SDPI experts call for Structural transformation, financial inclusion, tax reforms in Budget 2026-27

ISLAMABAD, Jun 14 (APP): Experts at the Sustainable Development Policy Institute (SDPI) have urged the government to pursue structural economic transformation, strengthen financial inclusion and implement comprehensive tax reforms, while reviewing the Federal Budget 2026-27 during a post-budget briefing held in Islamabad on Sunday.

Speaking at the event, SDPI Executive Director Dr. Abid Qaiyum Suleri described the Federal Budget 2026-27 as a planning instrument rather than something that could be simply classified as good or bad.

He said the government had attempted to provide relief to documented sectors of the economy while maintaining fiscal discipline.

According to him, the salaried class, information technology sector and other documented businesses have received notable incentives.

However, Dr. Suleri noted that the budget lacked a clear strategy to bring the undocumented economy into the tax net and warned of implementation challenges in agricultural income taxation.

He observed that relief measures were being offset through revenues generated from petroleum levy and sales taxes.

While appreciating provincial cooperation in federal fiscal arrangements, he expressed concern that reductions in provincial development spending could negatively affect education, health, water and local government sectors. He also stressed the importance of transparency in the Federal Board of Revenue’s automated assessment and audit reforms, along with strong safeguards for citizens’ data privacy.

SDPI Deputy Executive Director (Research) Dr. Sajid Amin Javed said the budget remained focused on fiscal stabilization rather than structural transformation and export-led growth.

He stated that the government’s 4 percent GDP growth target appeared achievable, but much of the projected expansion was expected to come from the real estate sector, which generates limited employment and has weak connections with construction and manufacturing industries.

He projected inflation to remain between 11 percent, higher than the official target of 8.2 percent, citing elevated petroleum prices, a record petroleum development levy target of Rs1.67 trillion, increased energy costs and uncertainty in global oil markets.

He warned that interest rates could remain in the range of 12 to 13 percent and may increase further if international oil prices rise.

Dr. Javed said the government’s Rs15.264 trillion tax revenue target was achievable through inflation, economic growth, new taxation measures and improved compliance.

SDPI Deputy Executive Director (Policy) Dr. Shafqat Munir Ahmed said the budget could not be viewed solely as a stabilization budget despite ongoing IMF-supported fiscal consolidation. He welcomed efforts to improve tax compliance and revenue administration, including the introduction of a faceless tax system and enhanced tracking mechanisms, while emphasizing the need for transparent implementation and stronger financial inclusion measures.

Dr. Munir also called for strengthening climate resilience in agriculture and better integration of social protection programmes with disaster management systems. He advocated greater investment in early warning systems, anticipatory action and climate-responsive cash transfers through the Benazir Income Support Programme (BISP).

SDPI Research Fellow Dr. Fareeha Armughan highlighted the growing complexity of poverty in Pakistan due to climate risks and multidimensional deprivation. While welcoming the 17 percent increase in the BISP budget and plans to expand beneficiary families to 10.2 million, she stressed the need to move beyond conventional cash assistance towards adaptive social protection models linked to employment generation, micro-enterprises and women’s economic empowerment.

Discussing the energy sector, SDPI Research Fellow Dr. Khalid Waleed said the budget continued to prioritize electricity generation capacity rather than demand-side management and energy efficiency. He advocated retiring imported fuel-based power plants and accelerating investment in battery storage technologies.

SDPI Research Fellow Dr. Irfan Ahmad Chatha said the primary objective of the budget was macroeconomic stability and fiscal discipline rather than rapid economic growth. He stressed the importance of evaluating the budget within a medium-term fiscal planning framework and called for stronger internal audit systems, greater expenditure transparency and continued reforms in public-sector governance and procurement.

The experts concluded that while the Federal Budget 2026-27 supports fiscal stability and revenue generation, greater emphasis is needed on structural reforms, climate resilience, financial inclusion and broadening the tax base to ensure sustainable and inclusive economic growth.