Pakistan Unveils 18.77 Trillion-Rupee Budget, Lifting Defence 18% and Cutting Development
Updated
Updated · Reuters · Jun 12
Pakistan Unveils 18.77 Trillion-Rupee Budget, Lifting Defence 18% and Cutting Development
3 articles · Updated · Reuters · Jun 12
Summary
3 trillion rupees is earmarked for defence in Pakistan’s 2026-27 budget, up 18%, while federal development spending is capped at 1 trillion rupees in a plan built around IMF targets.
15.26 trillion rupees in tax revenue is targeted despite this year’s shortfall, with much of the increase expected from petroleum levies and other taxes as Islamabad seeks a 2% primary surplus.
7.02 trillion rupees is the projected federal deficit, while the overall fiscal gap is targeted at 3.6% of GDP after a 1.79 trillion-rupee provincial surplus and cuts to provincial development plans.
4% growth and 8.2% inflation are the government’s forecasts, but rising oil prices linked to the U.S.-Israeli war on Iran have already pushed inflation back into double digits.
Analysts say the squeeze will likely fall on salaried workers and formal businesses, underscoring how debt servicing, security spending and the $7 billion IMF programme are limiting room for welfare relief.
Is Pakistan's IMF-driven budget sacrificing its digital future by imposing heavy taxes on the tools of education and innovation?
Is this austerity plan a necessary cure for Pakistan's economy, or does it trap the nation in a repeating cycle of debt?
As Pakistan's middle class faces new taxes, will the nation's powerful, untaxed agricultural and real estate barons ever pay their fair share?
Pakistan’s 2026-27 Budget: Austerity, Inequality, and the Impact of Global and Climate Crises
Overview
Pakistan’s 2026-27 budget introduces strict austerity measures in response to tough IMF conditions and the economic fallout from global conflicts like the US-Israel war on Iran. The government is focused on stabilizing the economy by severely cutting spending on development, with no new projects planned except for defense and interior needs. This freeze on development highlights a shift toward prioritizing essential state functions and national security over growth. These decisions reflect the government’s urgent need to manage financial pressures and navigate external shocks, setting a challenging path for the country’s economic future.