Finance Minister Muhammad Aurangzeb unveiled a Rs17.6 trillion federal budget for fiscal year 2025-26 in the National Assembly on Tuesday.

Aurangzeb said that the budget came at a historic moment after Pakistan’s victory over India.

“The spirit with which we protected our national sovereignty, we need to ensure our financial security in the same way,” he added.

This represents a slight decrease from last year’s budget of Rs18.78 trillion. The budget includes a tax collection target of Rs14.02 trillion for the Federal Board of Revenue (FBR), a significant increase from the revised estimates of Rs12.33 trillion for the current fiscal year. Meeting this revised target by June 30th remains a significant challenge.

Key features of the proposed budget include a salary increase for public sector employees, projected to be between 7.5% and 10%, along with a disparity allowance of up to 30% for grades 1 to 16. A substantial allocation of Rs2.55 trillion is earmarked for the defense budget. Markup payments are set at Rs8.2 trillion, a reduction from the previous year’s Rs9.7 trillion. Other key allocations include Rs1.05 trillion for pensions, Rs1.186 trillion for subsidies, Rs1.9 trillion for grants, and Rs1 trillion for the Public Sector Development Program (PSDP).

The government anticipates a budget deficit requiring financing of Rs6 to 7 trillion to remain within the desired limits. Provincial governments are expected to generate revenue surpluses to contribute to reducing the overall consolidated budget deficit, a key condition of the ongoing International Monetary Fund (IMF) program. The budget projects total gross revenue receipts at Rs19.298 trillion, with transfers to provinces under the NFC Award totaling Rs8.2 trillion. Following the budget’s presentation, the National Assembly will hold a series of sessions for debate and approval of the budget and related legislation.