Today, Finance Minister Muhammad Aurangzeb will unveil Budget 2025 in Pakistan’s National Assembly, presenting a proposed spending plan of Rs17.8 trillion for the fiscal year 2025–26. He’ll also lay the Finance Bill for Senate approval, setting the stage for a year of fiscal reform and economic recalibration.
Fiscal Overview & Economic Context
This year’s Budget 2025 comes amid economic fragility. GDP growth fell to an estimated 2.7%, missing the 3.6% target for 2024–25. While the government plans an outlay of Rs17.8 trillion, it continues to operate under IMF conditions, aiming to stabilise the growing fiscal deficit.
Relief for Salaried and Pensioners
Government employees and retirees will see some easing:
- 10% pay hike for federal staff
- Pensions increased by 5–7.5%
- Civil servants in Grades 1–16 receive a 30% special allowance merged into basic pay.
These measures aim to balance austerity with compensation for low- and mid-income individuals.
Also Read: New COVID Variant NB.1.8.1 Raises Global Concern, Says WHO
Broadening the Tax Net & IMF Compliance
A core goal of Budget 2025 is to expand Pakistan’s tax base and curb evasion. New revenue measures include:
| Sector | Planned Tax Reform |
|---|---|
| Agriculture | First-ever agricultural income tax |
| Freelancers / Digital Workers | Tax on online and export earnings (freelancing) |
| Capital Gains | Higher tax on property and shares (CGT increase) |
| Consumer Goods | Taxes on fertilisers, insecticides, confectionery |
| FATA Region | Elimination of exemptions; 12% tax rate applied |
Goods such as beverages and cigarettes may see reduced rates, while others will become more expensive.
Public Sector Investment & IMF Strategy
Aligned with the IMF’s roadmap, the budget focuses on structural reforms—fuel subsidy cuts, digital tax systems, and improved fiscal discipline. It also seeks to boost development spending in agriculture, infrastructure, and digital finance.
Challenges Ahead
Despite measures, misaligned economic targets and rising poverty persist. The agricultural sector continues to underperform, and many remain tax-exempt, limiting revenue gains. Monitoring implementation and revenue realization will be critical.
What to Expect Next
Once approved, Budget 2025 will define tax rates, thresholds, and duties from July 1. Businesses, freelancers, farmers, and taxpayers must understand the new regime. Experts suggest stakeholder awareness and digital transparency will be crucial for success.
