Budget to be presented on June 12 as govt finalises fiscal framework after key consensus

ISLAMABAD: Finance Minister Muhammad Aurangzeb will present the federal budget for fiscal year 2026-27 in the National Assembly on June 12, following the completion of consultations with coalition partners and provinces on key fiscal matters.

The revised budget schedule was confirmed by Adviser to the Finance Minister Khurram Schehzad, who announced that the Pakistan Economic Survey 2025-26 would be unveiled by the finance minister at 2:20pm on June 11, ahead of the formal budget presentation.

President Asif Ali Zardari has already summoned sessions of both the National Assembly and Senate for the budget proceedings.

The announcement came after the National Economic Council (NEC), the country's highest economic decision-making body, met on Wednesday under the chairmanship of Prime Minister Shehbaz Sharif to finalise federal and provincial development plans for the upcoming fiscal year.

Addressing the meeting, the prime minister said the federal government had conducted extensive consultations with provincial governments and made decisions in the broader national interest. The NEC meeting was finally held after being postponed three times due to prolonged negotiations over provincial shares under the National Finance Commission (NFC) Award.

The budget, originally scheduled to be presented on June 10, was delayed as the federal government, coalition partners and provinces sought consensus on the Centre's demand for additional fiscal space exceeding Rs1 trillion to meet strategic and development requirements.

A breakthrough was achieved earlier this week when the ruling PML-N and its key coalition partner, the PPP, reached an understanding on the broad contours of the federal budget. The two sides agreed on expenditure rationalisation across federal and provincial levels to address an estimated revenue shortfall of around Rs800 billion this year and create additional fiscal space for next year's requirements.

According to informed sources, provincial shares from the federal divisible pool are expected to remain frozen at the current fiscal year's level, while any increase in Federal Board of Revenue (FBR) collections beyond this year's base will be retained by the federal government. The additional fiscal space generated through this arrangement could range between Rs1.3 trillion and Rs1.7 trillion, depending on revenue performance.

However, sources said that Balochistan and Khyber Pakhtunkhwa had not yet fully endorsed the arrangement.

Under the proposed development framework, the government plans to unveil a record national development programme worth Rs4.715 trillion despite fiscal constraints and close oversight by the International Monetary Fund (IMF).

The development portfolio includes provincial Annual Development Programmes (ADPs) amounting to Rs3.138 trillion, reflecting a 9.6 per cent increase over the current year. The federal Public Sector Development Programme (PSDP) is projected at Rs1.126 trillion, up 12.6 per cent, while development spending by state-owned enterprises is expected to rise to Rs451 billion from Rs355 billion this year.

Officials said the government has reallocated resources to accommodate major infrastructure projects, including national highways, while earmarking funds for coalition partners' development priorities and lawmakers' schemes.

Meanwhile, Prime Minister Shehbaz Sharif reiterated the government's commitment to expanding the tax base and integrating the informal economy into the documented sector. As part of these efforts, the government recently launched the Fixed Tax Asaan Scheme aimed at bringing small traders and shopkeepers with annual turnovers of up to Rs200 million into the tax net.

Sources in the financial sector also indicated that the government is considering easing remittance-related restrictions in the upcoming budget to facilitate overseas Pakistanis and encourage greater investment inflows into the country.