Pakistan News
Budget 2025-26: Austerity budget offers ‘crumbs’ for relief
• Next year’s revenue target set at Rs14.13tr
• Provinces’ contribution helps Centre outperform fiscal target, record lowest budget deficit in a decade
• Subsidy allocations have been reduced by 14pc
• Reduced debt servicing drives expenditure containment of nearly Rs2.26tr
• Generous tax relief, incentives for construction sector
• Fuel levy, electricity surcharges to rise next year
• Tough crackdown planned on non-filers, tax evaders
• Development spending squeezed to cut deficit
ISLAMABAD: Maintaining an aggressive stance on fiscal consolidation, as required by the International Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb on Tuesday still managed to offer some notional relief to the salaried class in the federal budget for fiscal year 2025-26, along with incentives for the real estate and construction sectors, in an effort to revive the struggling industrial sector and stimulate economic growth.
At the same time, however, the government announced it was imposing a ‘carbon levy’ of Rs2.5 per litre on petrol, diesel and furnace oil in the upcoming fiscal year, to be doubled the following year. It also introduced a 5 per cent tax on large pensions, an 18pc tax on imported solar panels, and an increase in the debt servicing surcharge on electricity to finance not only interest payments, but also principal debt. Additionally, it announced the gradual elimination of tax exemptions for the tribal areas beginning this year.
Ambitious targets
Despite a record tax shortfall of Rs1.07 trillion recorded for the current fiscal year, the finance minister set next year’s revenue target at Rs14.13tr — an 18.7pc increase from this year’s revised estimate of Rs11.9tr, against the original budget target of Rs12.97tr. This would include approximately Rs840 billion in additional revenue measures, on top of a Rs1.39tr automatic tax increase supported by projected inflation of 7.5pc and economic growth of 4.2pc and expenditure containment of nearly Rs2.26tr (equivalent to 2pc of GDP), driven primarily by reduced debt servicing costs, and also at the expense of development and public welfare initiatives.
Not only the Federal Board of Revenue (FBR), but the provincial governments, too, were unable to meet their commitment of maintaining a Rs1.22tr surplus for the current year. Still, they provided vital support to the federal government with a surplus of Rs1.01tr.
This contribution enabled the federal government to outperform its fiscal target and record a budget deficit of just 5.6pc of GDP (Rs6.44tr) — the lowest in a decade since FY2015-16 — compared to a higher projected deficit of 5.9pc (Rs7.28tr). This notable fiscal tightening was achieved through punishing additional taxation measures amounting to Rs2.2tr (1.8pc of GDP) alongside a reduction in expenditure as interest rates declined from a historic peak of 22pc.
Accordingly, the FY2025–26 budget sets an ambitious target to reduce the budget deficit to 3.9pc of GDP (Rs5.04tr), contingent upon a cash surplus of Rs1.46tr from the provinces. As a result, the primary budget surplus is projected to rise to 2.4pc of GDP, or Rs3.17tr, for the next year — up from this year’s 2.2pc of GDP (Rs2.5tr).
Relief for select groups
The government found sufficient fiscal space to offer some relief to the salaried class, who have been burdened by high tax rates, declining real incomes, and severe inflation over the past two years.
The finance minister proposed a reduction in income tax by half, to 2.5pc, on annual income between Rs600,000 and Rs1.2 million. It is pertinent to mention that there was a discrepancy in the income tax rate for the lowest taxable bracket announced by the finance minister and the tax rate mentioned in the finance bill, which was even lower at 1pc.
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Clarity is awaited on this matter. Similarly, the annual tax on a salary of Rs1.2m was proposed to be reduced to Rs6,000, down from the current Rs30,000. Mr Aurangzeb added that the income tax rate for those earning up to Rs2.2m per annum would be cut to 11pc, down from the current 15pc. Similarly, the tax rate has been reduced to 23pc from 25pc for salaried income between Rs2.2m and Rs3.2m. In addition, the finance minister acknowledged that oppressive tax rates were driving highly skilled professionals to migrate, contributing to a “brain drain”. As a corrective measure, he announced a 1pc reduction in the surcharge on annual incomes exceeding Rs10m.
Apart from this, a 10pc increase in salaries and 7pc rise in pensions was announced for government employees. The salaries of armed forces personnel would also be increased by 25pc, including a special relief allowance in recognition of their recent heroic performance in response to Indian aggression, the finance minister said.
