President Asif Ali Zardari has authorized the federal budget sessions for both houses of Pakistan’s parliament. The National Assembly is scheduled to convene at 5pm on June 5, followed by the Senate session at 6pm the same day. These sessions will initiate formal discussions on the federal budget for the upcoming fiscal year, a key event in the country’s legislative calendar.
In a significant development, the International Monetary Fund (IMF) has projected Pakistan’s federal revenues at Rs17.145 trillion for the 2026–27 fiscal year. This ambitious target accompanies a series of fiscal and structural reforms outlined in the IMF’s latest staff report. Included in the projection are Rs430 billion in new budgetary measures and an 18% increase in the petroleum levy target, which is expected to reach Rs1.73 trillion.
Notably, the IMF anticipates that provincial governments will generate an additional Rs430 billion through enhanced tax collection efforts, particularly from sales tax on services and agricultural income tax, increasing their total revenues to Rs1.95 trillion. The Federal Board of Revenue (FBR) has been assigned a target of Rs15.264 trillion for FY27, representing a 13.7% rise over the current fiscal year. The IMF expects around 12% organic growth driven by inflation and economic expansion, with the remainder coming from enforcement and administrative reforms.
The report also details commitments including Rs95 billion from tax audits, improved sales tax enforcement, and greater recoveries from sectors such as sugar, cement, tobacco, and fertiliser. Provincial governments are expected to return a larger cash surplus equivalent to 1.4% of GDP. Additionally, Pakistan has agreed to increase Benazir Income Support Programme (BISP) payments to Rs18,000 per family, linking tariff relief in the power sector to targeted social protection under BISP.
The IMF projects Pakistan’s economic growth at 3.5% with average inflation at 8.4% for FY27, while emphasizing tighter fiscal discipline across sectors. Defence spending is expected to rise to Rs2.665 trillion, and interest payments are projected to reach Rs7.8 trillion, reflecting ongoing fiscal pressures. Development expenditures will also increase, with the Public Sector Development Programme rising to Rs986 billion and provincial development budgets expanding to Rs2.5 trillion.
Meanwhile, power sector subsidies will be limited to Rs830 billion, a significant reduction from the previous year, shifting focus toward targeted assistance through BISP instead of broad subsidies. The IMF has called for reforms in energy pricing, reduction of circular debt, and resolution of disputes with K-Electric. It has also urged adoption of a national sugar policy, reduction of state intervention in commodity markets, and phasing out incentives for special economic zones by 2035.
Further commitments include strengthening governance in key institutions, enhancing anti-corruption frameworks, and digitizing all government payments by June 2027. The IMF stressed the importance of full cost recovery in the energy sector and timely tariff adjustments.
An IMF mission was recently in Pakistan to finalize budgetary parameters ahead of the federal budget for 2026–27, which is expected to be presented next month.
