2026-27 Budget

The coming Budget for FY27 looks to consolidate rather than innovate

The federal budget for the coming financial year, 2026-27 is to be presented on June 5, which allows 24 days for the process of passage through both Houses, including both discussions on individual sectors through cut motions, as well as in general, during the Budget debate. As it is the Shehbaz government’s third budget, it is a midpoint after which the countdown to the next general election will begin. Thus it is expected to be a relatively conservative budget, with no new initiatives to be taken, nor any such relief granted to the public as would be expected with an election imminent. It is not even the last budget under the current IMF programme; that will come next year.

The IMF is important because it looms large over the budgetary process. The gross figures have to be approved, and because the figures are bandied about, the outlines of the budget are common knowledge. For instance, it has a spending target of Rs 17.1 trillion, with debt servicing at Rs 7.8 trillion and defence spending at Rs 2.7 trillion accounting for about Rs 10 trillion, leaving about Rs t trillion needed for general administration, subsidies and other such expenditure. To bridge the gap, the Federal Board of Revenue is being tasked with the collection of Rs 15.3 trillion. This implies a 14 percent to 20 percent increase on this year’s collection. The Public Sector Development programme is being pitched at Rs 1.5 trillion next year, without making up for the massive cut which was made this year due to the Gulf crisis.

That crisis is not yet over, and just as it snatched the current financial year in terms of development, it is set to affect the next. The government has based its budgeting on a growth target of 4.1 percent and inflation of  8.4 percent.The targets may become virtually impossible to achieve, IMF or no IMF, if there is a resumption of the conflict, and the international oil price starts to go up once again. Pakistan may be basking in its role as mediator between the USA and Iran, but the harsh realities of the conflict are taking their toll as it tries to make a budget for the year.