ISLAMABAD, JUN 13: 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.
“The main theme of this budget is export-led growth. A key question has been what constitutes the enabling environment for exports, and in this budget, we have made comprehensive efforts to address those factors,” he added.
Highlights of the presser:
Pakistan’s economy shifting from stabilisation to export-led growth
Super tax abolished for businesses earning over Rs500 million
Lowest salary bracket tax slashed from 5% to 1%
Rs100,000 monthly earners now pay only Rs500 tax
All duties on agricultural machinery imports reduced to zero
Government moving toward AI-driven, faceless tax collection system
Public-Private Partnership to lead future development project financing
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.
He said these taxation measures were not isolated decisions but part of a broader policy direction aimed at incentivising production, encouraging documentation and supporting industries that contribute to exports.
“This is about setting the right direction of travel — moving towards a tax system that supports growth rather than constrains it,” he remarked.
The minister also highlighted the government’s focus on broadening and deepening the tax base through structural reforms. He said efforts were underway to introduce a modern tax operating model based on automation, artificial intelligence and reduced human intervention to improve efficiency and transparency.
“We want to move towards a technology-driven, faceless system in income tax and sales tax, similar to what has been introduced in customs,” he said, adding that digital monitoring was already yielding additional revenues and would play a key role in improving compliance going forward.
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.
Responding to a question, Aurangzeb said the government had built sufficient fiscal buffers to absorb the secondary impact of rising international oil prices and expected the financial support arrangement with provinces to continue for the next three years.
He said Pakistan had already witnessed the impact of higher oil prices in April when the country’s oil import bill increased by $1 billion. He said coordinated efforts by the government, particularly through the National Command and Monitoring Centre (NCMC), helped reduce the additional burden to around $500 million in May.
Aurangzeb said the government hoped ongoing diplomatic efforts by Pakistan’s leadership would help bring an early end to the regional conflict, but cautioned that damage to energy infrastructure would continue to affect global energy markets into the next fiscal year.
He said while the government had successfully managed the immediate supply and price impacts, it had incorporated adequate fiscal redundancy in the budget to address second and third-order effects of energy market disruptions.
On provincial support, the minister expressed gratitude to all provinces for assisting the federal government in meeting pressing national requirements, including allocations reflected in the defence budget.
He said the current arrangement was in place for the ongoing fiscal year and the federal government expected it to continue for the next three years following discussions with the provinces.
Responding to a question regarding the petroleum levy target of Rs1.676 trillion, Aurangzeb said the government had not increased the levy rate, and any changes would only involve adjustments between petrol and diesel while maintaining the overall levy structure.
‘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.
Kayani said the government’s export-led growth strategy would benefit the entire economy by encouraging industrial expansion, diversification, job creation and higher wages.
He said exporters were not the sole beneficiaries of the policy as workers, machine operators, drivers and labourers across the industrial value chain would also gain from increased economic activity.
Highlighting development priorities, Kayani said the PSDP included funding for major education and health projects, including the Jinnah Medical Complex in Islamabad, Danish University in Muzaffarabad and educational institutions in Gilgit-Baltistan, Balochistan, Sindh and other underdeveloped regions.
He said the Danish Schools and universities initiative reflected Prime Minister Shehbaz Sharif’s vision of providing quality education opportunities to the poorest segments of society, particularly orphaned children.
He said housing finance initiatives would also support low and middle-income groups, citing examples of drivers and factory workers who had successfully obtained loans to build or purchase homes.
Development spending and public-private partnership
Meanwhile, Aurangzeb said $12 billion was available for development projects across the country in the current year alone, adding that the sheer volume of funds meant even full utilisation would be a challenge.
“We do not have a shortage of resources,” he said.
He stressed, however, that the government must now shift toward Public-Private Partnership for development projects, limiting direct budget spending to projects where commercial viability was not possible.
He cited the Sindh government’s work in Thar as a strong example of successful PPP execution, saying all future development projects should be evaluated for their commercial potential before public funds were committed.
— Some additional input from APP.
