Pakistan’s finance minister unveiled the nation’s upcoming budget to parliament on Friday, featuring an 18% boost in military expenditures while reducing allocations for development initiatives and providing limited tax breaks for wage earners.
The budget proposal highlights the challenges facing Prime Minister Shehbaz Sharif’s administration as it grapples with sluggish economic expansion, elevated living expenses, and instability caused by regional conflicts and Middle Eastern warfare.
The country has positioned itself as an important intermediary in facilitating dialogue between Iran and the United States to address the current conflict. While negotiations have reached an impasse, a fragile ceasefire remains active.
Additionally, Pakistan finds itself in a dispute with adjacent Afghanistan, claiming that Kabul is providing refuge to Pakistani insurgents battling the Islamabad government — allegations that Kabul rejects. The renewed violence since February has resulted in hundreds of casualties.
Finance Minister Muhammad Aurangzeb informed Parliament that the proposed budget sets total expenditures at 18.77 trillion rupees ($67.49 billion), representing a modest rise from the previous year.
The fiscal year 2026-27 for Pakistan commences July 1, with parliamentary voting on the proposal scheduled for later this month.
Aurangzeb stated the government targets 4% economic expansion and 8.2% inflation for the upcoming year, although cost pressures continue to burden families already affected by years of increasing expenses.
The budget aligns closely with requirements from Pakistan’s current $7 billion International Monetary Fund agreement, which demands increased revenue collection, expanded taxation, and structural changes to address persistent budget shortfalls.