At the same time, the government introduced a generous tax relief and incentives for the construction sector, including access to cheaper mortgage financing, in a bid to revive large-scale manufacturing, which has been contracting for the past three years due to unprecedented increases in energy and borrowing costs. To this end, the finance minister announced a reduction in the withholding tax on the purchase of real estate from 4pc to 2.5pc. The next two current withholding tax rates of 3.5pc and 3pc will also be reduced to 2pc and 1.5pc respectively.
Additionally, a 7pc federal excise duty imposed last year on the transfer of commercial properties, plots and houses has also been proposed to be abolished.
As a new initiative, the budget includes a tax credit on mortgages for homes of up to 10 marla (250 square yards) and flats of up to 2,000 square feet. This is in addition to a new scheme aimed at promoting mortgage financing. The finance minister also announced a reduction in stamp duty on property purchases in Islamabad Capital Territory, from 4pc to 1pc, and expressed hope that provincial governments would follow suit by reducing heavy taxation on immovable property.
The government also succeeded in persuading the IMF to exempt fertilisers and insecticides from taxation for the current year, in an effort to position agriculture as the engine of economic growth.
Tightening the net
On the other hand, the finance minister announced an increase in the tax rate on interest income from 15pc to 20pc, a move that may discourage savings. However, he clarified that this would not apply to small savers or investments in national saving schemes.
Similarly, digital marketplaces and online businesses are to be brought into the tax net through courier companies, it was announced. The minister also announced a 5pc income tax on pensions exceeding Rs10m per annum for pensioners under the age of 70. In a move to promote a cashless economy, non-filers will now be subject to a 1pc advance tax on cash withdrawals, up from the existing 0.6pc. Taxpaying businesses will be discouraged from making cash sales exceeding Rs200,000. Additional measures have also been introduced to encourage online transactions and digital payments.
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Strict steps will be taken against non-filers. Only taxpayers who submit their wealth statements will be allowed to undertake large financial transactions, such as the purchase of vehicles, immovable properties, securities, mutual funds, or the opening of certain bank accounts.
Tightening the noose around unregistered traders, the finance minister proposed the freezing of bank accounts, restrictions on property transfers, and the sealing of business premises in cases of serious violations of sales tax laws, with the involvement of trade bodies. In the same vein, he also announced a notional 0.5pc reduction in the super tax for corporate firms with annual incomes between Rs200m and Rs500m.
Improved tax collection
The finance minister noted a rise in the tax-to-GDP ratio, which has historically been one of the weakest aspects of Pakistan’s economy, from 8.8pc in June 2024 to 10.3pc in the first nine months of the current year. This figure is projected to reach 10.4pc by June 30, 2025. Including non-tax revenue, the federal tax-to-GDP ratio has improved to 11.6pc, representing an increase of 1.2 percentage points, up from 0.8 percentage points last year. The consolidated tax-to-GDP ratio, the finance minister added, has reached 12.3pc, including a 0.7pc contribution from the provinces. “The 1.6pc of GDP increase in FBR revenue is not only the highest in Pakistan’s history, but is also rarely seen anywhere else in the world in recent times,” the minister boasted.
Balancing the budget
The government has set the non-tax revenue target for the next year at Rs5.15tr, slightly higher than the current year’s Rs4.9tr. This brings the total gross federal revenue (FBR plus non-tax) to Rs19.28tr, up from the current year’s original budget target of Rs17.8tr, which was later revised down to Rs16.8tr. After transferring Rs8.2tr to the provinces, the net federal revenue is estimated to be Rs11.07tr for the next year, compared to Rs9.8tr this year. This leaves a projected federal deficit of Rs6.5tr, a reduction from the current year’s budgeted Rs8.5tr, which was later revised to Rs7.44tr.
Subsidy allocations have been reduced by 14pc to Rs1.19tr for the next year, down from Rs1.38tr in the current year. This is primarily due to a 13pc (Rs154bn) cut in power sector subsidies. The tariff differential subsidy for ex-Wapda distribution companies has been reduced by 9.7pc (Rs27bn) to Rs249bn, from Rs276bn this year. Meanwhile, the tariff subsidy for K-Electric has been cut by 28pc (Rs49bn), to Rs125bn from Rs174bn. An even larger reduction has been applied to the tariff subsidy for Azad Jammu and Kashmir, which has been reduced to Rs74bn from Rs108bn, reflecting a cut of 31.5pc.
