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Saturday, 13 June, 2026 | 27 ZilHaj, 1447
Rs 20.00 | Vol XVII No 79 | 8 Pages | Islamabad Edition
GOVT UNVEILS RS18.7TR BUDGET FOCUSED ON GROWTH AND RELIEF
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g WHO GETS RELIEF AND WHO FOOTS THE BILL? PROFIT
Pakistan raises defence budget above Rs3tr
SHAHNAWAZ ALI
loud, sustained ruckus surrounded Finance Minister Muhammad Aurangzeb as he rose to deliver the federal budget on June 12, two hours after the stipulated time. Members of the Pakistan Peoples Party, the government’s uneasy coalition partner, refused to enter the chamber, while opposition legislators filled the hall with accusations of theft and chants of dissent. Through the uproar, Aurangzeb pressed ahead with a speech built around the language of “relief measures”. The spectacle was marred with contradiction as the government presented a Rs18.77 trillion budget as an instrument of stability and relief from within a parliament already fractured over its terms. Before reading out a single figure, Aurangzeb spent considerable time acknowledging coalition allies who were barely present, praising the prime minister and recounting Pakistan’s recent geopolitical gains. He presented the country’s improved international standing as the culmination of a sequence that began with Operation Bunyan-um-Marsoos during last year’s confrontation with India and reached its peak with Pakistan’s mediation between Iran and the United States during a dangerous regional escalation. On the same day as the budget speech, Prime Minister Shehbaz Sharif announced that Washington and Tehran had agreed on the final text of a peace deal and that Islamabad was working with both sides on the next steps. While the political noise is always a part of Pakistan’s federal budget, the numerical exercise itself promises to be a fairly interesting one. The budget also came with a finance bill 2026, containing a list of legislative changes required to make the newest figures work. Here is a breakdown of the budget itself. An overview of the revenue and expenditure side: The federal government has set the total size of the Budget 2026-27 at Rs18.771 trillion, with net federal revenue expected to cover less than two-thirds of expenditure and the remaining Rs7.020 trillion to be financed through domestic and external borrowing and privatisation proceeds.
PROFIT SADDAM HUSSAIN
The federal government has allocated more than Rs3 trillion for defence in the budget for fiscal year 2026-27, up from Rs2.56 trillion in the previous year, amid heightened regional security concerns. Defence expenditure is projected at 2.1% of gross domestic product in FY27, compared with the revised estimate of 2.03% for the outgoing fiscal year. Presenting the budget, Finance Minister Muhammad Aurangzeb linked the higher allocation to military preparedness and changes in the regional security environment. He said Pakistan’s military response to India in May 2025 had increased international interest in the country’s defence capabilities and locally produced fighter aircraft. Aurangzeb said defence exports could generate foreign exchange and contribute to economic activity, alongside meeting national security requirements. He also referred to the defence agreement signed between Pakistan and Saudi Arabia last year, saying it had expanded bilateral strategic cooperation. The minister credited Prime Minister Shehbaz Sharif and Chief of Defence Forces and Chief of Army Staff Field Marshal Asim Munir with strengthening defence ties between the two countries.
