Details emerging ahead of the official unveiling of the federal budget for fiscal year 2025-26 reveal a significant projected deficit of Rs6,501 billion — nearly 5% of the country’s GDP.
The Finance Minister is set to present the budget in the National Assembly later today. As per insiders familiar with the budget documents, the total proposed federal expenditures amount to Rs17,573 billion, while revenues are estimated at Rs19,298 billion.
Read more: Pakistan Set to Unveil Rs17.6 Trillion Budget: Debt, Defense & Development in Focus
After transferring Rs8,206 billion to provinces under the NFC Award, the net federal revenue is expected to be Rs11,072 billion.
The Federal Board of Revenue (FBR) has been tasked with collecting Rs14,131 billion in taxes, and the government expects to generate an additional Rs5,167 billion through non-tax revenues — part of its effort to broaden the revenue base.
Debt servicing emerges as the largest expenditure category, with Rs8,207 billion allocated for interest payments. Defense spending follows as the second-highest priority, with Rs2,550 billion earmarked for military needs.
Other significant allocations include Rs1,055 billion for pensions, Rs971 billion for civil government operations, Rs1,186 billion for subsidies, and Rs1,928 billion in grants and transfers. Additionally, Rs1,000 billion has been designated for the Public Sector Development Programme (PSDP).
The total recurring (non-development) expenditures are projected at Rs16,286 billion, underscoring the mounting financial pressure from fixed obligations such as debt and pensions, which limit flexibility for development-focused spending.
The government is expected to justify its fiscal roadmap by highlighting reforms aimed at boosting revenue and curbing unproductive expenses.
