Finance Minister presents Rs18.771 trillion federal budget for FY 2026-27

ISLAMABAD, Jun 12 (APP):Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb on Friday unveiled a growth-oriented federal budget worth Rs18.771 trillion for the fiscal year 2026-27, posting an increase of 6.81 per cent compared to the Rs17.573 trillion budget for the outgoing fiscal year.

The finance minister presented the budget in the National Assembly, outlining the government’s fiscal priorities aimed at sustaining economic growth, enhancing revenue generation, and providing relief to various sectors of the economy.

Pursuing a strategy of balanced and inclusive development across the country, he said the federal government has allocated Federal Public Sector Development Programme (PSDP) of Rs 1 trillion.

The budget also focused on development spending, social protection measures, and efforts to maintain macroeconomic stability while supporting investment and employment generation.

The finance minister said that despite the US-Iran war and devastating floods in the country, the Gross Domestic Product (GDP) growth rate was recorded at 3.7 per cent, while Large-Scale Manufacturing (LSM) registered growth of 6.1 per cent and the services sector expanded by 4.1 per cent.

The minister said that the LSM and services sectors recorded their highest growth rates in the last four years.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said that Pakistan’s economy had achieved significant macroeconomic stability during the last two years, with the size of the national economy reaching $452 billion and per-capita income increasing from $1,751 to $1,901 billion.

He said the government’s economic reforms had helped restore stability, strengthen public finances and improve investor confidence despite global economic challenges.

He said the policy rate had been reduced from 22 percent to 11.5 percent during the last two years, while the country’s foreign exchange reserves had improved significantly to reach $17 billion, sufficient to cover three months of import payments.

The minister said overseas Pakistanis continued to play a vital role in supporting the economy, adding that workers’ remittances reached $38 billion during the first 11 months of the current fiscal year and were projected to rise to $41 billion by the end of the current financial year.

Muhammad Aurangzeb said the Federal Board of Revenue’s tax-to-GDP ratio had improved from 8.5 percent to 10.3 percent, while revenue collection during the last three years increased by two percentage points as compared the economic growth.

He said the fiscal deficit, which stood at 7.8 percent of GDP in 2023, had declined significantly due to the government’s reform measures and was expected to fall to four percent by the end of the current fiscal year. The minister said inflation had also eased substantially, averaging 4.5 percent during the current fiscal year compared to 23.4 percent in the corresponding period of the previous year.

He, however, noted that due to the ongoing conflict between the United States and Iran and its impact on international markets, average inflation was likely to remain around 07 percent, though still lower than the government’s earlier projection of 7.5 percent for the current fiscal year.

Muhammad Aurangzeb said the recent increase in inflation was largely driven by developments in the Middle East and expressed confidence that inflationary pressures would ease once the regional conflict subsided. The finance minister said the restoration of financial and economic stability had helped rebuild the confidence of international financial institutions and global investors.

He said leading international credit rating agencies, including Moody’s, Fitch Ratings and S&P Global Ratings, had upgraded Pakistan’s sovereign credit ratings, reflecting improved economic fundamentals.

He said renewed investor confidence enabled Pakistan to re-enter international bond markets after 2022 and issue Eurobonds worth $750 million during the last four years. The minister said demand for domestic bonds remained stable despite global uncertainty, adding that Pakistan had also issued a Panda Bond on the occasion of the 75th anniversary of diplomatic relations between Pakistan and China, enabling the country to become part of one of the world’s largest capital markets.

He said the Pakistan Stock Exchange continued to reflect growing investor confidence and strong corporate performance.
Muhammad Aurangzeb said corporate profitability increased by 22 percent during the January-March 2026 period compared to 09 percent growth recorded earlier, while 173,000 new investors entered the Pakistan Stock Exchange, with a majority comprising young investors.

The minister said 11 Initial Public Offerings (IPOs) were launched during the current fiscal year, the highest number recorded in two decades. He further informed the House that the Securities and Exchange Commission of Pakistan registered 39,000 new companies during the year, reflecting increased business activity and investor confidence.

The finance minister said several leading international companies, including Google, VEON, BYD, Aramco, Alibaba Group, AD Ports Group, Raqmi and Turkish Petroleum, were making investments in Pakistan, demonstrating growing international confidence in the country’s economic outlook.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said that the government had continued its privatization programme in line with its commitments and successfully completed the privatization of the First Women Bank and Pakistan International Airlines (PIA) through a transparent process.

The minister said PIA had been transferred to the private sector in a transaction valued at Rs185 billion. He termed the deal a historic achievement and a practical manifestation of Prime Minister Shehbaz Sharif’s vision of promoting the private sector as the engine of sustainable economic growth.

He said the government was committed to completing the privatization of other state-owned enterprises, including generation companies (GENCOs), distribution companies (DISCOs), banks, insurance firms and airports. Letters of intent for the privatization of three DISCOs had already been issued, he added.

Aurangzeb reaffirmed the government’s commitment to overhauling the domestic revenue collection system through structural reforms, describing it as one of the prime minister’s top priorities.

The finance minister said the government had also launched a number of initiatives aimed at ensuring that the benefits of economic growth reach ordinary citizens. He said five new schemes had been introduced, including the “Zarkhez” programme, under which more than 750,000 small farmers would be provided loans worth Rs300 billion through a fully digital process.

He said low- and middle-income families would be offered housing finance at a markup rate of just five percent. The government had also launched the Pakistan Accelerated Vehicle Electrification initiative to facilitate the provision of electric motorcycles and e-rickshaws.

Aurangzeb said the fourth initiative, the Prime Minister’s Fan Replacement Program, would help replace old, electricity-intensive fans with energy-efficient models to reduce power consumption.

Highlighting progress in digitalization, he said the Digital Pakistan and financial inclusion programs were expanding rapidly, leading to increased banking penetration, greater digital transactions and the promotion of a cashless economy.

He said the number of merchants connected to digital payment systems had increased to 1.69 million from 500,000 a year ago. Similarly, digital banking users had risen from 95 million to 133 million, while annual digital transactions had grown from 6.9 billion to 10.1 billion.

The minister added that 92 percent of workers’ remittances received by the country were now being routed through formal banking channels.