FY26 Budget: Initial Estimates Point to Significant Deficit

Preparations are underway for Pakistan’s Federal Budget for the fiscal year 2025-26, with initial estimates from sources within the Ministry of Finance suggesting a substantial budget deficit. Finance Ministry sources told ProPakistani that the preliminary estimate for the federal budget deficit stands at Rs. 7.222 trillion. This comes despite an estimated provincial surplus of Rs. 1.360 trillion. The Ministry of Finance sources project the total federal revenue for the upcoming fiscal year to be Rs. 19.111 trillion. This includes an estimated tax revenue of Rs. 15.270 trillion to be collected by the Federal Board of Revenue (FBR) and a non-tax revenue projection of Rs. 3.841 trillion. After accounting for provincial transfers, the net income available to the federal government is estimated to be Rs. 10.331 trillion, according to the sources. On the expenditure side, the federal government’s total estimated expenditure for FY26 is Rs. 17.533 trillion. This includes significant allocations for defense, pensions, and salaries, in addition to interest payments. The estimates also incorporate the development budget, subsidies, and grants. A significant portion of the expenditure is earmarked for debt servicing, with estimated interest payments reaching Rs. 8.106 trillion for the next fiscal year. Sources suggest that a further decrease in the interest rate could potentially reduce these payments. After accounting for all estimated expenditures, the federal government is projected to have only Rs. 2.225 trillion remaining, highlighting the scale of the anticipated budget deficit. These are preliminary estimates, and the final budget figures may undergo revisions before being presented.