Pakistan Budget 2025–26: Key Highlights, Tax Changes, and Economic Outlook

>What to Expect in Budget 2025–26?

The anticipated measures in the Pakistan budget 2025-26 aim to promote economic stability.

Here are the likely themes and measures to be announced:

1. IMF-Driven Fiscal Tightening

The Pakistan budget 2025-26 will likely feature fiscal tightening measures as part of the strategy.

• IMF will demand reduction in fiscal deficit, better tax collection, and subsidy reforms                     ISLAMABAD: As virtual technical-level discussions on the upcoming federal budget begin, the International Monetary Fund (IMF) expects Pakistan’s total revenue to grow to nearly Rs20 trillion in the next fiscal year, up from the current estimate of less than Rs17.8tr, with an emphasis on tight expenditure controls to ensure sustainable debt servicing.

• Higher taxes on luxury items, real estate, non-filers, and possibly on retailers and traders.

2. Tax Reforms

• Broadening of the tax net:                                                                                                                      Expanding the tax net is the government’s top priority,” Sharif said. “We want to reduce the tax rate to ease the burden on the common man

  Tax reforms included in the Pakistan budget 2025-26 may significantly impact various sectors.

• Crackdown on non-filers: Under the proposed measures, individuals who fail to file taxes will face severe restrictions. Non-filers will be banned from purchasing property, vehicles, and opening or maintaining bank accounts. They will be banned from opening a current or savings bank account or maintaining an old account.

• New taxes on digital economy, real estate, and agriculture income (possibly):                                   The World Bank has proposed closing all tax exemptions and including agriculture, retail, and real estate in the tax bracket to help Pakistan generate revenue.

  >Priority projects: CPEC, Bhasha Dam, Education, IT Parks,      and health sector:       

The Pakistan budget 2025-26 will incorporate significant funding for national defense.

The Government of Pakistan is expected to allocate significant funds in the upcoming budget to support strategic national projects. These are aligned with economic growth, infrastructure development, and social uplift:

1. China-Pakistan Economic Corridor (CPEC) – Phase II

• Focus on industrial cooperation, Special Economic Zones (SEZs), and infrastructure completion.

  Strategies in the Pakistan budget 2025-26 will likely emphasize energy sector reforms.

• Key projects may include:

  • ML-1 Railway modernization

  • Gwadar Port development

  • Energy connectivity and road infrastructure

• New investments expected in agriculture and IT under CPEC umbrella.

  New funding initiatives in the Pakistan budget 2025-26 are expected for technology and infrastructure.

2.  Diamer-Bhasha Dam

• One of Pakistan’s most ambitious hydropower and water storage projects.

• Budget may allocate over Rs. 100 billion for ongoing construction.

  The Pakistan budget 2025-26 aims to enhance employment opportunities in various sectors.

• Aims to:

  • Generate 4,500 MW of electricity

  • Enhance water storage by 8.1 MAF

  • Create jobs in remote areas

    Healthcare initiatives will also receive attention in the Pakistan budget 2025-26.

3.  Education Sector

• Emphasis on:

  • Higher Education Commission (HEC) budget enhancement

  • School infrastructure upgrades

  • Digital literacy and e-learning platforms

• Possible new scholarships or skill development programs for youth

4. Information Technology Parks & Digital Economy

• Pakistan aims to boost IT exports to $5 billion+ by 2026.

• Budget may include:

  • IT Park development in Islamabad, Lahore, Karachi

  • Tax incentives for software exporters and startups

  • Investment in 5G infrastructure & digital payments

5. Health Sector

• • Continued focus post-COVID on strengthening healthcare systems:

    • Expansion of Sehat Card (Universal Health Coverage)

    • New hospitals and mobile clinics in underserved areas

    • Increased funding for maternal & child health programs

      Social welfare programs will be a focus in the Pakistan budget 2025-26.

    • Medical equipment imports and local pharmaceutical support

4. Social Welfare

• Higher allocations to BISP (Benazir Income Support Programme):                                                       

  According to sources, Rs 716 billion will be allocated for BISP in the next fiscal year budget, reflecting an increase of 20% compared to the current fiscal year.

  The amount for beneficiaries of the Benazir Income Support Program will be increased from January 2026.

  BISP beneficiaries to get Rs 14,500

  Sources said the quarterly amount will be increased from Rs 13,500 to Rs 14,500 from January next year.

  It is worth remembering that last year, the amount of the Benazir Income Support Program was increased from Rs 10,000 to Rs 13,500.

  Thousands of deserving people are benefiting from BISP, and now there are reports of further increase by the government.

• More funds for Ehsaas Program, especially cash handouts during inflation

5. Defense Spending

Defense spending in the Pakistan budget 2025-26 will reflect the current geopolitical landscape.

• Always a large chunk – could increase by 10–15% due to rupee depreciation & security costs:                                                      Pakistan coalition government has endorsed an 18 per cent increase in defence spending to over Rs 2.5 trillion in the next budget due to tensions with India, according to a media report on Tuesday. The government is set to unveil the 2025-26 budget in the first week of the next month ahead of the start of the new fiscal year from July 1.

6. Energy Sector

• Subsidy reduction likely due to IMF conditions:

  The government plans to implement a series of fiscal measures starting July 1 aimed at reducing the fiscal deficit and addressing the country’s mounting energy-sector debt.

  These measures include additional levies on petroleum products, a new debt service surcharge on electricity bills, and adjustments to gas tariffs. Electricity prices will be rebased annually beginning July 2025, while gas prices are expected to be adjusted twice — first in July 2025 and again in February 2026.

  Read more: IMF slaps 11 new conditions on Pakistan

  Sources said the federal government has committed to imposing a carbon levy of Rs5 per litre on petrol and diesel. Provincial governments are not expected to offer any subsidies on electricity or gas under the new policy framework.

• Promotion of solar energy:    The government says: Lower “Buyback” Price: If you send extra solar power to the grid, they’ll pay you Rs10 per unit (down from Rs27). New Rules for New Users: If you install solar after 2025, you can’t make a system bigger than your home’s power needs (plus 10% extra).

  Promotion of renewable energy will be highlighted in the Pakistan budget 2025-26.

• New levies on fuel or electricity possible

7. Privatization Plans

• Government may announce plans to privatize PIA, Steel Mills, DISCOs                                                           there is a chance that the government will be privatize the Pakistan International Airline PIA.The government had previously assured the International Monetary Fund (IMF) that the PIA privatisation would happen by July 2025, but the latest delay underscores the challenges faced in initiating the process. The government is also on track to miss its target of generating Rs30 billion from privatisation proceeds in the current fiscal year, with no entity expected to be privatised until at least June 2025.

  Privatization plans will feature prominently in the Pakistan budget 2025-26 discussions.

  According to the Tribune’s report, Adviser to the Prime Minister on Privatisation Muhammad Ali confirmed the delay during the Business Summit organised by Nutshell Group, where he discussed the hurdles to the privatisation agenda.

  watch the budget speech live or read the official Budget-in-Brief document, usually available on the Ministry of Finance website a few hours after the speech.