Finance Minister Muhammad Aurangzeb on Friday delivered the budget 2026-27 speech to unveil the government’s latest tax decisions for hte next 12 months.
Here’s his complete speech:
Mr. Speaker,
I am pleased to present before this honorable House the Budget for the fiscal year 2026–27. I would like to thank the leadership of the coalition government, including Prime Minister Muhammad Shehbaz Sharif, former Prime Minister Muhammad Nawaz Sharif, President Asif Ali Zardari, Deputy Prime Minister Senator Ishaq Dar, PPP Chairman Bilawal Bhutto Zardari, and all coalition partners for their guidance and support.
Mr. Speaker,
A budget is not merely a collection of figures. It reflects the aspirations of a nation. It represents the hopes of workers, farmers, youth, women, entrepreneurs, and every citizen striving for a better future.
Mr. Speaker,
The recent conflict between Iran and Israel marked a significant development in the region. Pakistan has consistently advocated peace, dialogue, and stability. The government remains committed to supporting diplomatic efforts to prevent escalation and maintain regional peace.
Pakistan’s strategic importance has increased in the changing global environment. Our armed forces have once again demonstrated professionalism and preparedness. The successful induction and operational readiness of modern defense assets, including advanced fighter aircraft, strengthens our national defense and contributes to regional stability.
Mr. Speaker,
Pakistan continues to strengthen strategic partnerships with friendly countries. Relations with China remain the cornerstone of our foreign policy. Cooperation under the China-Pakistan Economic Corridor (CPEC) continues to support infrastructure, energy, and industrial development.
Relations with Gulf countries, Türkiye, Central Asian states, and other partners are also expanding. These relationships are creating new opportunities for trade, investment, and economic cooperation.
Mr. Speaker,
Pakistan has played a constructive role in international diplomacy. The government remains committed to peace, dialogue, and conflict resolution.
Recent diplomatic engagements, including discussions involving major international stakeholders, reflect Pakistan’s continued commitment to regional peace and stability.
Mr. Speaker,
The conflict in the Middle East has raised concerns regarding global oil prices. The government has carefully monitored developments and taken measures to protect the economy from external shocks.
To shield consumers from international price volatility, the government has implemented targeted subsidies and relief measures where necessary. These efforts are aimed at minimizing the impact of rising global energy prices on ordinary citizens.
Pakistan has also built economic buffers that help protect the country from external pressures. These include improved foreign exchange management, better fiscal discipline, and stronger macroeconomic fundamentals.
Mr. Speaker,
The government inherited significant economic challenges. Through difficult but necessary reforms, Pakistan has achieved notable progress.
GDP growth has recovered.
Inflation has declined substantially from previous highs.
Foreign exchange reserves have improved.
Investor confidence has strengthened.
International credit rating agencies have upgraded Pakistan’s outlook.
Mr. Speaker,
Pakistan’s economy is showing signs of recovery and resilience.
GDP growth is expected to reach approximately 4 percent in FY 2026–27.
Inflation has fallen significantly compared to previous years.
Large-Scale Manufacturing (LSM) has returned to positive growth.
Services sector growth remains strong.
Agricultural performance has improved.
Exports have continued to expand, while remittances from overseas Pakistanis have reached record levels, providing important support to the economy.
Mr. Speaker,
Pakistan’s external position has improved markedly.
Remittances have reached historic highs.
Export performance has strengthened.
Current account management has improved.
Foreign exchange reserves have increased.
International financial institutions and rating agencies have acknowledged Pakistan’s progress.
Mr. Speaker,
Global rating agencies including Moody’s, Fitch, and S&P have improved Pakistan’s outlook due to stronger macroeconomic indicators and successful economic reforms.
Mr. Speaker,
Pakistan has successfully re-entered international capital markets. The government has pursued diversified financing sources and explored innovative instruments, including Panda Bonds and other funding mechanisms.
These initiatives strengthen Pakistan’s financial position and reduce dependence on traditional borrowing channels.
Mr. Speaker,
The corporate sector has shown encouraging performance.
Corporate profitability has improved. Business confidence has strengthened. New listings and investment activity have increased. Technology and innovation sectors are expanding.
Several major international companies and investors have expressed interest in Pakistan, demonstrating growing confidence in the country’s economic prospects.
Mr. Speaker,
The government remains committed to privatization and reform of state-owned enterprises.
The privatization process for Pakistan International Airlines (PIA) has advanced significantly. Work is also progressing on reforms involving distribution companies, generation companies, and other public-sector entities.
The objective is to improve efficiency, reduce fiscal burdens, and enhance service delivery.
Federal Board of Revenue (FBR) Reforms
Comprehensive reforms are underway in the FBR.
These include:
Mr. Speaker, The reforms underway in the Federal Board of Revenue are focused on improving transparency, reducing discretionary powers, and strengthening compliance.
The government has expanded:
The objective is to increase revenue collection through technology-driven governance rather than through intrusive enforcement.
The government believes these reforms will:
Mr. Speaker, Pakistan’s economic progress must benefit all segments of society. Accordingly, the government is introducing several initiatives aimed at:
The government will launch a nationwide fan replacement initiative. The purpose is to replace old and energy-inefficient fans with modern energy-saving models.
