Pakistan's economy moving from stability to growth, says FinMin in post-budget presser

Finance Minister Muhammad Aurangzeb said on Saturday that Pakistan's economy was firmly moving from stabilisation toward growth, as he expanded upon the federal budget proposed yesterday (Friday) for the upcoming Fiscal Year 2026-27.

"The economy is moving in the right direction […] we will now move from economic stability to growth," Aurangzeb said while addressing a post-budget press conference, flanked by Minister of State for Finance and Revenue Bilal Azhar Kayani, Information Minister Attaullah Tarar, and Federal Board of Revenue Chairman Rashid Mahmood Langrial.

The finance minister said the government had worked to strengthen both the tax and export framework in the budget, adding that significant economic progress had been made during the outgoing fiscal year. He said the available fiscal space had been utilised in the best possible manner.

Aurangzeb announced that Rs70 billion in additional subsidies had been allocated to allow exporters to access financing at a reduced rate of 4.5%, a measure aimed at boosting export competitiveness and improving sectoral liquidity.

He confirmed that the super tax had been abolished for businesses earning more than Rs500 million, describing it as a meaningful step.

He added that when the budget was presented before Prime Minister Shehbaz Sharif and the federal cabinet, a specific directive was issued to abolish the super tax for all exporters — a measure he said he would include in his concluding speech at the end of the budget session.

The advance tax has also been abolished as part of efforts to create an enabling environment for export-led growth, he said.

Agriculture

On the agriculture front, Aurangzeb said customs duty, additional customs duty, and regulatory duty on the import of agricultural machinery had all been reduced to zero to facilitate modernisation of the sector.

Agricultural credit had grown by 15%, with the total volume now exceeding Rs2 trillion, he added.

He said the Zarkhez-e-Asaan scheme was progressing in a better and more effective manner. He gave a firm assurance that small farmers would not be asked to mortgage their homes to access agricultural support or financing.

The Prime Minister's Youth Programme has been allocated Rs262 billion, of which Rs125 billion has been specifically earmarked for agriculture. 

Salaried class and construction

Aurangzeb said the government had prioritised relief for lower-income salaried workers. The 5% tax slab has been brought down to 1%, while the 15% slab has been reduced to 13%. He said positive feedback had been received on measures related to higher salary brackets and surcharge adjustments.

Taxes in the construction sector have been reduced to encourage activity and investment, he added.

The Final Tax Regime (FTR) for the IT industry and freelancers has been retained, ensuring continuity and stability in the sector's taxation framework.

Energy and provinces

The finance minister acknowledged that pressure on energy infrastructure remained a challenge.

He said the oil import bill had initially increased by $1 billion but had since been contained to around $500 million. He added that some pressure on energy infrastructure would persist into the next fiscal year as well.

Aurangzeb expressed gratitude to the provinces for their support to the federal government, noting their cooperation in the budget process. This facility, he noted, would continue for the next three fiscal years.

He said a new, modern automated tax system was being introduced and that the tax net would be expanded in the coming period.

'Budget belongs to public'

For his part, Minister of State for Finance and Revenue Bilal Azhar Kayani described the budget as one that belongs to the public, to industrialists, and to those who wish to build their homes. "This is a budget that reduces the economic burden on the people," he said.

Kayani said the government's first priority had been to reduce the burden on the salaried class, adding that measures had been taken in consultation with the business community to lighten the overall tax load.

He said the demands of the export industry had been kept at the forefront while designing the budget's incentive framework.

He outlined the revised tax structure for salaried individuals: those earning up to Rs600,000 annually pay zero tax; those earning between Rs600,000 and Rs1.2 million annually pay 1%; and those earning between Rs1.2 million and Rs2.2 million annually had their tax reduced by 11% last year.

He added that a person earning Rs100,000 per month now pays only Rs500 in monthly tax, while someone earning Rs200,000 per month pays Rs13,500.

"This is a budget for the salaried class, industrialists, exporters, and the construction sector," Kayani added.

This is a developing story and is being updated with further details