Budget 2026-2027

A Budget giving more relief than expected

When Finance Minister Muhammad Aurangzeb presented his and the Shehbaz government’s third budget on Friday, it was not expected that it would afford much relief. However, while announcing a n 18.8 trillion budget, he also announced a reduction in the top income tax rate for the top slabs, and the abolition of supertax for both individuals and firms.  There have been none of the draconian taxation measures associated with previous budgets, which may well be an indication that the government’s stabilization measures have begun to work. However, there were no extravagant measures, either of relief or reform.

The Budget tried to handle the uncompromising equation before it, because of the assumptions of growth and inflation it was making, not to forget the restraints placed on it by the National Finance Commission. While one of the features of the budget was to get the provinces to receive their full NFC shares, but to pat back some, so that the Centre could meet some of the expenses that must be made. One of the major expenses is defence, which reached Rs 3 trillion for the first time, but Senator Aurangzeb, referring to this, said that the country had been recognized as a power worldwide because of its success in Operation Bunyanum Marsoos (in 2025) and because of its role as a mediator between the USA and Iran in the ongoing crisis. It is worth mentioning that, like the rest of the world, that crisis could well derail virtually all of the assumptions behind the Budget just presented. The growth target of four percent is not very ambitious, but it could easily be cut if oil prices do not go down. There seems to be some movement on a deal that allows the re-opening of the Hormuz Strait, but neither the USA nor Iran seem to heading towards a permanent settlement.

Perhaps most important was the silence on the subject of the IMF. With the current programme about to expire in a year, with only one budget on the programme ahead, and with the country still not out of the debt trap. When this government took office, with the programme stretching before it, there were loud protestations that it would be the last programme. The silence in this Budget Speech can only be described as deafening.