Budget FY26: NEC clears massive Rs4.2tr development plan to jumpstart growth

• 13th 5-Year Plan approved, aligned with Uraan Pakistan Framework.
• NEC sets FY26 GDP target of 4.2%, up from 2.7% projected for FY25.
• Council meeting informed major economic indicators blinking green.

ISLAMABAD: Pakistan’s top economic forum on Wednesday approved a landmark Rs4.2 trillion ($15.1 billion) national development budget for the fiscal year 2025–2026 (FY26), allocating Rs1 trillion for federal and Rs2.87 trillion for provincial projects, according to an official statement.

A meeting of the National Economic Council (NEC), chaired by Prime Minister Muhammad Shehbaz Sharif on Wednesday, approved the Annual Development Plan for FY26.

The six-point agenda of the NEC was unanimously given the go-ahead, along with the macroeconomic framework and targets for FY26.

The NEC directed relevant ministries, provinces, and government institutions to work closely with the Ministry of Planning to achieve the targets set in the proposed F26 annual plan.

Priority sectors in these development projects include health, education, infrastructure, the water sector, and housing, the PM Office Media Wing said in a press release.

The meeting also consented to the 13th Five-Year Plan (2024–2029), according to the approval of the “Uraan Pakistan Framework.” The meeting was informed that the 13th Five-Year Plan and the Uraan Pakistan Framework were mutually aligned.

The session was also presented with a third-party monitoring report on the annual national development programme. It was decided that future project planning would be guided by the recommendations of this report.

During the meeting, the prime minister congratulated the participants on Pakistan’s historic victory in operation Marka-e-Haq on May 10.

“By the grace of Allah Almighty, Pakistan achieved victory in Marka-e-Haq due to the professional competence and bravery of the Pakistan Armed Forces,” he added.

The prime minister termed India’s recent narrative against Pakistan as extremely irresponsible, posing serious threats to regional peace and security, adding that the people of Pakistan stood united in safeguarding national integrity against India.

“India’s threats to deprive Pakistan of its water resources are unacceptable,” the PM said, emphasising that they would also defeat India in the struggle to protect the water resources.

The prime minister said that a special meeting would be held with all chief ministers to formulate a robust strategy for the protection of Pakistan’s water resources in light of Indian aggression.

"The federation and provinces would work together to successfully safeguard Pakistan’s water resources," he added.

The premier noted that the recent economic stability was made possible due to the joint efforts of the federal and provincial governments, adding, “The country is now on the path to economic growth.”

He said that agriculture played a key role in increasing national reserves and economic growth.

"A strategy was being formulated for a gradual increase in agricultural production," he added.

The performance report of the revised indicators of the economy for FY25 was also presented at the meeting.

The meeting was informed that a total of Rs3.483 trillion was being spent on the Annual National Development Programme for FY25, including Rs1.1 trillion for the federal government and Rs2.383 trillion for the provinces.

The meeting approved a GDP growth rate of 2.7% for FY25 and a target of 4.2% for the next fiscal year.

A briefing noted that remittances increased by 30.9% from July 2024 to April 2025, and for the first time, the current account balance posted a surplus.

The fiscal deficit for FY25 was reduced to 2.6% of GDP, while the primary balance showed a surplus of 3% of GDP.

Due to government policies and measures, the policy rate gradually declined to 11%, and loans issued to the private sector from July 2024 to May 2025 rose to Rs681 billion, the briefing highlighted. The GDP for FY25 is projected at Rs114 trillion or $411 billion, the meeting was informed.

A report on the progress of the Central Development Working Party (CDWP) for the period April 2024 to March 2025 was presented to the Council. 

Details of national development projects approved by CDWP and the Executive Committee of the NEC during this period were also shared.

The prime minister thanked all participants for the consensus on the agenda items and said that such national consensus was the key to Pakistan’s bright future.

The meeting was attended by Deputy Prime Minister and Foreign Minister Muhammad Ishaq Dar, Minister for Planning Dr Ahsan Iqbal, Finance Minister Muhammad Aurangzeb, Information and Broadcasting Minister Attaullah Tarar, Adviser to Prime Minister Rana Sanaullah, as well as Chief Minister Punjab Maryam Nawaz, Chief Minister Sindh Syed Murad Ali Shah, Chief Minister Khyber Pakhtunkhwa Ali Amin Gandapur, Chief Minister Balochistan Nawab Sarfraz Bugti, and other members of the NEC.