ISLAMABAD: The federal government will unveil its budget for the fiscal year 2025-26 today (Tuesday), with Finance Minister Muhammad Aurangzeb presenting the financial plan in the National Assembly. The proposed budget size is Rs17.6 trillion—slightly lower than the Rs18.78 trillion budgeted for the outgoing year.
The Federal Board of Revenue (FBR) has been tasked with achieving a tax revenue target of Rs14.02 trillion, up from the revised Rs12.33 trillion set for 2024-25—a goal seen as difficult to achieve before the fiscal year closes on June 30.
Salary and pension increases for public sector employees are also on the agenda. The government is considering multiple proposals ranging from 5 to 12.5 percent, with a likely raise in the range of 7.5 to 10 percent. Additionally, employees from grade 1 to 16 may receive a Disparity Allowance of up to 30 percent.
On the revenue side, the government anticipates Rs14.2 trillion in tax receipts and Rs4 to Rs4.5 trillion in non-tax revenues. Under the NFC Award, nearly 60 percent of the divisible pool will be transferred to provinces, amounting to around Rs8 trillion, leaving the federal government with Rs6 trillion in tax and approximately Rs4.5 trillion in non-tax revenues.
To cover the gap between revenue and expenditures, the Centre will require Rs6 to Rs7 trillion in financing to keep the fiscal deficit within IMF-recommended thresholds. Provinces are expected to generate a budget surplus to contribute to fiscal consolidation.
Major allocations include Rs2.55 trillion for defence, Rs8.2 trillion for interest payments (down from Rs9.7 trillion in the previous year), Rs1.05 trillion for pensions, Rs1.186 trillion in subsidies, and Rs1.9 trillion in grants. The Public Sector Development Programme (PSDP) is set at Rs1 trillion.
Gross revenue receipts are projected at Rs19.3 trillion, with the FBR expected to collect Rs14.131 trillion and non-tax revenues anticipated at Rs5.167 trillion. After transferring Rs8.2 trillion to the provinces, the federal government’s net receipts will stand at Rs11.072 trillion. Total federal expenditures are projected at Rs17.573 trillion, including Rs16.286 trillion in current expenditures and Rs1 trillion in development spending.
Parliamentary Budget Schedule Announced
National Assembly Speaker Ayaz Sadiq has approved the schedule for budget proceedings. The budget will be presented on June 10, followed by recess days on June 11 and 12. A general debate on the budget will begin on June 13 and continue until June 21.
The House will not convene on June 22. On June 23, a discussion on charged expenditures will be held, followed by debates and votes on Demands for Grants and Cut Motions on June 24 and 25. The Finance Bill 2025 is scheduled for approval on June 26, and discussions on Supplementary Grants will take place on June 27.
