Rs17.5tr budget finalised; big chunk to go to debt servicing, defence, subsidies
ISLAMABAD: The size of the upcoming federal budget has been estimated at Rs17.5 trillion, according to informed sources.
For the fiscal year 2025–26, the Federal Board of Revenue (FBR)’s tax target has been set at Rs14.1 trillion. This figure is slightly lower than the earlier target of Rs14.3 trillion, which was set under an IMF condition.
Estimates for defence, development expenditures, and debt servicing have also been finalised.
Interest payments alone are expected to cost nearly Rs9 trillion in the next fiscal year. Of this, Rs7.7 trillion will be spent on domestic debt servicing, while Rs1.3 trillion is estimated for external debt and interest payments.
Subsidies for the next fiscal year have been estimated to cost Rs1.4 trillion. Federal grants have been projected at Rs1.62 trillion, while a surplus of Rs1.2 trillion is expected from provincial governments.
An allocation of Rs700 billion has been estimated for the Benazir Income Support Programme (BISP). The government also plans to increase tax rates on dividends and small vehicles. The sales tax on small vehicles is likely to rise from 12.5 per cent to 18 per cent.
The IMF has directed strict adherence to austerity measures in the upcoming fiscal year.
All federal ministries and departments will be barred from purchasing new vehicles. Electricity and gas bills of ministries and departments will be capped, and the issuance of unnecessary supplementary grants will be prohibited.
Emergency supplementary funds will only be released during natural disasters. No funds will be allocated for unapproved or miscellaneous projects