Expected benefits include:
The initiative will provide subsidized financing facilities for:
The objective is to:
Mr. Speaker, Pakistan will launch innovative Social Impact Financing initiatives. The government intends to introduce Impact Bonds in collaboration with institutions including NAVTTC and other stakeholders.
The goal is to:
The government is establishing an Agricultural Storage Financing Facility.
This initiative will support:
Mr. Speaker, Pakistan’s digital transformation agenda continues to gain momentum.
Key achievements include:
The government considers digitization essential for:
Mr. Speaker, Pakistan’s youth are its greatest asset. More than two-thirds of Pakistan’s population consists of young people.
The government is therefore expanding several youth-focused initiatives.
Implemented through NAVTTC, this program provides:
Independent evaluations show encouraging outcomes in employment and income generation.
Mr. Speaker, The Youth Business and Agriculture Loan Scheme continues to expand.
Since its launch:
Hundreds of thousands of young people have received financing.
Significant loan disbursements have been made. Entrepreneurship opportunities have increased.
The scheme remains one of the largest youth financing initiatives in the country’s history.
The government is expanding sports development programs. Talent identification initiatives are being implemented nationwide to identify promising athletes.
The program covers multiple sports and seeks to create opportunities for young athletes to compete at higher levels.
Mr. Speaker, Pakistan requires a forward-looking trade policy to support exports and industrial development.
The government has therefore introduced a number of reforms aimed at improving competitiveness.
To encourage exports:
The purpose is to:
Mr. Speaker, The National Tariff Policy 2025–30 represents a major reform agenda. Its objectives include:
Key measures include:
The government expects these reforms to support industrial growth and export expansion.
Mr. Speaker, the energy sector remains central to Pakistan’s economic future.
Important reforms have already been undertaken. The government has:
The government estimates savings of approximately Rs. 143 billion through subsidy rationalization and reforms.
Negotiations with Independent Power Producers (IPPs) have also generated significant fiscal benefits.
Mr. Speaker, the Competitive Trading Bilateral Contract Market is being implemented to introduce competition into the electricity market.
The objective is to:
The government has announced plans to gradually move toward a Direct Subsidy Mechanism.
Under this approach:
Mr. Speaker, the government has achieved significant progress in addressing circular debt.
The objective remains:
Pakistan has successfully renegotiated certain LNG Sale and Purchase Agreements. The government estimates that these negotiations will generate substantial savings for the national exchequer.
Information Technology and Digital Economy
Mr. Speaker,
Pakistan’s information technology sector continues to be one of the fastest-growing segments of the economy.
The government is committed to building a digital-first economy and expanding opportunities for innovation, entrepreneurship, and technology-driven growth.
Key developments include:
The government has announced plans to conduct Pakistan’s 5G spectrum auction.
The rollout of 5G services is expected to:
The government has undertaken Right-of-Way reforms to facilitate infrastructure deployment.
These measures have contributed to:
Fiberization has improved significantly and is expected to continue growing.
Mr. Speaker,
The government has finalized Pakistan’s National Artificial Intelligence Policy.
The policy aims to:
Pakistan intends to position itself as a competitive participant in the global AI economy.
Digital Nation Pakistan Act
The government has introduced the Digital Nation Pakistan framework to accelerate digital transformation.
Key components include:
A National Data Exchange Layer is being developed to enable secure information sharing among government entities.
The government believes these reforms will improve efficiency and transparency.
Mr. Speaker,
Pakistan’s debt profile has improved through prudent management and reforms.
The government has implemented a Medium-Term Debt Management Strategy focused on:
Key Achievements:
The government will continue pursuing responsible fiscal and debt policies.
Special Investment Facilitation Council (SIFC)
Mr. Speaker,
The Special Investment Facilitation Council has emerged as a key platform for attracting investment and removing bureaucratic barriers.
Over the past year, SIFC has:
Investment Pipeline includes:
A substantial pipeline of investment opportunities exists under SIFC-supported initiatives.
Pakistan’s logistics and warehousing sectors are being modernized.
Development of modern warehousing infrastructure is expected to:
Mr. Speaker,
Agriculture remains the backbone of Pakistan’s economy.
The government has prioritized:
Measures have been introduced to support exporters through improved financing and simplified procedures.
The government is encouraging:
Agricultural development is expected to generate:
Mr. Speaker,
The government intends to strengthen tax compliance while reducing unnecessary burden on honest taxpayers.
The strategy focuses on:
The Federal Board of Revenue will continue implementing reforms to improve transparency and reduce tax evasion.
Mr. Speaker,
The government remains committed to maintaining strong national defence.
Adequate resources are being allocated to ensure:
The government emphasized that economic stability and national security are closely linked.
Mr. Speaker,
The government has set the following macroeconomic objectives:
GDP growth target: approximately 4%
Average inflation target: approximately 7.5% to 8.2%
Fiscal Consolidation
Revenue Targets
Mr. Speaker,
The federal government acknowledges the importance of cooperative federalism.
