‘Tariff reforms key to economic growth, export boost’, FinMin Aurangzeb in post-budget presser

Finance Minister Muhammad Aurangzeb addressed a post-budget press conference to elaborate on the government’s economic objectives and key details for the upcoming Fiscal Year 2025-26 (FY26).

The press briefing followed a day after Prime Minister Shehbaz Sharif’s government presented its Rs17.57 trillion budget, setting a 4.2% GDP growth target. The budget includes relief measures for the salaried class while reducing overall federal expenditure by 7%.

“Projecting a deficit of 3.9% of the GDP, the budget expects inflation to be at 7.5% in the next fiscal year,” Aurangzeb stated. The government has proposed a 20.2% increase in defence spending, allocating Rs2,550 billion, alongside an 18% higher tax collection target of Rs14,131 billion—raising the tax-to-GDP ratio to 10.1%, up by 1.6%.

The budget also introduces revised tax slabs for salaried individuals, who have faced a heavy tax burden in recent years. “The minimum rate [for salaried taxpayers] has been reduced to 4% from the existing 15% for those earning up to Rs2.2 million annually,” the finance minister explained. Additionally, individuals making between Rs600,000 and Rs1.2 million per year will see their tax rate drop from 5% to 2.5%.

To broaden Pakistan’s tax base, the budget proposes strict measures against non-filers. “If approved, non-filers will be locked out of the country’s financial system,” Aurangzeb warned, emphasizing the government’s push to increase tax compliance.

The FY26 budget aims to balance fiscal discipline with economic growth while providing relief to middle-income earners and tightening enforcement on tax evasion.