The major non-tax revenue item is expected to be the petroleum levy on POL products, projected at Rs1.47tr, which is a 26pc increase from the current year’s Rs1.16tr. An even larger contribution is anticipated from State Bank of Pakistan profits, estimated at Rs2.4tr for the next year, though this marks a slight decline from Rs2.6tr this year.
The debt servicing cost for next year has been estimated at Rs8.2tr, representing an 8pc decline from actual repayments of Rs8.95tr, and 16pc lower than the original budget estimate of Rs9.78tr. Pension expenditure is expected to rise by around 4pc, reaching Rs1.06tr, up from Rs1.01tr this year. Military pensions are projected to grow by 12pc to Rs742bn, compared to a 10pc increase in civil pensions, which are expected to reach Rs243bn.
As a result, total current expenditure has been set at Rs16.29tr for the next year, slightly below this year’s figure of Rs16.39tr.
Published in Dawn, June 11th, 2025
Pakistan News
CM Murad asks authorities to boost polio vaccination across Sindh
KARACHI: Sindh Chief Minister Syed Murad Ali Shah on Wednesday reviewed the progress against poliovirus, noting that Sindh had reduced its polio burden from 23 cases in 2024 and nine in 2025 to just one case so far in 2026. However, environmental surveillance showed that the virus is still present in a few high-risk areas.
Chairing a meeting of the Provincial Task Force (PTF) on Polio Eradication, the CM reaffirmed the government’s commitment to eliminating the disease and directed authorities to intensify vaccination, surveillance and community engagement efforts ahead of the September 21-27 Sub-National Immunisation Days (SNIDs) campaign.
“The progress achieved by Sindh is encouraging and reflects the hard work of our health workers, district administrations and partner organisations, but our mission will only be completed when every child is protected, and the virus is eliminated from every district,” said Murad Ali Shah.
“No child should remain unvaccinated due to negligence, weak supervision or lack of follow-up.”
Reviews preparations for week-long campaign beginning on 21st
The meeting, held at CM House, was attended by Health Minister Dr Azra Fazal Pechuho, chief secretary Asif Hyder Shah, Mayor of Karachi Murtaza Wahab, IG Police Sindh Javed Alam Odho, commissioner of Karachi Hassan Naqvi, provincial secretaries, provincial coordinator of Emergency Operations Centre (EOC) Shaharyar Gul, Sindh government partners, and deputy commissioners. From other districts, commissioners, DIGs, deputy commissioners and SSPs participated via video link.
Briefing the meeting, Health Minister Dr Azra Fazal Pechuho said Pakistan’s wild poliovirus (WPV1) cases have declined sharply from 74 in 2024 to 31 in 2025 and only three so far in 2026. Sindh has recorded a single case this year, reported from Sujawal on February 10, compared to nine cases last year and 23 in 2024.
In-charge of EOC Shaharyar Gul informed the chief minister that environmental surveillance data shows a significant reduction in virus circulation across the province. The number of positive environmental surveillance sites has fallen from a peak of 29 in March 2025 to only five in August 2026. Outside Karachi, all 14 surveillance sites are currently negative, while six of Karachi’s 15 sites remain positive, indicating that transmission is increasingly confined to limited pockets of the city.
The meeting participants were told that the absence of confirmed polio cases in Karachi during the 2025 high-transmission season, despite some positive environmental samples, reflects stronger population immunity achieved through routine immunisation and repeated vaccination campaigns.
Chief secretary Asif Hyder Shah said that sustained immunisation efforts have helped prevent clinical cases even where environmental surveillance continues to detect virus circulation.
Expressing satisfaction over the declining trend, the chief minister directed all commissioners, deputy commissioners and district health authorities to adopt a zero-tolerance approach towards missed children, refusals and operational gaps.
Reviewing surveillance findings, he ordered intensified vaccination and monitoring efforts in Karachi and other identified high-risk areas, full implementation of the Karachi Action Plan 2.0, stronger coordination among district administrations and health authorities, closer monitoring of migrant and mobile populations and improved routine immunisation coverage in underserved communities.
EOC coordinator Shaharyar Gul reported that nearly three million oral polio vaccine (OPV) doses and 2.89 million booster doses were administered in Karachi, while campaigns in other divisions delivered approximately 2.7 million OPV doses and 2.58 million booster doses. Expanded-age vaccination strategies helped reach older children through schools and community-based interventions.
The chief minister appreciated the efforts of frontline workers, teachers, community mobilisers and health staff working in remote and hard-to-reach areas, describing them as the backbone of the eradication programme.