Strong coordination with provincial governments remains essential for:
The government emphasized continued collaboration under constitutional and NFC arrangements.
The budget documents indicate:
Mr. Speaker,
The PSDP remains a key instrument for economic growth and infrastructure development.
PSDP Allocation priorities include:
Resources have been allocated for restructuring and reform of selected state-owned enterprises.
The government reaffirmed commitment to the 5Es framework:
The PSDP and development initiatives are aligned with these national priorities.
Mr. Speaker,
Pakistan is facing serious water challenges, including limited storage capacity, rising demand, and climate-related pressures.
To address these issues, the government has allocated funds for:
These investments aim to strengthen long-term water security across the country.
Mr. Speaker,
With rapid urban population growth, the government has prioritized:
Key initiatives include:
The government has announced measures to improve industrial competitiveness, including:
Support will also be extended to export-oriented manufacturing and stitching units.
Mr. Speaker,
Health remains a top priority.
Additional funding has been allocated for:
The goal is to improve access and quality of healthcare services nationwide.
Mr. Speaker,
Human capital development remains central to national policy.
Allocations include:
Funding has been allocated to strengthen:
Digital Learning and AI
These initiatives aim to prepare youth for future job markets.
Programs under NAVTTC and other institutions will continue to support:
Mr. Speaker,
The government is implementing reforms to improve:
Digital governance systems will continue to expand.
Additional funding has been allocated for:
Balanced regional development remains a national priority.
A broad tax rationalization package has been introduced to:
One of the key budget highlights is tax relief for salaried taxpayers.
Revised Income Tax Slabs:
The government said the changes aim to ease inflation pressure on salaried households.
Federal government employees will receive a 10% salary increase.
Pensions have been increased by 7% to help offset inflation.
Minimum monthly wage has been proposed to increase from Rs37,000 to Rs40,000, a rise of around 10%.
The aim is to support low-income workers and improve purchasing power.
Pension taxation structure:
Ordinary pensioners will remain protected under the revised framework.
Mr. Speaker,
The IT sector remains a key growth area.
Export Income Tax:
Final Tax Regime (FTR):
These measures aim to support:
The government has proposed a 0.5% withholding tax on debit card transactions.
Officials stated that high transaction taxes previously encouraged undocumented cash usage.
The objective is to:
The government has abolished Capital Value Tax (CVT) to:
Sales tax has been removed on sanitary pads, recognizing them as essential health products.
Sales tax has been fully exempted on contraceptives to:
A fixed tax system for small retailers will be introduced to:
The government will promote:
Tax reforms are designed to balance inflation pressures while ensuring fiscal sustainability.
Overall objectives include:
Mr. Speaker,
The government believes sustainable economic growth requires a broader and fairer tax base.
Accordingly, additional measures are being introduced to improve:
The objective is not only to increase taxes, but to ensure that all economic activity contributes fairly to the formal economy.
Mr. Speaker,
Retail remains one of the largest sectors of Pakistan’s economy.
The government has introduced reforms to document retail activity.
A simplified fixed-tax system will be introduced for small retailers.
Key objectives:
The government is promoting:
Objectives:
National Faceless Centre
Mr. Speaker,
A major administrative reform is the establishment of a National Faceless Centre.
Under this system:
The government expects this to:
Two assessment models will be introduced:
Single-Blind Mode
Double-Blind Mode
These systems aim to reduce bias and misuse.
The system will be integrated with the IRIS portal to enable:
Mr. Speaker,
The government is developing:
Algorithmic Settlement Mechanism
This will:
A centralized data system will integrate information from multiple sources.
Objectives:
The government will expand use of third-party data, including:
The aim is to detect undeclared income and broaden compliance.
Mr. Speaker,
The government is expanding Real-Time Production Monitoring to additional sectors.
Objectives:
Several reforms are being introduced to simplify sales tax compliance and improve documentation.
Objectives:
Mr. Speaker,
The government has introduced measures to address misuse of petroleum-based solvents and naphtha.
These products were previously linked to tax leakage and distortions.
New measures aim to:
Mr. Speaker,
Tax changes have been introduced for larger vehicles, including SUVs and high-engine-capacity vehicles.
Objectives:
The government continues to support:
Mr. Speaker,
Pakistan’s industrial sector is undergoing modernization through:
Focus sectors include:
Healthcare Equipment and Relief Measures
Additional relief measures have been introduced for healthcare-related goods and services.
Objective:
Mr. Speaker,
Pakistan aims to integrate more deeply into Global Value Chains (GVCs).
Expected benefits:
Focus on:
Mr. Speaker,
Pakistan’s industrial future depends on:
Reforms aim to strengthen Pakistan’s position in global markets.
The budget confirms:
These measures address inflation pressures and support household incomes.
The minimum monthly wage is reaffirmed at an increase from:
Mr. Speaker,
The government stated the budget aims not only to manage finances but to build a stronger economy.
Key priorities:
The government emphasized:
Pakistan aims to compete in emerging global technology sectors.
Mr. Speaker,
The government expressed gratitude to:
The speech concludes with emphasis on:
The government stated that despite challenges, Pakistan is moving toward a stronger and more resilient economic future.