On the revenue side, the Federal Board of Revenue has been assigned a tax collection target of Rs15.264 trillion, compared with Rs 14.131 trillion in the outgoing year, representing an increase of 8 %. Non-tax revenue has been projected at Rs5.336 trillion, against Rs 5.147 trillion previously, a change of 3.6%. Together, tax and non-tax collections are expected to generate gross revenue receipts of Rs20.600 trillion. Of this amount, Rs8.848 trillion will be transferred to the provinces as their share of the divisible pool. After the provincial transfer, net revenue receipts available to the federal government will stand at Rs11.751 trillion, against Rs 11.07 trillion in FY26. This means the federal government’s own net revenue will finance only around 62.6% of its Rs18.771 trillion expenditure plan. The remaining Rs7.020 trillion, or approximately 37.4% of the budget, will have to come from borrowing,
Locals foil suicide attack on mosque in Lakki Marwat LAKKI MARWAT
STAFF REPORT
Budget 2026-27 proposes relief for salaried class, however, it seems to have missed the mark PROFIT
ZAIN NAEEM
When the budget was going to be announced, there was an expectation that the salaried individuals would be provided some much-needed relief. In the last year, the salaried class paid around Rs 550 billion in taxes which makes up roughly 29% of all tax collections made. The newly announced federal budget has proposed revised income tax slabs for individuals, however, the relief is only for a few of the tax slabs with the ones below the threshold getting no relief whatsoever. The tax slabs that have been given some sort of relief start from Rs 183,333 per month, going all the way up to Rs 583,333 per month, with additional benefit being given to individuals earning more than Rs 1 crore annually. Based on the new tax slabs, individuals earning below Rs 50,000 per month are expected to pay no tax at all. The tax slabs start from Rs 50,000 per month to Rs 100,000 per month. Individuals in this slab will end up paying 1% of income earned above Rs 50,000 per month.
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Super tax on many industries to be abolished PROFIT In the recent budget being proposed, it was announced that businesses earning between Rs 150 million and Rs 500 million who were being taxed with 6 different slabs ranging from 1% to 7.5% will see this tax completely abolished. Similarly, for income above Rs 500 million, the supertax rate will be decreased from 10% to 8%. The purpose of this tax cut is to provide relief to small businesses and make it easier for them to do business. The super tax will still be applicable on banks, oil and gas exploration companies and fertilizer manufacturers. The super tax has been in focus recently after the Federal Constitution Court of Pakistan delivered a landmark verdict stating that the supertax was constitutionally valid under Sections 4B and 4C of the Income Tax Ordinance 2001. The decision came in response to the provincial High Courts which had judged in the favour of the companies which deemed the tax to be unconstitutional. The impact of this decision was that the tax that had been applied from 2022 of 10% on income above Rs 500 million was going to be collected retrospectively which meant that companies had to implement this in their financial accounts.
rowing of Rs4.012 trillion and privatisation proceeds of Rs161 billion will produce Rs7.020 trillion in financing. When added to net federal revenue receipts of Rs11.751 trillion, total resources will reach Rs18.771 trillion, exactly matching planned expenditure. Total borrowing minus the privatisation proceeds is estimated at Rs6.82 trillion slightly higher that the Rs 6.41 trillion borrowing of last year. On the expenditure side, current spending will dominate the budget at Rs17.495 trillion, compared with Rs 16.286 trillion in the previous year, an increase of 7.5%. Current expenditure will account for approximately 93.2% of the entire federal budget, leaving only Rs1.276 trillion for development and net lending. Interest payments remain the largest expenditure head at Rs8.054 trillion. Debt servicing alone will consume roughly
external inflows and asset sales. The government expects to raise Rs2.034 trillion through non-bank borrowing, including National Savings Schemes and other public-account sources. Meanwhile, net external receipts flowing into the Federal Consolidated Fund have been estimated at Rs813 billion, almost $3 billion. Although external financing remains part of the budget plan, it accounts for only around 11.6% of the total financing requirement, much lower than all the previous budgets. The single largest source of deficit financing will be bank borrowing. This alone will provide more than 57% of the total Rs7.020 trillion financing requirement. Privatisation proceeds have been projected at Rs161 billion. The combined, nonbank borrowing of Rs2.034 trillion, net external receipts of Rs813 billion, bank bor-
PM says economy stabilised, pledges stronger growth in new budget ISLAMABAD STAFF REPORT
An alleged Khawarij operative attempting to carry out a suicide attack on a mosque during Friday prayers was killed by local residents before he could reach his target, according to local sources on Friday. The attacker reportedly sought to enter a mosque packed with worshippers for congregational prayers with the intention of carrying out a suicide bombing. Sources said alert and courageous local citizens intervened in time and successfully neutralised the suspect before he could penetrate the mosque premises. However, explosives attached to the attacker’s motorcycle detonated during the incident, triggering a powerful blast that resulted in the martyrdom of a five-year-old girl. At least five other people, including children, sustained injuries in the explosion and were shifted to nearby hospitals for medical treatment. Following the blast, security forces and law enforcement agencies swiftly cordoned off the area and launched a comprehensive search and clearance operation to ensure no other threats remained. Authorities are investigating the circumstances surrounding the attack and collecting evidence from the scene. The incident sparked widespread anger and condemnation among residents of Lakki Marwat, who expressed outrage over the targeting of worshippers and innocent civilians. Further details regarding the identity of the attacker and the nature of the operation are awaited as investigations continue.
