The Pakistan government is set to unveil its budget for the fiscal year 2025-26 on June 10, with the total size expected to be around Rs17.68 trillion, marking a reduction of Rs900 billion compared to the current year’s Rs18.7 trillion. This budget will emphasize austerity, with strict measures planned across federal ministries.
A significant factor behind the reduced budget size is a projected decline in the policy rate, which is expected to lower loan and interest payment expenditures by roughly Rs1,300 billion. Interest payments are estimated at Rs8,685 billion, with Rs7,503 billion allocated for domestic debt and Rs1,119 billion for foreign debt servicing.
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In line with austerity, the government plans to ban the purchase of new vehicles for all ministries and departments and expects strict limits on electricity and gas usage. The IMF has demanded a prohibition on unnecessary supplementary grants, allowing emergency funds only for natural disasters.
Social welfare remains a focus, with Rs716 billion potentially allocated for the Benazir Income Support Programme, which may see its quarterly cash stipend increase from Rs13,500 to Rs14,500 by early 2026. The budget deficit is projected at Rs6,632 billion, partly offset by an anticipated Rs1,220 billion surplus from provincial governments.
