Finance Minister Muhammad Aurangzeb’s appeal to parliament for legislative support to bolster the Federal Board of Revenue’s enforcement powers is more than a technical request — it is an admission of political hesitancy within the ruling coalition and among opposition ranks. That the finance czar had to publicly seek backing for what should be a routine fiscal measure reflects the deep-rooted resistance to tax reform that continues to cripple Pakistan’s economic management.
The minister’s frustration was palpable during the post-budget press conference, where he recounted being prevented — at the eleventh hour — from withdrawing sales tax exemptions for powerful industrial sectors in the former Fata and Pata regions. Though that measure has now found its way into the upcoming fiscal plan, it is telling that even minor tax rationalisation efforts are stymied by vested political interests.
His blunt message to lawmakers — either pass the enabling legislation to empower the FBR or prepare for additional taxes — underscores the narrowing fiscal space available to the government. Yet, even with these potential gains, the budgeted tax collection target of Rs14.1 trillion (up 19% from this year) appears wildly optimistic. The goal is pinned on overly hopeful GDP growth and inflation projections, without commensurate structural reforms or an expansion in the tax base.
Equally questionable is the government’s assumption that the economy can grow at a moderate pace of 4.2% while staying within the IMF’s policy constraints and avoiding external sector stress. This aspiration leans heavily on a hoped-for rebound in real estate and a continued rise in remittances — assumptions that carry considerable risk in a volatile global and domestic environment.
On the ground, the budget continues the trend of slashing public development expenditure, a move necessitated by the need to manage the fiscal deficit but one that also dampens economic momentum. With large-scale industry and key agricultural sectors struggling, it is hard to envision how growth can be revived without significant public or private investment — neither of which is clearly forthcoming.
In this context, the budget lacks more than just bold measures — it lacks strategic coherence. The finance minister may refer to this as Pakistan’s “East Asian moment,” but such a claim feels misplaced when the plan is devoid of sweeping reforms or a long-term vision. The IMF has already revised its FY26 growth outlook for Pakistan downward to 3.6%, a sign that global observers are unconvinced by the optimism being projected.
Even if the current budget manages to hit its growth and revenue targets — a generous assumption — the absence of deeper economic reforms means these gains will be short-lived. Without a fundamental shift in tax policy, governance, and institutional capability, Pakistan will remain on a treadmill: moving, perhaps, but going nowhere fast.
The country needs more than numbers; it needs direction. Unfortunately, this budget offers little of either.
