Finance Minister, Muhammad Aurangzeb, on Monday announced that the federal government is poised to introduce “bold measures” in the upcoming budget for fiscal year 2025-26. Speaking at an event organized by Karandaaz Pakistan and the Pakistan Banks Association (PBA) in Islamabad, Aurangzeb emphasized that the budget will not merely be a financial statement but will provide a clear “strategic direction” for the nation’s economy.
“We are going to bring some bold measures during the budget for FY2025-26,” said Aurangzeb. He articulated his vision for the budget as more than just an exercise in balancing revenue and expenditure, stressing that it must articulate “where the economy is, and where it is heading.” He added that rather than simply “making the math work,” the government intends to make the budget document “more strategic.”
The federal budget for FY2025-26 is scheduled to be presented on June 10, 2025, with the Pakistan Economic Survey 2024-25 preceding it on June 9, 2025.
Addressing Regional Tensions and IMF Engagement
Touching upon the recent escalation of tensions between Pakistan and India, Aurangzeb commented, “These are very tense moments. The entire nation has rightly celebrated the way our armed forces and political leadership have stood up against the aggression.” This statement comes amidst proposals for a significant increase in the defense budget for FY26, as highlighted in reports from tax advisory firms.
Aurangzeb also revealed that significant efforts were made to derail Pakistan’s ongoing engagement with the International Monetary Fund (IMF). “There was no stone left unturned in terms of ensuring that the meeting [with the IMF] does not happen. If the meeting does happen, then these items are not on the agenda, whether it’s the second tranche under the Extended Fund Facility (EFF) and the $1.3 billion under the Resilience and Sustainability Facility (RSF),” he explained. However, he confirmed, “we are beyond that, and our case was discussed and decided on merit.” He drew a parallel between the unity shown against recent aggression and the unity needed on the economic front.
Breaking the Boom-and-Bust Cycle and Macroeconomic Stability
On the crucial aspect of macroeconomic stability, Aurangzeb stressed the imperative to avoid repeating past mistakes. “We have achieved macroeconomic stability in yesteryears and in the previous decades as well, but we have squandered the opportunity. Because it is easy to get into a sugar rush, i.e. pump liquidity into the market, go for consumption-led growth,” which inevitably triggers balance of payment and foreign exchange issues, he elaborated. To break away from this persistent boom-and-bust cycle, he emphasized Pakistan’s need to “stay the course” in terms of structural reforms.
Simplifying Tax Filing and Accelerating SOE Reforms
A key area of focus for the government, according to Aurangzeb, is simplifying the tax return filing process for the salaried class. Acknowledging that “70-80% of the salaried class don’t necessarily hold equity or income portfolios,” he questioned why they should be burdened with filling “140-150 measures.” He stated the government’s intention to reduce this complexity significantly, aiming to bring it down to “nine items, five on the wealth and four on the income tax side.” The government hopes to implement this simplified process by the end of September.
Regarding State-Owned Enterprise (SOE) reforms, the finance minister admitted that “this is one area where we did not do well last year.” However, he reiterated the government’s commitment to accelerating reforms in this sector. He specifically confirmed that the Pakistan International Airlines (PIA) transaction has been relaunched and expressed optimism about its successful completion.
On debt servicing, Aurangzeb noted a decrease of Rs1 trillion in government debt servicing costs during the ongoing fiscal year. He added that for the next year, the government plans to “restructure/reorganise our debt management office along the modern lines.” He expressed confidence that the ongoing structural reforms would ultimately put Pakistan’s economy “on a path of sustainable growth.”
Long-Term Economic Trajectory
Aurangzeb concluded with optimism about Pakistan’s long-term economic trajectory. “Our economy has crossed the $400 billion level. This shows we’re moving in the right direction,” he stated. However, he also highlighted the critical challenges that need mitigation for Pakistan to achieve its ambitious goal of becoming a $3 trillion economy by 2047: “population and climate.” He pointed out that four out of the six points under the recently inked 10-year Country Partnership Framework with the World Bank specifically address these two existential issues.
