Pakistan has presented a proposed federal budget of Rs. 18.77 trillion for the fiscal year 2026–27, reflecting a significant shift in spending priorities. Under the new plan, defence expenditure has been increased by 18% to reach Rs. 3 trillion, while the allocation for federal development projects has been capped at around Rs. 1 trillion. Officials have stated that these adjustments are driven by evolving regional security dynamics as well as ongoing fiscal pressures that continue to limit available resources.
Finance Minister Muhammad Aurangzeb has outlined a tax revenue target of Rs. 15.26 trillion for the upcoming year, alongside an expected fiscal deficit of 3.6% of GDP. The government has indicated that a large portion of the budget will be directed toward debt servicing obligations, defence requirements, and the continuation of commitments made under the International Monetary Fund (IMF) programme, all of which leave limited room for discretionary spending.
The budget has been formulated in a challenging global economic environment, where rising international oil prices and renewed inflationary pressures are affecting domestic stability and economic recovery efforts. As a result, despite broader ambitions for growth and development in the coming year, fiscal constraints have led to relatively restrained allocations for development projects and public relief initiatives.
