In a significant address at the Pakistan Governance Forum 2026 held in Islamabad, Prime Minister Shehbaz Sharif emphasized the urgent need to ease the burden of direct taxes in the forthcoming federal budget. He underscored that sustainable economic progress cannot be realized by continuously imposing heavier tax demands on individuals and businesses alike. The prime minister questioned the viability of stretching taxpayers any further, highlighting the limits of current fiscal policies.
He elaborated that without fostering growth, boosting production, and expanding exports, the government’s ability to levy additional taxes remains constrained. Furthermore, attracting foreign direct investment (FDI) and encouraging domestic investment are crucial pillars for economic revival. Shehbaz Sharif stressed that the government is committed to reducing direct taxes to provide relief to the business community, thereby instilling greater confidence among investors who seek assurance that their returns will not be eroded by excessive taxation.
Alongside the plan to cut direct taxes, the prime minister also discussed efforts to broaden the tax base. He pointed out that Pakistan’s tax-to-GDP ratio has improved to 10.5 percent, a result of various policy measures implemented over recent years. However, he acknowledged that there is still considerable room for enhancing revenue collection through increased production, exports, and investment inflows. The prime minister also called for a reduction in indirect taxes in the upcoming fiscal budget, noting concerns over the improper handling of indirect tax revenues collected from consumers.
Shehbaz Sharif highlighted the importance of collective responsibility among all stakeholders to overcome the country’s economic challenges. Reflecting on the past, he recalled that Pakistan was on the brink of default in June 2023. Yet, through coordinated efforts involving the federal and provincial governments as well as military leadership, the economy has been stabilized within two years. Inflation, which had soared to approximately 35 percent, has now been brought down to below 7 percent, and the policy interest rate has been lowered to 10.5 percent, signaling a more favorable economic environment.
The prime minister further explained that some of the economic reforms undertaken were indigenous and not tied to conditions set by the International Monetary Fund (IMF). These home-grown reforms are designed to create a more resilient economy capable of withstanding future shocks. Addressing the power sector, he announced a reduction of Rs9 per unit in electricity prices and reaffirmed the government’s commitment to protecting investments in solar energy. However, he also revealed that the country suffers losses amounting to Rs200 billion annually due to power theft, calling for a united approach to tackle this issue.
In addition to economic reforms, Shehbaz Sharif touched upon measures taken to improve governance and curb corruption. He mentioned the closure of Utility Stores, which had become synonymous with corruption and theft, as well as the shutdown of the Pakistan Works Department (PWD), which was plagued by similar issues. These actions, he noted, have saved billions of rupees for the national exchequer. Moreover, under the Prime Minister’s Ramazan Package, Rs38 billion is being distributed transparently to deserving citizens through digital wallets, ensuring accountability and direct benefit to the needy.
The forum was attended by a diverse group of participants, including chief ministers, federal ministers, diplomats, investors, and business leaders, reflecting the broad interest in Pakistan’s economic trajectory. In his concluding remarks, the prime minister acknowledged the challenges ahead, describing the path to economic recovery as long and difficult but reaffirmed the government’s determination to meet these challenges head-on. He emphasized that while the government’s role is not to run businesses, it must create an enabling environment that supports private sector growth, exporters, and investors through various incentives aimed at enhancing productivity and economic expansion.