The task force was informed that after the July 2026 SNIDs campaign, a special 10-day follow-up drive was launched to vaccinate children who had initially been missed. Of 146,149 missed children, more than 23,500 were subsequently vaccinated through targeted efforts focused on refusals and unavailable children.
Mr Shah directed district administrations to further reduce refusal rates through stronger community engagement and public awareness campaigns, emphasising that building trust with parents remains critical to the success of the programme.
The meeting reviewed preparations for the September 21-27 SNIDs campaign, during which nearly 10 million children under five will be vaccinated across Sindh. The campaign will cover 23 full districts and selected union councils in seven partial districts, with more than 80,000 frontline workers participating.
Officials said over 26,000 police personnel have been assigned security duties. The chief minister reiterated the provincial government’s financial support for the campaign and noted that incentives for frontline workers had been increased by 28 per cent.
He directed all districts to complete remaining preparedness measures, including vaccine supply, logistics, workforce deployment and supervision arrangements, before the campaign begins.
The chief minister also reviewed campaign quality indicators and was informed that Sindh has continued to maintain strong performance standards while pursuing key reforms in routine immunisation, surveillance, staffing and community engagement.
Published in Dawn, September 17th, 2026
Pakistan News
Dealers await answers as fuel subsidy rollout begins
• Petroleum dealers lament lack of clarity on payment mechanism, timeline
• PM wants facilitation desks to help people trying to buy subsidised fuel
• Ogra attributes hike to elevated crude prices despite decline in int’l rates
ISLAMABAD: Even as members of the public who have signed up for the PM’s Fuel Relief Scheme queued up at fuel pumps late on Wednesday night, petroleum dealers were still not clear about the mechanism whereby they would be compensated.
The concern was voiced by the Pakistan Petroleum Dealers Association (PPDA) during a presser in Karachi, where its chairman Malik Khuda Bakhsh said that no fuel pump could afford to bear a loss of Rs100 per litre without clarity on how they will be compensated.
He claimed that between the petroleum ministry, Oil and Gas Regulatory Authority (Ogra) and even the finance ministry, no one had been able to answer their questions.
“Officials from Ogra and oil marketing companies say that the petroleum ministry will possibly pay the subsidy amount, whereas ministry officials maintain that payments will be made by the finance ministry, while finance ministry officials assure us that the State Bank will release the funds in a day or two,“ Mr Bakhsh added.
A day earlier, the National Steering Committee on Fuel Subsidy — chaired by Deputy PM Ishaq Dar — had ordered that payments to fuel stations under the PM’s scheme be processed within 24 hours through the State Bank of Pakistan.
However, Mr Bakhsh said the federal government had assured dealers that they would be taken into confidence before the launch of the fuel relief package, but lamented that no such consultation took place.
”The government has to understand that if payments are not reimbursed in time, many dealers will stop participating in [the scheme], as many previous promises were also not fulfilled by the government,” he added.
PPDA Vice Chairman Tariq Hassan said that around 14,000 dealers across the country have been trying desperately to contact the government over the past three days, adding that whenever Islamabad wants to enforce something, it stops communication.
Another vice chairman, Anwar Kamal, said that if the scheme was to be successful, the government must negotiate with dealers, adding that dealers could not afford to have billions tied up for a long period under this scheme.
Mr Bakhsh later told Dawn they had been invited to a virtual meeting with the relevant federal secretary on Thursday morning.
He added that Ogra officials had also reached out to brief him, but he had asked for that information in writing, so he could relay that to the members of his association.
Facilitation desks
Earlier, Prime Minister Shehbaz Sharif ordered authorities to set up facilitation desks comprising administration officials, volunteers and petrol pump staff to assist citizens in easily obtaining fuel subsidy under the special relief scheme, which was rolled out across the country at Wednesday midnight, following the launch of the pilot phase in Islamabad.
Presiding over a meeting to review progress on the scheme, PM Shehbaz directed that personnel deployed at the facilitation desks should guide eligible citizens and provide them with all possible assistance in registration and other necessary procedures.
The prime minister also asked the relevant authorities to remain proactive in creating public awareness about the scheme, which will benefit people from all four provinces, Azad Jammu and Kashmir and Gilgit-Baltistan.
The meeting was informed that the scheme had been designed in a simple and easy-to-understand manner for the public. Only four pieces of information were required for registration: the applicant’s CNIC number, vehicle number plate, province of registration and vehicle registration date.