Prime Minister Shehbaz Sharif on Friday said Pakistan’s economy had achieved stability despite multiple challenges and expressed confidence that the federal government’s third budget would place the country on a stronger and faster growth trajectory. Addressing a special meeting of the federal cabinet convened to approve the budget, the prime minister said the government had successfully navigated difficult economic conditions and laid the groundwork for sustainable development. He paid tribute to the people of Pakistan for enduring inflation and economic hardship over the past two years, saying the patience of the country’s 240 million citizens had played a crucial role in stabilising the economy. The prime minister said the first two budgets of the current government were framed in line with national requirements and commitments under the International Monetary Fund (IMF) programme, which required difficult fiscal adjustments, including additional taxation, to stabilise an economy facing prolonged uncertainty. “We are fully aware of the difficulties faced by ordinary citizens. However, through consistent efforts over the last two years, inflation has come down from 38 per cent to single digits, while the
STAFF REPORT
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42.9% of total federal expenditure and around 46% of all current spending. The pension bill has been set at Rs1.169 trillion, against Rs 1.055 trillion last year. Defence affairs and services have been allocated Rs3.000 trillion, compared with Rs 2.5 trillion in the outgoing budget. Grants and transfers will receive Rs2.680 trillion. Subsidies have been budgeted at Rs1.091 trillion, while the cost of running the civil government has been set at Rs1.071 trillion. Development expenditure and net lending together have been fixed at Rs1.276 trillion, representing only around 6.8% of the total federal spending envelope. Within this amount, the federal Public Sector Development Programme has been allocated Rs1.000 trillion, against the same Rs 1 trillion last year.
PTI rejects Budget FY2026-27, calls it 'elite-centric and anti-people'
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ISLAMABAD
STAFF REPORT
policy rate has been reduced from 22.5 per cent to 11 per cent,” he said. He noted that regional and global developments, including tensions in the Gulf, had created additional challenges, but Pakistan had remained on a path of economic stability. He said key indicators were improving and expressed optimism that the new budget would further strengthen growth and investment. Earlier, the prime minister informed the cabinet that he had attended the funeral prayers of military personnel martyred in a recent helicopter crash, including two Christian brothers, saying the tragedy had left the entire nation grief-stricken. “These sacrifices will not go in vain. Terrorism will ultimately be
eradicated from Pakistan,” he said. Highlighting future priorities, PM Shehbaz stressed expanding investment in renewable energy sources such as solar, wind and battery storage, alongside accelerating work on water reservoirs and dams to strengthen longterm energy and water security. He said the budget process involved extensive consultations with provinces and thanked them for their cooperation, saying discussions on fiscal targets reflected national unity and collective responsibility. The prime minister particularly acknowledged the support of Punjab Chief Minister Maryam Nawaz and appreciated former prime minister Nawaz Sharif’s role in strengthening coordination between the federal and Punjab governments.
