The government has finalized key economic targets for the Federal Budget 2026-27, approving a national development outlay of Rs4,715 billion and setting a 4 percent economic growth target for the upcoming fiscal year.
Budget documents also reveal a major shift in financial resources toward the provinces, while the federal government plans to collect an average of Rs2,156 billion annually in surcharges from the public.
According to budget documents, the government has proposed a 4% GDP growth target for the next fiscal year. Sector-wise growth targets have also been outlined, with agriculture projected to grow by 3.8%, industry by 4%, and the services sector by 4.2%.
The targets form part of the government's broader strategy to accelerate economic activity and support long-term development.
Economy falls short of target
The proposed growth target comes after the economy failed to meet expectations during the current fiscal year. Documents show that economic growth remained limited to 3.7%, falling short of the original 4.2% target set by the government.
The lower-than-expected performance highlights the economic challenges faced during the outgoing fiscal year.
National development outlay Rs4,715bn
The government has approved a national development outlay of Rs4,715 billion for FY2026-27. The allocation is aimed at financing development projects across the country, including infrastructure, public services and economic development initiatives.
As part of this framework, the federal government plans to spend Rs1,126 billion under the Public Sector Development Programme (PSDP).
Budget documents indicate that provinces have become financially stronger than the federation in terms of development resources.
The government has acknowledged that the federal development budget has remained largely stagnant for the past eight years, limiting Islamabad’s share of development spending.
Meanwhile, provincial governments have gained a larger role in financing and implementing development projects.
Provincial development budgets exceed Rs3.1tr
The four provincial governments are expected to spend a combined Rs3,138 billion on development projects during the next fiscal year. Punjab has allocated the largest development budget at Rs1,450 billion. Sindh follows with a development allocation of Rs816 billion.
Khyber Pakhtunkhwa has earmarked Rs564 billion for development initiatives, while Balochistan has set aside Rs308 billion for its development programme.
These allocations are expected to support a range of infrastructure, education, healthcare and economic development projects across the provinces.
Apart from federal and provincial development expenditures, various federal government agencies are expected to spend an additional Rs451 billion separately.
This spending will contribute to the overall national development effort and support sector-specific projects.
Govt plans annual surcharge collection
The budget framework also includes a plan to collect an average of Rs2,156 billion annually from the public through surcharges.
The proposed revenue collection strategy is intended to support government finances and help fund development spending in the coming fiscal year.
The proposed budget reflects the government’s focus on economic growth, infrastructure development and public investment despite ongoing fiscal challenges.
With a national development outlay of Rs4.715 trillion, sector-specific growth targets and significant provincial spending commitments, FY2026-27 is expected to place development and economic expansion at the center of Pakistan’s fiscal agenda.
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