According to an official, the number of successful registrations was gradually rising, while provincial governments were extending “full cooperation” for nationwide implementation of the scheme.
Oil prices
Meanwhile, notifying fresh POL rates on Wednesday night, Ogra attributed the steep hikes to elevated international crude oil and petroleum product prices.
The price of high-speed diesel was increased by Rs5.62 per litre to Rs421.45, while petrol became costlier by Rs6.88 per litre, taking its new price to Rs391.22 per litre.
Brent crude futures fell $2.92, or 2.7 per cent, to settle at $105.83 a barrel. US West Texas Intermediate futures fell $3.40, or 3.2pc, to close at $102.43, Reuters reported.
Saudi Arabia is offering more loadings of crude oil to Asian refiners via ship-to-ship transfers off Oman’s Sohar port, people familiar with the matter said, blunting some of the hit to global supply from attacks on the country’s East-West pipeline to the Red Sea.
Oil prices had gained more than $3 in the previous session after shipping industry sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh had cancelled some cargo deliveries to European customers.
The suspension followed strikes on the East-West pipeline, which feeds the Saudi port of Yanbu. It became the main Saudi outlet for oil exports after Iran began blockading the Strait of Hormuz after US and Israeli attacks on the country.
Published in Dawn, September 17th, 2026
Pakistan News
Islamabad, Beijing activate joint border commission
ISLAMABAD: Pakistan and China on Wednesday operationalised a long pending joint mechanism for managing their common border, with Islamabad describing the move as a significant milestone in bilateral relations and a step toward closer coordination on border management, trade and cross-border connectivity.
“The inaugural meeting of the Commission was held at the Ministry of Foreign Affairs in Islamabad,” the Foreign Office said in a statement.
The meeting was co-led by Li Ya, deputy director general of the Department of Boundary and Ocean Affairs at China’s Ministry of Foreign Affairs, and Bilal Mahmood Chaudhary, director general for China at Pakistan’s Foreign Office.
The FO described the operationalisation of the Pakistan-China Boundary Joint Commission as a “significant milestone for Pakistan-China relations”, saying it would set “the stage for enhanced cooperation in border management, joint border surveys, trade flows and people to people connectivity.”
The commission has its origins in the 2013 Agreement on the Boundary Management System signed during the visit of then Chinese Premier Li Keqiang to Islamabad. Article 45 of the agreement provides for establishment of the joint commission to oversee implementation of the border management arrangements.
The mechanism would provide an institutional framework for dealing with practical issues along the border, including maintenance and inspection of the boundary, joint surveys, boundary marker issues, management of cross-border facilities and handling of incidents involving the border.
Its activation also gives the two countries a mechanism for regular coordination on a border that is important for movement between Pakistan and China, including through the Khunjerab crossing, and for trade and connectivity linked to the China-Pakistan Economic Corridor (CPEC).
The new commission is distinct from the Joint Boundary Demarcation Commission that was established under the Sino-Pakistan Boundary Agreement of March 2, 1963. The earlier commission had a specific and essentially one time mandate to conduct surveys, establish boundary markers, prepare detailed maps and set out the alignment of the boundary.
Its work ended after the signing of the protocol and maps completing the demarcation process. The 1963 agreement was signed in Beijing by then-Pakistani foreign minister Zulfikar Ali Bhutto and his Chinese counterpart Chen Yi.
It also provided that, following a settlement of the Kashmir dispute between Pakistan and India, the relevant sovereign authority would reopen negotiations with China on the boundary.
The 2013 agreement, by contrast, established a continuing system for managing the already demarcated boundary, including provisions for dealing with boundary markers and cross-border infrastructure. The agreement says that if a marker cannot be restored at its original location, the joint commission can determine another suitable location, provided the boundary line itself is not altered.
India, which disputes the validity of the 1963 agreement and regards the territory covered by it as part of Occupied Jammu and Kashmir and Ladakh, rejected the new mechanism.
“We have seen reports in this regard. Our position on this matter is clear and consistent. There is no boundary between Pakistan and China. We reject the so-called Joint Commission, which is without any legal basis,” Indian Foreign Ministry spokesman Randhir Jaiswal said.
For Pakistan and China, however, the commission provides a new institutional arrangement for managing their border relationship and dealing with practical issues that have emerged since the 2013 agreement, while leaving the broader territorial positions of the parties unchanged.
Published in Dawn, September 17th, 2026
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