The opposition Pakistan Tehreek-e-Insaf on Friday rejected the federal budget for fiscal year 2026-27, describing it as an “elite-centric” financial plan that would provide little relief to ordinary citizens and struggling businesses. The criticism came a day after Finance Minister Muhammad Aurangzeb presented the Rs18.8 trillion federal budget in the National Assembly, outlining a growth target of 4 per cent and describing the fiscal plan as being focused on stabilisation, reform and economic growth. In a statement, PTI Central Information Secretary Sheikh Waqas Akram said the budget was essentially a “refined exercise in elite selfpreservation” and failed to address the economic hardships faced by the public. He questioned the government's portrayal of a projected 3.7pc economic growth rate as a major achievement, arguing that the previous PTI government had recorded significantly higher growth despite navigating the challenges posed by the Covid-19 pandemic. Akram maintained that the current administration was relying heavily on remittances, external borrowing and other factors that had not translated into tangible improvements in the lives of ordinary Pakistanis. He also expressed concern over rising poverty levels and increasing economic pressure on lowincome households, saying the budget lacked meaningful measures to address the challenges faced by vulnerable segments of society.
PM says US–Iran peace deal text agreed as mediation reaches critical stage ISLAMABAD
SALEEM JADOON
Prime Minister Shehbaz Sharif on Friday said that a final text of a proposed peace deal between the United States and Iran has been agreed, even as Iranian Foreign Minister Abbas Araghchi urged restraint against speculation over its contours amid continuing public differences between Washington and Tehran. Taking to X, Prime Minister Shehbaz said Pakistan, which has been mediating between the two sides, is now working with both governments to finalise the next steps toward ending months of conflict involving the United States, Israel and Iran. “Amid ongoing intense mediation efforts by Pakistan, we are fully aware of the incessant misinformation campaign being waged by those who want to sabotage the peace deal,” the prime minister wrote.
“Setting aside the noise, we can confirm that a final, agreed-upon text of the peace deal has been reached and Pakistan is now working closely with both sides to finalise the next steps,” he added. “Peace has never been this close as it is now.” The statement marked the strongest indication yet that negotiations may be nearing conclusion, even as senior US and Iranian officials continued to publicly dispute key aspects of the proposed arrangement. Earlier on Friday, Iranian Foreign Minister Seyed Abbas Araghchi said the proposed “Islamabad Memorandum of Understanding” had “never been closer,” while cautioning media outlets against speculating on its details at this stage. “In line with our responsible and transparent approach, all details will be shared with the public in due course,” he said. However, US President Donald Trump rejected Iran’s interpretation of the emerging
agreement, accusing Tehran of misrepresenting the draft and saying its statements bore “no relation to the truth.” “What they said, including their weak and pathetic statement on having a deal, bears no relation to the truth,” Trump wrote on Truth Social. “Very dishonorable people to deal with. With them, there is no such thing as dealing in good faith.” Trump had earlier announced that planned new strikes on Iran were being called off after a deal was reached, but subsequent remarks from Iranian officials appeared to diverge from Washington’s position. A senior Iranian source told Reuters that the draft agreement includes the lifting of sanctions on Iranian oil exports, the unfreezing of billions of dollars in Iranian assets, and a cessation of hostilities on multiple fronts, including Lebanon.
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Dar engages Swiss, EU leaders as momentum builds for US-Iran peace deal ISLAMABAD
STAFF REPORT
Deputy Prime Minister and Foreign Minister Senator Mohammad Ishaq Dar held separate telephone conversations with Swiss Foreign Minister Ignazio Cassis and EU High Representative/Vice President Kaja Kallas on Friday, as Pakistan stepped up diplomatic engagement amid growing optimism over a possible United States– Iran understanding. According to the Foreign Office (FO), Dar and Swiss Foreign Minister Cassis exchanged views on the regional situation and welcomed encouraging progress to-
ward an understanding between Washington and Tehran. The Swiss foreign minister appreciated Pakistan’s “leading mediating role” in facilitating diplomatic engagement and advancing peace and stability in the region and beyond. Both sides agreed to remain closely engaged on future developments. In a separate call, Dar and EU High Representative Kaja Kallas also welcomed progress achieved through sustained diplomatic engagement and expressed hope that ongoing efforts would soon lead to a durable understanding and peaceful resolution, according to a statement issued by the Deputy Prime Minister’s Office.