The Government of Pakistan is set to unveil the federal budget for the fiscal year 2025–26 in the National Assembly today, with the total outlay expected to reach Rs. 17.6 trillion. This marks a reduction from last year’s Rs. 18.7 trillion federal allocation, signaling a slightly more restrained fiscal approach amid ongoing economic pressures.
Salaries and Pensions Increase
The new budget is projected to include several adjustments aimed at addressing inflation and rising living costs, particularly for salaried and retired public sector employees. Reliable sources indicate that government employees may receive a salary increase ranging between 7.5% and 10%, while retired personnel may benefit from a 5% to 12.5% hike in pensions.
30% Disparity allowance For grades 1 to 16
A significant policy proposal under consideration includes a 30% disparity allowance for civil servants in basic pay scale (BPS) grades 1 to 16. This measure is intended to reduce salary gaps across departments and ensure more equitable compensation structures.
The tax revenue target for the next fiscal year is projected at Rs. 14.2 trillion, reflecting the government’s efforts to expand the tax base and increase domestic revenue generation. In addition to tax income, non-tax revenues are expected to contribute Rs. 4.5 trillion, sourced from state-owned enterprises, petroleum levies, and other avenues.
Key allocations in the budget include:
- Debt servicing: Rs. 8.2 trillion
- Defense expenditure: Rs. 2.55 trillion
- Pension payments: Rs. 1 trillion
- Subsidies: Rs. 1.186 trillion
- Grants and transfers: Rs. 1.9 trillion
Total revenue for the upcoming fiscal year is estimated at Rs. 19.4 trillion, indicating a budget structured around cautious optimism and fiscal realism. However, the sheer volume of debt servicing—which will consume nearly half the expected tax revenue—highlights the enduring challenges posed by Pakistan’s growing public debt.
This year’s budget presentation carries added weight as the government negotiates with international financial institutions, including the International Monetary Fund (IMF), for ongoing economic support and structural reforms. The fiscal blueprint is likely to include measures focused on revenue mobilization, expenditure rationalization, and improved transparency.
As Pakistan navigates a complex economic landscape marked by inflation, currency pressure, and external debt obligations, the 2025–26 federal budget will play a critical role in determining the country’s short- to medium-term economic direction.
Public servants, pensioners, business communities, and international stakeholders will be watching closely to assess how the government balances fiscal discipline with the urgent need to provide relief to its citizens.