Minister for Finance Muhammad Aurangzeb will present the federal budget 2025–26 in parliament on Tuesday (today).
The government has projected the budget size at Rs17.6 trillion, down from Rs18.78 trillion in the previous fiscal year. It has set the FBR’s tax collection target at Rs14.02 trillion for the new budget, compared to the revised estimate of Rs12.33 trillion for the current fiscal year.
But it will be extremely difficult for the FBR to show the updated target of Rs12.332 trillion on June 30, 2025. With hopes of 7.5 to 10 per cent hike in wages of public sector employees, the Ministry of Finance has drawn up four plans for raising pay and pension between 5 and 12.5 per cent.
The Ministry of Finance wants to restrict this increase in the range of 7.5 to 10 per cent in the next budget.
The government is likely to grant a Disparity Allowance of up to 30% for employees in grades 1 to 16 in the upcoming budget.
On the revenue side, it has set the FBR’s tax collection target at approximately Rs14.2 trillion, while the non-tax revenue target is likely to range between Rs4 and Rs4.5 trillion for the next fiscal year.
After providing almost 60pc share to the provinces under the federal divisible pool (FDP) under the NFC Award, the provinces might secure Rs8 trillion in the coming budget.
So the Centre will be left with the revenues of Rs6 trillion and non-tax revenues of Rs4 or Rs4.5 trillion. The government will have to get budget deficit financing of Rs6 to 7 trillion to restrict the deficit within the desired limits.
The provinces will need to generate a revenue surplus to help reduce the consolidated budget deficit in line with the IMF programme.
Major Allocations and Expenditure Plan
The government has allocated Rs2.55 trillion for defence in the upcoming 2025–26 budget. It has set markup payments at Rs8.2 trillion, down from Rs9.7 trillion in the previous budget.
Furthermore, the federal government has fixed the pension bill at Rs1.05 trillion, subsidies at Rs1.186 trillion, and grants at Rs1.9 trillion.
It has set the federal Public Sector Development Programme (PSDP) at Rs1 trillion. The government has projected total gross revenue receipts at Rs19.298 trillion, with the FBR’s tax collection target at Rs14.131 trillion and non-tax revenue target at Rs5.167 trillion.
After transferring Rs8.2 trillion to the provinces under the NFC Award, the net revenue receipts of the federal government will stand at Rs11.072 trillion.
The government has projected total federal expenditure at Rs17.573 trillion, with current expenditure likely to reach Rs16.286 trillion, and development expenditure set at Rs1 trillion.
National Assembly Speaker Ayaz Sadiq meanwhile has cleared the calendar for the next sessions of the National Assembly on presenting and debating the federal budget 2025-26.
According to the schedule, the budget will be presented in the National Assembly on June 10 (today). The House will remain in recess on June 11 and 12, and the budget debate will start on June 13.
