Govt Eyes $2 Billion Commercial Loan to Boost Reserves to $14 Billion This Month

The government is in the process of getting a $2 billion loan to increase foreign exchange reserves from the current $11–12 billion to $14 billion by the end of June, Finance Minister Muhammad Aurangzeb informed the National Assembly Standing Committee on Finance on Thursday. During the briefing, the Finance Minister expressed confidence that the policy rate would move to single digits by the end of the calendar year. The committee was also informed that the government has proposed a special relief allowance of 50 percent for armed forces officers and 20 percent for JCOs and soldiers in the next budget. It was discussed that the fiscal deficit is targeted at 3.9 percent of GDP, or Rs. 5,037 billion, compared to 5.9 percent in the outgoing year. The primary surplus target has been set at 2.4 percent of GDP. The Federal Board of Revenue’s tax collection target is Rs. 14,131 billion, up from Rs. 12,970 billion this year and 19 percent higher than the revised estimate of Rs. 11,900 billion. Non-tax revenue is projected at Rs. 5,147 billion, compared to Rs. 4,845 billion this year. Financing of the federal deficit is budgeted at Rs. 6,501 billion for 2025–26, down from Rs. 8,500 billion in the current fiscal year. Net external financing is projected at Rs. 106 billion, while net domestic financing is expected to decline to Rs. 6,308 billion from Rs. 7,804 billion. Aurangzeb added that only Rs. 312 billion worth of new taxes are included in the budget and denied media reports of any mini-budget. He added that a proposed tax on fertilisers and pesticides was dropped after negotiations with the IMF on the prime minister’s direction. Committee members raised concerns over Rs. 550 billion worth of petroleum smuggling, which they said results in a Rs. 145 billion loss in uncollected petroleum levy. The chairman instructed the Finance Ministry to submit a full report on structural and tariff reforms.