Pakistan is gearing up to present its federal budget in the first week of June, with major economic decisions already taking shape. The government is aligning the budget with IMF conditions while promising targeted relief for citizens.
The government has decided that the upcoming federal budget will be prepared in line with the International Monetary Fund program.
Officials say this approach is aimed at ensuring fiscal discipline and meeting the requirements of the ongoing loan agreement.
Relief for salaried class
In a key move, the government is considering providing relief to the salaried class in the new budget. At the same time, the super tax is expected to be gradually reduced, but only after consultations with the IMF.
Major tax reforms and exemptions
Authorities have proposed abolishing income tax and sales tax exemptions across various sectors.
No new tax exemptions will be introduced, including for special economic zones, while previously granted exemptions for these zones will also be withdrawn.
The government plans to impose a ban on the sale of products manufactured in export zones within the local market. Additionally, the creation of new economic zones will remain restricted for now, reflecting a cautious industrial policy.
Regular and timely increases in electricity and gas prices will be made mandatory under the new budget framework. The IMF has emphasized stricter tariff adjustments in line with the loan program, signaling continued pressure on energy subsidies.
Increase in BISP stipend
The government has proposed increasing the stipend for beneficiaries of the Benazir Income Support Programme.
The amount will rise by Rs5,000, taking it from Rs14,500 to Rs19,500, with officials planning to adjust payments based on available budget resources.
The Federal Board of Revenue will see its audit system strengthened and centralized to improve tax collection and compliance. Meanwhile, a Pakistan Regulatory Registry is set to be established by 2027 to streamline regulatory frameworks.
The government also plans to gradually relax foreign exchange restrictions as part of broader economic reforms. These steps are expected to improve business confidence and facilitate smoother financial flows in the long term.
The upcoming budget reflects a balancing act between meeting IMF conditions and offering limited relief to citizens. While reforms aim to stabilize the economy, they also signal tighter fiscal controls and structural changes in taxation and energy pricing.
