The federal and Punjab governments have unveiled larger budgets for the 2026-27 fiscal year, increasing overall spending despite growing concerns among economists that higher allocations have yet to produce meaningful improvements in education, healthcare, agriculture, and industrial development.
The budgets come at a time when Pakistan’s economy has shown signs of stabilization following years of economic uncertainty. Inflation has eased considerably, foreign exchange reserves have improved, and fears of an immediate balance-of-payments crisis have subsided.
Federal Budget Grows to Rs18.77 Trillion
The federal government has proposed a Rs18.77 trillion budget for FY2026-27, compared to Rs17.57 trillion in the previous fiscal year.
Key highlights include:
- Total Budget Outlay: Rs18.77 trillion
- Revenue Target: Rs15.26 trillion
- Debt Servicing: More than Rs8 trillion
- Defence Allocation: Approximately Rs3 trillion
Debt servicing remains the single largest expenditure, consuming a substantial portion of government resources, while defence spending has also increased in the new fiscal year.
BISP Allocation Nears Rs845 Billion
Economist Rao Babar Jamil, Adviser on Political and Economic Affairs to Pakistan Peoples Party Central Punjab President Raja Pervez Ashraf, said the continued expansion of the Benazir Income Support Programme (BISP) demonstrates the government’s acknowledgment that millions of households continue to face financial hardship.
With allocations approaching Rs845 billion, BISP remains one of Pakistan’s largest social protection initiatives.
According to Babar, although inflation has slowed significantly, consumer prices remain elevated, limiting the financial relief experienced by ordinary citizens.
Punjab Budget Rises to Rs5.9 Trillion
The Punjab government has presented a Rs5.9 trillion budget for FY2026-27, up from approximately Rs5.3 trillion in the previous fiscal year.
However, the province’s Annual Development Programme (ADP) has been reduced substantially.
| Budget Item | FY2025-26 | FY2026-27 |
|---|---|---|
| Total Punjab Budget | Rs5.3 trillion | Rs5.9 trillion |
| Annual Development Programme (ADP) | Rs1.24 trillion | Rs752 billion |
The sharp reduction in development spending has prompted questions regarding the government’s long-term infrastructure and development priorities.
Concerns Over Education and Healthcare
Despite continuous increases in education spending over the years, experts argue that key challenges remain unresolved.
Millions of children remain out of school, public schools continue to struggle with quality concerns, and employers frequently report that graduates lack the skills required by the modern job market.
Similarly, higher healthcare allocations have not fully addressed overcrowding in public hospitals, forcing many Pakistanis to rely on expensive private healthcare services.
Agriculture and Industry Need Greater Support
Economists believe agriculture and industry require stronger policy support in the new budget.
Punjab’s farmers continue to face rising production costs, volatile crop prices, water shortages, and increasing climate-related risks. Experts suggest that greater investment in water-efficient irrigation systems, agricultural technology, crop insurance, and farmer income protection could significantly improve productivity.
Pakistan’s largest industrial province also continues to face challenges including:
- High electricity and energy costs
- Complex regulatory procedures
- Limited access to business financing
- Infrastructure bottlenecks
- Declining global competitiveness
Business leaders argue that addressing these structural issues is essential to boosting investment, exports, and long-term economic growth.
Bigger Budgets, Higher Expectations
While both the federal and Punjab governments have increased total spending for FY2026-27, economists stress that future success will depend not only on larger allocations but also on the efficient utilization of public funds.
They argue that sustained improvements in education, healthcare, agriculture, and industry will be the key indicators by which the effectiveness of the new budgets will ultimately be judged.
