiating with the International Monetary Fund (IMF) for a new long-term loan program
- Dealing with the aftereffects of regional geopolitical tensions
Despite these challenges, the State Bank of Pakistan has hinted at signs of macroeconomic stabilization, citing improved current account balances and controlled imports.
🧾 Key Expectations for the 2025–26 Budget
1. Tax Reforms and Broadening the Tax Base
- A major focus is expected to be on documenting the informal economy
- Introduction of new digital tax systems
- Possible increase in sales tax and income tax slabs for high-income earners
- Simplification of the tax filing process for small businesses
2. Public Sector Development Programme (PSDP)
- A significant rise in development spending is likely, with a focus on:
- Infrastructure
- Renewable energy
- Technology and digital transformation
- Emphasis on Public-Private Partnerships (PPPs) for mega projects
3. Relief for the Middle Class
- Likely subsidies on electricity, gas, and basic food items
- Increased allocation for Benazir Income Support Programme (BISP)
- Possible tax relief for salaried individuals
4. Defense and Strategic Spending
- Given the regional situation, an increase in defense allocations is expected, although exact figures may remain confidential.
5. Privatization and SOE Reform
- The government may push forward with the privatization of loss-making state-owned enterprises like Pakistan International Airlines (PIA) and certain power distribution companies.
📈 Impact on the Stock Market and Business Sentiment
The Pakistan Stock Exchange (PSX) has reacted cautiously ahead of the budget, with investors awaiting clarity on:
- Capital gains tax (CGT) revisions
- Corporate tax changes
- Industry-specific policies (especially in energy, IT, and banking sectors)
Analysts predict a positive market response if the budget includes:
- Clear fiscal consolidation targets
- IMF-aligned reforms
- Incentives for foreign direct investment (FDI)
🧠 Expert Opinion
“This budget could be a turning point. If it strikes a balance between fiscal responsibility and growth incentives, it will rebuild confidence in Pakistan’s economic outlook.”
— Dr. Sara Malik, Economist at LUMS
📅 Budget 2025–26 Announcement Date
The Finance Ministry has announced that the Federal Budget 2025–26 will be presented in the National Assembly in the first week of June, tentatively on June 7, 2025. Live coverage will be available via national news channels and official government platforms.
📌 Final Thoughts
The upcoming Budget 2025–26 holds critical importance for Pakistan’s economic future. With the right mix of reforms, relief, and revenue generation, the government aims to steer the country toward stability, growth, and investor confidence.
Stay tuned for a full breakdown once the budget is officially announced!
