Key details of the federal budget for the fiscal year 2025-26 surfaced ahead of its formal presentation, indicating a projected budget deficit of Rs6,501 billion — nearly 5 per cent of the gross domestic product (GDP).
The upcoming budget, expected to be unveiled by the Finance Minister in the National Assembly later today, outlines major allocations, including Rs2,550 billion for defence expenditures.
According to sources familiar with the budget documents, the federal government has proposed total expenditures amounting to Rs17,573 billion, while federal revenue is projected at Rs19,298 billion.
After provincial transfers — estimated at Rs8,206 billion — the net federal revenue is expected to stand at Rs11,072 billion.
The Federal Board of Revenue (FBR) has been given a tax collection target of Rs14,131 billion. Meanwhile, non-tax revenue is projected at Rs5,167 billion, reflecting the government’s attempt to widen its revenue base beyond conventional tax avenues.
Debt servicing remains a dominant expenditure component, with Rs8,207 billion proposed for interest payments. This is followed by the defense budget, which at Rs2,550 billion continues to be the second-largest allocation in the upcoming fiscal plan.
Other major heads of expenditure include Rs1,055 billion proposed for pensions, Rs971 billion for running the civil government, and Rs1,186 billion earmarked for subsidies. Grants and transfers are projected at Rs1,928 billion, while Rs1,000 billion is set aside for the federal Public Sector Development Programme (PSDP).
The budget also includes ongoing expenditures estimated at Rs16,286 billion for the fiscal year, underlining the financial strain posed by fixed obligations such as debt servicing and pensions, leaving limited fiscal space for development initiatives.
The Finance Minister is scheduled to formally present the federal budget 2025-26 — with an outlay of Rs17,600 billion — before the National Assembly this evening.
The government is expected to defend its fiscal strategy by pointing to efforts at enhancing revenue mobilization and controlling non-productive expenditures.
